9 PM Daily Current Affairs Brief – July 5th, 2021

Dear Friends,

Mains Oriented Articles 

GS Paper 2

• World without narrow domestic walls
• Without Aadhaar, without identity
• India to divert excess waters under Indus treaty to irrigate own land

GS Paper 3

• Brazen gaming of bankruptcy process on
• How Chhattisgarh has stalled a historic judgment
• The heavy footprint of a light rail
• SEBI’s new rules for Independent directors
• The problem now with the military synergy plan
• Rural Economy Recovery
• Bharat-Net fails to enter fast lane – Both phases staring at delay amid COVID
• India’s OECD tax deal may have revenue implications, say experts
• Despite so many feats, GST still a work in progress
• Three economic risks in need of mitigation plans
• Why liberal democracies have a distinct edge on cyber capability

Prelims Oriented Articles (Factly)

• Union Education Minister to launch NIPUN Bharat
• Draft anti-trafficking Bill widens scope of offences, includes stringent penalties
• A farmer-friendly solution to cut cattle methane emissions
• How India stands to gain from the proposed global minimum tax
• In 2020, wildlife board cleared land diversion for 48 projects
• Govt issues draft norms to regulate direct selling cos
• KVIC’s Project BOLD to Boost Tribals’ Income and Bamboo-based Economy in Rajasthan

Mains Oriented Articles

GS Paper 2

World without narrow domestic walls

Synopsis:

The current world order operates under the principle of national sovereignty and national interest, as witnessed by emerging vaccine nationalism during the pandemic. Nonetheless, a better world can be created if the international order is redesigned around the concept of humanity.

Background:

• The international world order is currently built around the principles that were first enunciated in the Peace of Westphalia in 1648. This brought the 30 and 80-year overlapping wars in Europe to an end.
• The principles were again reaffirmed in the Articles of Association of multilateral agencies like the UN, WTO and WHO created in the post the Second World War.

About the principles:

• The central thrust of these principles was that countries have an exclusive right of control over all matters arising within their territorial boundaries.
• Further, this “right” is not compromised by their signed commitments to multilateral governance. They centered around the concept of national sovereignty and national interest.

Role in influencing decisions:

• First, vaccine nationalism was observed in the distribution of Covid vaccines. Scientists did collaborate across national boundaries to develop the vaccine, but when it came to distribution, the politicians first secured supplies for their domestic constituency. After storing sufficient quantities, they shared supplies with the developing world.
• Second, the G7 leaders have often committed to financially support the efforts of the poorer countries in tackling climate change with a $100 billion package. However, domestic economic considerations have refrained them from meeting this commitment.
• Third, China is continuing to build new coal plants, which may jeopardise its carbon emission targets. Similarly, President Joe Biden has reportedly backtracked from his pre-election campaign to stall the construction of oil pipelines in his push for clean energy. He is allowing just such a project to continue in Minnesota.

Why do politicians mainly focus on national interest?

• Politics today is a hard-nosed, 24/7, winner-takes-all, and opportunist profession. With the narrowing margins between electoral victory and possible political oblivion, today’s politicians have no option but to remain continually in election mode. 
• They cannot afford to rest on their laurels even in the aftermath of victory, or pause to reflect on the longer-term ramifications of their decisions. They have to keep running to stay ahead of the opposition.
• Likewise, they know that their political future depends on fragmenting the opposition by stoking separatist identities and harnessing nationalistic sentiments. 

Way Ahead:

• The countries must work with each other in a humane manner. This involves cooperation built on trust, compassion, friendship, and conversation that can create a more equitable world.
• There should be redesigning of the Westphalian principles and the current hardware of electoral politics. This would be crucial for tackling global warming, environmental degradation, cross-border conflicts, social injustice and other problems.

Without Aadhaar, without identity 

Synopsis: Despite the large scale usage, the Aadhar system still has some inherent disadvantages.
Disadvantages of Aadhar system:

• The problem is that the only record many people have of their Aadhaar number is their Aadhaar card. If they lose the card, then they might not be able to retrieve their Aadhaar number.
  • The UIDAI website gave clear instructions on how to retrieve a lost Aadhaar number, but only for those who have a registered mobile or email address in the Aadhaar database.
  • The Right to Information Act information also reveal that “If mobile number and e-mail id are not registered with his/her Aadhaar, Resident can visit any Permanent Enrolment Centres for updation (mobile number and e-mail id)”. But the RTI information does not mention what if a person forget mobile number and email address also.
• Private agencies that deal with Aadhaar enrolment and updation at the local level are run by unaccountable data operators. Their misdeeds include
  • Overcharging for services,
  • Irresponsible handling of important documents, misplacing them,
  • Turning away poor people who bring difficult queries.

India to divert excess waters under Indus treaty to irrigate own land

About the news:

Recently Jal Shakti minister said that, “India is working on exercising its rights to stop excess water flowing to Pakistan under the Indus Waters Treaty of 1960 to irrigate its own lands”. He also mentioned that India has the right to stop the water required to irrigate two lakh hectares of land, by exercising our rights under Indus Waters Treaty.

About Indus Waters Treaty in 1960:

After nine years of negotiations, India and Pakistan signed the Indus Waters Treaty, with the World Bank also being a signatory. The treaty sets out a mechanism for cooperation and information exchange between the two countries regarding their use of six rivers—Beas, Ravi, Sutlej, Indus, Chenab and Jhelum.

Why India needs to stop the excess water flow?

