9 PM Daily Current Affairs Brief – August 2nd, 2023

Mains Oriented Articles

GS PAPER - 2

The dangers in the Digital Personal Data Protection Bill

Source– The post is based on the article “The dangers in the Digital Personal Data Protection Bill” published in the “The Hindu” on 2nd August 2023.

Syllabus: GS 2 – Indian Polity – Fundamental Rights

News– The government is set to introduce the Digital Personal Data Protection (DPDP) Bill in Parliament.

What is the importance of the Right to Information Act?

It has been a tool to empower millions of Indian citizens since 2005. Access to information is necessary for governments accountability in a democracy.

According to the Supreme Court of India, individuals have the right to access information about wilful defaulters and the specifics of Non Performing Assets held by public sector banks.

In democracies, voter lists containing names, addresses, and other personal information are regularly made public to facilitate public scrutiny and prevent electoral fraud.

Poor and marginalised people can enjoy the benefits of government schemes and welfare programmes, if they must have access to relevant information.

What are the issues related to the draft Data Protection Bill?

Exemptions under RTI Act– The RTI Act includes a provision to protect the privacy of people. It contains an exemption clause under Section 8(1)(j).

Personal information is exempt from disclosure if it is not related to public activity; or any public interest. The information is also exempted if it leads to invasion of privacy.

Therefore, data protection law does not require any amendment to the existing RTI law. The Justice A.P. Shah Report on Privacy also mentions it.

However, the DDP Bill 2022 includes an amendment to Section 8(1)(j). It exempts all personal information from disclosure. This is not good for the transparency and accountability regime in the country.

Excessive power to executive– A primary objective of any data protection law is to curtail the misuse of personal data, including for financial fraud.

Government is the biggest data repository. It should not have wide discretionary powers under the data protection law.

The DDP Bill, 2022, grants extensive authority to the executive to formulate rules and notifications covering a wide array of matters.

For example, the central government holds the power to exempt any government or private sector entity from adhering to the law’s provisions by issuing a notification.

This raises the possibility of the government selectively exempting entities like the Unique Identification Authority of India (UIDAI).

In contrast, smaller non-governmental organisations, research institutions, associations of individuals, and Opposition parties would be required to establish systems to comply with the stringent responsibilities of a data fiduciary.

Data Protection Board– it is critical that the oversight body set up under the legislation is adequately independent.

The draft Bill does not ensure the autonomy of the Data Protection Board. The strength and composition of the board, and process of selection and removal of its chairperson and other members will be decided by central government

Government will have power to appoint the chief executive responsible for managing the board.

Data Protection Board has power to impose fines up to ₹500 crore. It can be misused by the executive to target the political opposition and those critical of its policies.

C Raja Mohan writes: South Asia, now open to business

Source: The post is based on the article “C Raja Mohan writes: South Asia, now open to business” published in The Indian express on 2nd August 2023.

Syllabus: GS2- India and its neighborhood-relations.

News: In this article author talks about India’s growing economy and its potential positive effect on South Asia. They discuss how regional integration, influenced by economic reforms, can overcome political disputes. Despite challenges, there are new factors accelerating this process, including India’s increasing economic ties with neighbors, economic openness in the region, and support from Western countries. Ultimately, the author suggests India’s economic growth can benefit all South Asian countries.

How India’s growing economy and its potential positive effect on South Asia?

India is emerging as the third-largest economy and a major tech hub.

Effects on South Asia

Trade Increase:

Intra-regional trade grew from 2% in 1990 to 6% now.

India’s exports: $16 billion to Bangladesh, $6 billion to Sri Lanka, and $8.5 billion to Nepal in 2022.

Regional Integration:

Leaders from Nepal and Sri Lanka are showing interest in deeper economic ties with India.

Cross-border projects like rail, road, and energy are gaining momentum.

Great Power Influence:

The US and allies are focusing on India as a counter to China, helping promote India’s ties with its neighbors.

Japan is promoting connectivity between India and Bangladesh.

How South Asian regional integration can overcome political disputes?

