9 PM Daily Brief – October 3rd, 2020

Good evening dear reader.

Here is our 9pm current affairs brief for you today

9 PM for Mains examination

GS-3

1. The end of ‘Inspector Raj’- Labour and Farm Bill
2. C&AG’s report on GST compensation cess
3. Labour bills
4. Biodiversity and Pandemic
   

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9 PM for Preliminary examination

FACTLy

1.The end of ‘Inspector Raj’- Labour and Farm Bill

Source- The Indian Express

Syllabus- GS 3- Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Context- Reforms are broadly about leaving resource allocation and production decisions to market forces rather than know-all ministers and bureaucrats.

What were the challenges faced by general people working in the Agriculture and Labour sector after the Independence?

Farmers in Agriculture Sector-

• They had been treated as captive sources of producing cheap food grain while living at subsistence levels.
• There was no freedom to choose the point of sale for his produce, they could not decide the price of their product and had no say in selecting the buyer.

In Labour Sector-

1. Entrepreneurs-
   • If one even thought of becoming an entrepreneur, there were 44 different labour laws with more than 1,200 sections and clauses that demanded compliance.
   • Different inspectors and departments administered those laws and the tyranny of “inspector raj” hindered or killed many entrepreneurial journeys from taking flight.
2. Private Investors- The Companies Act of 2013 needed to be reform as the Bill had many adverse provisions, one of which was to criminalise even otherwise normal civil infractions of routine nature. The Bill completely paralysed risk-taking and quick decision-making among the private wealth creators.
3. Financial sectors –
   • They are completely outside the ambit of RBI regulation.
   • They served millions of ordinary people, but had no standard governance norms or binding regulations to protect customer interest.
   • The politicians who controlled these banks were the primary obstacles in introducing any reforms in these sectors.

What are the reforms that will change the life of famers in Agricultural Sector and labours in Labour sector?

Farmers in Agricultural Sector-

• Now he can sell his produce wherever he wants, to whomsoever he wants and at whatever price he can command.
• If he gets a higher price in the market, then he is free to take it else the security of MSP anyhow exists.
• The stifling nature of the Essential Commodities Act and the APMC Act has both been removed.
• Contract farming is now nationally enabled, allowing private investment to come in, which will bring in technology, modern equipment, better seeds, and know-how for in-between-season crops, improved yields, better logistics and freer access to national and international markets.

In Labour Sector-

1. Labour Laws-

• The web of 44 central labour laws has been dismantled.
• The Parliament has now put in place four labour codes that are much simpler —

1. The Code on Wages.
2. The Industrial Relations Code.
3. The Social Security Code.
4. The Occupational Safety, Health and Working Conditions Code.

• They universalise minimum and timely payment of wages among a host of other labour-friendly measures.
• They enable ease of doing business by bringing in a regime of one-registration, one-licence and one-return. The tyranny of “inspector raj” is finally over.

2. Private investors- The perverse sections of the Companies Act 2013 have been done away with and the fear of criminal prosecution that hung over every corporate decision is now history.
3. Banks-

• The bilateral banking netting law has been passed and a large corpus of unproductive capital has been freed to be deployed in the market.
• Cooperative banks will now be regulated by the RBI and its customers will have the same protections as those of other regular banks.

Way Forward

The bureaucracy must ensure that the fruits of these reforms reach the last mile.

2. C&AG’s report on GST compensation cess

Source- The Hindu

Syllabus- GS 3- Government Budgeting.

Context- In its audit report on the accounts of the Union Government, the Comptroller and Auditor General of India (CAG) has pointed out grave lapses in the accounting of revenue from the GST compensation cess.

What are the key findings of the CAG report related to cess?

1. Retained in the Consolidated Fund of India – The GST Compensation Cess with ₹47,272 crore, was not remitted to its rightful account over the first two years of GST.

• Union Finance Ministry quietly retained over 40% of all cess collections in 2018-19 in the Consolidated Fund of India (CFI).

2. Short transfer to the Public Account – As many as 35 different cesses, levies and charges yielded ₹2.75-lakh crore in the year, but just around ₹1.64-lakh crore was remitted to the specific reserve funds for which these cesses were levied.
3. Crude Oil Cess – Over 10 years, not a single penny of the ₹1.25-lakh crore of cess collected on crude oil was transferred to an oil industry development body it was meant to finance.
4. Central Road and Infrastructure Fund – Part of the hefty cess collected as additional excise duties on petrol and diesel, to finance roads and infrastructure, was similarly retained in the CFI.
5. A new 4% Health and Education Cess on income tax was partly deployed towards education, but no fund was created for health. Same with a Social Welfare surcharge levied on customs.

What is the mechanism of utilization of compensation cess?

Transfer of reserve funds– Cesses and levies collected are required to be first transferred to designated Reserve Funds and utilized for the specific purposes intended by Parliament.

• Funds collected through Central taxes along with cesses and other levies go to the CFI.
• Taxes and surcharges in CFI are parked in a divisible pool and 42% of the total is given to States as devolution.

What are the major reasons for the proliferation of cesses in India?

Inter- governmental fiscal arrangement-

1. Lack of transparency- Article 271 excludes the distribution of the revenue from any surcharge or cess levied by the Union government for any specified purpose, revenues from these sources do not form part of the divisible tax pool and are thus not shared with states. The lack of transparency in the accounting of these funds is undesirable.
2. Complexities in Tax structure- There are as many as 35 earmarked cesses, it is difficult to see all of them as priority areas requiring protection of funding. Too many cesses also complicate the tax system and add to administrative and compliance costs. There are debated over whether such levies are in sync with a nation trying to simplify its tax regime.

