{"id":8992,"date":"2017-09-29T12:19:58","date_gmt":"2017-09-29T06:49:58","guid":{"rendered":"http:\/\/blog.forumias.com\/?p=8992"},"modified":"2017-09-22T12:30:51","modified_gmt":"2017-09-22T07:00:51","slug":"answers-mains-marathon-upsc-mains-current-affairs-questions-september-28","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/answers-mains-marathon-upsc-mains-current-affairs-questions-september-28\/","title":{"rendered":"Answers: Mains Marathon \u2013 UPSC Mains Current Affairs Questions \u2013 September 28"},"content":{"rendered":"<p><strong><a href=\"http:\/\/blog.forumias.com\/mains-marathon\/\" target=\"_blank\" rel=\"noopener\">Archives<\/a>\u00a0<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Q.1) What is GST? What are the challenges in its implementation? What are the possible solutions? GS 3<\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">GST is an indirect tax reform which aims to remove the tax barriers between states and create a single market.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">It is a single tax on the supply of goods and services, right from the manufacturer to the consumer.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The Government had introduced the 122<\/span><span style=\"font-weight: 400;\">nd<\/span><span style=\"font-weight: 400;\"> Amendment Bill, 2014, in the Parliament to facilitate the introduction of GST in the country.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The Bill was finally passed by both the Houses in 2016<\/span><\/li>\n<li><span style=\"font-weight: 400;\">It is a consumption based tax\/levy. It is based on the \u201c<\/span>Destination principle.\u201d<\/li>\n<li><span style=\"font-weight: 400;\">GST is applied on goods and services at the place where final\/actual consumption happens.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">It came into force from 1 July, 2017.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">It is levied at multiple rates ranging from <\/span>0% to 28%.<\/li>\n<\/ul>\n<p><b>There are three components of GST:-<\/b><\/p>\n<p>Central GST (CGST)<span style=\"font-weight: 400;\"> \u2013 it will be Levied by Centre<\/span><\/p>\n<p>State GST (SGST) <span style=\"font-weight: 400;\">\u2013 It will be levied by State<\/span><\/p>\n<p>Integrated GST (IGST<b>)<\/b><span style=\"font-weight: 400;\"> \u2013 It will be levied and collected by Central Government on supply of goods and services<\/span><\/p>\n<p><b>What are the various challenges in implementation of GST?<\/b><\/p>\n<ul>\n<li>Financial challenges:<span style=\"font-weight: 400;\"> GST is expected to cause a downfall in state revenue and the bill ensuring compensation from the union government has still not been passed.<\/span><\/li>\n<li>Federal system<span style=\"font-weight: 400;\">: The states would lose their autonomy to levy indirect taxes and will be totally dependent on the centre government.<\/span><\/li>\n<li>Administrative challenges:<span style=\"font-weight: 400;\"> some states are demanding control over taxing all businesses. It is contentious issue as the central government also needs funds for its policies and for compensating the states.<\/span><\/li>\n<li>GST Council:<span style=\"font-weight: 400;\"> With one-third voting share in the hands of Union government, may states feel the share of the states should be more.<\/span><\/li>\n<li>No parliamentary approval is needed<span style=\"font-weight: 400;\"> for GST rates. <\/span><span style=\"font-weight: 400;\">The Central GST Bill, 2017 allows the central government to notify CGST rates, subject to a cap. This implies that the government may change rates subject to a cap of 20%, without requiring the approval of Parliament. <\/span><\/li>\n<li>Lack of skilled manpower<span style=\"font-weight: 400;\"> to effectively migrate from older system to GST<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The requirement of e-way bills for inter-State movements has also been a cause of concern.<\/span><\/li>\n<\/ul>\n<p><b>Effects on States<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">According to the Reserve Bank of India (RBI), even as the fiscal position at the Centre remains stable (Central budget deficit for 2017-18 pegged at 3.2% of gross domestic product), there has been a marked deterioration in the gross fiscal deficit of states.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The figure for 2016-17 is not finalized yet but could be as high as a deficit of 3.4%.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Revenue expenditure of the states has risen sharply in recent years with greater financial devolution and increased expenditure.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">In aggregate, the states spend about 30% more than the Centre. This gap will further increase with GST.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The GST is a destination-based tax, and as such is viewed as being to the advantage of the consuming States and to the detriment of the producing States.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">However the formula for compensating to states for such loss has been devised in GST.<\/span><\/li>\n<\/ul>\n<p><b>What are the suggestions?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It may be worth reconsidering these rates and bringing them down to the 5 per cent slab for stronger linkages between farmers and the food processing industry and creating jobs in rural areas.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Since the raw material could be sourced directly from farmers instead of being entirely depending on middlemen in mandis, e-NAM provides this opportunity to graduate to a real pan-India market for agricultural products.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">GST would ensure that farmers in India, who contribute the most to GDP, will be able to sell their produce for the best available price.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">A smooth GST regime can break inter-state barriers on movement and facilitate direct linkages between processors and farmers. This can transform the operations of mandis too if other necessary reforms to free up agricultural markets are undertaken.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Q.2)\u00a0<\/span><span style=\"font-weight: 400;\">What do you understand by strategic partnerships? What is its relevance in today\u2019s world? What is the importance of strategic partnership with Japan for India? Discuss. <\/span><span style=\"font-weight: 400;\">GS 2<\/span><\/p>\n<p><b>Importance of strategic partnership with Japan for India<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">The India-Japan \u201cSpecial Strategic and Global Partnership\u201d (a designation and status New Delhi accords to no other partner) has reached new heights.