This portal ( http://forumias.com/portal ) is now deprecated and not updated any longer.

Print Friendly

9 PM Daily Brief – 9 April 2016

Brief of newspaper articles for the day bearing
relevance to Civil Services preparation

What is 9 PM brief?


GS PAPER 2


[1] Road to smart cities not smooth

The Hindu

Issue


World Economic Forum has said in a report that despite improvement in India’s business environment, there is still a need for reforms at various levels to successfully implement the Smart Cities programme.

Key problems highlighted  by  the report

  • Bureaucratic processes are “archaic” where obtaining licences and approvals takes a long time and “little value is added with each step”.
  • Land acquisition is fraught with delays and uncertainties.
  • With poor cost recovery and high legal costs, companies engaged in disputes find it difficult to sustain their activities.
  • Waste treatment is another area with limited private sector interest.
  • Water management, where around 50 per cent of water production is lost due to theft or leakages during the distribution process, the lack of metering, and low user charges.

Major problem

  • ULBs (urban local bodies)  lack the resources to execute the programmes.
  • Poorly organised city administrations
  • City governments are the least-prepared to execute the programmes from among all the stakeholders, which include the national government, state governments, the private sector, non-governmental organizations (NGOs) and academic institutions.

Solutions offered

In the report, WEF offers solutions for challenges in business environment,institutional setup, and sector-specific issues, all of which the government has to take cognisance of while going forward with the Smart Cities programme.

 

[2] Not a court of everyday appeal

The Hindu

 

Issue

Judicial Reforms

How?

  • National Court of Appeal (NCA)
  • By establishing a more robust judiciary

National Court of Appeal (NCA)

  • Establishment of a National Court of Appeal (NCA)  would act as an intermediate forum between the Supreme Court and the various high courts of India.
  • It  would relieve the Supreme Court of the weight of hearing regular civil and criminal appeals
  • It will allow the court to concentrate on determining only fundamental questions of constitutional importance.
  • NCA’s regional benches would allow greater access to litigants from remote parts of the country, for whom the distance to New Delhi acts as a grave barrier to justice.

Problem with NCA

  • Supreme Court has today used the pliability of its power to grant special leave to often interfere in mundane disputes is therefore not a product of any structural problem, but rather of a deliberate decision by the court’s judges.
  • Viewed thus, it is difficult to understand how the creation of an NCA would somehow ease the burden on the Supreme Court, allowing it to eschew its authority to grant special leave; this power was, after all, always meant to be used only in exceptional cases, where a particular interpretation of a law required definite resolution.
  • The focus ought to be not on altering the core structure of the judiciary, but in aiming to make changes that are more pragmatic, that place an emphasis on the strengthening of the base of India’s judicial edifice.

 

A bottom-up approach needed

 

  • If socially conscious and meritorious women and men, who subscribe to the best constitutional values, are elevated as judges to our subordinate judiciary and the high courts, the idea of viewing the Supreme Court as a routine court of appeal can be renounced altogether.
  • This would allow the Supreme Court to be more discerning in its use of discretion, thus substantially reducing its burden of acting as a corrector of simple errors.

Road ahead

  • Our judiciary isn’t broken because of any deficiencies in structure, but rather because of the feeble infrastructure that we have installed to support our justice delivery system.
  • If we work towards establishing a more robust subordinate judiciary, it would not only negate any requirement on the part of most litigants to approach the Supreme Court, but it would also free the court of its shackles, allowing it to possibly regain its constitutionally ordained sense of majesty.

 


GS PAPER 3


[1] Sort out the tax maze

Indian Express

Context

The Panama Papers show that even with much simpler systems and more effective enforcement, it is a challenge to prevent illegitimate cross-border flows.

 

What are Panama Papers

The Panama Papers are a leaked set of 11.5 million confidential documents that provide detailed information about more than 214,000 offshore companies listed by the Panamanian corporate service provider Mossack Fonseca, including the identities of shareholders and directors of the companies

 

What is OECD

The Organization for Economic Cooperation and Development (OECD) is a unique forum where the governments of 34 democracies with market economies work with each other, as well as with more than 70 non-member economies to promote economic growth, prosperity, and sustainable development.

 

The difference between tax evasion and tax avoidance

  • Tax evasion involves not paying taxes on your income and is illegal.
  • Tax avoidance, on the other hand, is about managing your taxes across different tax jurisdictions to take advantage of differences in tax rates, such as corporate tax rates, in tax treatment of different kinds of income, such as capital gains, and in tax treaties among countries.

