Current Affairs Analysis

20th December 2019 Current Affairs Analysis – IASToppers

Gandhi Citizenship Education Prize; GST Council; What is GST Compensation Cess? Special Economic Zone (SEZ); SEZ in Tripura; Kaleshwaram Lift Irrigation Project (KLIP); Balimela Reservoir; Sileru River; Operation Twist; Open Market Operations; Processing-grade White Onion (PWO-2); Section 144; National Company Law Appellate Tribunal (NCLAT); Jim Corbett National Park
By IT's Current Affairs Analysis Team
December 23, 2019

Contents

Government Schemes & Policies

  • GST Council puts proposal to vote for first time, fixes 28% tax for lottery across India
  • Tripura gets its first SEZ
  • Centre urged to treat KLIP as a national project
  • CPI(M) demands land rights papers for tribals
  • How Section 144 CrPC works
  • Key takeaways from NCLAT order; will Mistry be back at Tata HQs?

Economy

  • RBI to carry out US-style ‘Operation Twist’ to bring down interest rates

Environment, Ecology & Disaster Management

  • Bid To Boost Tourism: Rhinos to be re-introduced in Uttarakhand

Bilateral & International Relations

  • Portugal announces Gandhi Citizenship Education Prize

Science & Technology

  • Punjab Agricultural University unveils ‘processable’ onion variety

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Government Schemes & Policies

GST Council puts proposal to vote for first time, fixes 28% tax for lottery across India

In its 38th meeting, GST Council took up a proposal to fix a uniform 28 % tax rate on lottery effective March 1, 2020, all over India, decided by voting instead of following tradition of taking decisions through consensus.

GST-Council-MeetingNo-rate-hike-vote-for-single-lottery-rate-1

  • The GST Council also rationalised tax rate on woven and non-woven bags to 18%.

About GST Council

About-GST-Council

  • The Goods and Services Tax (GST) is governed by the GST Council. GST Council is constituted by the President.
  • Article 279 (1) of the amended Indian Constitution states that the GST Council has to be constituted by the President within 60 days of the commencement of the Article 279A.

GST Council consists of the following members:

  • Union Finance Minister as Chairperson
  • Union Minister of State, in charge of Revenue of Finance
  • Minister in charge of finance or taxation or any other Minister nominated by each State government, as members.

Mandate of GST Council:

  • The predominant responsibility of the GST Council is to ensure to have one uniform tax rate for goods and services across India.

GST-Council-Meeting-key-desicisions

  • Article 279A (4) specifies that the Council will make recommendations to the Union and the States on the important issues related to GST, such as, the goods and services will be subject or exempted from the Goods and Services Tax.

Center-State relation in GST council

  • The event of taking decision by voting (after failure of taking decision by consensus) highlighted the growing friction between the Centre and the states over the implementation of the GST and the dwindling revenues.

GST-Council-meaning-1

  • The states are unhappy over the delay in payment of compensation by the Centre. Recently, five states had raised a red flag over the pending compensation payment for almost 90 days. In fact, West Bengal demanded a complete review of the GST process.

What is GST Compensation Cess?

  • GST cess is imposed to compensate for the State’s loss of revenuedue to the implementation of GST.

What-is-GST-Compensation-Cess

  • GST is charged at the time of supplyand depends on the destination of consumption. For instance, if a good is manufactured in state A but consumed in state B, then the revenue generated through GST collection is credited to the state of consumption (state B) and not to the state of production (state A).
  • Due to the consumption-based nature of GST, manufacturing states like Gujarat, Haryana, Karnataka etc. feared a revenue loss. Thus, GST Compensation Cess was introduced by the government to compensate for the possible revenue losses suffered by manufacturing states.
  • This compensation cess is levied only for the first 5 yearsof GST regime: from 2017 to 2022.
[Ref: India Today, Livemint]

 

Tripura gets its first SEZ

The Ministry of Commerce and Industry has notified the setting up of the first ever Special Economic Zone (SEZ) in Tripura, at Paschim Jalefa, Sabroom, South Tripura District.

