Comprehensive News Analysis - 27 October 2016

A. GS1 Related

Nothing here today folks!

B. GS2 Related

1. Implementation of Pradhan Mantri Ujjwala Yojana (PMUY)

Category: Centre plans and programs

Topic: Pradhan Mantri Ujjwala Yojana

Key Points:

• LPG distributors have raised serious concerns regarding the government’s haste in implementing the targets set under the Pradhan Mantri Ujjwala Yojana – PMUY. The scheme aims at providing poor households with LPG connections. According to the distributors, rushed implementation could compromise the safety of the recipients. The oil marketing companies have sent letters to the LPG distributors exhorting them to meet the PMUY targets without fail or face the consequences, pressure that the distributors say only adds to the safety hazard.

The Federation of LPG Distributors of India – FLDI said that the implementation of PMUY is being done in an unsafe manner, with poor households receiving LPG cylinders without knowing or implementing the safety procedures associated with them.

• The onus of providing the connections to the right households is on the distributors, who are provided with a list of eligible households from the Socio-Economic and Caste Census 2011 – SECC.

The Ministry of Petroleum and Natural Gas issued a statement highlighting the steps it had been taking to ensure the safety of the LPG cylinder recipients, saying that it has been providing safety handouts, safety briefings at the time of installation and has been organising safety melas and clinics to increase awareness.

2. Gender Gap Index – 2016

Category: International reports and indices

Topic:  WEF’s Gender Gap Index

Key Points:

• According to the WEF’s Gender Gap index – 2016,Efforts to close gender gaps in pay and workforce participation slowed so dramatically in the past year that men and women may not reach economic equality for another 170 years.Statistics just a year ago predicted the economic gap between genders could close in 118 years, but progress has decelerated, stalled or reversed in nations around the world.

• Iceland and Finland ranked highest among 144 nations measured on progress in equality in education, health and survival, economic opportunity and political empowerment. Next were Norway and Sweden, followed by Rwanda, which has improved economic participation and income equality and has the highest share of women parliamentarians in the world.

At the bottom – Yemen, then Syria, Saudi Arabia and Iran

• The report further said – in the political sphere, women’s engagement in public life has a positive impact on inequality across society at large. In addition, there is a range of evidence to suggest that women’s political leadership and wider economic participation are correlated.

Globally, the political gender gap is slowly but steadily improving. On the other hand, the economic gap this past year reverted back to where it was in 2008. It stands at 59 per cent, meaning women’s economic participation and opportunity is a little more than half of what men have. At the current rate, and given that the gap widened last year, women and men will not be equal economically for another 170 years.

• Around the world, 54 per cent of working-age women on average participate in the formal economy, compared with 81 per cent of men. Women’s average annual earnings are roughly half those of men, estimated at $10,778, versus $19,873. The gap between men and women in terms of education – literacy and school enrolment is so small that they could be at equal levels within the next 10 years. But closing the gap in political empowerment, at current rates, could take 82 years

3. India revises DTAA with South Korea

Category: India – South Korea bilateral

Topic: DTAA

Key Points:

• After Mauritius and Cyprus, India has revised double taxation avoidance agreement (DTAA) with South Korea, giving India the right to tax capital gains made from investment here subject to a threshold. Under the new treaty with South Korea, if the capital gains in India pertain to selling of shares up to five per cent of the paid-up capital, then it will be taxed in South Korea. If these are more than this level, the tax would be in India.

The move could set a standard for proposed revision of the India-Netherlands DTAA as well. Currently, the talks of India-Netherlands DTAA at 10 per cent threshold for capital gains to be taxed in India are on.

• Like Mauritius and Cyprus, capital gains provisions would also come into effect from April 1, 2017. While DTAA with Mauritius talks of only 50 per cent of capital gains tax of two years from April 1, 2017, and full tax afterwards, there is no such mention in India-South Korea Like every new DTAA, the one with South Korea also inserted the limitation of benefits clause to ensure the benefits of the agreement are availed only by the genuine residents of both the countries.

The revised DTAA also enables bilateral advance pricing agreements (APAs) between India and South Korea in transfer pricing. In bilateral APAs, the governments of both sides are involved along with companies concerned, while in unilateral agreement, it is only India and the company concerned. It would also enable both the countries to apply the mutual agreement procedure (MAP) in transfer pricing disputes. MAP is a mechanism laid down in tax treaties to ensure that taxation is in accordance with the tax treaty.

