- Front Page / NATIONAL (The Hindu)
- International (The Hindu)
- Editorial Opinion
- Economy (The Hindu)
- Indian Express
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Front Page / NATIONAL (The Hindu)
[1].More services to accept Rs. 500, Rs. 1,000 notes
Context
Those depositing over Rs. 10 lakh of unaccounted income in their accounts would face tax and a penalty of 200 per cent under the Income Tax Act. If amount of above Rs. 10 lac is deposited in a bank account, not matching with the declared income, the same will be treated as tax evasion.
Government extends services accepting old notes
Metro station counters, LPG distributors, railway caterers, chemists, and ticket counters at Archaeological Survey of India monuments will be allowed to receive payments in the old Rs. 500 and Rs. 1,000 notes
Banks to be open on Sunday & Saturday
Banks will remain open on Saturday and Sunday as well for the convenience of people who need to exchange their high-value currency notes
Penalty for tax evasion
- If an amount of above Rs. 10 lakh is deposited in a bank account, not matching with the declared income, the same will be treated as tax evasion
Penalty:In such a case, the tax amount plus a penalty of 200 per cent of the tax payable would be levied as per Section 270(A) of the Income Tax Act
ATMs to dispense Rs 50 & Rs 100
ATMs will dispense notes only in the denomination of Rs. 100 and Rs. 50 for the next few days.
[2]. ‘Demonetization to hit terror financing hard’
Context
One of the reasons to demonetize currency notes of Rs. 500 and Rs. 1,000 was to curb the circulation of fake currency notes.
Quantity of fake notes in circulation
- As per a study done by the Indian Statistical Institute, Kolkata, in 2015, the only concrete work done on the subject, at any given point of time Rs. 400 crore worth of fake currency notes were in circulation in the economy
- The Indian Statistical Institute, Kolkata study was done on the behalf of the National Investigation Agency (NIA) and it also said that Rs. 70 crore fake notes were pumped into the economy every year.
- According to the National Crime Records Bureau (NCRB), in 2015, various law enforcement agencies seized 178022 pieces of fake Rs. 1,000 currency notes. This means Rs. 17 crore fake notes which were in circulation could be calculated as they could be seized
- In 2015 as many as 2,99,524 pieces of Rs. 500 fake notes were seized by the agencies
Source: The Hindu
Source of Fake currency
As per a government official, in 90 per cent cases, the fake currency had been pumped in through the land route from Bangladesh.
- The fake notes are manufactured in Pakistan and they reach Bangladesh through air and sea route. An organised group then pushes the money into India through the porous border areas
Note: It should be noted her that the supplier of raw currency notes, the ink and the silver thread is same for India and Pakistan. So, printing fake Indian currency is not much of a problem for Pakistan
Impact on terror funding
Demonetization would impact the terror financing, particularly in Jammu and Kashmir.
- Terrorist outfits like HizbulMujahideen collect donations in Pakistan and then route the money into the State through hawala operators.
- The terror funding module in place right now, will be affected as the terrorist operatives always store money in the form of big currency notes. That money has become a useless piece of paper now.
International
[1]. Donald Trump Won
Context
Trump defeated Democratic opponent Hillary Clinton by garnering about 300 votes in the Electoral College
What is the news?
Republican Donald J. Trump was elected the 45th President of the United States, the first public office that the 70-year-old real estate mogul-turned-politician will hold, succeeding President Barack Obama
- Trump defeated Democratic opponent Hillary Clinton by garnering about 300 votes in the electoral college. He did so by winning most of the “swing states,” despite losing the popular vote marginally to Ms. Clinton. Mr. Trump is now the oldest person to be elected President
Popular upsurge
Over 512 days, his comments about immigrants, Mexicans, Muslims, women, veterans, and the differently abled generated an unending train of controversies that commentators thought would destroy him. But they did not, and Mr. Trump built a popular upsurge for change that breached conventional Democratic strongholds such as Wisconsin and Pennsylvania and captured the White House for the Republicans in a nail-biting finish. The Republicans have also retained control of both chambers of the U.S. Congress.
Editorial/OPINION
[1]. A method in the shock therapy
Context
Author terms the sudden announcement of withdrawing the highest-value currency notes of Rs.500 and Rs.1000 as legal tender as a bold one.
