Civilsdaily

Author: Explains

  • NITI Aayog panel on Innovation

    Subjects:

    • A NITI Aayog panel on Innovation headed by Prof. Tarun Khanna submitted its report recommending that the private sector should help fund research and development, including in research labs at universities and startups
    • It was constituted following the 2015 budget speech of Finance Minister Arun Jaitley, where he allocated 150 crore rupees for Atal Innovation Mission (AIM)
    • The committee was asked to suggest ways to promote innovation and build an entrepreneur-friendly ecosystem to drive job growth

    Recommendations:

    • It recommended improved tax benefits for investments equivalent to a percentage of corporate profits in research labs in universities and startups
    • It recommended that all contracts with foreign defence companies above 5 billion dollars should include a clause for five percent of contract value to be directed to establish research-centric universities with strong emphasis on its core product areas
    • It suggested a Make in universities program which would involve setting up 500 tinkering labs, where aspiring entrepreneurs can experiment to create products that address local problems, with one 3D printer per institute
    • For these labs, the panel recommends utilisation of half of the 1000 crore rupees fund that Finance Minister Arun Jaitley had set aside for the Self Employed and Talent Utilization (SETU) scheme
    • It also recommends Grand Prizes approach to find ultra-low-cost solutions to India’s most intractable problems, on the lines of what is followed in some developed countries
    • It recommends that the AIM budget of 150 crore rupees be used entirely to award up to 12 grand prizes annually. Each challenge should carry a prize of between 10 crore and 30 crore rupees
    • The panel also pitched for an increase in investment in business incubators with up to 200 crore rupees public spending per year and roping in the private sector for the purpose
    • Establishing a fund-of-funds (FOF) by the Union Government to seed other early stage venture funds with a corpus of 5000 crore rupees

     

  • Recommendatins of Deepak Mohanty Committee on Financial Inclusion

    Subjects: ,

    • The Reserve Bank of India (RBI) has released the Report on Medium-term Path on Financial Inclusion submitted by 14-member committee headed by RBI Executive Director Deepak Mohanty
    • RBI had constituted the committee in July 2015 to examine the existing policy regarding financial inclusion and a five-year (medium term) action plan
    • It was tasked to suggest plan on several components with regard to payments, deposits, credit, social security transfers, pension and insurance

    Key recommendations:

    • Augment the government social cash transfer in order to increase the personal disposable income of the poor- It would put the economy on a medium-term sustainable inclusion path
    • Sukanya Shiksha Scheme: Banks should make special efforts to step up account opening for females belonging to lower income group under this scheme for social cash transfer as a welfare measure
    • Aadhaar linked credit account: Aadhaar should be linked to each individual credit account as a unique biometric identifier which can be shared with Credit information bureau to enhance the stability of the credit system and improve access
    • Mobile Technology: Bank’s traditional business model should be changed with greater reliance on mobile technology to improve ‘last mile’ service delivery
    • Digitisation of land records: It should be implemented in order to increase formal credit supply to all agrarian segments through Aadhaar-linked mechanism for Credit Eligibility Certificates (CEC)
    • Nurturing self-help groups (SHGs): Corporates should be encouraged to nurture SHGs as part of Corporate Social Responsibility (CSR) initiative
    • Subsidies: Government should replace current agricultural input subsidies on fertilizers, irrigation and power by a direct income transfer scheme as a part of second generation reforms
    • Agricultural interest subvention Scheme: It should be phased out
    • Crop Insurance: Government should introduce universal crop insurance scheme covering all crops starting with small and marginal farmers with monetary ceiling of Rs. 2 lakhs
    • Multiple Guarantee Agencies: Should be encouraged to provide credit guarantees in niche areas for micro and small enterprises (MSEs). It would also explore possibilities for counter guarantee and re-insurance
    • Unique identification of MSME: It should be introduced for all MSME borrowers and information from it should be shared with credit bureaus

  • Arvind Subramanian Panel on GST Tax Rates

    Subjects: ,
    Chief economic adviser Arvind Subramanian is heading the panel that has proposed changes in the GST.
    source: Live Mint
    • The Chief Economic Advisor Arvind Subramanian led panel submitted its report on Possible Tax rates under Goods and Services Tax (GST) to Finance Minister Arun Jaitley
    • Union government had set up the committee under chairmanship of CEA Dr. Subramanian in June 2015 to arrive at GST rates by factoring in the economic growth rate,  taxpayer base and tax compliance levels

    Recommendations:

    • Standard GST rate of 17-18%- It is the rate at which most products would likely be taxed
    • Not to specify GST rate in Constitutional Amendment Bill
    • Revenue-neutral rate of 15-15.5%- It is a single rate at which there will be no revenue loss to the centre and states in the GST regime
    • Eliminate all taxes on inter-state trade including one per cent inter-state tax on transfer of goods
    • Two options for states: Single rate of 1% or a range of 17-18%
    • Allocation to states will depend on revenues raised by Centre and states
    • Three-tier GST rate structure:
    1. Essential goods will be taxed at a lower rate of 12%
    2. Demerit goods such as luxury cars, aerated beverages, pan masala and tobacco products will be taxed at 40%
    3. Remaining all goods will be taxed at a standard rate of 17-18%
    • Excluded real estate, electricity and alcohol and petroleum products while calculating tax rates but suggests bringing them under the ambit of GST soon

  • Two committees to ensure consistency in tax policies

    Subjects: ,

    The Union Government has constituted two new committees:

    1. Tax Policy Research Unit (TPRU)
    2. Tax Policy Council (TPC)
    • Aim: To streamline the taxation policy and administration
    • These committees have been constituted based on the recommendation of the Tax Administration Reform Commission (TARC)

    Tax Policy Research Unit

    • The TPRU will be headed by Revenue Secretary
    • It will carry out studies on various topics of fiscal and tax policies
    • It will assist the TPC in taking appropriate policy decisions and shall prepare tax proposal and analysis of legislative intent
    • It will also take decisions on expected increase or decrease in tax collection and economic impact
    • It will comprise of officers from CBEC, CBDT as well as economists, researchers, statisticians and legal experts