 

What the officials from OECD countries are saying

  • Officials from OECD countries on the Panama list are under public pressure because they have been advocating that tax avoidance, though legal, is cheating.
  • A number of OECD initiatives have been taken to reduce tax avoidance

 


Tax havens

  • Tax havens such as Panama, the British Virgin Islands and the Bahamas try to attract business by offering low tax rates and easy compliance.
  • In addition to tax avoidance, as tax havens have laws to ensure greater confidentiality of companies and banking secrecy legislation, the companies may be used for money laundering.
  • There is a widespread perception that offshore companies are conduits for money laundering, illegal transactions, tax evasion or parking unexplained wealth.
  • While offshore companies may be used for illegal purposes, law-abiding citizens may hold them for making investments in other countries to help navigate the complex maze of tax treaties and multiple jurisdictions involved in managing tax liabilities.
  • Hedge funds that manage money in multiple countries often use tax havens to reduce compliance costs arising from different tax treaties among jurisdictions.

 

Why Indian case is more confusing

  • It has been made complicated by a set of tax laws that makes compliance more costly than in the OECD. We rank 157 in the ease of paying taxes.
  • The effective tax on profit is higher: The corporate tax rate and the dividend distribution tax put together make the tax rate on profits nearly 50 per cent.
  • The capital gains tax makes financial transactions even more unattractive. This regime is made more tortuous by an onerous set of capital controls.
    As a consequence, companies operating globally have every incentive to set up companies in such jurisdictions.

 

There are some cases in which the actions are clearly illegal.

 

  • The first, for example, is when the underlying activity is criminal,say, drug or arms trade. These activities are covered under the Prevention of Money Laundering Act.
  • The second is when there are cases of tax evasion: A person does not declare to the tax authorities in her home country her income, which is paid into a bank account of her company in Panama, and no taxes are paid.
  • The third case is if there is a violation of capital controls. This is an India-specific issue. Under the Liberalised Remittance Scheme (LRS), every Indian resident is allowed to invest $2,50,000 abroad every year. In 2004, the limit was one-tenth of this. Money remitted abroad is from income on which tax has already been paid. If the amount invested abroad exceeds the amount allowed by the RBI, it is a violation of the law.
  • Fourth, the illegality may be the non-declaration of assets held abroad. A provision in the Finance Bill introduced in 2015 made it criminal not to declare foreign assets in annual tax returns. If the assets held in tax havens have been declared, then it is not illegal to hold them.

    Looking forward
  • First, rationalisation of capital controls should be a top priority. Many government reports have laid out the path forward.

Second, India must move to a simple tax regime with lower compliance costs. The blueprint is ready in the Direct Taxes Code. When countries with simpler laws and better enforcement are not able to prevent violations of the law, we cannot hope to do so with our labyrinth of capital controls, maze of tax laws and much weaker tax administration.

 

[2] Make in India in defence

Indian Express

Issue
Confederation of Indian Industry(CII) have welcomed the provisions of Defence Procurement Procedure (DPP 2016).

 

Key points

 

  • The revised procedures provide more flexibility to the end-users and the industry to work together, especially on development projects.
  • A new procurement category — Indigenously Designed, Developed and Manufactured (IDDM) — has been introduced and accorded top priority.
  • It essentially means the government is leaving no stone unturned to give a boost to Make in India so that the defence sector can move from the periphery to the core of Indian manufacturing.
  • Excise and customs duty exemptions available to PSUs/ Ordnance Factory Board (OFB) have been withdrawn.
  • The Foreign Exchange Rate Variation (FERV) is now allowed for the private sector in all contracts, as was available to PSUs/ OFB earlier in nomination cases.
  • The DPP also addresses issues like incentives to move the Indian defence industry up the value chain.
  • Various provisions remove ambiguities, ensure transparency, offer a level playing field and clearly lay down procedures.
  • DPP 2016 has also opened up several co-development and co-production avenues for Indian as well as foreign companies.

 

  • For the first time, the defence ministry has accepted the industry’s longstanding request for linking defence procurement with defence production. This inter-linkage would go a long way in realising Make in India in defence.

 

Road ahead

 

  • The defence sector not only has the potential to augment manufacturing but also add nearly one million direct and indirect jobs.
  • This industry has the potential to become a huge foreign exchange earner and also lead India to its professed goal of self-reliance.

 


1. The lead article of the day is covered under Editorial Today. Click here to read.

2. Science and Technology and Environment articles has been left out, they will be covered in weekly compilation for next week.

BY: ForumIAS Editorial Team 

Print Friendly

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.