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Front Page / NATIONAL [The Hindu]
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RBI sets one-time limit for big deposits of old notes
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NIA charges JeM chief for Pathankot airbase attack
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Justice Khehar becomes 44th CJI
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Editorial/OPINION [The Hindu]
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ECONOMY [The Hindu]
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Indian Express
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Live Mint
Click here to Download 9 PM Daily Brief PDF (20th Dec. 2016)
Front Page / NATIONAL [The Hindu]
[1] RBI sets one-time limit for big deposits of old notes
Context
Explanation will be sought for any cash deposit of over Rs. 5,000
What has happened?
In a circular issued on 19th Dec 2016, the central bank said that
- Individuals can deposit the old Rs. 500 and Rs. 1,000 denomination currency notes, totaling more than Rs. 5,000 only once till December 30 and that too, if they provided satisfactory reasons as to why these deposits had not been made earlier
- Even if the value of a single deposit totaled less than Rs. 5,000, and the tenderer had cumulatively exceeded Rs. 5,000 in multiple deposits, they would be subjected to the same procedure
- Non-KYC compliant accounts: For accounts that are not fully KYC-compliant, the value of deposits using such notes would be restricted to Rs. 50,000
- Exceptions: The restrictions were not applicable to contributions under the Taxation and Investment Regime for the Pradhan MantriGaribKalyan Yojana, 2016
Explanation on record
The RBI said the explanation provided by the depositor should be kept on record to facilitate an audit trail at a later stage. Banks have been asked to flag the deposits in their systems so that no more deposits were allowed for that account.
Currency deposited till date
According to the latest RBI data, Rs. 12.44 lakh crore of old notes had been deposited back into the banking system, as of December 10. The total value of the old Rs. 500 and Rs. 1,000 currency notes in circulation, as on November 8, was Rs. 15.44 lakh crore.
[2] NIA charges JeM chief for Pathankot airbase attack
Context
The National Investigation Agency (NIA) on Monday filed a charge sheet against Jaish-e-Mohammad chief Masood Azhar, his brother Abdul RaufAsghar and two others, ShahidLatif and Kashif Jan, all based in Pakistan, for plotting and executing a fidayeen (suicide) attack at the Pathankot airbase.
Charge sheet says
- There were only four terrorists at the airbase and the presence of any other terrorist could not be established till date. It, however, said investigations in this regard would continue.
- JeM had been plotting the strike since April 2014 as it was “easy to attack the Air Force station as there were forests surrounding it.”
- The terrorists had an alternative plan to attack a police station if the Pathankot operation failed.
- The NIA has named 115 witnesses, including six protected witnesses and two men from Pakistan who helped identify the slain terrorists.
- The agency has also named a Federal Bureau of Investigation (FBI) agent and a trial attorney of the U.S. Department of Justice as witnesses.
[3] Justice Khehar becomes 44th CJI
The Hindu
Context
The President on Monday appointed Justice Jagdish Singh Khehar as the 44th Chief Justice of India from January 4, 2017.
Backdrop
The incumbent (presently holding office) Chief Justice T.S. Thakur had on December 6 communicated his recommendation to the government to appoint Justice Khehar. Chief Justice Thakur retires on January 3 after a tenure of a year
About Justice Khehar
- First CJI from Sikh community: Justice Khehar, who led the Constitution Bench which scrapped the government’s National Judicial Appointments Commission law, will be the first Chief Justice from the Sikh community
- President’s rule in Arunachal Pradesh: Justice Khehar headed the Bench which had set aside the imposition of President’s Rule in Arunachal Pradesh in January this year.
- Sahara case: He was a part of the Bench which sent Sahara chief Subrata Roy to jail while hearing the matter relating to the refund of money invested by people in his two companies.
- Equal pay for equal work: Justice Khehar led a Bench which recently gave a significant verdict holding that the principal of ‘equal pay for equal work’ has to be made applicable to daily wagers, casual and contractual staff
- NJAC: He led the Constitution Bench which scrapped the government’s National Judicial Appointments Commission law.
Editorial/OPINION [The Hindu]
[1] Grappling with water disputes
The Hindu
Context
A permanent tribunal to adjudicate river water disputes between States will undoubtedly be a vast improvement over the present system of setting up ad hoc tribunals.