Trade as a Bridge:

Intra-regional trade in South Asia grew from 2% in 1990 to 6% currently.

As trade benefits economies, it encourages nations to resolve political issues.

Leadership Engagements:

Visits by Nepal’s PM and Sri Lanka’s President to India have led to stronger economic commitments.

Such direct discussions can pave the way for resolution of disputes.

Economic Alliances:

Countries like Nepal and Sri Lanka show increased interest in economic ties with India.

Economic interests can overshadow past political differences.

External Influence:

Japan’s effort in promoting India-Bangladesh connectivity is an example of foreign nations pushing for regional unity.

The US’s $500 million grant to Nepal for energy and road connectivity emphasizes regional collaboration.

Alternative Cooperation Routes:

Instead of relying solely on SAARC, nations are pursuing bilateral and sub-regional cooperations, bypassing traditional hindrances.

Expansion worries: Enlarging Brics will not inevitably restore relevance

Source: The post is based on the article “Expansion worries: Enlarging Brics will not inevitably restore relevance” published in Business standard on 2nd August 2023.

Syllabus: GS2- Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

News: This article discusses the potential expansion of the BRICS group. China wants more countries like Russia to join. India and Brazil prefer democracies like Indonesia over autocracies like Saudi Arabia. This reflects BRICS’ challenges in staying relevant as its original purpose has shifted. India wants a careful, consensus-based expansion approach. The upcoming August summit will address these issues.

About BRICS current situation

BRICS includes Brazil, Russia, India, China, and South Africa.

They discuss global economic matters.

China wants countries like Russia to join.

India and Brazil prefer democracies joining, like Indonesia.

There’s debate over Saudi Arabia’s potential membership.

BRICS’ relevance has changed over time.

China’s growth and anti-Western stance influenced this change.

India now values the Quad and G20 more.

The August summit will discuss BRICS’ expansion.

India seeks a consensus-based approach to expansion.

What are the challenges faced by BRICS?

Differing Expansion Views: While China wants countries similar to Russia to join, India and Brazil lean towards democracies like Indonesia.

Potential New Members: The debate on including Saudi Arabia highlights differing priorities. While its addition would favor China, India remains cautious.

Shift in Relevance: Originally, BRICS was a stage for large emerging economies. However, China’s economic growth and its anti-Western approach have changed its focus.

China’s Dominance: The risk of BRICS becoming a “China-plus” grouping can reduce its balanced influence.

Balancing Act: India wants to stay independent of Sino-Western tensions, affecting its commitment to BRICS.

Alternate Forums: China has developed other platforms for engaging emerging countries, overshadowing BRICS.

Relevance Concern: With India valuing the Quad and G20 more, BRICS’ importance is questioned.

What should be done?

Consensus-based Expansion: All BRICS nations should agree on new members.

Objective Criteria: Use clear criteria for adding new members, not just geopolitical shifts.

Avoid Dominance: Prevent BRICS from becoming a “China-plus” group.

Value Democracy: Prefer established democracies like Indonesia over autocracies like Saudi Arabia.

Re-establish Purpose: Refocus on BRICS’ original goal of shaping the global geo-economic order.

Consistent Approach: Decisions should not be influenced by temporary geopolitical events.

Indian Institute of Management (Amendment) Bill, 2023: Explained, pointwise

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Introduction

Recently, the Indian Institute of Management (Amendment) Bill, 2023 was introduced in Lok Sabha. The Bill comes six years after the IIM Act, 2017 which declared the 20 IIMs across the country as “institutions of national importance” and conferred them with greater autonomy in both administration and academic functioning. The Bill represents the government’s reconsideration of the autonomy of IIMs.  

How are IIMs governed at present? 

IIMs are registered as societies under the Societies Registration Act, 1860 (or State Societies Registration Acts). Each society has a Memorandum of Association and rules specifying its objectives and the system of governance. 

Currently, IIMs are allowed greater autonomy to be run by its board of governors, with each institute having 19 members including only one representative each from central and state governments.  

The board has the power to take policy decisions related to the administration and working of the institutes. The chairperson of the board of governors is appointed by the board itself.  