    Tax Policy Council

    • The TPC will help the government in identifying key policy decisions for taxation
    • It shall aim to have a consistent and coherent approach to the issue of tax policy
    • It will look at all the research findings coming from TPRU and suggest broad policy measures for taxation
    • The council will be headed by Union Finance Minister
    • It shall have 9 members – Minister of State for Finance, Commerce Minister, NITI Aayog Vice-Chairman, Chief Economic Advisor and Finance Secretary
    • It would also have secretaries from the department of Revenue, DEA, DIPP and Ministry of Commerce

    Background:

    • Presently, taxation policy and administration is handled in the CBDT and the CBEC
    • But there are also two independent boards Tax Research Unit (TRU) and Tax Policy and Legislation (TPL) wings which are also sending proposals to the Union Finance Minister
    • TARC in its First Report had identified handling of tax policy and related legislation as one of the areas in need of structural modifications
    • In order to bring consistency, multidisciplinary inputs and coherence in taxation policy making, it had recommended establishment of Tax Council supported by a common Tax Policy and Analysis (TPA) unit to cater to needs of both direct and indirect taxes

  • Sukanya Samriddhi Yojana

    Subjects:

     

    • Launched on 22 January 2015
    • Small savings instrument for the girl child
    • Account can be opened in a post office or a public sector bank

    Who is eligible?

    • Girl child only
    • Child should be Indian citizen
    • Age limit: On the date of opening the account, the child’s age should 10 years or younger

    Who can Invest?

    Parent, or Legal Guardian of the eligible Girl child

    Investment limit:

    • In 1 year, minimum Rs 1000/- needs to be invested., thereafter in multiples Of 100/-
    • Maximum of Rs 1,50,000/- can be invested
    • Deposits can be made in lump-sum or spread out manner
    • No limit on number of deposits either in a month or in a financial year

    Operation of the account:

    • The account will be opened and operated by the guardian of a girl child till the girl child, in whose name the account has been opened, attains the age of 10 years
    • On attaining age of 10 years, the girl child may herself Operate the account

    Tenure:

    • Deposit needs to made until 14 years from opening of account
    • Deposit under scheme will mature 21 year after opening of the account

    Withdrawal:

    • No Premature Withdrawal is permitted
    • However, maximum up to 50% of deposit amount can be withdrawn for marriage or higher education of girl child, once she reaches 18 years of
      age

    Termination:

    • Scheme Tenure is 21 years from date of opening, or when the marriage of the girl child happens; whichever happens earlier
    • Account will compulsorily have to be closed after marriage of the girl child
    • In case after maturity of the account (21 years) the girl child does not marry, and if account is not closed after maturity, balance will continue to earn interest as specified for the scheme from time to time
    Published with inputs from Swapnil

  • Beti Bachao Beti Padhao

    Subjects:

     

    • Aim: To generate awareness and improve efficiency of delivery of welfare services meant for women
    • Launched on 22 January 2015 with an initial corpus of Rs. 100 crore
    • Joint initiative of Ministries of Women & Child Development, Health & Human Resource Development

    Districts Identified

    The three criteria for selection of districts:

    1. Districts below the national average (87 districts/23 states);
    2. Districts above national average but shown declining trend (8 districts/8 states)
    3. Districts above national average and shown increasing trend (5 districts/5 states- selected so that these CSR levels can be maintained and other districts can emulate and learn from their experiences)
    • First Phase:

    100 districts have been identified on the basis of low Child Sex Ratio as per Census 2011 covering all States/UTs as a pilot With at least one district in each state

    • Second Phase

    The scheme has further been expanded to 61 additional districts selected from 11 States/UT having CSR below 918

     

    Strategies:

    • Implement a sustained Social Mobilization and Communication Campaign to create equal value for the girl child & promote her education
    • Focus on Gender Critical Districts and Cities low on CSR for intensive & integrated action
    • Mobilize & Train Panchayati Raj Institutions/ Urban local bodies/ Grassroot workers as catalysts for social change
    • Ensure service delivery structures/ schemes & programmes are sufficiently responsive to issues Of gender and children’s rights
    • Enable Inter-sectoral and inter-institutional convergence at District/ Block/ Grassroot levels

    Implementation:

    1. Centre: A National Task Force (NTF) headed by Secretary WCD
      State: A State Task Force (STF)
    2. District: District Task Force (DTF) headed by the District Collector/ Deputy Commissioner with representation of concerned departments
    3. Block: A Block Level Committee headed by SDM/ SDO/ BDO
    4. Gram Panchayat/ Municipality: Respective Panchayat Samiti/ Ward Samiti
    5. Village: Village Health Sanitation and Nutrition Committees
    Published with inputs from Swapnil

  • Nuclear Security Summit (2010 – 2016) – What Next?

    Subjects:

    With the Nuclear Security Summit coming to an end in April 2016, the international community must garner requisite diplomacy to continue the legacy of the process.

    The 2016 Nuclear Security Summit
    source: nss2016.org

    The 4 NSS held in this series were – 

    • 2010 – Washington
    • 2012 – Seoul
    • 2014 – The Hague
    • 2016 – Washington

    How did this all begun?

    The nuclear security summit initiative began with an April 2009 call by U.S. President Barack Obama to hold a global summit on nuclear security in 2010 as part of an effort to “secure all vulnerable nuclear material around the world within four years.”

    Broad goals – 

    1. Address the threat of nuclear terrorism by minimizing and securing weapons-usable nuclear materials,
    2. Enhancing international cooperation to prevent the illicit acquisition of nuclear material by non-state actors
    3. Taking steps to strengthen the global nuclear security system

    The pledges secured under this summits are referred to as “gift baskets”.

    It isn’t relevant to go back in time and revisit the 1st, 2nd and 3rd summit but let’s have a look at the 4th (and the final one) –

    A primary goal of the 2016 summit is to approve 5 action plans for international organizations and initiatives that will continue the work of the summit process.

    The five groups are the UN, the International Atomic Energy Agency, Interpol, the Global Partnership Against the Spread of Weapons of Mass Destruction, and the Global Initiative to Combat Nuclear Terrorism.

    Since these organisations are at the forefront of the summit, it would be worthwhile to know about them for IAS Prelims. Hail google!

    Question:

    Write a critical note on the outcome of the recent Fourth Nuclear Security Summit held in Washington.

    While you answer this question – keep some points in mind – Russia gave it a miss, Iran was not invited.