• This is also of strategic importance to India, given that control over river water flow acts as a force multiplier during times of aggression.
• India’s plans to fully utilize its share of water under the treaty. It assumes strategic importance against the backdrop of China developing the controversial China-Pakistan Economic Corridor in the region.
• India is also expediting other strategically important hydropower projects in Jammu and Kashmir, following the reorganization of the terror-hit state.
• The Ravi, Beas and Sutlej have some tributaries whose water remains untapped because of geographical adversities and flows into Pakistan. For instance, the  Ujh river.
  • Ujh’s confluence is along with the Ravi river downstream. The Ravi river enters and exits Pakistan’s territory 17 times. It crisscrosses like this, and at most of the places, it’s Ravi that is the line of division between the two countries. So, because of that, one couldn’t get an appropriate location to divert it.
  • The Ujh multi-purpose project is to have a 186MW capacity for electricity generation and will also provide water to irrigate 16,743 hectares and 20 cusecs for drinking.
  • India is working on a plan to divert the waters of Ujh, which is one of the main tributaries of the Ravi river that flows into Pakistan.

How Pakistan will react?

• Pakistan has previously objected to India’s hydroelectric power project plans. While it had raised its objections on the 330MW project on the river Kishanganga, a tributary of Jhelum, the International Court of Arbitration at The Hague ruled in India’s favour in 2013.
• Pakistan had also raised objections on the 850 MW Ratle, 1,000MW Pakal Dul and 48MW Lower Kalnai hydroelectric projects on River Chenab.

India’s response to Pakistan objections:

• Rivers Ravi, Beas and Sutlej were allocated to India for exclusive use under the Indus waters treaty. So, Pakistan can’t raise a question. Even if they do, it would be illegal.

GS Paper 3

Brazen gaming of bankruptcy process on

Synopsis: Public Sector Banks should be the focus area of the reforms in resolution process. otherwise hard-earned money of taxpayers will be wasted without anything in return.

Introduction

Many big and small industrialists have criticised cases of bad loan write-offs by public sector banks (PSBs). There are allegations that new bankruptcy process is being misused by many promoters. They are stashing the money away and getting concession under bankruptcy process from banks. Thus, National Company Law Tribunal (NCLT) under IBC requires reforms.

However, mains issue is not promoters or NCLT, it is Public Sector Banks, that require reforms.

What are the issues linked to PSBs in bankruptcy process?

According to the data from the Insolvency and Bankruptcy Board of India (IBBI), in over 363 major NCLT resolutions since 2017, banks have taken an average loss of 80 per cent.

Whereas only only 8 per cent cases have been resolved and 30% cases resulted into liquidation under bankruptcy process. It means banks were not able to recover money after giving concessions.

According to few sources, the size of the bad loan was almost Rs. 20 trillion. Almost all of it was with PSBs. However, bad loan resolution is still ineffective, which is evident from the poor
financial results and stock prices of most of the PSBs.

This massive accumulation of bad loans was made possible by deep corruption and the
nexus between bankers, businessmen, and politicians in PSBs.

What are the promoters related issues in bankruptcy process?

Indian promoters  don’t want to give up control over their assets, even after a very bad mismanagement of the business. Hence, in one case after another, promoters were at the forefront of acquiring control over the same assets through the new bankruptcy mechanism.

Reforms introduced by government

Willful defaulters have been barred from bidding. Section 29A was amended to stop willful defaulters from regaining control of their company by forcing creditors to take massive haircuts.

Section 12A was added by a 2018 amendment, which allows the parties to close an insolvency case with the approval of 90 per cent of the committee of creditors (CoC).

How Chhattisgarh has stalled a historic judgment

Synopsis:

The Salwa Judum judgment was delivered 10 years ago, but it has not been effectively implemented by the government. The tribals are still facing many hardships and there has been no prosecution of security forces for human rights violations.

Background:

• The Supreme Court (SC) delivered a historic judgment on 5th July 2011 in Nandini Sundar and others versus the State of Chhattisgarh case.
• The judgment was aimed to curb the misuse of power by the government and protect tribal rights.

About the Judgment:

• The court banned Salwa Judum. It was a vigilante movement started in 2005 and sponsored by the Chhattisgarh and Central government. The movement ostensibly aimed to fight against the Maoists.
• The judges also ruled that the use of surrendered Maoists and untrained villagers in frontline counter-insurgency operations as Special Police Officers (SPOs) was unconstitutional. 
  • It directed that the existing SPOs be redeployed in traffic management or other such safe duties. 
• Other matters like prosecution of security forces for human rights violations, and rehabilitation of villagers who had suffered violence, were left pending. The State had been asked to submit comprehensive plans for this.

Situation before the judgement:

• At its peak between 2005 and 2007, the Judum involved forcing villagers into government-controlled camps. 
• Those who refused were punished by having their villages burnt. Hundreds of people were killed, and their deaths were not even recorded as ‘encounters’. 
• Villagers fled to neighbouring States or into the forests around their villages. Sangham members (active but unarmed Maoist sympathisers) were either jailed or compelled to join the security forces as SPOs.

Implementation of judgment by the state:

• Ten years on, nothing has been done to implement the judgment. Instead, the State government has merely renamed the SPOs. They are now known as the District Reserve Guard (DRG). 
• Most DRGs are captured or surrendered Maoists and are given automatic weaponry as soon as they join the police force. Some of them get one-three months of training, and some not even that. 
• They commit excesses against their former fellow villagers, suffer the most casualties in any operation. However, they are paid much less than the regular constabulary. Due to this apprehension, judges had outlawed their use. 

