POLITY AND ECONOMY
1. Don't let messenger shoot themselves :- Recent Context:
BSF jawan complained about poor quality food served to them on social media.
Existential questions: BACKGROUND
· The Border Security Force Bill, 1968 brought Border Security Police, but its function is not policing, it is something more than that.
· Though it is functioning on the borders, it is not the Army. The task of this Force is such that it is something between the Army and the Police Force.”In the now-forgotten traditions of parliamentary debate, opponents of the Bill asked why there was nothing in the Bill requiring the force to serve on the “border”, or why a central police force which was “neither fish nor fowl” was necessary when police was a State subject.
· A concern amongst even the Bill’s supporters was that there was a disparity between the Army and the BSF in terms of pay, service conditions, grievance redress mechanisms and deployments to forward areas.
· Rejecting these concerns and refusing to refer the Bill to a Parliamentary Select Committee, the Bill was passed and independent India’s first paramilitary force was born. The concerns of stepmotherly treatment in service conditions exist even today across all paramilitary forces in India as later videos by other servicemen have demonstrated.
· Today, no less than seven paramilitary forces exist, each created with less parliamentary debate than the previous one. These forces are all under the Home Ministry in contrast to the Army, Air Force, Navy and Coast Guard which are under the Defence Ministry. The Assam Rifles has changed hands between Home, External Affairs and Defence Ministries and is currently under the Home Ministry while under the Defence Ministry’s operational control.
· The military justice system does not believe that it is required to be equal for all and creates peculiar distinctions between the Army, Navy and Air Force on the one hand and the paramilitary forces and the Coast Guard on the other.
· The Armed Forces Tribunal came into being in 2007, 25 years after the Supreme Court made scathing remarks about the military justice system in Lt. Col. Prithi Pal Singh Bedi v. Union of India (1982) for not having even one layer of judicial scrutiny, for unchecked command influence in decision-making, and for absence of recorded reasons in final judgments.
· In 1999, the Law Commission’s 169th Report stated that disciplinary and service matters required quick resolution and proposed a special tribunal for the military and paramilitary forces.
· The Armed Forces Tribunal Bill was steered through Parliament only by the Defence Ministry, leaving paramilitary forces, even the Assam Rifles and the Coast Guard, outside the tribunal’s purview.
· Despite court martial systems within the military being reformed and judicial scrutiny now being available, paramilitary forces continue to follow a court martial-like system called the Security Force Court with less legal safeguards than those found inadequate by the Supreme Court.
· Yet, like in court martial proceedings, penalties including the death sentence can be imposed. With no process of appeal other than statutory petitions, often before the Home Minister, the only recourse left is expensive and time-consuming writ petitions.
· Even here, the fundamental rights of armed forces personnel are expressly limited under Article 33 of the Constitution which makes approaching civilian judicial systems a challenge.
· The Home Minister (MoS) in 2012 said that the reasons for suicide and fratricide amongst paramilitary forces are “…personal/domestic problems, illness, mental stress, alcoholic dependence, marital affairs and financial crisis of concerned individual. Despite taking all necessary steps, some discontented individuals are not able to control their emotions and tend to take such extreme steps due to the above said reasons.”
· He also stated that better dispute resolution, communication facilities in field areas, yoga, and increased interaction between jawans and officers were part of the 14 measures undertaken to boost morale.
ECONOMICS
1. GST stalemate resolved, rollout deferred to July 1
Contentious issues
o Administrative control over tax payers in the new indirect tax regime
o Cross empowerment and dual control
o Who would get to collect tax on the economic activities taking place in Indian territorial waters
Resolution:
2. As per the formula for dual control of assesses, 90 per cent of those with a GST turnover of Rs. 1.5 crore or less will be assessed for the purposes of scrutiny and audit by the States, and 10 per cent by the administrative machinery of the Centre.
3. Those above a turnover of Rs. 1.5 crore would be assessed in the ratio of 50:50 between the Centre and the States
4. The Finance Minister said that while the power to levy and collect the Interstate GST (IGST) will lie with the Central government, a special provision would cross-empower the States in the same ratio agreed upon for tax assessees.