    Pakistan had ratified the Convention on the Physical Protection of Nuclear Material 2005 Amendment, but it still has not adhered to the International Convention for the Suppression of Acts of Nuclear Terrorism.

    India may need to explore possibilities to negotiate with China and Pakistan to create a Regional Nuclear Security Summit process to prevent proliferation of weapons usable nuclear materials.

    Source: Ref1 | Ref2 | Ref3

  • Easwar Committee to simplify Income Tax laws

    Subjects: ,
    • Expert Committee to simplify income tax laws headed by Justice (retired) R.V. Easwar has submitted its report to Union Finance Ministry
    • The 10 member committee has recommended simplifying provisions related to tax deduction at source (TDS), tax refunds and claims of expenditure for deduction from taxable income
    • It also has suggested several taxpayer-friendly measures to improve the ease of doing business in the country, accelerate process of tax dispute resolutions and reduce litigation
    source: Live Mint

    Recommendations:

    • Deferring the contentious Income Computation and Disclosure Standards (ICDS) provisions and making the process of tax refunds faster
    • Deletion of a clause in IT Act, 1961 that allows the IT department to delay tax refund due beyond six months in case of delay in refunds levying higher interest
    • IT department should stop the practice of adjusting tax demand of a taxpayer against legitimate refunds due whose tax return is under assessment
    • Treat stock trading gains of up to Rs. 5 lakh as capital gains and not business income
    • Tax Deducted at Source (TDS) rates for individuals must be reduced to 5 per cent from current 10 per cent. Dividend income should be treated as part of total income
    • Exempting non-residents not having a Permanent Account Number (PAN), but seeking to provide their Tax Identification Number (TIN) for the applicability of TDS at a higher rate
    • Most of the working processes of the IT departments should be conducted electronically in order to minimize direct human interface
    • Eligibility criteria under the presumptive tax scheme to be increased to Rs. 2 crore from Rs. 1 crore rupees to make it easy for small businesses
    • Such scheme should be also for professionals

    Background:

    • Union Government had constituted this committee in October 2015 by following up on a promise to provide a fair and predictable tax regime
    • The committee was tasked to suggest recommendations to overhaul the IT Act, 1961 to remove ambiguities that cause unnecessary litigation and update the laws based on various judgements

    What is ICDS?

    • The Central Government had notified 10 Income Tax Computation & Disclosure Standards (ICDS) effective financial year 2015-16
    • Objective: To minimising tax related disputes by bringing greater consistency in the application of accounting principles governing the computation of Income
    • These standards were developed using the old Indian General Audit and Accounting Practices (GAAP)
    • Main Features:
    1. In case of conflict between the provisions of the Income Tax Act, 1961 and ICDS, the provisions of the Income Tax Act would prevail
    2. No need to maintain separate books of accounts for ICDS. Maintain book only for income computation

  • Bibek Debroy Committee on Restructuring of Indian Railways

    Subjects: ,

    Revising the most important facets of reforms proposed by the Bibek Debroy committee & highlighting the pain points of Indian railways –

     

    #1. The process of accounting in Indian Railways is “very complicated”. “It is impossible to figure out what the rate of return on a project is”

    The financial statements of Indian Railways need to be re-drawn, consistent with principles and norms nationally and internationally accepted.

    #2. Streamline recruitment & HR processes

    Remove the multiplicity of channels of recruitment and consolidate the process. At present there are 8 organized Group ‘A’ services in Indian Railways. Deployment to these services is by direct recruitment from UPSC (Civil Service and the Engineering examinations) and also by promotion of Group ‘B’ officers of the department.

    The eight services can be broadly categorized in two bigger groupings viz. technical and non-technical services.

    #3. Indian Railways should focus on core activities to efficiently compete with the private sector

    It should distance itself from non-core activities, such as running a police force, schools, hospitals and production and construction units.

    #4. Deploy an independent regulator

    Shift regulatory responsibility from the government to an independent regulator as the private sector will only come in if there is fair and open access to infrastructure.

    The report recommends setting up a Railway Regulatory Authority of India (RRAI) statutorily, with an independent budget, so that it is truly independent of the Ministry of Railways.

    #5. Merge Railway budget with Central government budget

    “End gross budgetary support, end this system of paying dividends and therefore you effectively end the railway budget. You not only end the railway budget, you eventually also end the Ministry of Railways and integrate it into a Ministry of Transport.”

    Now that’s quite ambitious!

    Source: ET

    Want to read more?

  • Ajay Shankar Committee on Replacing Multiple Prior Permissions

    Subjects: ,
    • Government-constituted expert committee to examine the Possibility of Replacing Multiple Prior Permissions with Pre-Existing Regulatory Mechanism had submitted its recommendations
    • The 11 member committee was headed by Ajay Shankar, Former Secretary of Department of Industrial Policy and Promotion (DIPP)
    • The expert committee was constituted by DIPP in April 2015

    It was tasked to:

    1. Examine the possibility of replacing multiple prior permissions with a pre-existing regulatory mechanism
    2. Recommend a framework of the proposed regulatory mechanism and draft proposed legislation
    3. Identify safeguards for replacing the system of prior permission and integrating them in the proposed regulatory mechanism

    Recommendations:

    • Introduction of credible third-party certification in most areas of regulation to cut down on multiple permissions needed by investors
    • Adopting global best practices for emission norms in order to promote ease of doing business in the country
    • Need for a standing institutional mechanism within the government for an independent regulatory impact assessment

    For start-ups:

    • Steps like Greenfield development and earmarking of mixed land use redevelopment should be undertaken
    • Start-ups must be exempted from the requirement of seeking building plan approvals would give a boost to the ecosystem
    • Any inspection of a start-up in cases of actionable complaints should be done only with the permission of an officer at a sufficiently higher level

    Environmental Issues:

    • Ministries of environmentally sensitive sectors should join with the Ministry of Environment and Forests to prepare a 20 year perspective geographical plan
    • This plan must indicate preferred locations in prioritised categories for their anticipated projects in order to minimise the negative impact of environment

  • Tapan Ray Panel to Review Companies Law

    Subjects: ,
    • Aimed to review the 2013 Company Law, the Tapan Ray panel proposed over 2000 suggestions and recommendations
    • Recommendations are aimed at making the transition from Companies Act 1956 to Companies Act 2013 easier, improve Ease of Doing Business and provide better environment to start-ups