Further, the revised DTAA contains express provisions to facilitate exchange of information held by banks. Information exchanged under the revised DTAA can now be used for other law enforcement purposes with the authorisation of information supplying country.

4. India, New Zealand bilateral update

Category: Bilateral

Topic: India – New Zealand

Key Points:

• India and New Zealand reached an understanding on further cooperation on cyber-security, counter-terrorism, customs, education and food security. PM of New Zealand John Key repeated New Zealand’s consistent support for India to become a member of the reformed UN Security Council. New Zealand showed an understanding of India’s clean energy needs and the importance of predictability in global rules on nuclear commerce in enabling the expansion of nuclear energy in India indicating that India’s NSG membership application will hinge on its need to keep climate change commitments.

• The New Zealand PM’s visit comes in the run-up of a crucial NSG consultative Group meeting to be held in Vienna specifically to consider whether countries that haven’t signed Nuclear Non-proliferation treaty – NPT can be considered for membership. Mr. Key’s statement indicated that New Zealand is yet to change its hard-line position on only admitting signatories to the Non-Proliferation Treaty into the NSG, a group which works by consensus.

India’s membership bid failed to make headway in June, 2016 in Seoul, but the new South Korean Chairperson of the Group had mandated outgoing Argentine Chairperson Rafael Grossi to speak to all NSG members to discuss the way forward so that India’s case could be taken up later this year.

C. GS3 Related

1. India will be home to 10500 start-ups by 2020

Category: Economy

Topic: Start-ups

Key Points:

• According to a Nasscom – Zinnov start-up report, Indiacontinues to harbour the third largest start-up base, marginally behind the U.K. The report, titled Indian Start-up Ecosystem Maturing – 2016, says that the ecosystem is poised to grow by an impressive 2.2 times to reach more than 10,500 start-ups by 2020 despite the popular belief that the Indian start-up ecosystem is slowing down.

• According to the report there is an increased interest from student entrepreneurs in 2015-16. A remarkable growth of 25 per cent has been witnessed in 2016 with over 350 ventures founded by young students. The median age of start-up founders has reduced marginally from 32 years in 2015 to 31 years in 2016. Technology start-ups are creating a new identity for India and its technological process.

The report demonstrates continued growth in the number of start-ups in 2016, with Bengaluru, the National Capital Region, and Mumbai continuing to lead as major start-up hubs for the nation. In terms of vertical growth, investors are looking at the domains like health-tech, fin-tech, and edu-tech. With a total funding of approximately $4 billion, close to 650 young firms were funded signifying an aware and healthy growth of the ecosystem.

• The number of technology firms in India is expected to grow by 10-12 percent to over 4,750 start-ups by the end of 2016. Interestingly over 1400 new ventures have emerged in 2016 denoting that the ecosystem is becoming prudent with both investors and start-up founders focusing on profitability and optimising the overall spend.

2. Cyclone Kyant

Category: Disasters

Topic: Cyclone

Key Points:

• According to the India Meteorological Department (IMD), Cyclone Kyant is expected to make landfall over south coastal Andhra Pradesh. IMD further said due to the influence of the cyclone, the North-East monsoon is expected to settle over the Southern part of the Peninsula by October 30, after being delayed by at least 10 days.

The IMD said the conditions would become favourable for the exit of the South-west monsoon remnant and the simultaneous onset of the North-East monsoon during this phase.

• Kyant is seen hitting the home stretch towards the south Andhra Pradesh coast just to the north of Chennai, as depicted by wind field maps plotted by the India Met Department. It sees the storm washing over south Andhra Pradesh with no more than a whimper, but, importantly, setting up the platform for the North-East monsoon.

Sea conditions will be ‘rough’ to ‘very rough’ along and off South Odisha and along and off the Andhra Pradesh coast.

3. India to have 1 billion mobile subscribers by 2020

Category: Economy

Topic: GSMA

Key Points:

• According to the report ‘The Mobile Economy: India 2016’, released by Global System for Mobile communications Association- GSMA, India is expected to have 1 billion unique mobile subscribers by 2020 due to falling prices of devices and network coverage improvement.

• According to the report, at the end of June 2016, 616 million unique users had subscribed to mobile services in India, making it the second-largest mobile market globally. Almost half the country’s population now subscribe to a mobile service. Improving affordability, falling device prices and better network coverage aided by operator investment will help deliver over 330 million new unique subscribers by 2020, taking the penetration rate to 68 per cent – up from 47 per cent in 2015.