Situation after the judgment:

• Today, the Judum camps are virtually empty with only the former SPOs and their families, staying in now permanent houses. Villagers split between those who went to the camp and those who went to the forest are now reconciled. 
• People have come back and started cultivation. An entire generation has grown up and across the region, villagers are demanding schools and health centres. Instead, what they have got in abundance are CRPF camps. 
  • These have come up at intervals of less than 5 km, and roads are being bulldozed through what were once dense forests. 
• The security forces have vacated the schools as per SC directive. However, they  undertook a larger takeover of public land and private fields.
• No steps have been taken to prosecute government officials or security forces for their atrocities on tribals. For instance, CBI filed a charge sheet in 2011 against security forces for burning tribal villages, but they were not punished.
• The innocent villagers are still arrested as suspected Maoists and spend long years in jail before their acquittal. This was even evident during the pandemic times.
• Deaths in encounters between jawans and Maoists periodically hit the national headlines. But extrajudicial killings of villagers and Maoists and killings of suspected informers by Maoists continue at a steady pace, rarely hitting any high publicity note.

Way Ahead:

• T.R. Andhyarujina and Ashok Desai, the lawyers who argued for the villagers pro bono in the Supreme Court, have passed away. Similarly, many other activists have died, are in jail facing contested charges or have given hope of a sustainable solution.
• Unless both sides get serious about peace talks, another 10 years will pass. The 2011 Supreme Court judgment will be rendered even more meaningless, as will the idea of justice or the rule of law ever being possible in this land.

The heavy footprint of a light rail

Synopsis:

The light rail project of Kerala government connecting Thirunvananthapuram and Kasargod would inflict severe environmental damage in the state. The government should look for alternative options like a sea ferry that can ensure seamless transportation and significantly reduce environmental degradation.

Background:

• The Government of Kerala is planning to construct a light rail project. It will reduce the travel time between the two extremities of the State – the capital city of Thiruvananthapuram in the south and the town of Kasargod in its north.
• Currently, it has drawn criticism from environmental groups owing to its adverse impact on the region’s ecology, but there are economic concerns as well.

Concerns associated with of yet another rail line:

• First, the land chosen for railway construction is of an undulated topography combined with an often rocky surface that is prone to crumbling when dislodged.
  • Excessive quarrying and construction have already left it vulnerable to torrential rain, as seen in the devastating landslides recorded across the State in recent years. Therefore, the construction will severely impact the stability of the earth’s surface along its course.
• Second, its construction will submerge various wetlands of the state, which may deter the fresh water supply to nearby communities.
• Third, the wetland consists of paddy fields as well. Hence, submergence would hamper the livelihood of farmers and impact food security of the region, as paddy is the staple food of Malayalees.

Way Ahead:

• The government should listen to citizens’ concerns on the plan to install a light railway across the State.
  • Two years ago it had dismissed protests by the villagers of Keezhattur in Kannur District against a highway project that would destroy their paddy fields. 
• The government should look for alternate options for connectivity. The state already has a well-connected road, railway and airway transportation system. 
  • It can now build a sea-borne ferry service connecting Thiruvananthapuram with Kasargod, and all the ports in between. This would leave the land untouched.

Terms to Know

• Light Rail

SEBI’s new rules for Independent directors

Synopsis: The new rules for independent directors aim to ensure checks and balances.

Background:

• The recent controversy over the issuance of preference shares by PNB Housing Finance has raised concerns over the role of independent directors in India.
• Such concerns over the independence of independent directors are not new.
• Questions have repeatedly been raised over the appointment and selection process of independent directors, their compensation, and to what extent they are “distanced” from the promoters.
• Matters of propriety and conflict of interest have also been raised over the manner in which regulators, are appointed to boards of private companies they used to oversee.

Issues related to independent directors?

• Firstly, an investigation by Indian express has revealed that in the last 11 years, at least six heads of top regulatory bodies and two senior associates took directorships with private firms that fell within their regulatory domain.
• Secondly, even the cooling-off period is ignored in some cases.
  • But it’s not just the private sector.
  • Of the 172 independent directors in 98 public sector entities, at least 86, serving on 67 PSU boards, are linked to the ruling party.
• Thirdly, two years ago, the Indian Institute of Corporate Affairs noted that “the selection of independent directors for PSUs has not remained independent.

To address some of these concerns, the Securities and Exchange Board of India (SEBI) introduced new rules.

New rules issued by SEBI:

• It seeks a more robust framework for independent directors.
• As per the new rules, which will come into effect from January 1, 2022, the appointment or removal of independent directors has to be carried out through a special resolution of shareholders.
  • The earlier ordinary resolution was required with a simple majority.
• However, a higher threshold for the appointment and removal of independent directors is a deviation from the discussion paper released by SEBI earlier this year on this issue.
  • It had suggested that the appointment/removal be subject to a dual approval process.
  • Greater say will be given to the non-promoter shareholders.
• The new rules also seek to populate important committees with independent directors.
  • Two-thirds of the members of the nomination and remuneration committee have to be independent directors.
• All related party transactions have to be approved by independent directors on the audit committee.

Independent directors play a critical role in corporate governance. That is why ensuring their independence will protect their ability to differ from the promoter, and look out for the interests of the non-promoter and minority shareholders.

The problem now with the military synergy plan

Synopsis: There is need to address the structural gaps before the creation of theatre commands.