    Major recommendations:

    • As per 2013 law, a public sector company is required to seek approval from central government should it want to give total managerial remuneration which exceeds 11% of net profit. The panel has recommended doing away with the provision
    • Harmonizing disclosure standards between SEBI and Companies Act
    • The independent director should not have any kind of pecuniary relationship with the company
    • Defining a ‘subsidiary company‘ in terms of voting rights of the holding company instead of ‘total share capital’ of the holding company.
    • Removal of provision under Section 2(87), which prohibited the companies to not have more than two levels of subsidiaries
    • Establishment of an independent body, National Financial Reporting Authority (NFRA), to provide for matters relating to accounting and auditing standards. It is being seen as a major jolt to the Institute of Chartered Accountants of India (ICAI)
    • Allowing start-ups to issue 50% of the paid capital as sweat equity against existing norms of 25 %
    • Allowing start-ups to issue employee stock ownership plan (ESOP) to promoters who are working as employees or employee directors or whole-time directors
    • Only those frauds which involve Rs 10 lakh or above, or one per cent of the company’s turnover, whichever is lower, may be punishable under Section 447 of the companies act

    Background:

    • The enactment of the Companies Act, 2013 is considered to be one of the most significant legal reforms in India in the recent past, aimed at bringing Indian company law in tune with global standards
    • The Act introduced significant changes in the company law in India, especially in relation to accountability, disclosures, investor protection and corporate governance
    • In view of the extent and scope of changes, the stakeholders took some time to come to terms with the new regime with the new provisions, and encountered some difficulties in the process
    • Several representations were made to the Government on the practical difficulties faced during implementation
    • Though a few immediate amendments were made in May, 2015, the Government continued to receive representations that the Act needed further review

    The Committee was thus constituted to-

    • Make recommendations on issues arising from the implementation of the Companies Act, 2013
    • Examine the recommendations received from the Bankruptcy Law Reforms Committee, the High Level Committee on Corporate Social Responsibility, the Law Commission of India and other agencies

  • Net Neutrality Debate in India

    Subjects:
    Net Neutrality Debate in India
    source: Scroll.in

    This is a follow up discussion on Net Neutrality. Read these two important articles to enhance your understanding:

    Let’s understand the different stakeholders in the internet space

    4 stakeholders –

    1. Consumers (us)
    2. TSPs & ISPs – Telecom Service Providers & Internet Service Providers
    3. Over-the-top (OTT) service providers – Those who build websites, applications over the top of the internet layer
    4. Government or the regulator

    The Telecom Regulatory Authority of India (TRAI) is the independent regulator of the telecommunications business in India.

    The recommendations made by the TRAI are not binding on the Central Government. However, the Central Government has to mandatorily ask for recommendations from TRAI with respect to need and timing of new service provider and terms and conditions of the licence to be granted to the service provider.

    3 basic tenets of net neutrality

    1. All websites or applications should be treated equally by TSPs
    2. All applications should be allowed to be accessed at the same internet speed
    3. All applications should be accessible for the same cost [The bone of contention with allowing FREE Basics!]

    What are OTT services?

    Essentially they refer to the online content. OTT service can be facilitated by the TSP or ISP itself (music app from Airtel) or can be issues by a third party (Saavn.com, gaana.com).

    The creation of OTT applications has led to a wide-ranging conflict between companies that offer similar or overlapping services. Think of it this way – Airtel might offer you better browsing speeds because it wants you to use its music service – Wync but you happen to take the 3G pack from Airtel and use Saavn.com/ Gaana.com

    Take the controversy over the use of Whatsapp/ Normal messaging (where bulk revenue goes to the company which was the ISP).

    How is net neutrality regulated in other countries?

    The US Federal Communications Commission (telecom regulator in the USA) released new internet rules in March 2015, which mainly disallow:

    • Blocking,
    • Throttling or slowing down, and
    • Paid prioritisation of certain applications over others

    UK still allows paid discrimination.

    Coming back to TSPs/ ISPs & OTT service providers, what was the issue?

    We touched this point above (briefly) that TSPs are at the helm of making and maintaining the infrastructure over which the OTT services operate.

    1. They don’t get any share in the revenues of the OTT service providers
    2. Certain websites or applications require higher bandwidth than others for which the TSPs need to build and upgrade network infrastructure. Customers fret when they are not able to enjoy a seamless experience
    3. The case of common interests – VoIP vs. Call over Mobile network, SMS vs. Whatsapp!

    The Telecom and Regulatory Authority of India (TRAI) released the Prohibition of Discriminatory Tariffs for Data Services Regulations, 2016. These regulations prohibit Telecom Service Providers from charging different tariffs from consumers for accessing different services online.

    What do TRAI’s 2016 Regulations say?

    (i) no service provider is allowed to enter into any agreement or contract that would result in discriminatory tariffs being charged to a consumer on the basis of content (data services),

    (ii) such tariffs will only be permitted in closed electronic communications networks, which are networks where data is neither received nor transmitted over the internet,

    (iii) a service provider may reduce tariff for accessing or providing emergency services,

    (iv) in case of contravention of these regulations, the service provider may have to pay Rs 50,000 per day of contravention, subject to a maximum of Rs 50 lakh, etc

    Sources: Ref1 |  Ref2 | Ref3 (PRS Blog - for basics)

  • National Agricultural Market: How is this a necessity for India?

    Scope of discussion

    • State of Indian Agriculture & renewed focus on increasing a farmer’s income – Facts
    • What was wrong with APMCs? Mains
    • Quick facts on NAM – Prelims

    State of Indian Agriculture & renewed focus on increasing a farmer’s income

    If we go back in time (aug 2015) and read this PIB release – National Agricultural Market – A Harbinger of Change, we would realise that government realised (yet again) the importance of agriculture in Indian economy.

    While the Government has rolled out large number of programmes to improve yield levels on a sustainable basis, it recognises the need for creating a competitive market structure in the country that will generate marketing efficiency.

    Question: Good time to go back in time and revise the programs launched to improve yield levels. Would you like to write them out for us in the comments?

    The net result out of this concern this –

    The Department of Agriculture & Cooperation formulated a Central Sector scheme for Promotion of National Agriculture Market through Agri-Tech Infrastructure Fund (ATIF) through provision of the common e-platform.