The GSMA counts as unique mobile subscriber an individual, who may be using multiple mobile connections (SIMs)

4. Fin.min said ACs, chappals can’t attract the same GST rate

Category: Economy

Topic: GST

Key Points:

• Finance Minister Arun Jaitley explained the rationale behind the GST Council’s suggestion of four GST rates, writing that different items used by different segments of society have to be taxed differently. Otherwise the GST would be regressive – air conditioners and hawai chappals cannot be taxed at the same rate.

Total tax eventually collected has to be revenue neutral. The Government should not lose money necessary for expenditure nor make a windfall gain.

• He further said the decision to retain some cess, such as the clean energy cess and the tobacco cess was to make good Centre’s commitment to compensate states for any loss of revenue that may arise from the implementation of GST for the first five years.

“The tax on some products in a narrow slab regime will substantially increase,” the Finance Minister added. “This would be highly inflationary. A commodity being taxed by the Centre and the State at 11 per cent at present will be taxed at 12 per cent. If its taxation is suddenly raised on standard rate of 18 per cent, it would disrupt the market and would be highly inflationary.”

• Debt issue – Mr Jaitley said that increasing direct taxes or the Centre’s debt in order to pay states the compensation for the first five years of GST implementation was not feasible.

D. GS4 Related

E. Important Editorials: A Quick Glance

1. Running to stand still

• As proof of its commitment to economic renewal, the Narendra Modigovernment had set itself the target of breaking into the top 50 in the World Bank’s annual ranking of countries on ease of starting and operating a for-profit enterprise. That the Bank in its Doing Business 2017 report now ranks India 130 among 190 countries, just one notch higher than last year, is therefore likely to be taken as a signal of the snail’s pace of economic reform. This too when competition is hotting up.

• Seventy-five per cent of the 283 reforms reported this year were carried out by the developing economies, and the world’s ten best improvers include Pakistan, Kazakhstan, Serbia, Kenya and Indonesia. The report notes that the BJP-led government was elected in 2014 on a platform of increasing job creation, mostly through encouraging investment in the manufacturing sector. While it has left out labour regulations from this year’s index, the Bank acknowledges India’s gains in simplifying tax payments, trade procedures and contract enforcement (though it still ranks a low 172 on this front).

• Most heartening is that India is now the 26th easiest place to get an electricity connection, up 25 places from last year. The average time taken to get a connection has come down from 138 days in 2013-14 to 45 days in 2015-16. Besides, transformative changes such as the proposed Goods and Services Tax and insolvency and bankruptcy norms, if implemented by June next year, could propel India higher in the Bank’s next report.

• For its part, the government has argued that the Bank only focusses on two big cities while reforms are happening across States. But that, in fact, frames a larger problem because with an eye on the index officials had focussed on simpler procedures in Mumbai and Delhi.

• By May this year, an e-biz platform allowed investors to apply for 20 Central government services online, along with two services in Delhi and 14 each in Odisha and Andhra Pradesh. In Maharashtra, a $5-billion investment announced by Foxconn remains on paper. Other BJP-run States had, in fact, not signed up. Certainly, investment (and job creation) is not driven by rankings alone. In his first year in office, the Prime Minister had assured investors that the government had no business being in business, retrospective taxes would be relegated to history and land acquisition norms simplified.

• There is little movement on the first, and the third has become history. Old retrospective tax demands linger, while new instances (pertaining to bonus payments and mining royalties) are being battled in the courts. Losing its credibility with global capital should be a far bigger worry for the government than a World Bank endorsement.

F. Concepts-in-News: Related Concepts to Revise/Learn:

• LPG reforms
• DTAA – Double Taxation Avoidance Agreement
• NSG
• Gender Gap report
• Ease of doing business index
• Disasters – Cyclones
• Goods & Services tax

G. BILLS/ACTS/SCHEMES/ORGS IN NEWS

Pradhan Mantri Ujjwala yojana – PMUY

Global system of mobile operators association – GSMA

H. Fun with Practice Questions 🙂

Question 1: Which country topped the WEF’s Gender Gap index – 2016 for having least Gender Inequality in various spheres?

Question 2: With which of the following countries, India recently revised the Double Taxation Avoidance Agreements – DTAA to levy Capital Gains tax?

Question 3: Which of the following statements are correct regarding the Pradhan Mantri Ujjwala Yojana?

Question 4: Which of the following cyclone was in news recently over Bay of Bengal, IMD said it is likely to have a mild impact on Gopalpur, Vishakhapatnam and Machilipatnam?

Question 5: According to a Nasscom - Zinnov start-up report, which city is the major start-up hub for the nation?

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