The board of governors is the highest decision-making body of each IIM. It has power to appoint search-cum-selection panels for appointments of new directors as well as decide their pay, create posts, establish departments, approve annual budgets and determine fees. 

The Director, who is the Chief Executive Officer of the Institute, is appointed out of the panel of names recommended by a search-cum-selection committee constituted by the Board. The Board chairperson heads the search-cum-selection committee. 

What are the issues with the current governance system? 

Accountability issues: The 2017 Act requires the Board of Governors of the IIMs to commission an independent review of the institutes at least once every three years and place the report in the public domain. But even after 6 years, very few of the 20 IIMs have done so. 

Absence of norms on key matters: The absence of clear norms on key matters, such as the appointment of the dean, has been a matter of concern. 

Governance: There are variations in the level of governance among different IIMs with some lower ranked IIMs being accused of becoming private “fiefdoms” in which the director holds unchecked power. 

What are the key provisions of the Indian Institute of Management (Amendment) Bill, 2023? 

Visitor: The Bill designates the President of India as Visitor of every Institute covered by the Act. 

Appointment of IIM Directors: The Bill mandates the Board of Governors to obtain the prior approval of the Visitor before appointing an Institute Director.  The procedure for selecting the Director will be prescribed by the central government.    

Removal of IIM Directors: The Bill provides that the Board will require prior approval of the Visitor before removing a director.  The Bill also grants the Visitor the authority to terminate the services of the Director, as may be prescribed. 

Appointment of the Chairperson of the Board of Governors: The Bill stipulates that the Chairperson of the Board will be nominated by the Visitor. 

Inquiries against IIMs: The Bill confers the power of inquiry upon the Visitor. Based on the report of such inquiries, the Visitor may issue directions which will be binding on the Institute.  The Board may also recommend such inquiries to the Visitor. 

Dissolution of the Board: The Bill provides that the central government may prescribe the conditions and procedure for dissolving or suspending an Institute’s Board.   

Co-ordination Forum: The Bill provides that the Chairperson of the Co-ordination Forum for all the Institutes will be nominated by the Visitor. Chairpersons of all Institutes will be ex-officio members of the Forum. 

Balancing autonomy and accountability  

The bill has raised concerns among IIMs about direct government control and a potential dilution of their independence. Critics argue that introducing the concept of Visitor in IIMs is a way for the government to exercise direct control. 

But after the 2017 Act, the office of the Director became very powerful, and it has attracted controversy many times. For example, at IIM Calcutta, the majority of faculty signed a petition against the Director’s way of functioning. 

The director became accountable to a Board of Governors in which the two government nominees played a passive role. Individuals who comprise the rest of the Board have no stakes in their respective institutions and no incentive to exercise the necessary oversight.  

Some experts believe that the IIM Act created a situation where there were no meaningful checks and balances on the director. The government claims it aims to fix accountability through the Indian Institute of Management (Amendment) Bill, 2023. 

What is the significance of IIMs? 

The IIMs (IIM Calcutta and IIM Ahmedabad) were established in the early 1960s to train suitable managers for the public sector enterprises being established in pursuance of the Industrial policy.  

Since then, more IIMs have been set up across different cities in India, each contributing to the growth and development of the nation. 

IIMs contribute to the socioeconomic development of India by promoting entrepreneurship, supporting rural development initiatives, and conducting research that addresses societal challenges.  

IIMs have been instrumental in shaping India’s business landscape by producing exceptional business leaders, fostering innovation and entrepreneurship, and facilitating strong industry-academia collaborations. 

What are the challenges IIMs facing? 

Shortage of faculty: 493 teaching positions need to be filled up in the Indian Institutes of Management (IIMs) out of the sanctioned strength of 1566 (December 2022). 

Research output: IIMs have lagged behind leading global business schools in publishing papers in internationally peer-reviewed management journals. The quantity and quality of research carried out in the IIMs has been inadequate. 

Rising course fees: There has been a relentless rise in the fee for the MBA course, which is not related to the costs of the course. 

