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Current Affairs Analysis

4th January 2017 Current Affairs Analysis – IASToppers

Restaurants’ Service Charges; Consumer Protection Act, 1986; Socio-Economic and Caste Census (SECC); BIMARU states; Swachh Bharat Survekshan 2017; Modified Special Incentive Package Scheme (MSIPS); Mobile app for Haj Pilgrimage; etc.
By IT's Current Affairs Analysis Team
January 04, 2017

Contents

Polity & Governance

  • Startups brace up for legal war with Income Tax department
  • Government finds scientific way to implement social welfare programmes, combat poverty
  • India’s great school education challenge: Crisis in BIMARU states
  • Restaurants billing ‘service charges’ in addition to taxes is optional

Economy

  • Government against giving additional sops to Apple

Environment & Ecology

  • Swachh Bharat Survekshan 2017 launched in 500 cities

Key Facts for Prelims

  • Mobile app for Haj Pilgrimage

 

Polity & Governance

Startups brace up for legal war with Income Tax department

Startups that have been ordered to pay tax despite valuations being marked down in recent funding rounds are challenging the demands.

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  • They complained that the move runs counter to the government’s campaign to encourage entrepreneurial spirit.
  • Some startups have moved the income-tax tribunal against the notices while others have approached their advisers and could seek legal recourse in the coming days.

What’s the issue?

  • Amid concerns over profitability and competition, valuations of startups have declined sharply.
  • Last month, the tax department challenged such reductions at about 100 startups and issued orders seeking 33% tax at the elevated levels that prevailed earlier.
  • Experts said the Section was actually introduced to curb money laundering and was being wrongly aimed at genuine investment in startups.
  • The tax department’s move appears to be antithetical to the government’s encouragement for startups.

Solutions:

Experts opined that

  • This move makes no sense having offered tax breaks to young companies. The tax department should rescind its move to levy the tax on startups whose valuations have fallen on the grounds that the first premium was higher than the firm’s fair value.
  • The valuation rules must be simple and clear. Arbitrariness must be eschewed as investors need stability and certainty in tax policy. More so, when they take risks.
[Ref: Economic Times]

 

Government finds scientific way to implement social welfare programmes, combat poverty

The government is planning to adopt the Socio-Economic and Caste Census (SECC) instead of the poverty line-based method to identify recipients for its pro-poor schemes.

  • The move is aimed to better combat poverty by weeding out underserving beneficiaries.

Key features of SECC:

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  • The SECC 2011 ranks households based on their socio-economic status to enable state governments to prepare a list of families living below the poverty line.
  • It also makes available information regarding the socio-economic condition and education status of various castes and sections of the population.
  • The data also provides age-wise classification matched with various deprivation parameters.
  • SECC data also provides for automatic exclusion of beneficiaries on the basis of 14 parameters, automatic inclusion on five parameters and grading of deprivation on the basis of seven criteria.

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Sumit Bose Committee:

The Sumit Bose Committee formed to study the validity and efficiency of the SECC 2011 data in identifying the poor recently submitted its report, which is in favour of using the information for rural development schemes.

The committee also developed a formula based on deprivation parameters to identify beneficiaries for specific schemes. The greater the deprivation score, the higher will be the ranking of a household for getting government assistance.

[Ref: Economic Times]

 

India’s great school education challenge: Crisis in BIMARU states

According to an analysis by IndiaSpend, the four BIMARU states – Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh have some of the lowest literacy rates in the country in the Census 2011.

Highlights of the report:

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  • By 2020, India will have the world’s largest working population– 869 million, but it is still unprepared to educate and train its young population.
  • Overall, India’s literacy rate has increased 8.66 percentage points to 74.04 per cent between 2001 and 2011, according to Census data, but wide variations exists across states.
  • According to Census 2011, the crisis in education is especially apparent in the four BIMARU states with 445.1 million of India’s 1.2 billion population and some of the lowest literacy rates in the country.

