06 Feb 2022: UPSC Exam Comprehensive News Analysis

CNA 06 Feb 2022:- Download PDF Here

TABLE OF CONTENTS

A. GS 1 Related
B. GS 2 Related
POLITY AND GOVERNANCE
1. Many Seats redrawn in J&K delimitation draft
C. GS 3 Related
AGRICULTURE
1. Centre to form FPOs with small farmers
D. GS 4 Related
E. Editorials
ECONOMY
1. Crypto riddle: tax first, recognition later?
2. When will new Vande Bharat trains be launched?
INTERNATIONAL RELATIONS
1. Why are India’s imports from China rising?
F. Prelims Facts
1. Wildlife migration to Wayanad sanctuary begins
2. Committed to ending inequalities: PM
3. Sariska wears the stripes of success
4. In China, Olympics fuels winter sports boom
5. Antarctic microbes may help in plastic clean-up
G. Tidbits
H. UPSC Prelims Practice Questions
I. UPSC Mains Practice Questions
FIP Magazine

E. Editorials

Category: ECONOMY

1. Crypto riddle: tax first, recognition later?

Syllabus: Issues relating to mobilization of resources

Mains: Taxation on virtual digital assets and the government’s stand on its recognition.

Context

In the Budget speech, the Finance Minister introduced a 30% tax on income earned from the transfer of virtual digital assets.

Reason for introduction of taxation

  • The Government has not yet recognised or regulated cryptocurrencies in India, including Bitcoin and Ethereum. But despite this, people continue trading in digital assets in large numbers. 
  • This forced the Government to come up with a tax regime on such transactions.

Tax Regime on Virtual Digital Assets

  • The Budget proposed a 30% tax on income from the transfer of any virtual digital asset.
  • Except for the cost of acquisition, no deduction will be allowed.
  • Losses from such transfers cannot be set off against any income.
  • Tax will be deducted at the source at the rate of 1%, to capture transaction details, therefore initiating a tax deducted at source (TDS) mechanism.

India’s approach to cryptocurrencies

  • The fact that transactions using cryptocurrencies can bypass the tax net, and be used for illicit business, has bothered governments across the world.
    • The Government and the Reserve Bank of India have warned people against considering cryptocurrencies as legal tender.
  • In 2018 the RBI directed banks not to provide services to the cryptocurrency ecosystem. 
    • The Supreme Court squashed the move calling it disproportionate, as such currencies are not banned in the country.
  • The 2019 report by an inter-ministerial committee recommended a ban on all cryptocurrencies. A law on cryptocurrencies was to be brought in 2021 that has been delayed.
  • Despite all this, there has been a phenomenal increase in transactions in virtual digital assets.
    • The magnitude and frequency of these transactions have made it essential to provide a specific tax regime.

Crypto industries’ view

  • All major players in the ecosystem have welcomed the move. 
  • It is said to be a move that provides clarity and mainstream to the industry. 
  • The industry feels that the proposed legislation confirms that virtual digital assets are legal in India.
  • The industry plans to discuss with the Government to bring down the tax rate on par with other assets.

Does taxation guarantee legalization of cryptocurrencies?

  • Statements by the government and bureaucrats post the Budget suggest that the legality of cryptocurrencies in the country is still uncertain.
  • In the judgment of Commissioner of Income Tax, Gujarat v/s SC Kothari case, the court had observed that “if the business is illegal, neither the profits earned nor the losses incurred would be enforceable in law. But, that does not take the profits out of the taxing statute.”
  • The Finance Secretary said, “It’s not illegal to buy and sell crypto, but the government has put in a taxation framework that treats crypto assets in the same way it treats winnings from horse races, or bets and other speculative transactions.”
  • The Finance Minister also seemed to divorce the taxability issue from the legitimacy issue.
    • She said that there is nothing that can stop a sovereign Government from taxing an activity. Banning or not banning will be decided when the consultations give inputs. Legitimate or not legitimate is a different question, taxing is completely within her powers.
Nut Graf

Though the taxation regime on virtual digital assets has been a welcome sign, there is a need for recognition and regulation of such assets that help unlock new avenues of wealth creation.