Background:

• The Indian military continues to work in silos.
• Thus, Prime Minister issued directions to bring about jointness among forces. First Chief of Defence Staff (CDS) of India was assigned with this task.
• However, as per media reports, the Indian Air Force (IAF) is resisting the formation of theatre/functional commands.

Possible reasons for such demands by IAF:

1. Firstly, the IAF has been objecting because air power being seen as a supplementaryforce to the two surface forces. Further, if IAF is divided into penny packets, it would seriously degrade the effectiveness of air operations.
2. Secondly, the Army-Air Force silo.Historically, the Indian Army has always kept the IAF out of the information loop and demonstrated a penchant to ‘go it alone’. The use of offensive air power close to the Line of Control requires that the force leadership be kept informed.
   • After Kargil, the Chief of Army Staff (CoAS) himself admitted that information was not shared even between the Director General of Military Operation (DGMO) and the Director General of Military Intelligence (DGMI) within Army headquarters, much less with the IAF.
3. Third, the proposed air defence command conflicts with the domain commandsin seamless employment of air power.
   • The IAF does not wish to see its limited resources frittered away in fighting frontal defensive battles by a land force commander with little expertise in employment of air power.
   • The Army fails to realise that offensive air power is best not seen. It should engage the enemy air force elsewhere while giving own surface forces the freedom to manoeuvre and operate with impunity, as shown in 1971.
4. Lastly, the Chinese incursion into Eastern Ladakh last year is reminiscent of Kargil.
   • Use combat air power, as against 1962, has significantly contributed in deterring China.
   • However, such intent and a joint strategy would have been forcefully signalled by the presence of air force representatives in the ongoing negotiations to restore status quo ante.

What needs to be done before creation of Integrated theatre commands?

• Firstly, it is essential to first define the political objectivesand a national security strategy.
  • For instance, the failures of the mightiest militaries in Vietnam, Afghanistan, and Indian misadventure in Sri Lanka bear testimony to the lack of clear political objectives and appropriate military strategies.
  • It can define the types of contingencies, appropriate military strategies, doctrines and required capabilities.
• Secondly, identify duplication, wasteful resourcesand practices.
  • A large, manpower-intensive army with unusable armour formations would then also come into focus.
• Thirdly, theatre or any lower structure requires an institutionalised higher defence organisation, which has been missing since the Defence Committee of the Cabinet (DCC) became defunct in the 1950s.
  • It is leading to little regular dialogue between the political and military leadership, except in crises resulting in knee-jerk responses.
  • In the current proposal, it appears that the CDS, as the permanent chairman of the Chiefs of Staff Committee (CoSC), would also exercise operational control of the theatre/functional commands.
  • It is unlikely to be palatable to the politico-bureaucratic leadership and which has, called for further deliberations.

Hence, there is need of an adequate deliberations and discussions with all stakeholders to evolve an appropriate military strategy in a nuclear backdrop.

Rural Economy Recovery

Synopsis: The government has changed its fiscal strategy. It went all out last year to shield the rural economy and households by way of free food, free gas, front-loading PM-Kisan payments, increasing MGNREGA allocation, moratoriums etc.

Background:

• A large part of the resilience of the rural economy last year stemmed from government support.
• Now, the government is providing support in a targeted and calibrated manner.
• For example, free food rations have been extended till November.
• The government also increased the amount of subsidy on fertilisers unexpectedly.

This loss of lives coupled with the loss of livelihood can make rural spending more cautious.

Trends in rural India:

1. Firstly, rural India has been devastated by the vicious second wave.
   • At its peak last year in August-September, rural districts accounted for 2.28 million new cases.
   • In April and May this year, this rose to 7.61 million.
   • During August-September 2020, approximately 28,101 Covid-19 deaths occurred in rural districts.
   • In April-May this year, the reported number was up 198 per cent at 83,863.
2. Secondly, rural India has been displaying signs of a “Fast-in Fast-Out’’ phenomenon in the last few weeks.
   • For example, the CMIE rural sentiment index is up 2 per cent in June from the trough in May, even as the urban index is down nearly 3 per cent.
   • Similarly, average daily registrations of agricultural equipment like tractors, trailers, and harvesters are up 237 per cent in June as compared to May.
3. Thirdly, rural India now seems to be more optimistic as compared to urban India.

Way forward:

• The government needs to cut taxes on fuel and edible oils (it has been cut recently).
• Investment in commodities to enhance supplies.
• Simple supply-side responses to solve much of the problem related to sharp jump in food items of mass consumption.
  • Pulses have always been a bugbear in terms of their impact on inflation.
• Nudge NAFED to sell/release at least 15 per cent of the stock in 10 days. It will help cool the market.
  • In this context, the “SUPPLYCO” model, as currently prevalent in Kerala, could be effectively remodelled for NAFED to transfer maximum benefits to consumers and farmers in the entire crop-to-cash cycle.

That is why any signs of a nascent rural recovery have to be supported by government intervention through aggressive supply-side and compassionate measures.

Bharat-Net fails to enter fast lane – Both phases staring at delay amid COVID

Synopsis – The Union cabinet revised the Bharat-Net implementation strategy to speed up the rollout of high-speed optical fiber-enabled broadband.

Introduction-

The Bharatnet project was meant to cover all 2.5 lakh gram panchayats [GM] with high-speed optical fiber-enabled broadband. It should have been completed by March 2019. Almost two years later, the government has only been able to connect up to 1.56 lakh GM.

What is Bharat-Net project and the reason behind its delay?