• The operation of the cesses involving collections and transfer to designated funds in the Public Accounts makes the entire process opaque as the operation of these funds too needs to be monitored and audited.

Way forward

Taxes in democratic societies indicate the presence of a collective socio-economic vision aimed at improving livelihoods. Since a cess is introduced with a specific purpose, it is unjustified when the proceeds remain unutilized for so many years. It is high time that the government immediately begins utilizing cess proceeds. Importantly, it should also publish an annual account of the manner in which they have been utilized.

Read also:-  Daily Current Affair

3.Labour bills

Source: The Indian Express

Syllabus: GS-3- Economics

Context: Government’s response to migrants’ plight, economic crisis, has been to unilaterally bring changes in labour laws.

How has the share of circular migrants and workers outside agriculture changed over the years?

• Employment security: scarce jobs in industry and services increasingly became jobs which did not offer any job security.
• Between 2004-05 and 2017-18, the share of salaried workers outside agriculture without any written contract increased from 60 per cent to 71 per cent.
• In private and public limited companies, this share increased from 59 per cent to 71 per cent. 
• The share of the circular migrants in all the risky jobs outside of agriculture increased over this period from 47 per cent to 57 per cent.
• In organised manufacturing, the reported share of contract labour increased from 13 per cent in 1995-06 to 36 per cent in 2017-18.

What are the changes introduced in the ecosystem of labour laws?

• The three revised labour Code Bills were on Industrial Relations, Occupational Safety, Health and Working Conditions, and Social Security
• These three labour codes, along with the Code on Wages approved earlier, affect the lives of every Indian worker, except a tiny section of the public sector and managerial employees.
• In 2018, the government amended the Standing Orders on Employment Act and introduced the category of “fixed term” worker. That category, which creates a permanent unit of temporary workers, with no prospects of career growth and job security.
• Various government spokespersons had rationalised fixed-term employment by arguing that industries had resorted to the third-party engagement of contract labour to get around the rigidities in firing workers.
• Codes further liberalised the provisions relating to employment of contract labour and making their regulation applicable only in establishments employing 50 or more workers, instead of 20 or more.
• The key provisions which regulate the employment of inter-state migrant workers have been further diluted and made applicable only to establishments employing 10 or more such workers, compared to five earlier.
• The threshold for factories: It has been doubled from 10 to 20 workers with power and therefore eliminating a large number of important regulatory provisions for the smaller factories.
• Relevant governments have been given much more scope in excusing establishments from the applicability of a whole range of provisions in the Code.
• Inspection provisions have been diluted in all the Codes and will no longer even be complaints based.

Comment on the changes made in the bill?

• These changes may appeal to narrow-minded interests which believe that industrial prosperity can be built on a race to the bottom for workers.
• The National Commission for Enterprises in the Unorganised Sector (NCEUS) has clearly argued, informality contributes to inequality and to conditions which make sustainable growth impossible, and economic recovery more difficult.
• Low productivity and lack of competitiveness: It also creates conditions in which employers under-invest in workers’ capacities and workers are not invested in a company’s future.

Way forward

• The NCEUS calls for changes which balanced employers’ interests with workers’ security and rights. It is this thinking that has led somewhat more enlightened governments, and industrialists, in India and the world over, to investing in the long-term future of workers.

4. Biodiversity and Pandemic

Source: The Hindu

Syllabus: GS-3- Environment

Context: India’s pandemic recovery must be greened as the country is a key member of biodiversity convention.

Why should India should plan a green trajectory after Covid-19?

• Convention on Biological Diversity (CBD): The body acknowledged the link between biodiversity loss and the spread of animal pathogens and called for an end to destructive industrial and commercial practices.
• UN Global Biodiversity Outlook 5 report: None of the 20 targets has been fully met. Many countries have chosen to ignore the connection between biodiversity and well-being, and depleted ecological capital in a quest for financial prosperity.
• Conservation targets set a decade ago, to be achieved by 2020 were:
• reform or phasing out of subsidies that erode biodiversity
• steps for resource use within safe ecological limits
• preventing industrial fisheries from destroying threatened species and vulnerable ecosystems
• an end to pollution, including growing plastic waste
• protecting surface and subsurface water, inland, coastal and marine areas
• WWF’s Living Planet Index: It points out 68 per cent decline in vertebrate populations over 1970 levels.
• India has recognised the value of nature as much as the destructive impact of unregulated resources exploitation.
• National laws of the 1970s and 1980s have indeed protected islands of biodiversity, particularly in about 5% of the country’s land designated as protected areas
• The new EIA norms:There is little concern for indigenous communities that have nurtured biodiversity, and there was no effort to make them strong partners in improving the health of forests and buffer zones.

Way forward

• The 196 CBD member-countries must chart a greener course, aligning it with the Paris Agreement, which has a significant impact on the health of flora and fauna.
• India too has the opportunity to plan a trajectory of green growth after COVID-19, around clean energy, ecological agriculture, a freeze on expansion of mining and dam-building, resource recovery from waste, and regeneration of arid lands.
  

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9 PM for Preliminary examination

Click on “Factly articles for 3rd October, 2020”

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