Special-Economic-Zones

About the SEZ in Tripura

  • It will be a Sector Specific Economic Zone for Agro-Based Food Processing. Rubber based industries, textile and Apparel Industries, bamboo and Agri-food Processing Industries will be set-up in the SEZ.
  • The developer of the SEZ will be Tripura Industrial Development Corporation (TIDC) Ltd.

Significance

  • Apart from creating jobs, setting up of the SEZ in Sabroom will open up new avenues to attract private investment considering the proximity of the Chittagong Port and construction of the bridge across Feni River in South Tripura.

Special Economic Zone (SEZ)

  • Special Economic Zones (SEZs) are geographically delineated ‘enclaves’ in which regulations and practices related to business and trade differ from the rest of the country and therefore all the units therein enjoy special privileges.
  • SEZs can generate both static and dynamic benefits. Static benefits include employment creation, export growth and rise in government revenues; whereas dynamic benefits include economic diversification, innovation and transfer of technology through foreign direct investment (FDI), and skills upgrading.

Salient features of the SEZ scheme

salient-features-of-the-SEZ-scheme

  • No licence required for import;
  • Manufacturing or service activities allowed;
  • The Units are only required to achieve Positive Net Foreign Exchange to be calculated cumulatively for a period of five years from the commencement of production;
  • Domestic sales subject to full customs duty and import policy in force;
  • Full freedom for subcontracting;
  • No routine examination by customs authorities of export/import cargo;
  • Enjoy Direct Tax and Indirect Tax benefits as prescribed in the SEZs Act, 2005.

Major incentives and facilities available to SEZ developers

the-major-incentives-and-facilities-available-to-SEZ-developers.jpg

  • Exemption from customs/excise duties for development of SEZs for authorized operations
  • Income Tax exemption on income derived from the business of development of the SEZ in a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act.
  • Exemption from Central Sales Tax (CST) and Service Tax

Issues with SEZ

  • The standards of infrastructure and business environment within SEZs have to be up to the global standard. Delays in implementation and unsatisfactory delivery of services would make the SEZs unsuccessful.

Issues-with-SEZ

  • If there are vast differences in the quality of business environment between SEZs and rest of the economy, then excessive and continued external support would be needed for the survival of SEZs, which can have large financial implications.
  • SEZs would need to be connected to ‘efficient’ sea and land ports. Otherwise, many of the benefits of the SEZs would be lost.
  • It has to be ensured that the institutions governing the operations of SEZs are competent enough.

Challenges of SEZ in India

India, which built Asia’s first SEZ (at Kandla in Gujarat), has not been able to use its SEZs as well as several other countries in Asia have.

How-to-make-Special-Economic-Zones-successful

Reasons

  • Most of India’s new generation SEZs came up not for exporting, but for avoiding taxes. The best example of the tax avoidance is the large number of IT zones that have come up in India. Many of these simply relocated from Technology Parks for continuing to enjoy tax exemptions.
  • SEZs acted against a system desperately trying to increase its revenues. The biggest example is the Nokia SEZ at Sriperumbudur, that shut down following tax disputes with both the Centre and the state government.
  • Most manufacturing SEZs in India have performed below par due to their poor linkages with the rest of the economy. Weak connections of coastal SEZs with their hinterlands inhibited these zones from utilising their full potential.

Way Forward

The current policy of integrating existing coastal SEZs into the overarching plan of coastal development under ‘Sagarmala’ can lead to a turnaround for SEZs. Sagarmala’s focus on back-end connectivity with the hinterland is what many of these zones desperately need.

Sagarmala

Key Facts

  • Major SEZ in near India: Shenzhen in China, Incheon in Korea, East Coast Economic Region in Malaysia, Bintan in Indonesia, Subic Bay Metropolitan Authority in Philippines, Payam in Iran, Jebel Ali in UAE, and Chittagong in Bangladesh.
[Ref: PIB, Financial Express]

 

Centre urged to treat KLIP as a national project

The State government has once again requested the Centre to treat Kaleshwaram Lift Irrigation Project (KLIP) as a National Project and make adequate provision for it in the Union Budget for 2020-21. The reason for making it National Project lies in the fact that the expenditure on the KLIP is burdening Telangana.