    What was wrong with APMCs?

    Here’s a crisp answer from Quora,

    The APMC (Agricultural Produce Market Committees) is a relic of the past that forces the farmers to sell their produce only to middlemen approved by the government in authorized Mandis (markets). Thus, if you are a vegetable producer and I’m a supermarket, I cannot directly buy from you. Both of us need to go through a broker. This increases prices for the end buyer and unnecessarily adds redtape.

    • An Agricultural Produce Market Committee is a marketing board established by state governments of India
    • One main function of which is basically to provide a platform for farmers to sell their produce

    The challenges posed by present day APMCs – 

    1. Fragmentation of State into multiple market areas, each administered by separate APMC
    2. Separate licences for each mandi are required for trading in different market areas within a state. This means that we have limited the first point of sale for the farmer. He has to come to the local mandi – which could be both good and bad depending upon how it is governed
    3. Licensing barriers leading to conditions of monopoly
    4. Opaque process for price discovery

    The need to unify the markets both at State and National level was therefore, clearly the requirement of time. Think of it as an e-commerce platform with a marketplace model and not an inventory one. Every farmer has his own webpage (or something to the tune of that).

    Quick facts on NAM

    National Agriculture Market is going to implemented by the Department of Agriculture & Cooperation through Small Farmers Agribusiness Consortium (SFAC).

    NAM is not replacing the mandis. NAM is an online platform with a physical market or mandi at the backend enabling buyers situated even outside the state to participate in trading at the local level.

    It seeks to leverage the physical infrastructure of mandis through an online trading portal, enabling buyers situated even outside the state to participate in trading at the local level.

    source: Financialexpress.com

    NAM is currently being launched in 21 mandis and it will offer trade in –

    • chana,
    • castor seed,
    • paddy,
    • wheat,
    • maize,
    • onion,
    • mustard and tamarind

    Cons:

    1. Fruits and vegetables, where there often are prices fluctuations, are yet to be included in the NAM platform
    2. Country’s two biggest mandis—Azadpur (Delhi) and Vashi (Mumbai)—have not yet agreed to come on board
    3. What about interstate taxes and levies? NAM does not say anything on that!

    Questions:

    1. How will NAM function and what are the benefits that it would bring?
    2. What needs to be done on ground to make sure that NAM is successful?

     

    Source: Ref1 | Ref2 | Ref3

  • India, US defence ties – What are LSA, CISMOA and BECA agreements?

    Subjects:

    Scope of discussion

    • What do we mean by LSA, CISMOA & BECA – Back2basics terms
    • Why the US wants India to sign them? Mains & Interview
    • Why was India averse to signing these pacts? Mains
    • What is Defense Technology and Trade Initiative (DTTI)? Prelims & Mains

     

    What are LSA, CISMOA and BECA agreements?

    Welcome to the world of 3 foundational agreements that the US has been insisting on India to sign to further enhance the bilateral defence and strategic relationship.

    #1. The Logistics Support Agreement (LSA)

    • LSA would set a framework for the two countries to share military logistics
    • To assist each other’s armed forces with simple military logistics. For the U.S. Navy, for example, logistics support from India would be a valuable asset, helping it better project power in the Indian Ocean.
    • If you have been a regular with newspapers or CD’s daily news, you would realise that we gave an in-principle nod to LSA. Read the daily updates here.

    LSA would allow each other to access their military bases without any conflict for e.g in 1991 Gulf war India denied the US from refueling its aircraft from Indian territory.

    #2. The Communication and Information Security Memorandum of Agreement (CISMOA)

    • CISMOA would allow the United States to supply India with its propriety encrypted communications equipment and systems
    • Thus allowing secure peacetime and wartime communication between high-level military leaders on both sides
    • CISMOA would extend this capability to Indian and U.S. military assets, including aircraft and ships

    #3. The Basic Exchange and Cooperation Agreement (BECA)

    • BECA would set a framework through which the United States could share sensitive data to aid targeting and navigation with India

     

    Why the US wants India to sign them?

    • The agreements clearly puts emphasis on building interoperability and capacity of the emerging partners through joint military exercises, training, and defence equipment sales
    • US increasingly expects India to play the larger role of a “net security provider”
    • It believes that these foundational agreements will facilitate a strong defence and strategic partnership between the two countries

    During the United Progressive Alliance (UPA) Government, India was less inclined towards signing these agreements BUT the India-US defence and strategic relationship has dramatically improved since the Narendra Modi Government came to power in May 2014.

    Really? How so?

    1. India & USA agreed to transform from mere buyer-seller defence relationship to joint research, co-development and production of high end defence equipments
    2. Signed a “Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region”. Again, this would be a good time to revisit our updated maritime strategy where we increased our ambit of surveillance because we want to be a“net security provider” in Indo-pacific. Click to read here.

     

    If that is the case, why was India averse to signing these agreements before?

    1. India was concerned that it might erode its military independence
    2. Botch up its historically close security relationship with Russia, jeopardizing ongoing projects
    3. May antagonize China, leaving India in a disadvantageous position vis-a-vis its border disputes with Beijing. China’s visualization of US activity with any South Asian nation as its ‘Asia Pivot’ Strategy!
    4. In the case of CISMOA, it might allow the United States undue insight into Indian operational practices

    Question

    1. These look like valid reasons for not signing the agreements. And anyway, we were going on with our weapons procurement business with US with/ without these. What changed then? Why has India given an in-principle nod to signing the LSA?

    Hint:

    The India-US statement came on a day when China expressed anger at the Group of Seven (G7) advanced economies opposing “any intimidating coercive or provocative unilateral actions that could alter the status quo and increase tensions” in the East and South China Seas.

     

    Know more about Defence Technology and Trade Initiative (DTTI)

    1. Indo-Us defence pact, unveiled in 2012 – 4 major area of focus – Cooperation in (research, co-production , S&T and Military sales).
    2. It is mere framework not a treaty or law & disagreements have led to no progress since 2012!
    3. US prioritization of trade issues & India’s focus on technology transfers = Deadlock!
    4. Challenges and concerns = Terrorism from AF-PAK region, China’s assertiveness over South China sea.

    Want to read more?

    The debate on the value of these agreements for India is worth a read. Pratap Bhanu Mehta and Bharat Karnad lean against these agreements; Dhruva Jaishankar offers a case in favor.

