CNA 7 Feb 2020:- Download PDF Here
TABLE OF CONTENTS
A. GS 1 Related SOCIAL ISSUES 1. Panel suggests steps to curb child porn B. GS 2 Related POLITY AND GOVERNANCE 1. Omar Abdullah, Mehbooba Mufti booked under Public Safety Act 2. Centre persists with ‘toothless’ pharma codes INTERNATIONAL RELATIONS 1. Senate acquits President Donald Trump 2. India to study air corridors for trade with Central Asian countries 3. India, African countries resolve to fight terror C. GS 3 Related ECONOMY 1. Rates to fall despite RBI’s status quo 2. RBI extends deadline for one-time debt recast for MSMEs D. GS 4 Related E. Editorials POLITY AND GOVERNANCE 1. Custodial Deaths 2. For a data firewall: On need for a data protection law ECONOMY 1. Listening to the call of the informal 2. Complicating the tax regime further F. Tidbits 1. India to work with Russia on copters G. Prelims Facts H. UPSC Prelims Practice Questions I. UPSC Mains Practice Questions
A. GS 1 Related
A parliamentary panel has recommended a code of conduct for Internet service providers (ISPs) and strengthening the National Commission for Protection of Child Rights to curb child pornography.
- The report was prepared by an ad hoc committee set up by the Rajya Sabha and led by Congress MP Jairam Ramesh.
- The committee has delved into great detail in using technology to curb circulation of child porn such as:
- Breaking end-to-end encryption to trace its distributors of child pornography.
- Mandatory applications to monitor children’s access to pornographic content.
- Employing photo DNA to target profile pictures of groups with CSAM.
- The report recommends a multi-pronged strategy detailing technological, institutional, social and educational as well as State-level measures.
- Among its key recommendations is a code of conduct or a set of guidelines for ensuring child safety online.
- It puts a greater onus on ISPs to identify and remove child sexual abuse material (CSAM) as well as report such content and those trying to access them to the authorities under the national cybercrime portal.
- It has also called for strengthening the National Commission for Protection of Child Rights (NCPCR) so that it can serve as the nodal body for curbing child pornography. It is suggested that the capabilities required in the NCPCR should include technology, cyberpolicing and prosecution.
- Some of the recommendations are expected to lead to concerns over privacy and misuse.
- It is believed that asking ISPs to report content in addition to blocking and filtering may not be practical.
- It is opined that the suggestion to break encryption could also just lead to traffic moving to different platforms.
There is a need to develop a victim-centric strategy instead of just focusing on prosecution.
B. GS 2 Related
The Jammu and Kashmir administration has booked former Chief Ministers Mehbooba Mufti and Omar Abdullah under the Public Safety Act (PSA).
Public Safety Act has been comprehensively covered in the 17th September 2019 Comprehensive News Analysis. Click here to read.
Despite several instances of breach of the voluntary Uniform Code of Pharmaceutical Marketing Practices (UCPMP) by pharma companies, and the demand from the Indian Medical Association (IMA) and doctors to make it mandatory, the Department of Pharmaceuticals (DoP), which comes under the Ministry of Chemicals and Fertilizers, has yet again requested companies to abide by UCPMP.
- It is noted that rather than taking steps towards instituting statutory regulation of unethical marketing and promotion, the DoP is still requesting companies to abide by a toothless, unenforceable UCPMP.
- Pharma associations are requested to make sure that the pharma accompanies adhere to the provisions of UCPMP and no unethical promotion of pharma products be done during the conference.
- DoP is yet to make compliance under the UCPMP compulsory.
Uniform Code of Pharmaceutical Marketing Practices (UCPMP):
- India does not have a specific law at present that regulates the promotion and marketing of drugs and medical devices by companies before health care practitioners (HCPs).
- Advertisement of drugs and medical devices to end consumers, on the other hand, is heavily regulated.
- The Central Government had published a set of guidelines in December 2014 called Uniform Code of Pharmaceutical Marketing Practices (UCPMP) as guidance to the industry for promotion and marketing of drugs and medical devices. However, these guidelines are voluntary and do not have the force of law, at present.