Conclusion  

The idea that government control is antithetical to the functioning of an educational institution is flawed. Government control has not kept the IITs from creating a brand that is way above that of the IIMs. The IIM brand itself flourished for six decades under government control because the IIMs enjoyed the fullest autonomy in all operational matters. It is the prospect of the brand being undermined by unaccountable boards and directors that should be a matter of concern. No public institution can be exempt from the principle of democratic accountability. And accountability to government and Parliament is preferable to no accountability at all. 

 Sources: The Hindu, Indian Express, PRS

GS PAPER - 3

Core comfort – On Infrastructure development in India

Source– The post is based on the article “Core comfort” published in the “The Hindu” on 2nd August 2023.

Syllabus: GS3- Infrastructure

Relevance: Core sector of economy

News– Output at India’s eight core sectors strengthened in June.

What are some facts and statistics related to core sector output?

The overall year-on-year growth in production estimated at a five-month high of 8.2%.

Seven of the sectors, including steel and cement and electricity, achieved high growth. Steel was the best performer. Steel output was increased by 21.9%.

The growth in Cement sector was in double-digit. It reflects the continuing momentum in demand.

Steel grew 15.9% and 12.2%, respectively, over the April-June period in the fiscal first quarter. Infrastructure sector is key factor in growth of these two sectors

As per Controller General of Accounts data, total capital expenditure by the Centre in June increased by 62% year-on-year to ₹1.10 lakh crore.

Electricity growth was strongest in four months despite a cyclonic storm that impacted Gujarat and reduced the demand.

Coal output also increased by 9.8% in June. The growth in first-quarter’s production was 8.7%.

What are areas of concern?

The country is still heavily dependent on crude imports for its overall fuel needs. The crude oil production contracted by 0.6%.

Crude oil, in addition to refinery products, carries the most significant weight of 28% on the index. It experienced a consecutive decline. It highlights the ongoing challenges faced by the entire oil sector due to regulatory inconsistencies.

Climate finance adds another layer of inequity to climate change

Source– The post is based on the article “Climate finance adds another layer of inequity to climate change” published in the “The Hindu” on 2nd August 2023.

Syllabus: GS3 – Environment – Climate Change

News– The article explains the position of various countries on carbon dioxide emissions, investment in climate related activities and climate vulnerability.

What are facts and statistics related to carbon dioxide emissions of various countries?

According to the Institute for European Environmental Policy, the target baseline for carbon dioxide emissions to restrict global warming to 1.5° Celsius is 2.3 tonnes per capita.

However, the current global average emissions per capita have been twice this target. It has remained above 4.7 tonnes per capita since 2010. Notably, Africa and India have consistently maintained emissions below this target.

China surpassed the global average in 2004 and steadily increased its emissions to 8 tonnes per capita by 2021. It is now at par with Europe and Oceania.

The overall emissions of the UAE and the U.S. have declined. But these countries still had the highest emissions per capita. These are 21.8 tonnes and 14.9 tonnes, respectively.

What is the position of countries on investment in climate activities?

In 2019 and 2020, Sub-Saharan Africa led in climate-related investments. They allocate 1.3% of its GDP to such activities.

East Asia and the Pacific followed closely with 1% of their GDP. South Asia allocated 0.9%. The U.S. and Canada had the lowest proportionate investment. They dedicate only 0.3% of their GDP to climate-related initiatives.

A significant portion of the funds for climate mitigation and adaptation in the Global South originates from international multilateral climate funds, including the Green Climate Fund and the Clean Technology Fund.

These funds mainly come from economically developed countries. However, there have been some discrepancies in the disbursement of funds. For instance, since 2003, $3.3 billion was approved for South Asia, but only $1.3 billion was disbursed.

What is the position of various countries on climate vulnerability and debt stress?

Climate vulnerability index by country is calculated annually by the Notre-Dame Global Adaptation Initiative.

It is calculated by a country’s exposure, sensitivity, and capacity to adapt to climate change.

The risk of debt distress is based on the International Monetary Fund’s Debt Sustainability Framework reports.