     

    Source: Ref1 | Ref2 | Ref3

  • What is the significance of RCEP for India?

    Subjects: ,

    Scope of discussion

    • What is RCEP and how did it come into being? – Prelims & Mains
    • Why is RCEP Vital for India? – Mains & Interview
    • With TPP Advancing, India Pins Hopes On RCEP Trade Bloc

     

    What is RCEP?

    If you have been following our series on International Organisations, we talked about East Asia Summit (EAS) where we briefly touched upon RCEP.

    Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) between –

    • The 10 members of ASEAN
    • Additional members of ASEAN +3 = China, Japan, South Korea
    • Members with which ASEAN countries have FTA = India, Australia, New Zealand

    RCEP includes more than 3 billion people, has a combined GDP of about $17 trillion, and accounts for about 40 percent of world trade. By any means, this is a huge community in making.

    What is the significance of RCEP for India?

    From India’s point of view, the RCEP presents a decisive platform which could influence its strategic and economic status in the Asia-Pacific region and bring to fruition its “Act East Policy.” It is expected to be an ambitious agreement bringing the 5 biggest economies of the region – Australia, China, India, Japan and South Korea – into a regional trading arrangement.

    There are three immediate benefits that its trade policymakers should note-

    #1. The RCEP agreement would complement India’s existing free trade agreements with the ASEAN and some of its member countries.

    This consolidation can address challenges emanating from implementation concerns vis-à-vis overlapping agreements, which is creating a “noodle bowl” situation obstructing effective utilization of these FTAs.

    It will also help achieve its goal of greater economic integration with countries East and South East of India through better access to a vast regional market ranging from Japan to Australia.

    source: asiafoundation.org

     

    NOTE: India is not a party to two important regional economic blocs: the Asia-Pacific Economic Cooperation and the Trans-Pacific Partnership. The RCEP would enable India to strengthen its trade ties with Australia, China, Japan and South Korea, and should reduce the potential negative impacts of TPP and TTIP on the Indian economy.

    #2. Gets India closer to ASEAN

    • Clubbing with the ASEAN has been a principal policy priority for both China and India.
    • At present, while China has clubbed with the ASEAN+1, ASEAN+3 and ASEAN+6,
    • India is clubbed only under the ASEAN+6 framework

    #3. India can leverage its capabilities in IT, Healthcare, Education and services

    • The RCEP will create opportunities for Indian companies to access new markets
    • India is well placed to contribute to other countries in RCEP through its expertise in services

    Countering TPP with RCEP

    New Delhi fears the TPP, although years away from reality, could mean losing some textile and drugs exports to countries like Vietnam, which has embraced both the TPP and the RCEP.

    TPP is set to change the landscape of global trade. For India, it is most likely to affect sectors like leather goods, plastics, chemicals, textiles and clothing. 

    We will discuss more about TPP in a later discussion but suffice to say that RCEP’s realisation is important for India.

     

    Questions for you

    1. What’s the history behind ASEAN+1, ASEAN+3, ASEAN+6 and how is ASEAN+6 related to RCEP?
    2. Apart from RCEP, TPP – there is another arrangement called as Trans-Atlantic Trade and Investment Partnership (TTIP). What do you know about it?
    3. With China not clamping down on its excess steel production, how do you think these FTA arrangement will pan out? Or will they not? What is USA’s stance on this?
    4. It would be worthwhile to investigate the loyalties of the ASEAN nations wrt. China OR India. What are the major countries in ASEAN and who are they friends with. Why would you say so?

     

    Sources: Ref1 | Ref2 | Ref3

  • Indian maritime challenges and its diplomatic dimensions

    Subjects:

    Scope of discussion

    • Maritime challenges & Our new Maritime Security Strategy
    • Geopolitical aspects of maritime challenges – Fodder for Mains & Essay
    • Indian maritime agencies – Fodder for Prelims
    • Diplomatic dimensions – Fodder for Prelims & Interview
    • Challenges ahead? Mains & Interview

    Indian Maritime challenges

    India’s maritime geographical position is both an advantage and a challenge. The close proximity of international shipping lanes to India’s coasts attracts other powerful countries too to try to dominate and, thus, create the potential situation of confrontation with India.

    India’s own strategic interests made it pay attention to waters beyond its immediate proximity. Late 2015, we released our new edition of Maritime Security Strategy. Contrast the aggressiveness vis a vis the older strategy document released in 2007:

    • 2015 – Ensuring Secure Seas
    • 2007 – Freedom to Use the Seas
    source: nausena-bharti.nic.in

    This is the third maritime guidance document since 1998 and the most comprehensive account of India’s nautical imperatives, challenges, strengths and opportunities. Here’s why we say so:

    #1. India has accepted the concept of “Indo-Pacific” in India’s maritime security. This essentially brings the Indian Ocean and the Western Pacific – theaters of geo-political competition  into one strategic arc and broadens our focus.

    #2. The latest Maritime Security Strategy (2015) enhanced its definition of primary & secondary areas of maritime interest – 

    • Primary – Coastal areas, islands, EEZ, the Arabian Sea, Bay of Bengal, Andaman Sea, their littorals, Persian Gulf, Gulf of Oman, Gulf of Aden, Red Sea, various choke points and their littorals, SLOCs and energy and resource interests

    • Secondary – Various seas outside the Indian Ocean Region

    South-west Indian Ocean and the Red Sea were formally under the secondary area of interest. In defining the areas of interest, the navy’s intention is to outline the geographic extension of its strategic influence and give an indication of its involvement in those areas.

    #3. Aim to become the “net security provider” to island states in the Indian Ocean. What does that mean?

    As per the document, the term net security describes the state of actual security available in an area, upon balancing against the ability to monitor, contain, and counter all of these.

    #4. The strategy emphasises the importance of maintaining freedom of navigation and strengthening the international legal regime at sea, particularly UNCLOS.

    Geopolitical aspects of maritime challenges

    1. Indian strategists are, naturally, paying attention to developments practically in all waters due to the country’s growing international profile
    2. Their growing concern is regarding tensions rising in the East China Sea, the South China Sea and the Mediterranean
    3. The Indian Ocean remains largely peaceful but has an unstable littoral
    4. Pakistan has declared its intention to put its nuclear weapons at sea which raises the prospect of nuclear weapons falling into the hands of Jihadis
    5. We face a mix of the ‘traditional’ and ‘non-traditional’ challenges – IT, biotechnology, race for natural resources etc.