- The government is contemplating a separate code for the promotion of medical devices called the Uniform Code for Medical Device Marketing Practices (UCMDMP). However, the code has not yet been finalized.
- Until UCMDMP is officially published, the UCPMP should be treated as the official guidance for the promotion of medical devices by medical devices companies.
U.S. President Donald Trump, impeached by the House of Representatives, has been acquitted by the Senate, bringing to a close, the impeachment process.
This issue has been covered in the 26th September 2019 Comprehensive News Analysis. Click here to read.
To know more about the Impeachment of the U.S. President, watch Explained: How the US President can be impeached.
The External Affairs Minister has said that, apart from developing trade via the Chabahar port in Iran, India would like to explore setting up “air corridors” between India and five Central Asian nations.
- The air corridors — similar to what India established in 2018 with Afghanistan — would include regular cargo flights with special clearing and customs facilities to expedite the movement of goods, especially fresh fruit and other agricultural produce.
- The air corridors are currently being discussed. The India Central Asia Business Council has brought together Indian businessmen and diplomats from five Central Asian countries: Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan.
- The India Central Asia Business Council is being set up by the Federation of the Indian Chambers of Commerce and Industry (FICCI).
- At present, most of the trade between Central Asia goes via Bandar Abbas in Iran, northern Europe or China.
- In recent years, the government has been seeking to develop more direct routes from Chabahar, a trilateral arrangement with Iran and Afghanistan, the International North South Transport Corridor (INSTC) and becoming a part the Ashgabat Agreement.
- However, the rail-link between Chabahar and the crossover into Afghanistan is yet to be developed, which would be an important part of growing regular trade.
Importance of air corridors with the five Central Asian countries:
- It is believed that it is a matter of concern that a lack of overland connectivity (a reference to barriers to transit trade through Pakistan) has kept the total trade between India and Central Asia quite low at approximately $2 billion per year.
- India has made progress in overcoming this challenge through the Chabahar route.
- India, Iran and Afghanistan believe that Chabahar will become the fulcrum of connectivity for Indian goods to reach Afghanistan and further north to Central Asian states, and for the landlocked Central Asia to find access to the ocean through this port.
- Union budget 2020-21 has announced a Rs. 100 crore investment to develop the Iranian port.
- While flying time from Delhi for most of the Central Asian destinations is two hours, it may take two months for containers sent overland from India to reach these places.
- The availability of air corridors can boost trade in perishable goods, agricultural and food products.
- Apart from connectivity, visa procedures need to be streamlined further in order to grow services, especially medical tourism that brings hundreds of patients from Central Asia to India each year.
- Efforts are needed to further boost trade in energy, agro and food processing, tourism and pharmaceuticals.
India and several African countries have pledged to deepen cooperation to combat the growing threat of terrorism and preserve maritime security by sharing information, intelligence and surveillance, in a joint deceleration adopted at the first India – Africa Defence Ministers’ conclave at the Defexpo 2020.
- The dialogue was attended by 12 Defence Ministers and 38 countries were represented at the Conclave.
- The Lucknow Declaration said “We condemn, in the strongest terms, the growing threat of terrorism and acknowledge that it constitutes a major threat to peace and security in the region. We urge all countries to take resolute action in rooting out terrorism in all forms and manifestations, terrorist safe havens and infrastructure, disrupting terrorist networks and eliminating financing channels and halting cross-border movement of terrorists. We understand the need for all countries to ensure that all territory under their control is not used to launch terrorist attacks on other countries in any manner,” emphasising the need for stronger international partnership in countering terrorism and violent extremism, including through increased sharing of information and intelligence.
- The Declaration also called for strengthening the UN Counter-Terrorism mechanisms and to ensure strict compliance with the UN Security Council sanctions regime on terrorism.
- The Declaration said that it seeks to increase cooperation in securing sea lines of communication, preventing maritime crimes, disaster, piracy, illegal, unregulated and unreported fishing through sharing of information and surveillance.
C. GS 3 Related
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has decided to keep the interest rates unchanged in the wake of a rise in inflation, but emphasised that there would be space for a rate reduction.
- This is the second straight policy review meeting where the rates have been kept unchanged.