Issue: inter-state water disputes
What has happened?
Centre has decided to set up a permanent tribunal to adjudicate water disputes between states.
- You can read more on that decision here
Author’s view
Given the number of ongoing inter-State disputes and those likely to arise in future, it may be difficult for a single institution with a former Supreme Court judge as its chairperson to give its ruling within three years.
Finality of the award: SC in a landmark judgment has said that it has unfettered power to hear an appeal arising from a river water dispute tribunal under Article 136 of the Constitution. So, the award finally given by the tribunal might not provide the finality to the dispute, as its decision can be appealed against in the SC
Needless litigation: The idea of a Dispute Resolution Committee, an expert body that will seek to resolve inter-State differences before a tribunal is approached, will prove to be another disincentive for needless litigation.
Confusing aspect: A confusing aspect is that benches of the permanent tribunal are going to be created to look into disputes as and when they arise.It is not clear in what way these temporary benches would be different from the present tribunals.
Positive feature of the move
- Permanent expert data collection forum: There will be an expert agency to collect data on rainfall, irrigation and surface water flows. This acquires importance because party-States have a tendency to fiercely question data provided by the other side. A permanent forum having reliable data in its hands sounds like an ideal mechanism to apportion water.
Conclusion
Author concludes by saying that water disputes have humanitarian dimensions including agrarian problems worsened by drought and monsoon failures. Institutional mechanisms should be backed by political will to make them work.
ECONOMY [The Hindu]
[1] I-T Act change to help small firms move to e-payment
The Hindu
Context
The Centre will amend the Income Tax Act in Budget 2017 to reduce the rate of deemed profit from 8 to 6% for small firms with a turnover of less than Rs.2 crore who receive their payments electronically.
Issue: Promoting digital payments
Rationale behind this move
With the recent demonetization move and the ensuing focus on the move towards a less-cash economy, government wants to incentivise small traders/businesses to proactively accept payments by digital means
What experts have to say?
Operational difficulties: While this should encourage the adoption of electronic payments, it could lead to some operational difficulties for companies that conduct their business both electronically and in cash, according to experts.
Existing provision of IT Act
- Profit is deemed to be 8% of the turnover: Under the existing provisions of section 44AD of the Income-tax Act, 1961, in case of certain assessees (i.e. an individual, HUF or a partnership firm other than LLP) carrying on any business (other than transportation, agency, brokerage and commission) and having a turnover of Rs.2 crore or less, the profit is deemed to be eight per cent of the total turnover
- If a business has a turnover of less than Rs.2 crore, it is not required to maintain books of account. In such cases, the Income Tax Department takes into account a deemed profit of eight per cent for tax purposes. The tax is computed on this eight per cent. This change does not apply to service providers
Change in the provision
- Reducing the rate to 6%: Under the proposed change it has been decided to reduce the existing rate of deemed profit of 8% under section 44AD of the Act to 6% in respect of the amount of total turnover or gross receipts received through banking channel/digital means for the financial year 2016-17
- Applicable to electronic transactions: The reduction in the rate of deemed profit would apply only to the revenue generated from electronic transactions with the rate remaining unchanged for revenue from cash receipts.
Positives of the move
- Facilitate a move towards digital payment system
- It will incentivise businesses to disclose their true income &will also reduce the compliance costs for some small businesses
Legislative amendment in 2017
The legislative amendment to make the required changes to the Income Tax Act will be carried out through the Finance Bill 2017.
Indian Express
[1] Bill of Rights
Context
New disabilities bill draws on the language of justice, improves on the current act.
Issue: Passage of Disabilities bill
What has happened?
Parliament has passed the Disabilities Bill
Note: Bill has been covered in detail in the brief dated 15th Dec 2016&16th Dec 2016
Issues with the Bill
Certification: Certification is a major issue for the vast majority of the disabled people. A disability certificate is a basic document for any entitlement. Even for registering a complaint under the Persons with Disabilities Act, a person requires a disability certificate.
- The 2015-16 annual report of the Department of Empowerment of Persons with Disabilities reveals that only 49.5 per cent of the disabled population identified by the 2011 census, have been issued certificates as of August 31, 2015
- The condition above was when 7 conditions for disability were recognised. The present Bill increases that to 21.