    To read more on how India has evaluated its prospects in Indian ocean, read this article on Blue Economy

     

    Indian maritime agencies

    #1. Indian Navy – It aims to be the ‘net security provider’ in the maritime neighbourhood, including deployments for anti-piracy, maritime security, NEO (Non-combatant Evacuation Operations) and HADR (Humanitarian Assistance and Disaster Relief) operations

    #2. Coast Guard – The Coast Guard protects India’s EEZ (Exclusive Economic Zone) from criminals, pirates, smugglers, poachers, human-traffickers and foreign subversion.

    #3. Coastal police – The role of the coastal police gained prominence following the Mumbai terror attacks of November, 2008. confines its activities to largely coastal waters up to 24 nautical miles.

    #4. Ocean affairs – Ministry of Earth sciences (2006) is responsible for development of technology for exploitation and exploration of marine resources, weather services, climate change and geo-hazards

    Diplomatic dimensions

    1. India has cooperated well in anti-piracy operations, played a key role in IORA (Indian Ocean Rim Association), launched IONS (Indian Ocean Naval Symposium, 2008) and shaped BIMSTEC and MGC (Click to read)
    2. Prime Minister’s articulation of India’s ‘Security and Growth for All in the Region’ (SAGAR), on 12 March, 2015, highlights both security framework for the Indian Ocean as well as regional integration with emphasis on Ocean Economy
    3. Japan’s inclusion into the MALABAR exercises
    4. Navy has also carried out Non-combatant Evacuation operations in Libya (2011), Kuwait (2014) and Yemen (2015)
    5. Humanitarian Assistance and Disaster Relief (HADR) operations such as cyclone relief (in 2007, 2008, 2013 and 2014)

    Did you know: In August 2013, a dedicated communications satellite for the navy, GSAT-7, was launched for surveillance purposes

    What are the challenges ahead?

    1. The navy’s fleet is ageing, with an estimated 60% of vessels reported to have reached various stages of obsolescence
    2. The Scorpene-class submarine is the first to be acquired in 16 years, in an attempt to stabilise the fleet’s fast-dwindling numbers
    3. The navy is 16% below strength in officer ranks and 11% below strength in non-commissioned ranks
    4. In August 2013, the navy suffered its worst peacetime accident when an ex-Russian Kilo-class conventional submarine sank in Mumbai’s naval dockyard, killing 18 personnel

     

    Questions for you

    1. Since we are talking about maritime security, comment on the point of convergence and divergence of Project Mausam & Project Sagarmala
    2. “Net security provider” – This term would have crossed your reading sphere in our dealings with US (defence ties) as well. Is India showing promising signs in becoming one? What has been our progress on this front (land, air, sea)
    3. Since we revised our maritime document very recently and increased the ambit of Primary & Secondary areas of interest – find & locate them on the world map (for Prelims’ sake!)
    Sources: Ref1 | Ref2 | Ref3

  • Pharma Jan Samadhan

    Subjects:

     

    Aim: Redressal of grievances of consumers related to drug pricing and availability of medicines

    Key facts:

    • The scheme is a web-enabled system created by National Pharmaceutical Pricing Authority (NPPA)
    • It seeks to serve as a robust E-governance tool for protection of interests of consumers through effective implementation of the price of drugs
    • The scheme will provide consumers with an online facility to redress their complaints related to over-pricing of medicines, non-availability of medicines and refusal of supply for sale of any medicine without good and sufficient reason
    • After receiving the complaint, NPPA will initiate action on any complaint within 48 hrs
    • The scheme also seeks to create awareness among the people and act as a deterrent against black-marketing, spurious medicines and inflated cost of drugs by creating phama-literacy initiative

    To read more on the related topic, visit the news on this story –

    Published with inputs from Swapnil

  • Technology Acquisition and Development Fund (TADF)

    Subjects: ,

    Union Government has launched TADF the  under the National Manufacturing Policy (NMP), 2011

    Key facts:

    • TADF will facilitate Micro, Small & Medium Enterprises (MSME) to acquire clean, green and energy efficient technologies
    • It will also catalyse the manufacturing growth in MSME sector with an aim to contribute to ‘Make in India’ initiative
    • Implementation: The scheme will be implemented through Global Innovation and Technology Alliance (GITA) which is a joint venture company of CII and Department of Science & Technology
    • GITA was launched in 2007-08 to stimulate private sector’s investment in Research and Development
    • Direct Support for Technology Acquisition: Proposals will be invited for reimbursement of 50 per cent or up to 20 lakh rupees of technology transfer fee from Indian industry
    • In-direct Support for Technology Acquisition through Patent Pool: TADF will provide financial support to MSME’s to acquire patent from across the world based on applications
    • Patent/Technology would be licensed to selected MSME’s and they will get a subsidy of 50 per cent of mutually agreed value or upto 20 lakh rupees
    • Technology/Equipment Manufacturing Subsidies: TADF will support manufacturing of equipment for reducing energy consumption, controlling pollution and water conservation
    • In this regard, subsidy of up to 10 per cent of capital expenditure and machinery will be provided to the manufacturing units subjected to a maximum of 50 lakh rupees
    • Green Manufacturing–Incentive Scheme: TDAF seeks to facilitate resource conservation activities in industries located in National Investment and Manufacturing Zone (NIMZ)
    • In this regard, financial support for under incentive or subsidy schemes will be provided for construction of green buildings, energy or water audits and implementation of waste treatment facilities
    Published with inputs from Swapnil

  • Role of border states in India’s Foreign Policy

    Subjects: ,

    Scope of discussion

    • 2003-05-15: Our focus on Look East – Act East
    • Other Regional Cooperation groupings – Preilms fodder & General gyan
    • The concept of Buffer zone – Factoids
    • Policy imperatives for NE region wrt border states – Mains & Interview

     

     

    Following is an excerpt from the Distinguished lecture series organised by MEA. The talk was given by Amb (Retd) Shyam Saran and extensively touches upon our interactions with neighbouring states and evolution in our foreign policy wrt them. Quick timeline check –

    2003

    Prime Minister Atal Bihari Vajpayee proposes the establishment of a South Asian Economic Union, based on –

    • South Asian Free Trade Agreement (SAFTA),
    • a Customs Union and
    • a common currency
    • Also puts forward the idea of a South Asian Parliament

    2005

    Prime Minister Dr. Manmohan Singh extols the virtue of a free flow of goods, people and ideas across national borders while respecting the political realities at ground

    2014

    In comes PM Modi, inviting the heads of state from all the South Asian countries to his swearing in ceremony – quickly followed by his visits to some of these countries to deepen the relationship

    But why such a huge thrust forward?