- The RBI Governor asserted that it has to be kept in mind that RBI has several instruments that can be deployed to address the challenges that the economy faces in terms of the sluggishness in the growth momentum.
- The central bank took two measures that could ease lending rates further.
- It opened a window to extend Rs. 1 lakh crore to the commercial banks at the repo rate, which is 5.15%.
- Banks have been exempted from maintaining the Cash Reserve Ratio (CRR) — which is 4% of the net demand and time liabilities now — for home, auto and MSME loans that are extended from January 31 to July 31, 2020.
- It is believed that CRR exemption for incremental lending to auto, housing and MSMEs is a good way to channelize credit to areas where demand has not met commensurate supply.
- RBI said they will conduct Long Term Repo Operation (LTRO) from the fortnight beginning on February 15, at the policy rate.
- Under LTRO, RBI will conduct term repos of one-year and three-year tenors of appropriate sizes for up to a total amount of Rs 1 lakh crore at the policy repo rate.
- It is a measure that market participants expect will bring down short-term rates and also boost investment in corporate bonds. These new measures coupled with RBI’s earlier introduced ‘Operation Twist’ are an attempt by the central bank to manage bond yields and push transmission of earlier rate cuts.
- While the RBI has decided to keep rates unchanged during the sixth bimonthly review of the monetary policy, it has taken steps to lower interest rates in the economy.
- The RBI reduced the rates by 135 bps between February and October 2019. Banks have so far cut rates by 69 basis points following RBI’s 135-bps reduction.
- The Reserve Bank is actively engaged in revitalising the flow of bank credit to productive sectors having multiplier effects to support impulses of growth.
- Since June 2019, the RBI has ensured that comfortable liquidity is available in the system in order to facilitate the transmission of monetary policy actions and the flow of credit to the economy.
The graph shows the change in repo rate and lending rates on fresh loans by commercial banks.
- The RBI’s statement that it would maintain an accommodative stance “as long as necessary to revive growth” clearly signals its commitment to growth. By explicitly saying that there is “policy space available for future action”, the RBI has signalled that there could be at least one more cut in the months ahead in this rate-easing cycle.
- Whether banks really do what the RBI has signalled to them (transmit lower rates to borrowers) depends on various factors, not the least of which is demand for credit.
- The decision to extend the one-time restructuring of MSME loans, linking pricing of loans to medium enterprises to an external benchmark, and the nod for permitting extension of date of commencement of commercial operations for loans to commercial real estate are all welcome measures that raise questions of excessive forbearance but will certainly help the industry.
- The projected GDP growth of 6% for 2020-21 appears achievable, assuming that the nascent signs of recovery sustain. The RBI has gone on the front foot to boost growth in this policy. It is to be hoped that these steps will change the sentiment in the economy.
The Reserve Bank of India (RBI) has extended the deadline for one-time debt recast for firms in the micro, small and medium enterprises (MSME) sector that are in default but have not been classified as non-performing.
- It has been decided to extend the benefit of one-time restructuring without an asset classification downgrade to standard accounts of GST-registered MSMEs that were in default as on January 1, 2020.
- The original scheme was applicable for standard MSME accounts as of January 1, 2019, while the restructuring was to be implemented by March 31, 2020.
- The restructuring under the scheme has to be implemented latest by December 31, 2020.
- This will benefit the eligible MSME entities which could not be restructured under the provisions of the circular dated January 1, 2019 as also the MSME entities which have become stressed thereafter.
- The central bank has also asked commercial banks to link pricing of loans for the medium-sized enterprises to an external benchmark effective April 1, 2020. The step was taken with a view to further strengthening monetary transmission.
One-time restructuring scheme:
- Under the scheme, accounts in the micro, small and medium enterprises segment which are in default but are still standard, can be restructured once, without any downgrade on their asset classification.
- A provision of 5 percent in addition to the provisions already held, shall be made in respect of accounts restructured under this scheme.
Importance of MSME sector:
- The micro, small and medium enterprises (MSMEs) sector plays an important role in the growth of the Indian economy, contributing over 28% of the gross domestic product (GDP), more than 40% of exports, while creating employment for about 110 million people.