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Reason: the rise of China and questions about America\u2019s commitment in Asia have drawn India and Japan into a deepening security-cum-economic relationship.<\/span><\/li>\n<\/ul>\n<p><b>Relevance of strategic partnerships in today\u2019s world<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">We live in a world today driven by \u201cstrategic partnerships\u201d. States find themselves in an interdependent system where the traditional power politics doesn\u2019t fit.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">For example, every major relationship is characterized by strategic tension such as U.S.-China, Japan-China, India-China is simultaneously one of economic gain. The U.S. and China are each other\u2019s chief trading partners, while China ranks at the top for Japan and India. Besides, India might confront China at Doklam but it also wants Chinese investment.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Strategic partnerships carry certain characteristic features falling short of alliances. Unlike alliances, they do not demand commitments to a partner\u2019s disputes with other countries.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Strategic partnership means that both retain the flexibility to continue political engagement and economic cooperation with their common adversary. Second, they avoid \u201centrapment\u201d, or being dragged into a partner\u2019s disputes and potentially into conflict, which happened in the First World War. Third, regular high-level political and military interactions facilitate a collaborative approach to strategic policies over a range of economic and military activities.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The aim of major strategic partnerships is to strengthen defences against marginal conflict, convey a determination to stand up to a strategic adversary and, overall, generate a persuasive environment that discourages potential intimidation.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Occasionally, as between India and China, a \u201cstrategic partnership\u201d is a way of opening a channel of communication and minimal cooperation intended to stabilise and develop the potential for a d\u00e9tente and conceivably something warmer.<\/span><\/li>\n<\/ul>\n<p><b>Way forward<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">India\u2019s two main strategic partnerships, with the U.S. and Japan, are dovetailing nicely.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">For New Delhi, U.S. will remain its chief backer both to enhance India\u2019s conventional defence capabilities and to draw political support in global political institutions, for example in components of the nuclear non-proliferation regime.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Japan, in the meantime, is becoming its primary collaborator in developing its economic sinews and for building a geostrategic network that offers Indian Ocean states an alternative to dependence on China.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Q.3) What are Private Equity (PE) funds? What does FDI inflow do for the economy? Examine. <\/span><span style=\"font-weight: 400;\">GS 3<\/span><\/p>\n<p><b>About Private Equity (PE) funds<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">These funds are used to finance retail trade of mostly imported consumer goods to expand their market shares, in order to boost the firm\u2019s market valuations.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Since PE investments are highly leveraged (high debt-equity ratios), rising markets valuations help them reap disproportionate gains when they make their exit. <\/span><\/li>\n<li><span style=\"font-weight: 400;\">PE firms do not commit to fresh capital formation or invest in technology, as expected of FDI.<\/span><\/li>\n<\/ul>\n<p><b>Impact of FDI inflow on economy<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">FDI (as against foreign portfolio investment, which flows into the secondary capital market) brings in long-term fixed investments, technology and managerial expertise, together with foreign firms\u2019 managerial control.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">FDI in green field investment is for fresh capital formation, and in brown field investment for acquiring existing enterprises with the expectation of improving the firm\u2019s productivity and profits.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Despite rising FDI inflows, domestic capital formation rate, or industrial capacity utilization, have declined.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Drawback: FDI does not come from leading global producers of goods and services, but from shadow banking entities such as private equity (PE) funds as discussed above. <\/span><\/li>\n<\/ul>\n<p><b>Contribution of FDI in question<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">If the foregoing arguments and evidence are valid, then recent FDI flows have contributed little by augmenting domestic capabilities, output and employment growth. <\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Inward FDI, increasingly from PE funds, has largely financed e-commerce firms, driving import-led consumption boom.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Outward FDI, instead of enabling domestic enterprises to access external markets and technology, has instead helped international capital to take advantage of India\u2019s tax treaties to optimize tax burden of global firms. <\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Archives\u00a0 Q.1) What is GST? What are the challenges in its implementation? What are the possible solutions? GS 3 GST is an indirect tax reform which aims to remove the tax barriers between states and create a single market. It is a single tax on the supply of goods and services, right from the manufacturer&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/answers-mains-marathon-upsc-mains-current-affairs-questions-september-28\/\">Continue reading <span class=\"screen-reader-text\">Answers: Mains Marathon \u2013 UPSC Mains Current Affairs Questions \u2013 September 28<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":2292,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[25,9],"tags":[],"class_list":["post-8992","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mains-marathon-answers","category-public","entry"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2017\/06\/pen-paper-laptop.jpg?fit=1000%2C500&ssl=1","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/8992","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=8992"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/8992\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/2292"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=8992"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=8992"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=8992"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}