Bharat-Net project- The Project began in 2011 as the National Optical Fibre Network (NOFN), and was renamed Bharat-Net in 2015.

However,

• In March 2020, the deadline for both the phases was pushed back to August 2021. Later it was again pushed beyond August 2021 due to COVID.

Major reason for Delay-

• Poor implementation-
  • Lack of approved detailed project report.
  • Non-existent project implementing agencies- no agency made responsible for project implementation.
• Non-availability of required funds.
• Right of way [RoW] challenge – RoW permission from Forest department, railways, and NHAI.
• COVID pandemic – The pace of the project was affected by the lockdown and movement curbs imposed due to COVID.
• Linear architecture– During phase 1, only single fibre path from the nearest exchange is available for endpoint connection at the gram panchaya [GP]. The GP site is isolated in the event of a failure due to the lack of a backup path.

What is the revised implementation strategy of the Bharat-Net project?

The government changed the scheme’s implementation strategy and decided to rope in private players to finish the pending work of the Bharat-Net project.

Read more –

• Revised Bharat Net Project 

India’s OECD tax deal may have revenue implications, say experts

Synopsis:

Agreeing to the Global minimum Tax rate will impact India’s Equalisation Levy and create revenue implications.

About the Deal:

India recently joined the OECD-G20 framework for a global minimum tax. But the deal will bring certain challenges to India.

Under the agreed outline of the OECD multilateral solution, a portion of profits of companies with Euro 20 billion revenues and a profit margin above 10 percent would be taxed in jurisdictions where they have sales.

Between 20 per cent and 30 percent of profits above a 10 percent margin may be taxed.

The pact will bring only the top 100 digital companies like Google, Facebook, and Netflix into the global taxation pact. So, this might have revenue implications for India.

What India is demanding?

India and other developing countries were fighting to include companies with at least Euro 1 billion in revenues as against the final proposal of Euro 20 billion revenues and a profit margin above 10 per cent. This will cover at least 5,000 global entities.

Challenges with the deal:

As per the deal, India needs to withdraw the contentious 2 percent equalisation levy on e-commerce operators by 2023. The levy will most definitely go by 2023 if the proposal comes into effect, unless India can think of some other way of augmenting the tax.

• The equalisation levy has a much lower annual revenue threshold of Rs 2 crore (Euro 0.2 million) as against Euro 20 billion agreed by 130 countries at the Organization for Economic Cooperation and Development (OECD).
• India collected Rs 2,057 crore from the equalisation levy in 2020-21, an 85 per cent growth over Rs 1,136 crore in the previous fiscal. But, the OECD deal will not give the same amount of revenue.

The background of the Equalisation levy:

The equalisation levy or EL was introduced at the rate of 6 per cent in 2016 for digital advertising services, which led to a Rs 200 crore collection.

• The scope was widened in April 2020 to impose a 2 per cent tax on non-resident e-commerce players. The scope was further expanded in the Budget 2021-22 by way of clarifications.
• In May, India also notified a revenue threshold of Rs 2 crore and a limit of three lakh users for non-resident technology firms to pay tax in India under new or revised bilateral tax pacts. This is a part of the significant economic presence (SEP) principle. SEP, introduced in the Finance Bill 2018-19.

Challenges with the Equalisation Levy:

• The EL has been a bone of contention between India and the United States, with the latter deciding to impose additional tariffs on a slew of Indian imports, including basmati rice, seafood, jewellery, bamboo, semi-precious stones and pearls, among others.
• However, the tariffs will remain suspended for six months with an expectation of a multilateral solution to the issue of digital taxation.

Suggestions:

India will have to take an aggressive stance to protect its rightful tax base, and need to reach a fair consensus to protect the Indian tax base.

Despite so many feats, GST still a work in progress

Synopsis:

The GST is still a work in progress. Hopefully, the GST Council will rediscover the spirit of cooperative federalism and move forward.

Improvements after the GST:

• Due to the introduction of GST, Voluntary tax compliance increased, tracking tax evasions quickly and faster movement of goods through various states.
• After several slip-ups, the GST Network (GSTN), the digital platform through which almost all processes are carried out, is now functioning smoothly
• The e-invoice details and reports from the GSTN help the taxpayers chase the vendors who don’t promptly report the supply details.
• The exporters get refunds automatically and more quickly than earlier.

Present challenges are associated with the GST system:

• A major issue is the hold up of a conveyance due to minor defects in the e-way bill.
• Most decisions of the GST Council have been unanimous, but that is now getting more difficult. Because of the adverse effects of some compromises made to attain consensus by appeasing the States are now showing up. For instance,
  • “Principle of equivalence” (to fix the GST rate for an item at the aggregate of excise duty and sales tax in the earlier regime) was abandoned. This resulted in lower tax rates for many items and a consequent shortfall in tax revenues.
• The governments have responded by borrowing, raising the Customs duties, imposing fresh cesses and surcharges, increasing the excise duty and sales tax on fuel and so on.
• The Central government is unable to keep its promise to compensate the states for the shortfall in the projected increase in revenues.
  • Thus, apparently, the consumers have gained through lower GST rates, but they have to pay in other ways to make up for the revenue shortfall.
• The states have been given jurisdiction over 90 per cent of the taxpayers. But many GST authorities in the states are not as familiar with the complexities of the import and export trade or taxation of services.
• Further, the States tax collection efforts are also relatively sloppy, as the States are assured of compensation for the shortfall in projected revenues. Rigorous tax audits have not taken place due to the pandemic. So, many compliance issues have not yet shown up.
•  A centralised authority for the advance ruling has not been set up. GST appellate tribunals have also not been constituted.