D. GS 4 Related
Nothing here for today!!!
“No one can truly know a nation until one has been inside the jail. A nation should not be judged by how it treats its highest citizen but its lowest ones” – Nelson Mandela
“Independent India must choose whether we will have a people’s police or a ruler appointed police, or in other words whether the people should rule or whether the parties should rule. The Constitution has laid down that the people should rule, so the police must also be the people’s police”- Khosla Commission
- Custodial death is the demise of an individual when he is detained or when he is under the custody of the Police Authorities.
- Pradeep Tomar, a resident of Uttar Pradesh, was called to the police station for questioning in connection with a murder case. He died hours later after the policemen allegedly assaulted him.
- He was accompanied by his son to the police station who claimed that Tomar was repeatedly kicked, punched, hit with planks of wood, given electric shocks and pierced with a screwdriver.
Law in India
- As per the Seventh Schedule, ‘Police’ and ‘Public Order’ are State subjects under the Constitution.
- So the primary responsibility of prevention, detection, registration, investigation and prosecution of crimes, lies with the State Governments.
- Most of the states in India have separate legislations dealing with the control of the police in that state.
- According to the National Crime Records Bureau, custodial deaths have been on the increase in recent years. They increased by 9% from 92 in 2016 to 100 in 2017.
Custodial deaths are amongst the worst crimes in any civilized society. It is a flagrant violation of human dignity. It strikes at the very roots of the rule of law.
- These incidents have brought into sharp focus the way Indian policemen torture and interrogate suspects in their custody leading to death.
- The policemen responsible for custodial deaths rarely get punished, they feel emboldened to continue using torture as the tool to get to the truth.
Why the issue persists?
- The police play a major role in the administration of criminal justice. One of the reasons for custodial death is that the police feel that they have the power to manipulate evidence as the investigation is their prerogative and with such manipulated evidence, they feel they can bury the truth.
- Lack of accountability reflects the failure of the Government to keep a check on police forces.
- Close nexus between political masters and police helps them escape trial.
- There is a huge structural imbalance of power between the police and those who are tortured. The social and economically vulnerable status of most of the victims affects the chances of justice.
- In most cases even where there is evidence of custodial deaths, FIRs are not registered.
- Even if the FIR is filed and investigation takes place, since these enquiries are carried out by police officers after the custodial deaths, the results mostly favor the police.
- The Supreme Court in Prakash Singh v. Union of India had issued an order in 2006 on Police Reforms.
- It said that every State Government should set up an independent Police Complaints Authorities at the State and district levels to look into public complaints against police officers in cases of serious misconduct, including custodial death, grievous hurt or rape in police custody.
- However, only a few states such as Kerala, Jharkhand, Haryana, Punjab and Maharashtra have implemented the order. Others have not taken the matter seriously.
- Judicial Enquiry has to be conducted and if charges of violation are proved, maximum punishment as prescribed by law has to be imposed on the Police Officers.
- Scientific tools along with proper legitimate interrogation techniques have to be used to reduce custodial deaths rather than using practices of third-degree and torture.
- The government must re-educate the police, sensitize them and inculcate values of respect for the human being.
- Finally, to ensure that custodial deaths are avoided, CCTV cameras must be installed inside the lock-ups, which should be monitored by the senior police officials.
- Therefore changes have to be introduced in the way the police operate by winning the support and confidence of the public and also by reorienting their style of functioning from brute force to one of service.
- This article discusses the formal sector and the informal sector in the economy.
- It speaks about how the Govt is focusing more on the formal sector and also plans to bring the chain of informal sector participants into the fold of the formal sector.
- This idea of formalizing the informal could impact the growth, reveals papers published by
- Economist Seema Jayachandran for National Bureau of Economic Research.
- She argues that there is no strong evidence from studies conducted in many developing countries that formalisation improves business outcomes.
- Economist Santosh Mehrotra for the International Labour Organisation (ILO).
- He calls formalisation an evolutionary process during which small, informal enterprises learn the capabilities required to operate in a more formal, global economy. He says they cannot be forced to formalise.