5. Area of 12 nautical miles into the territorial waters is concerned, it’s a part of the Centre’s territory. But as per convention, the States will be empowered to collect tax on any economic activity there
6. Four draft laws — the Central GST, State GST, Interstate GST, and the Compensation Law — would have to be tabled for approval in the budget
7. Following this, the laws would have to be tabled for approval in the legislative bodies of the Centre and the States.
2. Vagaries of job market
· The International Labour Organization’s in its report ‘World Employment and Social Outlook 2017’
o A serious concern is reducing the extent of vulnerability that currently affects about 42 per cent of the total working population.
o It is lack of access to contributory social protection schemes among the self-employed and allied categories, unlike their counterparts in the wage-earning and salaried classes.
o The former segment accounts for nearly 50 per cent of workers in the emerging economies and 80 per cent in developing countries.
o The hardships faced by these 1.4 billion working people in the backdrop of either the absence of strong welfare legislation or its effective enforcement in a majority of these countries.
o Sub-Saharan Africa, South Asia has been the most affected by such volatile conditions.
3. Serious job losses are taking place
· Amartya Sen predicts that the demonetization will hit the economy quite drastically.
· The primary impact of the demonetization:
o Long queues outside banks and shortage of cash.
· Now we are seeing the secondary impact,
o Which is on the informal sector? Potato sowing in West Bengal is affected and some other businesses are collapsing.
· Particularly for small businesses (farming, for example), money is often used in the form of cash.
· In the long run, cashless transactions can perhaps be made into routine practice, through organization and training, but that would take time.
· To act on the presumption of instant learning and institutionalization is to place the hard-earned interests of many people without any connection to ‘black money’ in serious risk.
· The underdevelopment of electronic accounts and transactions, big parts of the economy are similarly vulnerable. For many, especially among the poor, making efficient and correct use of electronic payments and receipts would remain difficult to master and the possibility of losing one’s money would be hard to avoid, especially given the shortage of infrastructure and the slowness of learning in using cashless transactions.
Why has over 85 per cent of cash suddenly been taken out of circulation?
· Demonetization has been seen both as a way of catching and eliminating ‘black money’, and as a way of moving towards a ‘cashless economy’
· A very small proportion of black money (it is estimated to be 6 per cent or so, certainly less than 10 per cent) is in cash. Most black money is in the form of precious metals and other assets in foreign accounts.
· The inconvenience and loss imposed with no black money (workers earning wages; small businesses doing trade or production; people, even housewives, keeping small savings) are much more acute than any benefit from catching relatively small amounts of black money.
· There are going to be huge job losses too, and the recent reports by All India Manufacturers’ Organization are beginning to show that serious job losses are already happening
.
4. Demonetization has hit India's growth
· IMF: The government’s demonetization move could dampen India’s growth by one percentage point in the current fiscal year and 0.4 percentage point next year
· The IMF now expects India to record a growth of 6.6 percent for the current year, and 7.2 percent next year. Earlier, IMF had projected 7.6 percent this year and next year.
· World Economic Outlook (WEO)
Reasons:
· The temporary negative consumption shock induced by cash shortages and payment disruptions associated with the recent currency note withdrawal and exchange initiative
· Global growth for 2016 is now estimated at 3.1 percent
· For China, the growth forecast for 2017 has revised upwards, to 6.5 percent, 0.3 percentage point above the October forecast. In 2018, China’s growth rate is projected to be 6 percent against India’s 7.7 percent.
5. Budget may have sops for start ups
· Raising the tax holiday for start-ups to seven years from the current three years.
· Exempt start-ups from the minimum alternate tax
· The Centre is also roping in States and local authorities to look into issues relating to local taxes and other problems that trouble start-ups.
· The Department of Industrial Policy and Promotion (DIPP) will hold a meeting with the RBI, banks, SIDBI and venture capital funds to discuss the hurdles on start-up funding.
· Involving corporates and banks to support start-ups.
o Several top companies had been asked to use their corporate social responsibility funds to help start-ups.
o States were looking to ease labour and environment norms for start-ups, he added.
· Start-ups to enter into segments such as waste management, fuel aggregation, animal husbandry and veterinary science.
· Link to smart cities: “A virtual hub, which will be a one-stop solution platform for queries and serve as a ground for investors, incubators and start-ups”
6. Richest one percent own 58% wealth in India
OXFAM REPORT ON INEQUALITY: ‘An economy for the 99 per cent’
· India’s richest 1 per cent wealth = 58 per cent of the country’s total wealth
· Just 57 billionaires in India have same wealth (USD 216 billion) as that of the bottom 70 per cent population of the country.
· Globally, just 8 billionaires have the same amount of wealth as the poorest 50 per cent of the world population.
· ‘Eight men as rich as half the world’
· the richest 10 per cent of the population in China, Indonesia, Laos, India, Bangladesh and Sri Lanka have seen their share of income increase by more than 15 per cent.
· On the other hand, the poorest 10 per cent have seen their share of income fall by more than 15 per cent.