Sub-Saharan Africa has the highest number of countries facing debt distress. It is also the region most vulnerable to climate change.

Generally, countries categorized as high risk or in debt distress are more susceptible to the impacts of climate change. In South Asia, three out of the eight countries fall into this category.

Forest law amendments: Rich in rhetoric, poor in substance

Source– The post is based on the article “Forest law amendments: Rich in rhetoric, poor in substance” published in “The Indian Express” on 2nd August 2023.

Syllabus: GS 3 – Environmental Conservation

News – The government is introducing the Forest (Conservation) Amendment Bill 2023.

What led to the introduction of the Forest Conservation Act, 1980?

It originated in the belief that state governments were very liberal in diversing forest land for non-forest activities, particularly for cultivation.

The 42nd constitutional amendment brought forests into the concurrent list. It enabled the passing of a central Act .

The Forest Conservation Act, 1980 (FCA) was introduced due to concerns that state governments were excessively allocating forest land for non-forest purposes.

It mandated that states should seek approval from the central government before diverting forests for non-forest activities.

What was the effectiveness of FCA in reductions of forest diversion?

In the beginning, there was a notable decrease in diversions. However, after 1991, the pressure to permit diversions for development projects grew. Only diversions for agriculture were restricted.

Despite this, the regulatory process did have some impact in slowing down diversions.

The compensatory afforestation requirement, while seeming significant, often resulted in failed plantations.

What was the stand of SC ON forest conservation and its impacts?

In 1996, the Supreme Court, in the TN Godavarman case, raised concerns about the consistent application of the Forest Conservation Act to all forested areas.

There were regions across the country where land covered by natural forests had not been officially classified as “forest” under any law. It led to unregulated diversion without FCA oversight.

The Court ruled that the actual vegetation present on the land should determine the applicability of the FCA. This decision led to the establishment of a new legal category known as “deemed forest” land.

What is the effectiveness of the Forest Rights Act in 2006 in forest conservation?

The Forest Rights Act in 2006 provided rights over the forests to the local community. In the Niyamgiri case in 2013, the Supreme Court affirmed the local community’s right.

However, the development lobby has consistently opposed such regulations. Since 2014, there has been a concerted effort to weaken the Forest Conservation Act (FCA) and other environmental regulations significantly.

A narrative emphasizing “delays in clearances” was constructed to exert pressure. The absence of clear thresholds or criteria in the FCA regarding permissible diversions was exploited opportunistically.

The Forest Advisory Committee was openly influenced to prioritize developmental and national security concerns above all else. Despite the Niyamgiri judgment, consent from local rights-holders was frequently disregarded.

In many instances, district collectors allegedly certified the absence of community rights, even when the process of community rights recognition under the Forest Rights Act (FRA) had not been initiated.

Moreover, “linear projects” like railways and highways were exempted from obtaining community consent by the Environment Ministry.

What are the issues with FCA Amendment Bill 2023?

One amendment restricts the scope once again to land that is officially “recorded as forest,” effectively. It nullifies the impact of the Godavarman order.

Another amendment grants complete exemption for “linear projects” categorized as “strategic projects of national importance and concerning national security” within 100 kilometers of the national border.

Almost anything can be labeled as “strategic” and of “national importance.”

A third amendment exempts security camps in districts affected by Maoist insurgency, despite the emerging issue of deforestation caused by such camps in the Bastar region.

A fourth amendment categorizes the establishment of zoos and safaris as still falling under a forestry purpose.

What the data hides and shows

Source: The post is based on the article “Madan Sabnavis writes: What the data hides and shows” published in The Indian express on 2nd August 2023.

Syllabus: GS3- Indian Economy and issues relating to planning.

News: In this article author discusses the reliability of economic indicators in India. The Purchasing Managers Indices (PMI) and other data often suggest strong economic health, but actual growth rates can be different. Issues arise from limited sample sizes, unaccounted informal sectors, and biases in monthly figures. While data availability has improved, its accuracy for policymaking remains questionable.