Black money: Money which is obtained through legal sources but on which tax is not paid or money which comes from illegal sources
Reasons for current move
The underlying idea is to flush out the black money & to check counterfeit currency, to make it useless as it leads to,
- Inflation
- Terrorism
- Real Estate: A huge component of black money comes from real estate as there is always some cash involved in such transactions. This cash finds its way in the economy like funding of political parties
Way forward
Author suggests that,
- Poor people: Centre must ensure that no poor person is left with old, useless notes due to the lack of official identity documents or a bank account
- Older citizens: Government should avoid putting to disadvantage older citizens unable to visit a bank repeatedly to exchange high-value notes.
- Benami properties: Government should find ways to check black money in benami properties (possibly through a digital land and realty inventory) and gold.
What are Benami properties?: These are the assets held in the name of another person or under a fictitious name to avoid taxation and conceal unaccounted wealth.
- Digital payments:There must also be administrative and electoral reforms to advance digital payments and eliminate the prospect of the new currency regime giving rise to a parallel ghost economy again.
Conclusion
Any disruptive measure is going to cause trouble and problems for the common people but author hopes that people understand that the larger public purpose outweighs the immediate difficulties.
[2]. Straws in the wind
Context
Paddy stubble, unlike wheat residue, isn’t valuable animal feed. Incentivising biomass-based power plants in Punjab and Haryana will help north India breathe easier.
Backdrop
Problem of pollution in Delhi exacerbates as winter approaches. One of the reasons for this is the stubble burning practice followed by the farmers of Punjab & Haryana to prepare the field for sowing of wheat in November as there is little time left between the harvesting of paddy and sowing of wheat.
Hence, author states that, there is need to address the basic problems that force the farmers to resort to such a practice
Why rice production increased in Punjab & Haryana?
The increase: Author states that, historically, rice was not a major crop grown in Punjab and Haryana.
- Punjab: In Punjab, rice accounted for only 7.6 per cent of the total cropped area during 1970-1973, which increased to a whopping 36 per cent during 2011-13
- Haryana: In Haryana, paddy area increased from 5.6 per cent to 19 per cent during the same period
Reason for increase
Following reasons have induced farmers to grow paddy and expand the area of cultivation considerably over time,
- Extensive development of irrigation
- Assured price (Minimum Support Price)
- Secured market (government procurement)
Consequently, farmers in this traditionally wheat-growing belt started cultivating rice and wheat in rotation year after year
Impact of rice-wheat rotation
Rice-wheat rotation year after year has resulted in problems. As various studies have shown the rice-wheat rotation has put land and other resources under severe strain and,
- Resultedin depletion of soil nutrients
- Decline in water table,
- Build-up of pests and diseases
- Micronutrient deficiency
Marketing problems
State government tried to incentivize crop diversification but if failed as crop diversification with vegetables and fruits hit a roadblock due to marketing problems.
Problem of crop harvesters
Use of machines for harvesting has serious implications for crop residue management at the farm level. The combine harvester cuts the crop well above the ground, leaving behind substantial amount of stubble on the field. The machine leaves the residues in such a state that it is difficult to collect them manually.
No problems with wheat
- Animal feed: Over time, farmers found ways to collect the wheat residue (bhusa) as it is a highly valuable animal feed and is even traded across districts. Given its economic use, the farmers run a chaff combine (reaper) after combine harvesting to collect straws, cut stubbles and make into chaff for feeding to animals directly or mixed with green fodder. So the burning of wheat residue is not necessary for the farmers because of the availability of technology and its higher economic value as dry fodder
Rice straw: Unsuitable for animal feed
- High silica content: Rice straw, however, is not used as fodder as it is found to be inedible to animals due to its high silica content. Because of its little economic value as animal feed and other general uses, farmers are prompted to burn it on the field instead of incurring a high cost on collecting it
Aware of health risk
Author further states that many field studies show that even though farmers are aware that the burning of straw is harmful to health, they do not have alternatives for utilizing them effectively. Hence, there is a need to find sustainable technological solutions that can help farmers
Possible solutions
Author points out few solutions that can be looked into,
- Energy through biomass: Biomass provides safe and reliable energy. The available paddy straw can be effectively used for power generation, which can go a long way in overcoming the problem of disposal of crop waste and power deficiency in the region.