Reasons:
· Due to a combination of discrimination and working in low-pay sectors, women’s wages across Asia are between 70-90 per cent of men’s
· Global Wage Report 2016-17 of International Labour Organization, the study said India suffers from huge gender pay gap and has among the worst levels of gender wage disparity — men earning more than women in similar jobs — with the gap exceeding 30 per cent.
· In India, women form 60 per cent of the lowest paid wage labour, but only 15 per cent of the highest wage-earners. It means that in India women are not only poorly represented in the top bracket of wage-earners, but also experience wide gender pay gap at the bottom.
· It also said that more than 40 per cent of the 400 million women who live in rural India are involved in agriculture and related activities.
· Women are not recognized as farmers and do not own land, they have limited access to government schemes and credit, restricting their agricultural productivity.
7. Cap set on sops for electronics
· A modified special incentive scheme for electronics manufacturing.
o It has decided to reduce the time frame for companies to avail sops under the scheme,
o Cut down the application window by almost 19 months to December 31, 2018 and
o Cap the outflow through the special incentive package at ?10,000 crore.
· Incentives of ?10,000 crore have been allowed.
· If investment is more than $1 billion, then a high-powered committee presided over by the Cabinet secretary will approve it
· Further, the subsidy to electronic manufacturing companies will be provided for investments made within five years of the project getting approved against a subsidy time frame of 10 years earlier.
· Investments above ?6,850 crore will be cleared by a high-powered committee.
· A separate Committee headed by the Cabinet secretary and comprising CEO, NITI Aayog, expenditure secretary and MeitY secretary will be set up in respect of mega projects, envisaging more than ?6,850 crore (about $1 billion) investments
Domestic manufacturing
· The MSIPS, aimed at boosting domestic electronic product manufacturing, was notified in 2012 for both new and expansion projects. The scheme provides for capital subsidy of 20-25%, besides reimbursement of countervailing duty/excise for capital equipment for non-SEZ units and also reimbursement of central taxes and duties for some of the projects with high capital investments.
8. Industry seeks foreign partners for trade
· India’s top industry bodies are attempting to build a coalition with counterparts in other nations with similar interests to give a fillip to the country’s proposal for a Trade Facilitation in Services (TFS) Agreement at the World Trade Organisation (WTO)-level.
· The proposed TFS pact
o Aims to make it easier for professionals and skilled workers to move across borders for short-term work,
o Ensure portability of their social security contributions.
· Two leading industry bodies — CII and FICCI — will next month hold a global seminar in Delhi and Mumbai on the topic.
· According to a ‘communication’ from India to the WTO in November 2016, “while services occupy a significant and growing share of domestic and international transactions, trade flows in services still remain subject to numerous border and behind-the-border barriers as well as procedural bottlenecks.
· “These impediments particularly limit the benefits of trade in services for small and medium enterprises as well as small exporters worldwide.”
Eliminating bottlenecks
· TFS Agreement will address the key issues pertinent to facilitating services trade, such as transparency, streamlining procedures, and eliminating bottlenecks.
· In brief, the TFS Agreement is aimed at ensuring that the market access arising out of existing as well as future liberalization commitments is effective and meaningful
9. Draft steel policy to enable Rs 10 Lakh crore investments'
· The Steel Ministry has proposed setting up greenfield steel plants along India’s coastline to tap cheap imported raw materials such as coking coal and export the output in a more cost-effective manner, as part of the new draft National Steel Policy of 2017.
· The policy envisages to more than double India’s domestic steel production capacity to 300 million tonnes by 2030-31, a requirement of ?10 lakh crore of fresh investments to meet that goal and expects at least 11 lakh new jobs being created in the process.
· The steel sector presently employs about 25 lakh people and has a capacity of little over 120 million tonnes.
· The draft policy lays out two alternatives of its vision —
o To create a globally competitive steel industry that promotes inter-sectoral growth” or
o To create a self-sufficient steel industry that is technologically advanced, globally competitive and promotes inclusive growth.
· Steel impediments like high input costs, availability of raw materials, import dependency and financial stress plaguing the sector will be taken care of.
· To cut down reliance on expensive imports of coking coal, the policy has mooted gas-based steel plants and technologies such as electric furnaces to bring down the use of coking coal in blast furnaces.
PSU units
· Public sector firms in the steel sector should aim for economies of scale and will be encouraged to divest their non-core assets through mergers and restructuring, according to the policy.
· Establishment of steel plants along the coast under the aegis of Sagarmala project will be undertaken.
· Such plants would be based on the idea of importing scarce raw materials and exporting steel products
· A cluster-based approach will be pursued, especially for micro, small and medium enterprises to ensure optimum land use, easy availability of raw materials and economies of scale.