Kaleshwaram-project-3

  • The Centre under the AP (Andhra Pradesh) Reorganisation Act is mandated to support the programmes for the development of backward areas in Telangana, including expansion of physical and social infrastructure. The Telangana suffered injustice in the erstwhile Andhra Pradesh and that is the reason why nine out of 10 districts were covered under the Backward Regions Grant Fund.

About Kaleshwaram Lift Irrigation Project (KLIP):

About-Kaleshwaram-Lift-Irrigation-Project-(KLIP)

  • The Kaleshwaram irrigation project is a multipurpose water project on river Godavari, located in Kaleshwaram in Jayshankar Bhoopalpally district of Telangana.
  • This Project is proposed at Medigadda Village, below the point of confluence of Pranahitha and Godavari River near Kaleshwaram village, where famous Shiva temple, Kaleshwaram, exists. The project is thus named as Kaleshwaram Project.
  • The project is programmed to be completed by 2022. This Project has been conceived from the erstwhile B.R. Ambedkar Pranahita- Chevella Sujala Sravanthi project.

Objective:

  • To bring drinking water and irrigation to the parched areas of Telangana
  • To provide Drinking Water, as well as for industrial use, to Cities of Hyderabad & Secunderabad.

This project is

World’s

  • Largest multi-stage, multi-purpose lift irrigation project
  • Biggest project of its kind, completed in the shortest time.
  • Biggest underground pump house
  • Biggest underground surgepool

Key Facts

  • Mission Bhagiratha (provide drinking water) and Mission Kakatiya (to restore irrigation tanks) are being taken by the Telangana.

Mission-Bhagiratha-and-Mission-Kakatiya-1

Mission Bhagiratha and Mission Kakatiya 2

[Ref: The Hindu]

 

CPI(M) demands land rights papers for tribals

The Odisha unit of the Communist Party of India (Marxist) – CPI(M) has demanded that the State government immediately start providing patta or documented land rights to the tribal inhabitants of ‘Swabhiman Anchal’, the erstwhile cut-off area of the Balimela reservoir.

CPI(M)-demands-land-rights-papers-for-tribals

Balimela Reservoir

  • The Balimela Reservoir is located in Malkangiri district, Odisha, on the river Sileru which is a tributary of the Godavari river.

Balimela-Reservoir1.jpg

  • Andhra Pradesh and Odisha states entered into agreements to construct Balimela dam as a joint project and share the Sileru river waters available equally at Balimela dam site.

Sileru River

  • Sileru River is a tributary of Sabari River. The Sileru rises as the Machkund River in the Eastern Ghats in Andhra Pradesh and flows into Odisha state.
  • It joins Sabari river tri-junction boundary point of Andhra Pradesh, Chhattisgarh and Odisha.
  • Hydroelectric dams on the Machkund River at Jalaput Reservoir and on the upper and lower courses of the Sileru are a significant source of power for the region.

Balimela-Power-House

[Ref: The Hindu]

 

How Section 144 CrPC works

As protesters against the Citizenship Amendment Act hit the streets in large numbers in several states, state governments sought to tamp down on the demonstrations by issuing prohibitory orders under Section 144 of the Code Of Criminal Procedure (CrPC), 1973.

How-Section-144-CrPC-works

What is Section 144?

Section 144 CrPC, a law retained from the colonial era, empowers a district magistrate, a sub-divisional magistrate or any other executive magistrate specially empowered by the state to prevent and address urgent cases of apprehended danger or nuisance.

What powers does the administration have under Section 144?

section 144

  • The magistrate can direct any person to abstain from a certain act or to take a certain order with respect to certain property in his possession. This usually includes restrictions on movement, carrying arms and from assembling unlawfully.
  • It is generally believed that assembly of three or more people is prohibited under Section 144. However, it can be used to restrict even a single individual.
  • However, no order passed under Section 144 can remain in force for more than two months unless the state government considers it necessary. Even then, the total period more than six months.

Why is the use of power under Section 144 criticised so often?

  • The criticism is that it is too broad and the words of the section are wide enough to give absolute power to a magistrate that may be exercised unjustifiably. The immediate remedy against such an order is a revision application to the magistrate himself.

Does Section 144 provide for communications blockades too?