Three economic risks in need of mitigation plans

Synopsis: RBI’s Financial Stability Report listed Inflation, a reversal of capital inflow, and lenders’ mounting bad assets are all listed as potential threats. All three should be avoided.

Introduction

Many central banks throughout the world have recently taken various measures to deal with economic pressures.

• Markets have become agitated as a result of their attempts to increase production growth through extended periods of cheap interest rates and liquidity infusion.
• The matrix of hazards washing up on Indian shores has suddenly become considerably more complex and scary. The US Federal Reserve recently stated that it may start hiking interest rates sometime in 2023. Reserve Bank of India (RBI) governor must keep an eye on threats emanating from global markets as well as those emerging in the home economy.
• The current Financial Stability Report (FSR) from the central bank attempts to acknowledge all of them.
  • A restoration to pre-pandemic levels of economic activity would take longer than previously predicted, as the Indian economy is facing variable speed of covid vaccination and the asymmetric opening up across regions.
• It will take time to repair supply-side capacities that have been harmed. On the demand side, increased employment rates and households’ confidence in converting precautionary savings into consumption are critical.

What are the potential threats listed in the RBI’s Financial Stability Report?

Three vulnerabilities that have an impact on systemic and financial stability stand out in the research and need to be addressed. Commodity inflation and global capital flow curtailment are two external factors. The third concern is our domestic banking sector’s developing fault lines.

• Capital will be critical in weathering a bad-loan catastrophe. If credit demand rises in pace with our economic openness, there are concerns that banks will not only have enough capital to back new lending, but also to cover a rising wave of bad loans.
• The government, which is the sector’s primary source of capital, has limited resources that are being tugged in various ways.

What should be done?

• Firstly, there is no clear risk-mitigation strategy insight. One of them is to use the RBI’s growing foreign exchange reserves for infrastructure investment, which is unwise. Foreign currency reserves will be needed to balance any “taper tantrum” if and when capital inflows revert.
• Secondly, the danger of imported commodity inflation will require more careful monitoring and management. Surveys already show increased inflationary expectations among households, and the RBI should be willing to adjust its rate policy.
  • Long periods of low loan rates have assisted indebted wholesale borrowers, but not capital investment or economic growth.
• Thirdly, to improve the health of the banking sector, the near-term option may be selling modest portions of new shares to individual and institutional investors, rather than complete bank privatisation. State-owned banks would be able to raise money in this way, and the government’s interest in them would be valued more favourably.

Why liberal democracies have a distinct edge on cyber capability

Introduction-

The International Institute of Strategic Studies net assessment of Cyber Capabilities and National Power compares countries across seven criteria-

• Strategy and doctrine
• Governance, command and control
• Core cyber-intelligence capability
• Cyber empowerment and dependence
• Cyber security and resilience
• Global leadership in cyberspace affairs
• Offensive cyber capability.

The report has divided the 15 countries into three tiers of cyber power-

• First Tier – The US is the only country with world-leading strengths in all categories.
• Second Tier– Countries each of which have world-leading strengths in some of the categories. This Include China, Russia, UK, France, Canada, Israel and Australia.
• Third Tier – Countries that have strengths or potential strengths in some categories but significant weaknesses in others. The countries in the early stages of their cyber power development like India, Japan, Iran, Indonesia, Malaysia, Vietnam, and North Korea.

India specific observation according to the report-

India’s approach towards institutional reform of cyber governance has been slow and incremental compared to other countries.

India also lacked the history of an intelligence apparatus that older powers like the UK and France had which needed to be built up from scratch.

Key finding of the report-

Doctrinal difference between liberal democracies and authoritarian regimes – liberal democracies did not have to worry about defending their ideological borders like authoritarian states.

• Liberal democraciesdo not have to use their resources on controlling what their citizens think.
• Authoritarian regimeson the other hand such as China and Russia, have focused on hiding information in order protect their citizens from foreign ideas and also erect psychological barriers in their minds. They have established a system of censorship [Firewall], coercion and information control to protect its authoritarian regime from being threatened by their citizens.
  • This allows Liberal democracies to focus on offensive capabilities to achieve the desired effect in a sharp and surgical manner.
  • While Authoritarian regimes likely to spend a lot more on its Great Firewall than on its offensive cyber units.

Open societies must ensure that technology does not become a Trojan horse for both cyber attackers and illiberal values.

Prelims Oriented Articles (Factly)

Union Education Minister to launch NIPUN Bharat

Source: PIB

What is the News?

The Ministry of Education will launch the National Initiative for Proficiency in Reading with Understanding and Numeracy(NIPUN Bharat) Mission.

About NIPUN Bharat Mission:

• Aim: To create an enabling environment to ensure universal acquisition of foundational literacy and numeracy. It will enable every child to achieve the desired learning competencies in reading, writing and numeracy by the end of Grade 3 by 2026-27.
• Implementation: NIPUN Bharat will be implemented by the Department of School Education and Literacy.
• Mechanism: A five-tier implementation mechanism will be set up at the national- state- district- block- school level in all states and UTs for the mission.
• Funding: No additional funding is being allocated for the mission. Instead, money is being allocated from the Samagra Shiksha scheme, which saw a 20% drop in its budget in 2021.
• Significance: Foundational literacy and numeracy is one of the goals under the National Education Policy 2020.
  • Initially, the policy had included a 2025 deadline to achieve this goal. But the target has been extended to 2026-27, given that COVID-19 has already disrupted two academic years.