How high-frequency economic data add value to economic understanding?

Timely Insights: High-frequency data like PMI is available on the first of every month, offering quick snapshots of the economy compared to other data released with a 40–45-day lag.

Sectoral Performance: PMI informs about the state of industry and services monthly, providing sector-specific insights.

International Comparisons: PMI and similar indices are available for many countries, allowing for international economic comparisons and understanding global trends.

GST Collections: They give insights into tax compliance and the extent of formalization in the economy.

Indication of Demand: While they might have limitations, high-frequency data can still hint at consumption trends and sectoral demand, aiding in economic analysis.

Why do high-frequency economic data tend to be misleading in India?

Limited Sample Sizes: One problem is the limited sample sizes in surveys. For instance, the Purchasing Managers’ Index (PMI) is based on only 400 businesses. Such a small number doesn’t represent India’s diverse and massive economy well. So, while PMI might show strong growth, the real GDP growth can be much lower, as seen last year.

Unaccounted Informal Sector: India’s economy has a big informal sector. However, many economic indicators do not account for this. For example, the National Statistical Office’s data, released 40-45 days later, mainly covers the organized sector, leaving out a large portion of the economy. This omission can lead to inflated growth rates.

Biases in Monthly Figures: Monthly data like export numbers, industrial production, or GST collections can be affected by temporary factors such as commodity prices, compliance changes, or logistical issues. They may not reflect long-term trends, leading to erroneous conclusions if extrapolated.

Over-reliance on Announcements: Investment announcements by companies and Memoranda of Understanding (MoUs) signed at summits often don’t materialise. Despite this, they’re taken as positive economic indicators, which can be misleading.

Killer On The Train: Why was a railway cop his bosses say was suffering mental health issues, put on armed duty? RPF committee must answer

Source: The post is based on the article “Killer On The Train: Why was a railway cop his bosses say was suffering mental health issues, put on armed duty? RPF committee must answer” published in “Times of India” on 2nd August 2023.

Syllabus: GS3- Various Security forces and agencies and their mandate

News: An RPF jawan assigned to the train shot dead his superior and three others with his assault rifle. The RPF claims the jawan had mental health issues.

What are the reasons for jawans having mental health issues?

The Central Armed Police Forces have reported instances of fratricide linked to personal issues.

The job within such forces is acknowledged as stressful.

What are the implications of having jawans on duty with mental issues?

Implications of Having Jawans with Mental Issues on Duty:

Increased Violence Risk: An RPF jawan with mental concerns killed four aboard the Jaipur-Mumbai Express.

Threat to Passengers: The jawan targeted specific community members, causing panic.

Potential Fratricide: GOI stated personal issues often lead to such incidents in Armed Forces.

Public Trust Erosion: Incidents like these can diminish faith in security forces.

What should be done to address this?

Regular Health Checks: Mandatory mental health evaluations for all personnel.

Training Programs: Sensitize forces about mental health issues and their impacts.

Immediate Off-Duty: Temporarily relieve those identified with severe issues.

Support Systems: Establish counseling and therapy facilities.

Review Protocols: Consider private security options in light of the 2015 suggestions of a railway reform commission chaired by Bibek Debroy.

Digital public infrastructure ought to girdle the globe

Source: The post is based on the article “Digital public infrastructure ought to girdle the globe” published in Mint on 2^nd August 2023.

Syllabus: GS 3 – Infrastructure

Relevance: About Digital Public Infrastructure (DPI)

News: Last year, India and the US jointly stated that Digital Public Infrastructure (DPI) like UPI could establish a new norm for public-private digital partnerships.

However, during the recent PM’s visit to the US, no discussions were held on this matter.

How is infrastructure usually funded?

Historically, the public sector has been responsible for funding physical infrastructure such as road and rail networks. However, public-private infrastructure partnership has become the new standard.

For example, in India, the public sector has less than a 10% share in India’s telecom and internet infrastructure.

Similarly, many infra-like elements of online apps necessitate a public-private interface. It can aid in the establishment of ‘public’ digital infrastructure.