- Economist Seema Jayachandran for National Bureau of Economic Research.
Advantages of Formalization
- Formalisation reduces the last-mile expenses for the banks.
- It also leads to more money in the banking sector which lower interest rates and brighten prospects of more lending by banks.
- With formality, tax collection and monitoring of firms become easy.
- Thus it increases revenue for the Govt.
However, the process can also produce adverse outcomes for informal sector firms.
Disadvantages of excessive formalization
- A forced shift from the informal to the formal sector can lead to job losses.
- This sector accounts for 40 per cent of the Indian economy and provides employment to 75 per cent of its labour force.
- Any attempt to squeeze the sector is fraught with unwelcome consequences because this is where the bulk of our low skilled workers find employment.
- The unemployment crisis which we are currently witnessing in India can be reduced, as opportunities are provided in the informal sector to earn their wages.
- Rules laid by the Govt for formalization has helped the Govt but has increased the cost of operation for the informal sector that outweighs the benefits of formalisation.
- If firms actually comply with all the regulation, their costs are too high to offer competitive prices to the customers.
- Customers look elsewhere and the firms go out of business.
In fact, informal firms are able to improve their ability to do business in various ways.
- For example, small entrepreneurs gain from forming effective associations with their peers.
- They benefit greatly from ‘mentoring’.
- Skills of small entrepreneurs and their employees are best developed on-the-job. This is because they cannot afford the loss of income by taking time off for training.
- ‘Soft’ skills, to form associations, manage enterprises, matter as much for the success of the enterprises as ‘hard’ resources of finance and facilities. In fact, the productivity of enterprises depends on their soft skills.
Future course of action
- First, the government and its policy advisers must stop demeaning the informal sector and resist the temptation to reduce its size.
- Second, the development of an economy, from agriculture to the production of more complex products in the industry, is a process of learning.
- Informal enterprises provide the transition space for people who have insufficient skills and assets to join the formal sector.
- Large schemes to provide enterprises with hard resources such as money and buildings, which the government finds easier to organise, are not sufficient for the growth of small enterprises.
- Policymakers must learn how to speed up the process of learning within informal enterprises.
- Third, policymakers must learn to support informal enterprises on their own terms. And they should not impose their own versions of formality on them for their own convenience.
- Making it easy for MNCs and large companies to invest will not increase the growth of the economy if enterprises and incomes at the bottom of the pyramid do not grow.
- Voice of rural entrepreneurs should also be considered by the Govt for drafting policies.
- Fourth, networks and clusters of small enterprises must be strengthened.
- They improve the efficiency of small firms by enabling sharing of resources;
- They give them more clout to improve the terms of trade in their favor within supply chains;
- They reduce the ‘last mile costs’ for agencies and providers of finance.
- Fifth, there is an urgent need for labour reforms where
- Laws should be simplified.
- Administration improved.
- Improve the conditions of workers.
- The purpose of ‘labour reforms’ must be changed to provide safety nets, rather than make the workers’ lives even more precarious with misdirected attempts to increase flexibility.
- Finally, the social security framework for all citizens must be strengthened, especially for those who have to scramble for work in the informal sector.
- Health insurance and availability of health services must be improved, and disability benefits and old-age pensions must be enhanced.
- The thrust of the Indian government’s policies should not be to reduce the size of the informal sector. Rather, it must be to improve working conditions for the citizens who earn incomes in the sector.
- Their safety at work, their dignity, and their fair treatment by employers must be the thrust of any reform.
- Indeed, even in developed industrial countries, the informal sector is growing with advances in technologies, the emergence of new business models, and growth of the gig economy.
- Finance Minister Nirmala Sitharaman announced a new optional income tax regime in Budget 2020-21.
- This new system is optional and will co-exist with the old one with three slabs and various exemptions and deductions available to the taxpayer.
- The budget 2020 has given taxpayers the option to choose between the existing income tax regime (which allows availing existing income tax exemptions and deductions) and a new tax regime with slashed income tax rates and new income tax slabs but no tax exemptions and deductions.
- The new tax regime offers lower tax rates and new tax slabs and simultaneously removes tax exemptions/deductions and will result in lower tax outgo for taxpayers.