2. When will new Vande Bharat trains be launched?

Syllabus: Infrastructure: Railways

Prelims: Facts related to Vande Bharat Trains

Mains: Role of Vande Bharat Trains in improving Railways in India.

Context:

The Union Budget for 2022-2023 has proposed the development and manufacture of 400 new Vande Bharat trains in the next three years.

Vande Bharat Trains

  • The Vande Bharat train is an indigenously designed and manufactured semi high speed, self-propelled train that is endorsed as the next major leap for the Indian Railways.
  • The trains, that were called Train 18 during the development phase, operate without a locomotive and are based on a propulsion system called distributed traction power technology.
  • The Vande Bharat coaches include on-board WiFi entertainment, GPS-based passenger information system, CCTVs, automatic doors, rotating chairs and bio-vacuum toilets.
  • The first train was manufactured by the Integral Coach Factory (ICF), Chennai, in 18 months as part of the ‘Make in India’ programme, with a cost of about ₹100 crores.
  • The train has a passenger-carrying capacity of more than 1,100 people. 
  • Currently, two Vande Bharat Expresses are operational; one between New Delhi and Varanasi and the other from New Delhi to Katra.

The significance of Vande Bharat Trains

  • It can achieve a maximum speed of 160 km/h due to faster acceleration and deceleration, reducing journey time by 25% to 45%. 
  • It has an intelligent braking system with power regeneration for better energy efficiency thereby making it cost, energy and environment efficient. 
  • The Vande Bharat is India’s first attempt at train set technology. The train set configuration, though complex, is faster, easier to maintain, consumes less energy, and has greater flexibility in train operation, according to the Indian Railways.

Performance of Vande Bharat Trains

  • Occupancy and earnings trends of Vande Bharat trains in the pre-pandemic years suggest good revenue potential.
  • According to experts, 400 trains would cover about 60-70% of the railways. 
  • The new semi-high speed trains with greater comfort will help get back passengers that are lost to roadways and low-cost airlines.
Vande Bharat Express trains occupancy

Image source: The Times of India

Vande Bharat Express trains earnings

Image source: The Times of India

Current status of Vande Bharat Trains

  • In August 2020, Hyderabad-based Medha Servo Drives Ltd. won the contract for designing and manufacturing the propulsion, control and other equipment needed to make the 44 train sets. 
  • The rakes or train sets would be manufactured at three production units; 24 rakes at ICF, Chennai and 10 rakes each at the RCF Kapurthala and the Modern Coach Factory, Raebareli. 
  • The Railways Minister said that designing for version 2.0 of these trains has been completed and that testing was expected to commence from April 2022.
  • The design updates in the upcoming trains would focus on the safety and comfort of the passengers, including reduced noise and vibration levels. 
  • The Railways is also said to be considering the use of aluminium instead of steel in the construction of the coaches as this would help make the trains much lighter thereby improving energy efficiency, and also making the trains faster.
Nut Graf

The plan of introducing 400 semi-high speed, next-generation Vande Bharat trains in the next three years is expected to achieve the objectives of the Railways to improve railway finances, operational efficiency along with ensuring better energy efficiency and passenger experience.

Category: INTERNATIONAL RELATIONS

1. Why are India’s imports from China rising?

Syllabus: India and its neighbourhood-relations.

Mains: Trends in India-China Trade Relations

Context

Trade figures released recently suggested that the imports from China have continued to increase after a fall in trade in 2020 due to the pandemic. 

Also read – CNA – 23 January 2022: India’s reliance on Chinese goods surged in 2021.

Trade with China in 2021

  • According to China’s General Administration of Customs (GAC), India’s trade with China in 2021 reached $125.6 billion, crossing the $100 billion mark for the first time.
  • India’s imports from China accounted for $97.5 billion, while exports reached $28.1 billion.
  • Compared to 2019 the trade declined substantially in 2020 because of the pandemic, this magnifies the year-on-year increase,
    • Imports from China are up 30%. 
    • Exports to China, up by 56%. 
    • The trade deficit, a long-term source of concern for India, is up by 22% since 2019.