  • The rules for suspending telecommunication services, which include voice, mobile internet, SMS, landline, fixed broadband, etc, are the Temporary Suspension of Telecom Services (Public Emergency or Public Safety) Rules, 2017.
  • However, Section 144 CrPC has often been used to clamp down on telecommunication services and order Internet shutdowns.

Attempts to repeal Section 144

  • The first major challenge to the law was made in 1961 in Babulal Parate vs Maharashtra. Supreme Court refused to strike down the law. It was challenged again by Dr Ram Manohar Lohiya in 1967 and was once again rejected, with the court saying no democracy can exist if ‘public order’ is freely allowed to be disturbed by a section of the citizens.
  • In another challenge in 1970 (Madhu Limaye vs Sub-Divisional Magistrate), Court said that the fact that the “law may be abused” is no reason to strike it down and upheld the constitutionality of the law.
[Ref: Indian Express]

Key takeaways from NCLAT order; will Mistry be back at Tata HQs?

The National Company Law Appellate Tribunal (NCLAT) reinstated Cyrus Pallonji Mistry to the position of Executive Chairman of Tata Sons and Director of the Tata Group of companies for the remainder of his tenure.

cyrus-Mistry

Background

  • The Tata Sons Board voted to remove Pallonji Mistry from the Chairmanship of Tata Sons in 2016. In 2018, the National Company Law Tribunal (NCLT) issued a verdict in favour of Tata Sons on charges of mismanagement done by Mistry in 2016.

nclt-order-nd-nclat-order

  • Now, National Company Law Appellate Tribunal (NCLAT) has set aside the 2017 order by the Mumbai bench of NCLT which had upheld Mistry’s removal from his positions and made Mistry’s removal illegal.

Significance of decision

  • The NCLAT direction will empower the minority shareholders, and will force Independent Directors to take their objections more seriously.

Minority-shareholders.jpg

About National Company Law Appellate Tribunal (NCLAT)

  • National Company Law Appellate Tribunal (NCLAT) was constituted under Section 410 of The Companies Act, 2013 to hear appeals against the orders of the NCLT(s).
  • It is also the appellate tribunal for orders passed by the NCLT(s) under Insolvency and Bankruptcy Code (IBC), 2016, and for orders passed by the Insolvency and Bankruptcy Board of India (IBBI).
[Ref: Indian Express]

 

Economy

RBI to carry out US-style ‘Operation Twist’ to bring down interest rates

RBI announced a simultaneous sale and purchase of government bonds under the Open Market Operations mechanism, on lines of the “Operation Twist”, to purchase Rs 10,000 crore worth of 10-year bond. On the sell side, it has proposed to sell four securities (maturing in 2020).

RBI-to-carry-out-US-style-Operation-Twist-to-bring-down-interest-rates-1

About Operation Twist

  • Operation Twist is the name given to a US Federal Reserve monetary policy operation, which involves the purchase and sale of government securities to boost the economy by bringing down long-term interest rates.

Operation-Twist

  • Operation Twist normally leads to lower longer-term yields, which will help boost the economy by making loans less expensive, while saving becomes less desirable because it doesn’t pay as much interest.
  • US implemented the ‘Operation Twist’ programme in 2011-12 to stimulate the economy hit by the global financial crisis.

What are Open Market Operations (OMO)?

  • The RBI manages and controls the liquidity, rupee strength and monetary management through purchase and sale of government securities (G-Secs) in a monetary tool called Open Market Operations.

Open-Market-Operations-(OMO)-1

  • When the RBI feels that there is excess liquidity in the market, it resorts to sale of securities thereby sucking out the rupee liquidity. Similarly, when the liquidity conditions are tight, RBI may buy securities from the market, releasing liquidity into the market.
  • OMO is one of the tools that RBI uses to smoothen the liquidity conditions through the year and minimise its impact on the interest rate and inflation rate levels.
[Ref: Indian Express]

 

Environment, Ecology & Disaster Management

Bid To Boost Tourism: Rhinos to be re-introduced in Uttarakhand

The Uttarakhand State Wildlife Board has cleared a proposal by the Wildlife Institute of India (WII) to introduce rhinoceroses in the Corbett Tiger Reserve (CTR) to boost tourism and revive the habits of species that survive on low-height grass.