Draft anti-trafficking Bill widens scope of offences, includes stringent penalties

Source: Indian Express

 What is the News?

The Ministry of Women and Child Welfare has invited suggestions and comments for its Trafficking in Persons (Prevention, Care and Rehabilitation) Bill, 2021.

About Trafficking in Persons (Prevention, Care and Rehabilitation) Bill, 2021.

• The objective of the bill is to prevent and counter trafficking in persons, especially women and children.
• The bill has increased the scope of the nature of offenses of trafficking as well as the kind of victims of these offenses with stringent penalties.

Key Provisions of the Bill:

• Definition: The bill defines exploitation to include the exploitation of the person for prostitution or other forms. Which includes pornography, forced labour, forced removal of organs or illegal clinical drug trials.
• Includes Transgender: The bill extends beyond the protection of women and children as victims. It now includes transgenders as well as any person who may be a victim of trafficking.
• Victim Definition: The bill does away with the provision that a victim necessarily needs to be transported from one place to another to be defined as a victim of trafficking.
• Punishment: The Punishment will be for a minimum of seven years period, which can go up to an imprisonment of 10 years and a fine of Rs 5 lakh. However, in cases of the trafficking of more than one child, the penalty is life imprisonment. In certain cases, even the death penalty can be sought.
• Nodal Investigative Agency: National Investigation Agency(NIA) shall act as the national investigating and coordinating agency responsible for prevention and combating of trafficking in persons.
• Jurisdiction: The bill will extend to all citizens inside as well as outside India. It will also be applied to every offence of trafficking in persons with cross-border implications.
• Seizing of Property: Property bought via trafficking as well as used for trafficking can now be forfeited, similar to that of the money laundering Act.
• Coverage: The scope of the Bill vis a vis offenders will now also include defence personnel and government servants, doctors and paramedical staff or anyone in a position of authority.

A farmer-friendly solution to cut cattle methane emissions

Source: Indian Express

GS-3: Science and Technology- Developments and their Applications and Effects in Everyday Life.

Relevance:

Synopsis: ICAR develops a feed supplement that reduces emissions and also boosts milk production.

Contribution of cattle in methane emissions

• Methane is a more potent greenhouse gas that has a global warming potential of 25 times of carbon dioxide (CO2) over 100 years.
• An average lactating cow or buffalo in India emits around 200 litres of methane per day.
• Belching cattle, buffaloes, sheep, and goats in India emit an estimated 9.25 million tonnes (mt) to 14.2 mt of methane annually.
• The 2019 Livestock Census showed India’s cattle population at 193.46 million, along with 109.85 million buffaloes, 148.88 million goats, and 74.26 million sheep.
• Ruminants in industrialized countries are given more easily fermentable/digestible concentrates, silages, and green fodder. It helps in reducing methane production.
• Whereas, in India, Ruminants are largely fed on agricultural residues (wheat/paddy straw and maize, sorghum, or bajra stover) and it tends to produce 50-100% higher methane.

How Methane is produced in cattle?

• Methane is produced by animals having rumen.
• Rumen is the first of their four stomachs where the plant material they eat (cellulose, fibre, starch, and sugars) gets fermented by microorganisms prior to further digestion and nutrient absorption.
• Carbohydrate fermentation leads to the production of CO2 and hydrogen.
• These are used as substrates by archaea microbes in the rumen. It has a structure similar to bacteria to produce methane, which the animals then expel through burping.

What is ‘Harit Dhara’ and how it can reduce methane produced by cattle?

• Indian Council of Agricultural Research (ICAR) institute has developed an anti-methanogenic feed supplement ‘Harit Dhara’.
• Harit Dhara is prepared using condensed and hydrolysable tannin-rich plant-based sources abundantly available in the country.
• Tropical plants containing tannins (bitter and astringent chemical compounds) are known to suppress or remove protozoa from the rumen.
• Harit Dhara acts by decreasing the population of protozoa microbes in the rumen. Which is responsible for hydrogen production and making it available to the archaea for reduction of CO2 to methane.

How ‘Harit Dhara’ can be economically beneficial to Farmers?

• It provides much of the energy for lactose (milk sugar) production and body weight gain, there is an economic benefit, too, from feeding Harit Dhara.
• According to experts, feeding 500 g Harit Dhara to lactating cattle and buffaloes would increase milk output by 300-400 ml/animal/day.
• Compound animal feed manufacturers can also incorporate it into their products by replacing wheat or de-oiled rice bran.
• If given to bovines and sheep, it not only cuts down their methane emissions by 17-20%, but also results in higher milk production and body weight gain.

How India stands to gain from the proposed global minimum tax

Source: Livemint

What is the News?

India and the 129 countries have backed a Global Minimum Corporate Tax. It will keep multinational firms from avoiding taxes by shifting their profits to countries with low rates.

What was the need for the Global Minimum Corporate Tax(GMCT) deal?

• Governments have long-faced the challenge of taxing global companies operating across many countries.
• At the moment, companies can set up local branches in countries that have relatively low corporate tax rates and declare profits there.
• That means they only pay the local rate of tax, even if the profits mainly come from sales made elsewhere.
• Hence, such erosion of the tax base has prompted nations to come together for a Global Minimum Corporate Tax(GMCT) deal.

What does the GMCT deal contain?