Biomass–based power generation plants: According to data from the Ministry of New and Renewable Energy, Punjab and Haryana have not made much progress in creating biomass-based power generation plants as compared to States such as Maharashtra, Uttar Pradesh, Karnataka and Tamil Nadu. Thus, there is great potential for making investments in paddy straw-based power plants which can help avoid stubble burning to a large extent and also create employment opportunities
- Improving soil quality: Incorporation of crop residues in the soil can improve soil moisture and help activate the growth of soil microorganisms for better plant growth. However, suitable machinery for collection, chopping and in situ (on site) incorporation of straw is required
- Composting: Author suggests that initiatives can be taken up to convert the removed residues into enriched organic manure through composting
- New scientific uses:Presently, a limited quantity of paddy straw is used for cardboard making and in packing industries and paper mills. However, new opportunities for industrial use, such as extraction of yeast protein, can be explored through scientific research
- Developing new varieties:There is also a need to develop rice varieties that are both rich in grain yield and high in straw quality. Use of such dual-purpose rice varieties will help to maintain food security, farm income and improve environmental sustainability.
ECONOMY (The Hindu)
[1]. Centre on course to expedite patent filings
Context
The Commerce and Industry Ministry is taking several steps including hiring more people and training them to reduce the time and pendency of patents and trademark applications
Biggest problem
Joint Secretary in the Department of Industrial Policy and Promotion said that the “biggest bane of our system” is the time consumed in processing of intellectual property (IP) applications. He further said that,
- Cutting down on time: Last year, the first examination of trademark applications was taking almost a year and a half. Today that time has come down to about 4-5 months and by March 2017, it will come down to only one month
- Training: This was happening because the ministry had augmented its manpower and was training them
Backdrop
The Joint Secretary was speaking at the CII’s India — United Kingdom Tech Summit.
[2]. Improve ports, logistics to boost exports: WB
Context
India must frame policies to reduce farm subsidies and cut import tariffs on cars and take steps to improve ports and logistics to emerge as an export powerhouse, according to the World Bank.
Backdrop
The Bank has released a report titled ‘South Asia’s Turn: Policies to Boost Competitiveness and Create the Next Export Powerhouse’, suggesting a set of policy actions in four sectors — agribusiness, apparel, electronics and automotive
Observations of the report
- South Asia can triple its share in global markets: With the right set of productivity-enhancing policies, South Asia, led by India, could more than triple its share in global markets of electronics and motor vehicles and come close to doubling its already significant market share in wearing apparel (excluding textiles and leather) by 2030
- In the farm sector, passive and non-targeted subsidies (e.g. water, fertilisers and minimum support price) have encouraged farmers to continue to produce low value crops using low productivity and unsustainable techniques while restrictions on agricultural markets have constrained productive private investments in higher value food products
- Improving business climate in farm sector: In order to enhance the business environment in the sector, the government needs to bring out reforms including reducing subsidies and promoting competition, according to the World Bank.
Electronics sector
Constraints faced by Electronic sector: It is facing problems of underdeveloped clusters and poor trade logistics
To become a significant player in electronic sector
India needs to facilitate the development of clusters (reducing transaction costs and facilitating access to large pools of skilled labour and services) and improve its trade logistics to enable the seamless import and export of hundreds of components
Constraints faced by apparel sector: This sector is facing problems to import man-made fibre, preventing upgrading and diversification.
- India needs to reform the duty drawback scheme to facilitate the import of fabrics for exports.
Duty drawback: It is the rebate of duty chargeable on imported material used in the manufacturing of goods in and is exported. The exporter may claim drawback or refund of excise and customs duties being paid by his suppliers
[3]. Demonetisation: What you need to know
Context
Article contains some details and a suitable ex-plainer from the RBI over the recent demonetization move by the government.
Why is this scheme introduced?
The incidence of fake Indian currency notes of higher denomination has increased. For ordinary persons, the fake notes look similar to genuine notes, even though no security feature has been copied.
- The fake notes are used for anti-national and illegal activities.
- High denomination notes have been misused by terrorists and for hoarding black money
India remains a cash-based economy hence the circulation of fake Indian currency notes continues to be a problem. In order to contain the rising incidence of fake notes and black money, the scheme has been introduced.
How much value will I get?
You will get value for the entire volume of notes deposited at the bank branches / RBI offices.
Can I get all in cash?
No. You will get up to Rs.4,000 per person in cash irrespective of the size of tender and anything over and above that will be receivable by way of credit to bank account.
A sum of Rs.4000 cash is insufficient for my needs.
You can use balances in bank accounts to pay for other requirements by cheque or through electronic means of payments such as Internet banking, mobile wallets, IMPS and credit/debit cards.
What if if I have only Jan-Dhan account?
A JDY account holder can avail the exchange facility subject to the caps and other laid down limits in accordance with norms and procedures.
