18 Jan 2023: UPSC Exam Comprehensive News Analysis

CNA 18 Jan 2023:- Download PDF Here

TABLE OF CONTENTS

A. GS 1 Related
HISTORY
1. Subhas Chandra Bose
B. GS 2 Related
INTERNATIONAL RELATIONS
1. UNSC sanctions committee blacklists Lashkar’s Makki
C. GS 3 Related
D. GS 4 Related
E. Editorials
INTERNATIONAL RELATIONS
1. The illogical rejection of the idea of South Asia
INDIAN ECONOMY
1. A case for reassigning GST to States
F. Prelims Facts
G. Tidbits
1. India, Russia begin manufacturing of AK-203 assault rifles in U.P.’s Amethi
2. India plans β€˜buffers’ in proposed Arunachal hydropower project to counter 
β€˜China threat’
3. News marked false by PIB to be taken down: draft rule
H. UPSC Prelims Practice Questions
I. UPSC Mains Practice Questions
FIP Magazine

Category: INDIAN ECONOMY

1. A case for reassigning GST to States

Syllabus: GS-3, Indian Economy and issues related to planning and mobilization of resources.

Mains: Vertical Fiscal Imbalance and measures to address it.

Prelims: Vertical Fiscal Imbalance.

Details:

  • The vertical fiscal imbalance (VFI) arises between the Union and State governments when the Union has more tax powers than the States and the State governments are assigned with more expenditure responsibilities. It is the responsibility of the Finance Commission to correct this imbalance.
  • In the context of Goods and Service Tax (GST), the Union and State governments concurrently levy GST on commodities with 50% as Central GST (CGST) and 50% as State GST (SGST). There is also an Integrated GST (IGST) on inter-State trade so that 50% of it goes to the final destination state.Β 
  • States do not have the power to unilaterally change the tax.

Also read: Goods and Services Tax (GST) Bill Explained

Vertical Fiscal Imbalance:

  • In simple terms, VFI equals β€˜one minus the ratio of the State’s own revenue to own expenditure’.Β 
    • If the VFI ratio is zero, it implies that States have enough revenue to meet their own expenditure. In this case, there is no need for financial transfers.
  • VFI for all the States together can also be calculated. Some of the findings are:
    • VFI showed an increasing trend in the last three Finance Commissions (2005-06 to 2020-21).
    • The ratio was 0.530 from 2015-16 to 2020-21. This implies that only 47% of the States’ own expenditure was financed by their own revenue.
    • State revenue structure was transformed and they became more dependent on the Union Government. The four major changes that took place in this period were:
      • The divisible taxes of the Union government increased from two to all the Union taxes. It enlarged the revenue base to be shared with the States.
      • Fiscal responsibility law was implemented to limit the fiscal deficits of the States.
      • The planning commission was dissolved which led to the withdrawal of Plan grants.
      • GST was introduced in 2017.

For information on the GST Council, read here: Goods and Services Tax Council

Way Forward:

  • In order to correct the VFI, it is advised to reassign the tax powers between the States and the Centre.Β 
  • Currently, the Union government has exclusive power to levy excise duty on petroleum products, and the States have exclusive power to levy excise duty and sales tax on liquor. It is recommended that the CGST and the excise duty on petroleum products should be assigned to the States. The following measures can be taken in this regard:
    • All commodities along with petroleum products should be brought under GST.Β 
    • The Central government should continue to collect IGST to settle revenue on a destination basis, as it will strengthen harmonization.
    • GST Council should continue to determine tax. But, the Union should not be given the veto power.Β 
    • Moreover, commodity taxation should be transferred to State List II of the Seventh Schedule of the Constitution but with the condition of maintaining the harmonization of commodity taxation.
  • The above measures will have the following consequences:
    • Assignment of excise duty on petroleum products to the States will expedite the integration of taxes on petroleum products into GST.Β 
    • Though it will reduce the tax potential of the States, higher buoyancy of GST will compensate for this revenue loss.Β 
    • It will also increase the own tax revenue of the States. It will consequently improve the accountability of the States on fiscal matters.
    • The VFI will also come down and there will be no need for assigning shares in Central taxes and grants in aid.
  • It should also be noted that the unequal tax base with unequal expenditure requirements between the States creates a horizontal fiscal imbalance among the States. To address this issue of horizontal fiscal inequality, the Union government should use equalization transfers.