Moreover, India’s DPI experience is now part of its G20 presidency agenda but doubts about DPI persist among several G20 countries.

What are the G20 countries’ concerns?

These countries have little clarity about India’s DPI. Hence, an open discussion is needed about the advantages and possible shortcomings of the DPI with those countries.

What are some of the advantages of the DPI that could be highlighted during the discussion?

First, DPI can reduce market entry barriers and pave the way for the emergence of new industries. PhonePe, Google Pay, and PayTM are three instances that account for more than 95% of all UPI transactions.

These apps have taken use of UPI’s open architecture and offered users a service level that ensures high adoption rates.

Second, DPI set-ups are also inclusive by design. Civil society stakeholders play a key role in their development.

For instance, the ‘Modular Open-Source identification Platform’ (MOSIP) is an open-source architecture for establishing identification systems

Several countries including Burkina Faso and Madagascar have signed up with MOSIP to design and deploy population-scale identity schemes.

However, new infrastructural paradigms often raise concerns, especially when the public interest is involved.

For this reason, the Indo-US Joint Statement expresses a bilateral commitment to “protect privacy, data security, and intellectual property (IP)” in DPI deployment.

Must Read: India’s Digital Public Infrastructure (DPI) and associated challenges – Explained

How can privacy and data security concerns with the DPI be addressed?

The model where consent managers, intermediaries who collect approval from website and app users to use and process their personal data can be considered. They also allow users to cancel their consent.

This model empowers users while also holding intermediaries accountable for preventing data leaks and unauthorized third-party surveillance.

Moreover, India, like the US, has robust IP protections and is a signatory to the World Trade Organization’s Trade-Related Aspects of IP Rights. 

Therefore, if a business demonstrates significant skill and creativity in the compilation and organization of a database, it can claim copyright protection of it.

What can be the way ahead?

G20 presidency since 2016 emphasized digital technologies’ role in inclusive and sustainable economic development, but adoption has been limited.

Therefore, India’s willingness to co-conceptualize the principles that encourage DPI adoption is a positive sign.

Axe the oil windfall tax: It’s outlived its rationale

Source: The post is based on the article “Axe the oil windfall tax: It’s outlived its rationale” published in Live Mint on 2^nd August 2023.

Syllabus: GS 3 – Growth & Development

Relevance: concerns with windfall tax

News: According to a recent government notification, India’s windfall tax on petroleum crude has increased significantly to ₹4,250 per tonne from ₹1,600, and diesel now incurs a levy of ₹1 per litre, which was previously nil.

Are these windfall taxes justified?

The windfall tax was first introduced in India’s oil sector in mid-2022, shortly after the outbreak of the Russia-Ukraine war. At that time, it was considered justifiable as it aided in the fiscal recovery of the nation after the pandemic.

Since the extra profits earned by the oil companies arose from external factors rather than any strategy, windfall taxes appeared reasonable and beneficial for the government.

However, despite the economic recovery, these taxes persist, worsening the tax situation in India.

Must Read: Explained | What is windfall tax and why are countries imposing it on the energy sector?

What are the concerns with these windfall taxes?

First, these taxes are being levied even though price of crude has decreased below early war levels, representing normalcy.

Second, the fortnightly tax review on oil and diesel is perceived as a means to extract revenues from the sector.

This state intervention results in business uncertainty and distorts not only the oil industry’s operations but also India’s energy outlook.

Third, state intervention also raises concerns about attracting investments for the green transition in India, given the lack of policy stability.

Hence, the state intervention to control retail fuel prices has failed to allow market forces to reshape the sector. Any such reform becomes more complex due to the frequent changes in windfall taxes.

What can be the way ahead?

First, taxes tend to become permanent. Therefore, it has been more than a year since the windfall taxes, and it requires them to be rolled out.

Second, the hydrocarbon sector should be protected from other taxes and integrated into the GST regime.

Third, a system of carbon pricing should be implemented in the oil sector. However, before implementing such a system, there is a need to address the current complex tax liabilities in the sector.

Prelims Oriented Articles (Factly)

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