India’s Imports from China

  • India’s imports from China include,
    • Electrical and mechanical machinery
    • Range of chemicals that are intermediate imports used by industries
    • Active pharmaceutical ingredients (APIs)
    • Auto components
    • Medical supplies
  • According to India’s Ministry of Commerce, all the above key imports continued to rise in 2021.
  • The total value of the top 100 import categories, each of which accounts for more than $100 million in imports, increased by $16 billion in the last year, reaching $45 billion. 
  • The top items include
    • Finished goods like, 
      • Integrated circuits (up by 147%)
      • Laptops and computers (up by 77%) 
      • Oxygen concentrators (up by four times)
    • Intermediate products like Chemicals (acetic acid up by eight times)

Analysis

  • Experts feel that India’s growing dependence on China for finished goods is a cause for concern. 
  • The rise in intermediate imports is, however, less of a concern as it is a sign of industrial recovery and greater demand for inputs. 
  • Indian exports to China have increased by more than 50% in the last two years. However, they are mostly raw materials such as ores, cotton and seafood, and not finished products. 
  • The five-year trend shows the trade deficit has continued to widen in favour of China. 
    • The deficit has grown from $51.8 billion in 2017 to $69.4 billion in 2021. 

Implications on India-China Relations

  • In the wake of the LAC crisis in April 2020, the Indian government said that business cannot be as usual, when there are tensions along the border. 
  • Investments from China in 2021 have dipped amid strict curbs. 
  • In the tech sector, the rapidly increasing Chinese investments in start-ups from tech giants such as Alibaba and Tencent has come to an abrupt halt as more than 200 apps remain banned.
  • In the telecom sector, Chinese firms have been kept out of 5G trials in India. 
  • India has tightened scrutiny on Chinese firms in India, as it recently conducted tax investigations into companies like Xiaomi. 
  • China’s Ministry of Commerce called on India to “provide a fair, transparent and non-discriminatory environment for Chinese businesses”.
  • The trade pattern is unlikely to change drastically in the near future, even as India considers a long-term plan to reduce some of these import dependencies by accelerating plans to manufacture these critical goods in India or by sourcing them from other countries.

Also read: India – China relations

Conclusion

While trade between the countries continues to boom, other aspects of economic relations have dramatically changed. The prospects of the rest of the India-China economic relationship still remain uncertain as talks continue to resolve the tensions along the border.

Nut Graf

The rising trade despite the border crisis with China along the Line of Actual Control (LAC), does not suggest a return to normalcy in relations. Other areas, like investment, remain in a deep freeze amid the continuing tension in bilateral relations.

F. Prelims Facts

1. Wildlife migration to Wayanad sanctuary begins

Context: 

The seasonal migration of wild animals has begun from the adjacent wildlife sanctuaries in Karnataka and Tamil Nadu to the Wayanad Wildlife Sanctuary (WWS).

Wayanad Wildlife Sanctuary (WWS): 

  • Wayanad Wildlife Sanctuary is an integral part of the Nilgiri Biosphere Reserve. 
  • It is contiguous to the protected areas of Nagarhole and Bandipur of Karnataka on the north-east and Mudumalai of Tamilnadu on the south-east. 
  • Wayanad Wildlife Sanctuary is the second largest wildlife sanctuary in Kerala. 
  • It is part of the Deccan Plateau and the vegetation is predominantly of the south Indian moist deciduous teak forests.

2. Committed to ending inequalities: PM

Context:

A dedicated 216-foot-tall statue of Vaishnavite saint Sri Ramanujacharya was inaugurated at Muchintal in Telangana.

About Statue of Equality: 

  • The 216-feet tall Statue of Equality commemorates the 11th-century Bhakti Saint Sri Ramanujacharya, who promoted the idea of equality in all aspects of living including faith, caste and creed.
  • The Statue is made of ‘panchaloha’, a combination of five metals: gold, silver, copper, brass, and zinc and is among one of the tallest metallic statues in sitting position, in the world. 
  • It is mounted on a 54-feet high base building, named ‘Bhadra Vedi’.
  • The statue has been conceptualized by Sri Chinna Jeeyar Swami of Sri Ramanujacharya Ashram.

