26 Aug 2022: UPSC Exam Comprehensive News Analysis

E. Editorials

Category: ECONOMY

1. ‘Freebies’, a judicial lead and a multi-layered issue

Syllabus: Indian Economy and issues relating to planning, mobilization, of resources, growth, development 

Mains: Issue associated with the grant of subsidies and tax preferences

Context: As the debate over the “freebies” culture has gained momentum in India, there have been questions about the economic rationale of granting subsidies and the issue of tax preferences.

Background

For detailed background about the issue refer to the following article:

UPSC Exam Comprehensive News Analysis dated 19 Aug 2022

Subsidies and concerns over the grant of subsidies 

• According to World Trade Organization’s Agreement on Subsidies and Countervailing Measures (ASCM), a subsidy is said to be granted if there is a financial contribution by a government wherein,
  • If the government’s measure involves a direct transfer of funds. 
    • Example: through grants, loans or equity infusion
  • If the government’s revenue that is due is foregone or not collected
  • If a government provides goods or services
• Further, subsidies also involve any form of income or price support extended by the government. 
• The aspect of “tax exemption” included in the definition of subsidies has been debated extensively.
• The government through a document/statement called “Revenue Foregone under the Central Tax System” in the Union Budget from 2006-07 gave insights about the grant of direct subsidies and transfer payments. 
  • However, from 2015-16, the term “Revenue Foregone” was replaced and the document in the Union Budget was renamed “Statement of Revenue Impact of Tax Incentives under the Central Tax System”.
• With the debate over “freebies” in the limelight, the market fundamentalists have raised concerns over the grant of various subsidies and opine that subsidies are undesirable for the growth of an economy as they have poor outcomes.
• Critics feel that the subsidies result in the wastage of resources.

Issue of tax preferences

• Tax policy encompasses various aspects such as special tax rates, exemptions, deductions, rebates, deferrals, and credits which are called “tax preferences”.
• Tax preferences have a significant impact on the overall level and distribution of tax.
• Such tax preferences are a part of both direct and indirect tax policies for extending specific benefits which are required to ensure the greater public good.
  • Example: the Income Tax regime contains various tax preferences to enhance the savings of individuals, improve exports from the country, promote R&D, etc.
• However, in the backdrop of debate over the grant of subsidies, such tax preferences are also considered to be indirect subsidies extended to certain individuals.
• The extent of revenue foregone with respect to direct taxes was highlighted by a report of the Comptroller and Auditor General of India (CAG) in 2016 which indicated that the extent of revenue foregone in 2010-11 was close to 21% of direct tax revenue.
  • Later it was reported that the extent of revenue foregone had increased to 22% of tax revenue in 2019-20.
• In recent years, corporations have been enjoying higher benefits of tax preferences and low tax rates as compared to individuals. 
  • Further, such benefits extended to corporations have not translated into higher private investment as expected and hence few experts call it “freebies”.

Way forward

• The author points out a severe decline in the investment by the government in sectors such as agriculture, public health and education in the last 30 years.
  • Expenditure on public health has been around 1.5% of GDP, which is very less compared to other major economies.
  • With respect to education, the government has failed to implement the Kothari Commission’s recommendations (1966) of increasing investments to 6% of the national income as soon as possible.
  • Investments in agriculture stood at 10% in 2000-01 which has been reduced by nearly half in recent years.
• The author feels that the focus on public health and education has been diluted to create opportunities for private players.
• There is an immediate need for the government to increase its investments in key sectors like agriculture, public health and education despite increased criticism of its policies of granting subsidies as these sectors are crucial in ensuring overall welfare.

Nut graf: The support or subsidies extended by the government in order to protect lives and livelihoods cannot be termed as “freebies”.

Category: INTERNATIONAL RELATIONS

1. Should India change its policy on the Rohingya?

Syllabus: Effect of Policies & Politics of Developed & Developing Countries on India’s Interests

Mains: India’s refugee policy and the issues with its policy on Rohingya refugees

Context: Recently the Union Government reiterated that its policy on the Rohingya refugees in the country will not change and termed them “illegal foreigners”.