• Global Minimum Corporate Tax(GMCT) allows home governments to “top-up” their taxes to the agreed minimum rate. It will eliminate the advantage of shifting profits to a tax haven.
  • A tax haven is generally an offshore country that offers foreign individuals and businesses little or no tax liability in a politically and economically static environment.

Key Provisions of the deal:

• The deal commits countries to a global minimum corporate tax rate of 15% to avoid countries undercutting each other.
• Besides this, markets for Multinational Companies(MNCs) will get taxation rights.
• MNCs with global sales above €20 billion and profit before tax above 10% will be covered initially by the global tax.
• In addition, countries will be able to tax any MNC with revenues of €1 million or more in that market.

Potential Impact on India:

• There’s no need for India to tweak its corporate tax rate, as it is already either on a par with or above the proposed 15% global minimum tax.
• India will get new taxation rights over offshore digital economy companies accessing Indian consumers.
• Moreover, once the deal materializes, India is expected to remove its equalization levy on digital economy firms.

In 2020, wildlife board cleared land diversion for 48 projects

Source: TOI

What is the News?

According to a report, the Standing Committee of the National Board for Wildlife (SC-NBWL) had approved the diversion of around 1,792 hectares of wildlife habitat in protected areas.

What are the projects cleared by the Standing Committee of the National Board for Wildlife(SC-NBWL)?

• The SC-NBWL had considered 82 proposals, out of which 25 were for diversion within wildlife sanctuaries and national parks.
• Most of the projects cleared were for linear diversion within sanctuaries, national parks, and tiger reserves.
  • Linear projects are land-disturbing activities that are linear in nature such as roads, railways, transmission lines, pipelines, or any utility lines.
  • Linear projects are known to be especially destructive because they fragment the entire landscape and interrupt the movement range of animals.
• Moreover, the SC-NBWL had also approved the deletion of around 1 lakh hectares of protected areas (PA) from Hastinapur Wildlife Sanctuary (HWS) in UP and Great Indian Bustard Sanctuary in MP.

National Board for Wildlife(NBWL):

• NBWL is a statutory body constituted under the Wildlife Protection Act,1972.
• Chairman: Prime minister.
• Vice-Chairperson: Minister of Environment, Forests & Climate Change.
• Functions: Its role is advisory in nature and advises the Central Government on framing policies and measures for the conservation of wildlife in the country.
• The board has the power to review all wildlife-related matters and approve projects in and around national parks and sanctuaries.
• No alteration of boundaries in national parks and wildlife sanctuaries can be done without the approval of the NBWL.

Standing Committee of NBWL:

• The Standing Committee OF NBWL is chaired by the Union Minister of Environment, Forests & Climate Change.
• It consists of a member secretary and different members, including a non-official nominated by the minister.

Govt issues draft norms to regulate direct selling cos

Source: TOI

What is the News?

The Ministry of Consumer Affairs has issued the Draft for Consumer Protection Rules (Direct Selling) 2021.

Key Features of the Draft Consumer Protection Rules (Direct Selling) 2021:

Applicability of Rules: These rules will apply to:

• All goods and services brought or sold through direct selling
• All direct selling entities such as Amway, Tupperware offering goods and services to consumers in India
• All forms of unfair trade practices across all models of direct selling
• Direct selling entity which is not established in India but offers goods or services to consumers in India.

Registration:

• Every direct selling entity carrying out business in India will have to be registered with the Department for Promotion of Industry and Internal Trade(DPIIT) and must have at least one office in India.
• The registration number has to be displayed prominently on its website and all invoices. They will also need to have dedicated executives to address grievances and comply with the government directives.
• Such direct selling entities will also need to have a 24×7 customer care number to resolve all issues.

No Pyramid Scheme:

• No direct selling entity will be allowed to promote the ‘Pyramid Scheme’ and participate in the ‘Money Circulation Scheme’ in the garb of direct selling business.
• The pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, instead of the sale of products or services.

No Entry Fee for Agents:

• Direct Selling entities will be barred from charging any entry or registration fee from agents. They can’t charge for the cost of equipment and materials for sales demonstrations from their agents as well.
• Moreover, a direct selling entity would also have to take back spurious goods or deficient services and will have to refund the consideration paid for goods and services provided by it.

KVIC’s Project BOLD to Boost Tribals’ Income and Bamboo-based Economy in Rajasthan

Source: PIB

What is the News?

Khadi and Village Industries Commission(KVIC) has launched a project named Bamboo Oasis on Lands in Drought(BOLD) in Udaipur, Rajasthan.

About Project BOLD:

• Project BOLD seeks to create bamboo-based green patches in arid and semi-arid land zones of the country. It aims at reducing land degradation and preventing desertification in the country.
• As part of the project, 5000 saplings of bamboo species – Bambusa Tulda and Bambusa Polymorpha specially brought from Assam – have been planted over 16 acres of vacant arid Gram Panchayat land in Rajasthan.
• Further, the KVIC is set to replicate the Project at Village Dholera in Ahmedabad district in Gujarat and Leh-Ladakh region.

Significance of the Project:

• Firstly, the Project has created a world record of planting the highest number of bamboo saplings on a single day at one location.
• Secondly, the Project will help in reducing the land degradation percentage of the country.
• Thirdly, the project will give a boost to self-employment in the region.

Why was Bamboo chosen for the Project? KVIC has chosen bamboo for developing green patches because:

• Bamboos grow very fast and in about three years’ time and could be harvested.
• Bamboos are also known for conserving water and reducing evaporation of water from the land surface, which is an important feature in arid and drought-prone regions.