About Sri Ramanujacharya: 

  • Born in 1017 in Sriperumbudur in Tamil Nadu, Ramanujacharya is revered as a Vedic philosopher and social reformer. He traveled across India, advocating equality and social justice.
  • He had a vision towards Lord Vishnu and his consort Shri and instituted a daily worship ritual for them. He is known for his influential thinking towards devotional Hinduism. 
  • The great poet-saint Ramanuja was an eminent teacher and the founder of Vishishtadwaita. He was an expert in Vedic scriptures. 
  • According to the ancient scriptures, he lived for 120 years.
  • Ramanujacharya fought against social, cultural, gender, educational, and economic discrimination.
  • Several scholars followed his path and the works of many ancient poets like Annamacharya, Bhakta Ramdas, Thyagaraja, Kabir, and Meerabai were inspired by him.
  • He made education accessible to those who were the most deprived in those days and came up with the concept of Vasudhaiva Kutumbakam.
  • He is also believed to have taught about the protection of nature and its resources like air, water, and soil.
  • He opened the doors of temples to all people, including those subjected to extreme discrimination.
  • Shri Ramanujacharya wrote nine scriptures called Navaratnas and composed numerous commentaries on Vedic scriptures.

3. Sariska wears the stripes of success

Context: 

The tiger population in Sariska Tiger Reserve in Rajasthan has gone up to 25.

What Efforts Were Taken For Tiger Conservation?

  • As part of its corporate social responsibility expenditure, a foundation is funding the development of earthen bunds and water holes for wild animals at 10 locations and making livelihood interventions for the villagers, etc.
  • The grassland habitats developed in dry patches of land have helped ungulates to feed better, leading to enhanced feed for tigers.
  • Know More About Tiger Conservation in India.

Tiger Relocation

  • The tiger reserve witnessed the first-of-its-kind tiger relocation from the Ranthambore National Park by helicopter in 2008 after the felines became extinct in the sanctuary. 
  • At the Panna tiger reserve in Madhya Pradesh, similar aerial translocation was done in 2009.
  • Know more About Sariska Tiger Reserve.

4. In China, Olympics fuels winter sports boom

Context:

Beijing secured the distinction of becoming the first city to host both the summer and winter games.

About Winter Olympics:

  • The Winter Olympic Games is a major international multi-sport event held once every four years for sports practised on snow and ice. 
  • The first Winter Olympic Games, the 1924 Winter Olympics, were held in Chamonix, France.
  • The original five Winter Olympic sports were bobsleigh, curling, ice hockey, Nordic skiing and skating.

5. Antarctic microbes may help in plastic clean-up

Context: 

A team of Argentine scientists is using microorganisms native to Antarctica to explore the idea of cleaning up pollution from fuels and plastics.

How could the microbes help clean the plastic waste?

  • The cleaning process uses the potential of native microorganisms – bacteria and fungi that inhabit the Antarctic soil, even when it is contaminated.
  • The researchers helped the microbes with nitrogen, humidity and aeration to optimize their conditions.
  • Basically with that, we get the microorganisms to biologically reduce, with a very low environmental impact, the level of contaminants.

Madrid Protocol: 

  • The Protocol on Environmental Protection to the Antarctic Treaty (also known as the Madrid Protocol) provides for comprehensive protection of Antarctica.
  • The Protocol was adopted in 1991.
  • The Madrid Protocol unambiguously prohibits mining in Antarctica.

G. Tidbits

Nothing here for today!!!

H. UPSC Prelims Practice Questions

Q1. Tropic of Cancer passes through which of the following states in India?
  1. Gujarat
  2. Rajasthan
  3. Chhattisgarh
  4. Manipur
  5. Tripura
  6. West Bengal

Options:

  1. 1, 2, 3, 4 and 5 only
  2. 2, 3, 4, 5 and 6 only
  3. 1, 2, 3, 5 and 6 only
  4. 1, 4 and 6 only
CHECK ANSWERS:-

Answer: c

Explanation:

  • Tropic of Cancer is an imaginary line that is at an angle of 23.50 degrees. It is North of the Equator, which passes through the middle of India. 
  • The Tropic of Cancer passes through eight states in India:
    • Gujarat (Jasdan)
    • Rajasthan (Kalinjarh)
    • Madhya Pradesh (Shajapur)
    • Chhattisgarh (Sonhat)
    • Jharkhand (Lohardaga)
    • West Bengal (Krishnanagar)
    • Tripura (Udaipur)
    • Mizoram (Champhai)
  • Tropic of Cancer crosses Mahi River twice, first in Madhya Pradesh from where it flows towards Rajasthan and enters Gujarat where it cuts for the second time.
  • Hence Option C is correct.
Q2. Consider the following statements with respect to Dholavira:
  1. Dholavira’s location is on the Tropic of Cancer.
  2. It is located on Khadir Bet Island in the Kutch Desert Wildlife Sanctuary in the Great Rann of Kutch.
  3. It is the first site of the ancient Indus Valley Civilisation (IVC) in India to get the UNESCO World Heritage tag.