- Positive point wrt certification: Certificate issued at location say Bihar will now be valid in Delhi. Earlier this was not the case
Dilutions made to the 1995 act
- Penal provisions reduced: Lack of penal provisions for non-compliance of the 1995 act gave violators a free rein. The current legislation seeks to address this. Though the provision for a jail term has been, through an amendment, reduced to a fine of up to Rs 10,000 for the first violation and not “less than fifty thousand rupees but which may extend to five lakh” for subsequent contraventions, the fines should be deterrents
- Reservation in employment: The original bill provided for 5% reservation, that has now been reduced to 4%
- Government has assured that the provision with regard to reservation in employment will be ensured in the Act against the total number of vacancies in the cadre strength and not against identified posts.
- National and state commissions: The provision for national and state commissions for persons with disabilities has also been discarded.
- Clause 3(3): This clause states that “No person with disability shall be discriminated on the ground of disability, unless it is shown that the impugned act or omission is appropriate to achieve a legitimate aim.”
- It was feared that this clause will give unfettered power to the implementing agencies to discriminate against persons with disabilities, on the pretext of serving a “legitimate aim”. In response to amendments moved the minister for social justice and empowerment has assured that provisions will be made to ensure that this clause is not misused.
Strengths of the Bill
- Private entities have now been brought within the purview of the definition of “establishment”
- There are specific provisions for women and children with disabilities
Conclusion
Despite its inadequacies, the current legislation is a big advance over the 1995 Act and brings in the rights based perspective. However, the battle for its implementation has to begin in earnest.
[2] First economic satyagraha
Indian Express
Context
The demonetization drive aims to cleanse the ills of neoliberalism.
Give it a go through once.
Live Mint
[1] Landing a leapfrog
Context
Building a sustainable less-cash society will require more than the shove of demonetization
In the first few paragraphs author has cited to the aftermath of the Vardah cyclone wherein digital payments were refused, ATMs stopped working as telecommunication networks were damaged.
Cash: A robust medium
The lesson that can be learnt from above example is that cash is a robust transaction medium. It doesn’t need an institutional infrastructure that is a fundamental requirement of the digital payment system. Digital financial services are as resilient as the physical infrastructure upon which they are built
Ease of use
Author points towards the ease of usage of the cash wherein a customer can reach inside his pocket and hand out the required amount to the shopkeeper. Any digital transaction mechanism would need to duplicate this ease of transaction if we are to go cash less or even less cash in the near future
More than just demonetization
Author states that building a sustainable less-cash society will require more than the shove of demonetization. It will depend upon,
- An unprecedented speed of infrastructure development
- Skilful regulation of a new industry
- Concerted efforts to build and maintain trust in invisible cash
Challenges involved
Author points out at future challenges in the way of reaping the benefits of demonetization move,
- Addressing the limitations of the network infrastructure: The fragility and everyday limitations of the underlying information network infrastructure need to be addressed like vulnerabilities to natural disasters. Tower-sharing, for example, concentrates disruption risk in a single place. Network topology—the arrangement of nodes and connecting lines—determines the effect of a particular cut on outages. Balancing the above concerns by providing adequate incentives to build a resilient infrastructure is a significant policy challenge
- Ensuring competitiveness of payment industry: We need to ensure that the payments industry remains competitive enough to promote close attention to user needs, and responsible enough to invest aggressively in security that the market only demands when it’s too late. Policy is moving fast on this front—the Watal committee was given a year from August 2016, but submitted its report earlier this month
- Trust: Evidence shows that levels of trust in the banking system is a major factor. Distrust can be triggered by a history of economic crises, social experience of exclusion and discrimination, or even just unreliable access to banks and savings. Trust is also hard to build and easy to destroy.
- Probability of fraud is high: The odds of a major breach or fraud in some part of the payments industry are high, given the rapid growth on top of legal and physical infrastructure that is still under development
- Few incentives to report: The political and commercial climate around digital payment also creates few incentives to report and thus enable learning from smaller escalating attacks. Establishing a credibly private and open-minded forum for reporting small breaches would be an important step in maintaining defencesif it has not already been done
Conclusion
Rising to these challenges will require collaboration and open communication, two social practices in short supply. India has committed to a leapfrog, and has already taken off on the trajectory. It’s up to us now to land well.
Read More: A less cash roadmap
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