Where can I go to exchange the notes?
The exchange facility is available at all Issue Offices of RBI and branches of commercial banks/Regional Rural Banks/ Urban Cooperative Banks (UCBs)/State Co-op banks or at any Head Post Office or Sub-Post Office.
Do I need to go to my bank branch and not other banks’?
- For exchange up to Rs4000 in cash you may go to any bank branch with identity proof.
- For exchange of more than Rs4000, which will be credited to your bank account only, you may go any branch of a bank with which you have an account.
- To use other banks’ branches, you will need identity proof and your bank account details
Indian Express
1]. Anti-corruption game-changer
Context
The decision to demonetise Rs 1,000 and Rs 500 notes was particularly well-timed as India has become the bright spot in the global economy.
Author has listed out various measures taken by the current government against the black money and corruption.
Income declaration Scheme (IDS)
Under the Income Declaration Scheme implemented in 2015, citizens were allowed to declare their undisclosed income and pay tax, surcharge and penalty amounting to 45 per cent of the total undisclosed income.
- Rate of taxation: Here, the income declared would be taxed at 30 per cent plus a Krishi Kalyan Cess of 25 per cent on the taxes payable
- Penalty: A penalty at the rate of 25 per cent of the taxes payable, amounting to 45 per cent of the income declared. This would be used for the welfare of farmers
Constitution of SIT
The very first cabinet meeting held in May 2014 approved the constitution of a Special Investigating Team (SIT) headed by a retired Supreme Court judge to implement the decision of the apex court to bring large amounts of money stashed abroad by evading taxes or generated through unlawful activities
Passing of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015
The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, came into force on July 1, 2015 for disclosure of foreign black money within three months by paying 60 per cent tax
Investigation of Panama Paper Leaks
For the investigation of the Panama Paper leaks, the government constituted a Multi-Agency Group (MAG) comprising officers of the Central Board of Direct Taxes, Reserve Bank of India, Enforcement Directorate and Financial Intelligence Unit.
Benami Transaction Bill 2015
Lok Sabha passed the BenamiTransaction Bill, 2015 which is a predominantly an anti-black money measure with the purpose to seize unknown property and prosecute those indulging in such activities
Agreements with other countries
India reached agreements with many countries, including the US, to add new provisions for sharing banking information. Double Taxation Avoidance Agreements (DTAAs) were inked with several countries, including tax havens like Mauritius and Cyprus
AEOI
India joined global efforts to combat tax evasion and black money by joining the Multilateral Competent Authority Agreement in respect of Automatic Exchange of Information (AEOI). An Automatic Exchange of Information Agreement was also negotiated with Switzerland to get information on accounts held by Indians.
Launching of JAM
The ultimate aim of the government, as per author, is to ensure cashless transactions by eliminating corruption, middlemen and prevent leakages in government schemes. That’s why the Jan Dhan Aadhar and Mobile (JAM) scheme was launched to ensure that 100 per cent of every benefit/aid was directly transferred to the intended beneficiary without any middleman or leakage of revenue like, scholarship, subsidy, compensation or insurance.
Other schemes launched
The other pro-poor and pro-farmer schemes launched include the Jan Suraksha Yojana, the Pradhan Mantri Mudra Yojana for small enterprises, the Stand-up India Programme for Dalits, Adivasis and women, the Pradhan Mantri Ujjwala Scheme for LPG connections, the Pradhan Mantri FasalBeema Yojana, the Pradhan Mantri Krishi Sinchai Yojana and the Soil Health Card Scheme.
Benefits of demonetization
Author states that apart from curbing corruption, this revolutionary step will,
- Bring down inflation
- Diminish the parallel economy while giving a boost to the formal economy
- Bring down land prices and home-buyers will get housing at affordable prices.
Conclusion
Author concludes by stating that this historic step will open up new opportunities for the poor and the middle class. Difficulties that people are going to face for few days are nothing as compared to the benefits that they will receive in the long run.
[2]. Start from the top
Context
To set an example for the judiciary, the Supreme Court must address its own backlog of cases
Author starts the article by listing out the statistics which outline the arrears in the lower, subordinate, High Courts and Supreme Court
He cites the Rankin committee report as per which until a court has pending cases, it cannot work efficiently. More important work is pushed into background while the presiding officer is burdened with arrears.