Which of the above statements is/are correct?

  1. 1 and 2 only
  2. 2 and 3 only
  3. 1 and 3 only
  4. 1, 2 and 3 
CHECK ANSWERS:-

Answer: d

Explanation:

  • Dholavira is a Harappan City in the Rann of Kutch in the state of Gujarat in western India.
  • Dholavira’s location is on the Tropic of Cancer. It is one of the five largest Harappan sites and most prominent archaeological sites in India belonging to the Indus Valley Civilization. Hence Statement 1 is correct.
  • It is located on Khadir Bet Island in the Kachchh Desert Wildlife Sanctuary in the Great Rann of Kachchh. Hence Statement 2 is correct.
  • Dholavira is the first site of the ancient Indus Valley Civilisation (IVC) in India to get the UNESCO World Heritage tag. Hence Statement 3 is correct.
Q3. Which Agreement/Convention is also described as a “Berne and Paris-plus” Agreement?
  1. Cancun Agreement
  2. Basel Convention
  3. TRIPS Agreement
  4. Abolition of Forced Labor Convention
CHECK ANSWERS:-

Answer: c

Explanation:

  • The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) came into force in 1995, as part of the Agreement Establishing the World Trade Organization (WTO).
  • The TRIPS Agreement introduces additional obligations in areas that were not addressed in these conventions or were thought not to be sufficiently addressed in them. 
  • The TRIPS Agreement is therefore sometimes described as a “Berne and Paris-plus” Agreement.
  • Hence Option C is correct.
Q4. With respect to the International Crops Research Institute for the Semi-Arid Tropics 
(ICRISAT), which of the following statements is/are correct?
  1. ICRISAT is an international organization that conducts agricultural research for development in Asia & sub-Saharan Africa.
  2. It is headquartered in Hyderabad.
  3. ICRISAT founded the Smart Food Initiative in 2013.

Options:

  1. 1 and 2 only
  2. 2 only
  3. 1 and 3 only
  4. 1, 2 and 3
CHECK ANSWERS:-

Answer: d

Explanation:

  • The International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) is a non-profit, non-political organization that conducts agricultural research for development in the drylands of Asia and sub-Saharan Africa. Hence Statement 1 is correct.
  • ICRISAT is headquartered in Hyderabad, Telangana State, in India. Hence Statement 2 is correct.
  • The Smart Food initiative was founded by the ICRISAT in 2013 with the vision to create a world where food is ‘Smart’. Hence Statement 3 is correct.
Q5. Consider the following Rivers:
  1. Brahmani
  2. Nagavali
  3. Subarnarekha
  4. Vamsadhara

Which of the above rise from the Eastern Ghats? PYQ (2021)

  1. 1 and 2
  2. 2 and 4
  3. 3 and 4
  4. 1 and 3
CHECK ANSWERS:-

Answer: b

Explanation:

  • The Eastern Ghats is a discontinuous range of mountains that run parallel to the eastern coast of India.
  • Rivers originating on the Eastern Ghats include:
    • Baitarani River
    • Budhabalanga River
    • Rushikulya River
    • Vamsadhara River
    • Palar River
    • Nagavali River
    • Champavathi River
    • Gosthani River

I. UPSC Mains Practice Questions

  1. Examine the rise and decline of the Islamic State as a ‘caliphate’. (250 words; 15 marks) GS II (IR)
  2. What is the debate around the legality of cryptocurrencies after the announcement of a 30% tax? Illustrate. (250 words; 15 marks) GS III (Economy)

Read the previous CNA here.

CNA 06 Feb 2022:- Download PDF Here

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