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  • School outcomes are also lower in the four BIMARU states. In 2014-15, fewer students moved from grade V to grade VI in UP, with a transition rate of 79.1%, when compared to Goa, with a transition rate of almost 100% in 2014-15.
  • Currently, only 2.5% of school-age children between the ages of five and 14 live in the four states — Kerala, Mizoram, Tripura and Goa — with the highest literacy in India, compared to 43.6 %per cent in the four BIMARU states, according to Census 2011.
  • BIMARU states also spend less on education than their more literate counterparts. For instance, MP spends Rs 11,927 ($175) per student, while Tamil Nadu spends Rs 16,914 per student, the Economic and Political Weekly reported in September 2016. The per student spending, at Rs 5,298, in Bihar is even lower.
  • Any reform in education in the BIMARU states would have the greatest impact for India.
[Ref: Indian Express]

 

Restaurants billing ‘service charges’ in addition to taxes is optional

The Department of Consumer Affairs has clarified that service charges billed by restaurants are optional and it is up to the customers to pay it.

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What’s the issue?

  • Although the service charge is voluntary, most hotels and restaurants levy up to 10% of the bill amount as service charge, which is considered as a tip. The service charge varies from place to place.
  • The department cited complaints that hotels and restaurants are levying an additional 5 to 20% in bills in lieu of tips, regardless of the kind of service provided.

Government’s actions:

  • In this context, the department of Consumer Affairs said arbitrary levy of this sum in lieu of tips amounts to an unfair trade practice.
  • The department has called for clarification from the Hotel Association of India which have replied that the service charge is completely discretionary and should a customer be dissatisfied with the dining experience he/she can have it waived off. Therefore, it is deemed to be accepted voluntarily.
  • The department has asked state governments to sensitise hotels and restaurants and advise them to display at appropriate places on their premises that service charges are discretionary/voluntary and can be waived if a consumer is dissatisfied with the services.

What the law says?

As per the Consumer Protection Act, 1986

  • A trade practice which, for the purpose of promoting the sale, use or the supply of any goods or for the provision of any service, adopts any unfair method or deceptive practice, is to be treated as an unfair trade practice and that a consumer can make a complaint to the appropriate consumer forum established under the Act against such unfair trade practices.
[Ref: The Hindu]

 

Economy

Government against giving additional sops to Apple

The Ministry of Commerce and Industry is not in favour of extending concessions to US-based iPhone maker Apple for setting up manufacturing unit in India as no other firm has asked for any incentive.

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Why the government is not in favour of extending any concessions?

Indian government already provides benefits under the Modified Special Incentive Package Scheme (MSIPS) to boost electronic manufacturing in the country.

  • The scheme provides financial incentives to offset disability and attract investments in the electronics hardware segment.
  • It also gives a subsidy for investments in Special Economic Zones, among other benefits.
  • Also, the MSIPS policy incentivises electronics and component makers to manufacture domestically by providing them a host of incentives including 20-25% subsidy on capital expenditure.

Background:

The Cupertino-based technology major Apple had asked for several tax and other incentives to enter India in the manufacturing sector.

Currently, Apple’s products are manufactured in six countries, including Korea, Japan and the US. The company sells its products through Apple-owned retail stores in countries such as China, Germany, the US, the UK and France, among others.

It has no wholly-owned store in India and sells its products through distributors such as Redington and Ingram Micro.

[Ref: Indian Express]

 

Environment & Ecology

Swachh Bharat Survekshan 2017 launched in 500 cities

In a bid to encourage competition to improve sanitation standards, the government will kick start a Swachh Survekshan survey to rank 500 cities across the country on cleanliness.

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Key facts:

  • The survey will be conducted by Quality Council of India.
  • It will judge cities on the basis of data provided by Municipal bodies, data collected through direct observations and independent assessment and citizen feedbacks.
  • The areas of evaluations include waste collection, sweeping and transportation, open defecation free and toilets, municipal solid waste-processing and disposal, information, education and behaviour change, and Capacity building – Swachh Bharat Mission e-learning portal.
  • The citizens can give their feedback by either giving a missed call on 1969 to record their response or by filling up a feedback form on the Swachh Survekshan website.

Background:

  • Swachh Survekshan 2016 had ranked 73 cities across the country and Mysore was ranked on top followed by Chandigarh.
[Ref: Hindustan Times]

 

Key Facts for Prelims

Mobile app for Haj Pilgrimage

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  • Union Ministry of Minority Affairs launched the Haj Committee of India’s mobile app.
  • The app will provide information and facilitate e-payments for the pilgrimage.
  • This is for the first time digital push has been given to the Haj application process.
  • It is also a major initiative in the government’s ‘Digital India’ programme.

 

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