    India is today the fastest growing emerging economy in the world and can become an engine of growth for all our neighbours

    Our border states will have an opportunity to benefit from the growing economic and commercial exchanges with our neighbouring countries provided appropriate policies are adopted

    Strategically – India’s North-East, which shares borders with 5 of our neighbours, namely China, Nepal, Bhutan, Bangladesh and Myanmar has a huge potential to leverage cross border economics

    What are some of the other regional cooperation groups in Asia Pacific where India has vested interest for its growth?

    #1. The Bangladesh-Bhutan-India-Nepal (BBIN) sub-regional cooperation

    Source: Live Mint

    • India’s North-East constitutes a major component of BBIN
    • A sub-regional power grid is beginning to emerge –
      • India supplying power to Bangladesh and to Nepal and
      • Bhutan supplying power to India

    There is a recent report on an additional 100 MW of power from Tripura being committed by India to Bangladesh in exchange for the latter leasing 10 GBPS internet bandwidth for use in India’s North-East

    There is a plan to reconnect the countries through the revival and development of riverine transport

    The natural outlet for the North East historically was Chittagong port, now in Bangladesh. As per the BBIN cooperation, this port may once be made available

    #2. BIMSTEC – Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation

    We have covered this extensively here – Click to read.

    #3. Strategic partner at ASEAN

    • India and ASEAN already have a free trade, investment and services agreement
    • Ongoing negotiations on a Regional Comprehensive Economic Partnership (RCEP) which includes –
      • 10 ASEAN member countries
      • China, Japan, the Republic of Korea, Australia and New Zealand

    To read more on ASEAN & EAS (East Asia Summit), click here to read our explainer

    Please note that EAS is a larger grouping which includes not only those represented in the RCEP but also the U.S. and Russia

    #4. Asia-Pacific Economic Cooperation (APEC) group

    India has applied to become a member

    APEC is not yet a free trade grouping but it is nevertheless an important forum for expanding economic and trade relations

    APEC could also become basis for a larger Asia-Pacific Free Trade Area (APFTA) which has been proposed by China

     

    Discuss: The answer to these two questions would be more or less the same. UPSC has a knack of testing aspirant’s clarity with simple/ complex approaches

    Simple question – The success of India’s Act East Policy is integrally linked to the role of India’s North East as a bridge between India and its extended eastern neighbourhood.

    Complex worded question – Borders should not be looked upon as impenetrable walls that protect us from the outside world but rather as “connectors” which bring us together with our neighbouring countries.

     

    Negative mindset with regard to national boundaries also impacts upon how we look at the role of our border states. How has this been historically true?

    In the period of British colonial rule various parts of the country were designated as Buffer Zones

    These being areas on the periphery of British Empire as distinct from its heartland

    Border regions were deliberately left undeveloped or under developed and access to these areas was restricted as a matter of policy

    This is the genesis of so-called Inner Line Permit regime which continues to apply in several parts of North East. What is that?

    Inner Line Permit is required for Indian citizens to enter Arunachal Pradesh, Nagaland and Mizoram. Inner Line Permit is issued under the Bengal Eastern Frontier Regulation, 1873.

    Impacted states – Arunachal Pradesh, Mizoram, Nagaland

     

    However, after India became independent – such distinctions between the heartland and the periphery became irrelevant. The Indian Constitution does not recognize any differential status among the States which constitute the territory of India.

    Arguments in favour of Buffer Zones – 

    For reasons of defense and security it may be necessary to limit the development of our border areas to only that which is necessary from the defense point of view. BUT – Persisting with this approach can lead to a sense of alienation among the population of border States and dilute their sense of being part of national mainstream.

     

    What should be the policy imperatives for the development of North East region?

    #1. Develop the Chicken’s neck

    source: The Diplomat

    The Siliguri Corridor, also called as India’s Chicken’s neck

    While the Siliguri corridor looks narrow on the map, it is 22-km wide and there is no reason why additional rail and road links cannot be laid in this corridor

    The feasibility of additional rail and road links needs to be examined on an urgent basis

    #2. North East intra-connectivity plan 

    At present there are no efficient transport linkages among the North East States themselves

    In this connection special attention needs to be paid to the revival of riverine linkages and water transport

    #3. Connectivity across Indian borders

    • The ongoing India-Myanmar-Thailand trilateral project
    • The Kaladan Multi-modal transport project which links Myanmar’s Rakhine province and its port of Sittwe with Mizoram
    • With China, there is a trade route in place through the Nathula Pass in Sikkim

    Read more on news and stories relevant to this theme?

    Bringing development to the north east

    Ensuring Peace in the Northeast

  • SAHAJ: Online LPG Connection

    Subjects: ,

    Union Government has launched SAHAJ scheme for online release of new LPG connections for the consumers as parts of its consumer friendly initiative

    Key facts:

    • Under the scheme, people can apply online for new LPG connection and they need not visit to the LPG distributors for it
    • SAHAJ facility will enable the customers to post online request for a new connection by filing Know Your Customer (KYC) form by uploading bank account details and photographs
    • After submitting the details, customer will receive the registration number to know the new connection status
    • Later, customer can opt for offline or online mode of payment for the new connection
    • Once payment is done, electronic subscription voucher will be mailed to the new customer
    • Later distributor will do physical delivery of the Gas cylinder, regulator with hose pipe

    Phases:

    • Initially, the scheme has been launched in twelve cities across the country
    • In near future, this scheme will be extended to other parts of the country
    • Twelve cities are Ahmedabad, Bhubaneswar, Bengaluru, Bhopal, Chennai, Chandigarh, Kolkata, Hyderabad, Lucknow, Patna, Mumbai and Pune
    Published with inputs from Swapnil | Image: Dailyhunt