Background

For detailed background about the issue refer to the following article:

UPSC Exam Comprehensive News Analysis dated 21 Aug 2022

India’s policy on Rohingya refugees

• Despite not being a signatory of the UN Refugee Convention, India has practised a humane approach while handling refugees from Tibet, Sri Lanka, Afghanistan, Bhutan and Myanmar.
• However, critics feel that the Rohingya refugees have been handled differently due to various political and security reasons.
• India like various other countries has serious concerns about international Islamist terrorism and Rohingya refugees are linked with various Pakistani and international terror groups. Hence there is greater sensitivity in India about Rohingya refugees.
• Experts feel that the introduction of the Citizenship (Amendment) Act has also resulted in the differential treatment of Rohingya refugees.

Treatment of refugees by other governments

• Many countries which have been signatories to the UN Refugee Convention also do not follow the accepted international standards and policies.
  • This was seen in the handling of refugees from Ukraine, Afghanistan and Syria.
• Discriminatory treatment of refugees is seen even in developed countries like the US and other European countries.
• The discrimination against the Rohingya in Myanmar is mainly because of their South Asian ethnicity.
• There are only about 40000 Rohingya refugees in India, whereas there are lakhs of refugees in countries like Bangladesh, Saudi Arabia, Pakistan and Malaysia where they are even more ill-treated.
  • Hence it is not correct to accuse only India of mistreatment of these refugees.

Path ahead for India

• Considering the security interest of India in Myanmar and its hostile neighbourhood, it is natural that India has prioritised its national interest. 
  • Further, it has been difficult for the Indian government to deal with the military regime in Myanmar. 
• India has to make sure that it follows fair and non-discriminatory practices while deporting such refugees back to their countries.
• Experts feel that India would not sign any of the instruments or conventions on refugees even in the future because of the nature of their origin, and the fact that they are discriminatory.
• Further, experts also feel that the political scenario in India also makes it difficult to formulate any refugee laws or legislation.

Nut graf: India which follows the principle of “vasudhaiva kutumbakam” must ensure that the deportation exercise of the Rohingya migrants must be carried out fairly and that the Rohingya are treated without any discrimination and provided with better living conditions until they return home.

Category: SOCIAL JUSTICE

1. Rainbow of hope

Syllabus: Mechanisms, laws, institutions and Bodies constituted for the protection and betterment of vulnerable sections

Mains: India’s refugee policy and the issues with its policy on Rohingya refugees

Context: Based on the recommendations of the Madras High Court, the Tamil Nadu government has issued a glossary of terms to address the individuals of the LGBTQIA+ community.

LGBTQIA+ communities The LGBTQIA+ community is a diverse group with varying sexual orientations and gender identities, including Lesbian, Gay, Bisexual, Transgender, Queer, Intersex, Asexual and other individuals.

Details

• The terms released by the Department of Social Welfare and Women Empowerment of Tamil Nadu include:
  • Paal pudhumaiyar for queer
  • Maruviya paalinam for transgender
  • Idaippaal for intersex
  • Paalina adaiyaalangaludan oththupogaathavar for a gender non-conforming person
• A few groups opine that the term “thirunar” should have been used for transgender which has been in use.
• Further, the Madras High Court had issued various guidelines and directed the police, and social welfare ministries of both Union and states, to ensure the safety of the community.
• Activists feel that such a glossary of terms should be flexible to accommodate the evolving changes of conversation around gender and sexuality and hope that such nomenclatures will not exclude those individuals who fall outside the generalisation of the benefits.

Read more about – Status of the LGBTQIA+ community in India in CNA dated July 8, 2022

Nut graf: The latest move by the Tamil Nadu government to bring in inclusiveness in language for addressing the LGBTQIA+ community is said to be a significant step towards ensuring the self-respect of the individuals from the community.