- The new income tax rate is beneficial for people with low investments in policy schemes. It offers seven lower tax slabs. Anyone paying taxes without claiming exemptions under the existing system can benefit from paying a lower upfront rate of tax.
- Another benefit of switching over to the new optional regime is not having to worry about complex filings, hence fewer mistakes in filing.
- It’s an optional scheme so people have the flexibility to switch over from one system to after evaluation for the previous year is complete. However, a taxpayer can only switch from the old system to the new one if he/she has no income from a business or businesses. This offers better flexibility to taxpayers to choose a different tax regime as per their requirements.
- 70 out of 100 exemptions, including common ones such as standard deduction and tax-saving policies under Section 80C, 80D and 80EE of the Income Tax Act, will not apply to the optional income tax regime.
- The exclusion of exemptions helps in containing income tax frauds.
- There are many cases where people have inflated their return filing for claiming more tax refunds. However, with a majority of exemptions gone under the new system, the scope of misusing exemption rules also reduces.
- It is good for people with low investments, but people who already invest a fair amount in tax-free savings schemes like PPF, NPS and claim deductions on them will suffer. Even if they move to the new system with a lower tax rate, they will pay more tax as there are no exemptions for them to claim.
- Some experts said that the new income tax structure could also discourage investments in the real estate sector. It may be noted that investment in housing property is a major tax saver for Indian households and making the full use of it can earn very high tax deductions. However, with no such exemptions under the new tax structure, the real estate sector could encounter falling demand.
- The insurance sector will also suffer as it will have to put more effort and money on advertisements to attract people to invest. The new income tax structure, therefore, may lead to reduced business for insurance companies.
- Another factor complicating the taxpayers’ filing process is that it isn’t clear which exemption will be scrapped in the near term and which one will continue in the long term.
- Which tax regime -old or new-would be beneficial and result in lower tax payable for each individual is likely to depend on his/her income composition and the investments done.
- Each individual will have to do his/her own income calculations to figure out which tax regime suits more.
- At the ongoing Defexpo 2020, Russian Helicopters (RH) signed a road map with Indo-Russian Helicopters Limited (IRHL) for localisation of Ka-226T helicopter production in India.
- The IRHL is a joint venture between Hindustan Aeronautics Limited (HAL) and Russian Helicopters (RH), which will assemble the Ka-226T helicopters in India.
G. Prelims Facts
Nothing here for today!!!
H. UPSC Prelims Practice Questions
Q1. Consider the following statements with respect to Cash Reserve Ratio (CRR):
- CRR is decided by the Monetary Policy Committee.
- CRR is a monetary policy tool used for controlling the money supply in the economy.
- If the Cash Reserve Ratio is low, the liquidity with the bank increases.
Which of the given statement/s is/are incorrect?
a. 2 only
b. 1 and 3 only
c. 3 only
d. None of the above
Q2. Consider the following statements with respect to “Bandar Abbas Port”:
- It is located in Iran, on the Gulf of Oman.
- It serves as Iran’s only oceanic port.
Which of the given statement/s is/are incorrect?
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2
Q3. Which of the following is/are NOT correct?
- Disguised Unemployment: lesser people employed than actually needed.
- Structural Unemployment: unemployment arising from the mismatch between the jobs available in the market and the skills of the available workers in the market.
- Cyclical Unemployment: loss of jobs or unemployment occurring due to changes in technology.
Choose the correct option:
a. 1 and 3 only
b. 2 and 3 only
c. 1 only
d. 3 only
Q4. Which of the following Central Asian Countries border the Caspian Sea?
Choose the correct option:
a. 1 and 2 only
b. 1, 2 and 3 only
c. 3 and 4 only
d. 1 and 4 only
I. UPSC Mains Practice Questions
- Death in Police Custody warrants strict action as it is a violation of the right to life. Discuss why Police reforms are the need of the hour. (15 Marks, 250 Words)
- Formalisation could be the harbinger of change for the economy, but excessive formalisation is a recipe for distress to the informal sector. Analyze. (15 Marks, 250 Words)
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CNA 7 Feb 2020:- Download PDF Here