He lists the following committees,
- High Court Arrears Committee (1949)
- Trevor Harris Committee in West Bengal (1949)
- Wanchoo Committee in Uttar Pradesh (1950)
- Shah Committee (1969)
- Satish Chandra Committee (1986)
- Arrears Committee (1989-90)
Types of recommendations
Author states that the recommendations of the above committees are of three types,
- Supply-side (more courts/judges)
- Productivity (better procedures, work norms, shift systems)
- Demand-side (alternative dispute resolution, curb on government litigation)
Author’s observations
- No Supply-side issue: The number of Supreme Court judges has steadily increased since 1950. There doesn’t seem to be a great supply-side issue.
- Replication: The Supreme Court’s website states, “Out of the 59,595 pending matters as on 31-03-2016, if connected matters are excluded, the pendency is only of 34,562 matters as on 31-03-2016.” Indeed, that seems to be the bunching of cases, specialisation and “productivity” improvement attempted in the 1990s. Why can’t it be replicated now?
- Advisory jurisdiction not important: The Supreme Court has original, appellate and advisory jurisdiction, but advisory jurisdiction isn’t that important quantitatively.
Question
Author asks, that in the light of current backlog, should SC be admitting any more petitions under its original (where one can directly approach the SC) and appellate (appeals challenging orders of lower courts) jurisdictions?
How many appeals admitted?
US Supreme Court: The US Supreme Court receives 7,000 to 8,000 petitions a year and hears (for oral evidence) 80. This is around one per cent.
Indian Supreme Court: A comprehensive paper by Nick Robinson found the Indian Supreme Court accepts between 15 per cent and 26 per cent of petitions(the exact figure depends on the year, let’s say an average of 20 per cent).
Conclusion
Author concludes by stating that a large number of appeals to the SC and the subsequent admission of large number of appeals signify deterioration of the lower judiciary
Live Mint
[1]. Demonetization is a net positive move
Context
Scaling back large bills will not end crime, but it will force the underground economy to employ riskier methods.
What is demonetization?
Demonetization is a process under which a particular form of currency is withdrawn from circulation
Timing is apt
- Access to Banks: Author states that with the roll out of Pradhan Mantri Jan Dhan Yojana (PMJDY), citizens’ access to bank accounts is nearly complete. A demonetization move would have been impossible if low-income households remained unbanked as without access to banking they would not have been able to exchange their old legal tenders for new ones
- Income declaration Scheme (IDS): Author further points out that government had announced the declaration scheme beforehand so those still possessing black money are left with no excuse now. Government followed its threat of curbing black money with a credible policy measure
Difficult few days
Author states that the coming few days will be difficult as common man scrambles for cash by lining up at the banks.There will be an urgent need for debit cards, electronic transfers and mobile payment platforms to be widely adopted.
- Institutional support from financial institutions, telecom platforms and payment interfaces will have to rise to the occasion and fill the supply gap. Hence, digital wallets like paytym, mobikwiketc will have to ensure a large coverage than before.
Going less-cash, not cash-less
Author writes that as an economy we should aim to go less-cash, and not cash-less. Cash greatly facilitates transactions and that is why the government will introduce new Rs2,000 bills because there are legitimate high value transactions in every economy.
New currency
The new Rs2000 bills have been designed with enhanced security features, so this is not just new money replacing old money in the system.
Will this eradicate black money and corruption in India?
Some “experts” have warned that Indians are creative and will find ways to circumvent this demonetization But removal of large bills will make several criminal and illegal activities more costly such as tax evasion, human trafficking, drugs, extortion and terrorism.
- Employ riskier methods: Withdrawing large bills will not end crime, but it will force the underground economy to employ riskier and less liquid payment methods. There is reason, therefore, to believe that this move will reduce corruption and several forms of criminal transactions in the economy.
Impact
The effect of this policy is not going to be uniform across the economy. Sectors that have a larger cash component in their transactions will be hit harder, such as real estate, movie production, campaign finance, etc.
- Author says that the impact might be deflationary (reduce prices) or contractionary (reduce business) but one thing is sure that market condition will now reflect true demand and supply picture
- Send a strong signal: Author says that in the long run this measure will be important as it will send a strong signal about India’s anti-corruption drive and is very likely to improve the country’s reformist stance
- Financial inclusion will get a boost: It also provides a boost to the government’s financial inclusion drive, pushing more households towards efficient banking and payment infrastructure
Demonetization elsewhere
The European Central Bank has announced that it will phase out the €500 mega-note
Conclusion
Author concludes by stating that the benefits of phasing out large paper currency are significant to an economy and even more to a society such as India where corruption has become an acceptable way of life.
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