Reason for transferring rhinos

Reason for transferring rhinos

  • Geographical terrain and environmental conditions in CTR are suitable for rhinos. The ideal sites chosen in Corbett are valley habitats bounded on either side by the lower Himalayas, Shivalik Hills and Ramganga Reservoir, which would also act as natural barriers to rhino movement outside these area, thereby minimising conflict with people.
  • Rhinos reduce the size of elephant grass by eating it. This would mean that species that thrive on lower-height grass (Hog Deer, Cheetal, Sambar and Swamp Deer etc.) would also be encouraged.
  • Rhino’s range was once continuous across the flood plains of the Indus, Ganges and the Brahmaputra. However, today, it is limited to small fragmented pockets in India and Nepal as a result of anthropogenic pressures. Re-introduction into habitats in its historic range would not only create safety-net populations for the species but also restore their ecological role in these degraded habitats.
  • The majority of the decline in rhino population in the state of Assam occurred during the period of political unrest. Similar trends in population decline were observed in Nepal during the Maoist movement. Uttarakhand has no such history of political instability and thus would be an ideal site for reintroduction.

About the Jim Corbett National Park

  • Jim Corbett National Park is the oldest national park in India and was established in 1936 as Hailey National Park to protect the endangered Bengal tiger.

the Jim Corbett National Park

  • It is located in Nainital district of Uttarakhand and was named after Jim Corbett who played a key role in its establishment.
  • The park encompasses the Patli Dun valley formed by the Ramganga river.
  • The park was the first to come under the Project Tiger initiative.
  • The park is surrounded by the dense moist deciduous forest mainly consists of sal, haldu, peepal, rohini and mango trees. Forest covers almost 73% of the park, 10% of the area consists of grasslands.
  • Corbett National Park is one of the thirteen protected areas covered by the World Wide Fund for Nature under their Terai Arc Landscape Program. The program aims to protect three of the five terrestrial flagship species, the tiger, the Asian elephant and the great one-horned rhinoceros, by restoring corridors of forest to link 13 protected areas of Nepal and India, to enable wildlife migration.
[Ref: Indian Express]

 

Bilateral & International Relations

Portugal announces Gandhi Citizenship Education Prize

Portuguese Prime Minister has announced that in order to help perpetuate Mahatma Gandhi’s ideals, Portugal will be launching a Gandhi Citizenship Education Prize, each year inspired by his different thoughts and quotes.

Portugal-announces-Gandhi-Citizenship-Education-Prize-1

  • The first edition of this prize will be dedicated to animal welfare as Gandhi said that the greatness of a nation can be judged by the way its animals are treated.
[Ref: Newsonair]

 

Science & Technology

Punjab Agricultural University unveils ‘processable’ onion variety

The Punjab Agricultural University (PAU) has developed a “processing-grade” white onion variety PWO-2, for commercial cultivation by farmers from the 2020-21 rabi cropping season. Punjab’s farmers now mainly grow PRO-6 and Punjab Naroya.

processing-grade-white-onion-variety-PWO-2

About Processing-grade White Onion (PWO-2)

  • PWO-2 was released in June 2019 by Punjab Agricultural University (PAU).

onion-variety-PWO-2

  • The biggest advantage of PWO-2 is that onions are processable and can be used to make de-hydrated products such flakes, powder, rings and granules.
  • The average yield of PWO-2 is 165 quintals per acre and it matures in roughly 140 days.
  • After successful trials by Indian Council of Agricultural Research, PWO-2 will be considered fit for release at the national level.

Need

  • The normal red onions are prone to discolouration as they turn dark brown on processing, making them less marketable relative to white powder.
  • The PWO-2 has lower dry matter (which means less time and energy requirement for dehydration) and less total soluble solids (TSS) content (which translates into higher onion powder recovery).
  • Moreover, production of onion in Punjab meets hardly a third of the state’s requirement.
  • Given rising onion prices, there is also need for varieties whose bulbs can be converted and stored in processed form.

Background

  • In 1994, PAU released a processing-grade white onion variety called Punjab White. However, its average yield was only 135 quintals per acre and did not interest farmers.
[Ref: Indian Express]

 

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