Also read: Taxation in India

Nut Graf: In order to address the issue of Vertical Fiscal Imbalance, the Goods and Service tax should be reassigned between the Union and the State governments. It will not only increase the expenditure of the states from its own tax revenue but will also improve the accountability of the state in fiscal matters.

F. Prelims Facts

Nothing here for today!!!

G. Tidbits

1. India, Russia begin manufacturing of AK-203 assault rifles in U.P.’s Amethi

  • Indo-Russian Rifles Private Limited (IRRPL) which is a joint venture between India and Russia, has started producing AK-203 Kalashnikov assault rifles at Korwa in Uttar Pradesh.
    • The IRRPL was established in 2019 jointly by the erstwhile OFB [now Advanced Weapons and Equipment India Limited (AWEIL) and Munitions India Limited (MIL)] of India and Rosoboronexport and Kalashnikov of Russia.
    • The IRRPL venture aims to ensure 100% localisation of the production of AK-203 rifles in India.
  • The Korwa Ordnance Factory in Amethi has produced the first batch of 7.62 mm Kalashnikov AK-203 assault rifles and it will be delivered soon to the Indian Army.
  • The use of Kalashnikov AK-203 assault rifles marks the entry of high-quality, convenient and modern small arms into India’s defence and law enforcement agencies.

2. India plans β€˜buffers’ in proposed Arunachal hydropower project to counter β€˜China threat’

  • The design of a hydropower project in Arunachal Pradesh’s Upper Siang district is being influenced by the concerns over China’s proposed 60,000 MW hydropower in Medog in Tibet.
    • The concerns are that the 60,000 MW dam in Medog might reduce the natural flow of the Brahmaputra, which might impact India during lean patches, or could also trigger β€œartificial floods” in India.
  • The Brahmaputra river which is known as Yarlung Tsangpo in China is a transborder river that originates in the Mansarovar lake near Mount Kailash in Tibet.
    • Brahmaputra river accounts for close to 30% of freshwater resources and 40% of India’s hydropower potential and diverting its flow can impact agriculture in states such as Assam and Arunachal Pradesh.
  • The proposed hydropower project in Arunachal Pradesh’s Upper Siang district is an 11,000 MW project and is said to be five times the size of the largest such projects in India.
  • The key objective of the construction of the project is to manage flooding in the Brahmaputra, however, there are also strategic aspects attached to the project.
  • Furthermore, the National HydroPower Corporation (NHPC) is expected to commission the 2,000 MW Subansiri Lower Hydro Electric Project which is the largest of its kind in terms of installed capacity in India.

3. News marked false by PIB to be taken down: draft rule

  • According to the Ministry of Electronics and Information Technology’s proposed draft, the social media platforms would be mandated to take down content that has been β€œfact-checked” by the Press Information Bureau’s (PIB) fact-check unit and has been flagged as false.
  • As per Rule 3(1)(b)(v) of the amended version of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, the social media platforms should make reasonable efforts to ensure that the users of the platform do not post content that has been identified as fake or false by the fact check unit at the PIB or any other agency authorised by the Central Government for fact-checking.
  • The fact check unit of the PIB has played an active role in exposing various baseless news that is being circulated on social media platforms like WhatsApp and Twitter.
    • The fact check unit has also issued denials on behalf of the government in response to news reports by online publications and newspapers alike in the past.

H. UPSC Prelims Practice Questions

Q1. Consider the following statements regarding elections in India: (Level – Medium)
  1. EVMs started being used on a larger scale in 1992 and since 2000, have been used in all Lok Sabha and State Assembly elections.
  2. The use of VVPATs has become universal in elections since mid-2017.
  3. The ECI sends the EVM software to two foreign chipmakers (in the U.S. and Japan) to burn into the CPU and the manufactured chips are then sent to India for assembly into machines by the two PSUs (BEL and ECIL).

Choose the correct code:

  1. 1 & 2 only
  2. 2 & 3 only
  3. 1 & 3 only
  4. All of the above
CHECK ANSWERS:-

Answer: d

Explanation:

  • Statement 1 is correct, EVMs started being used on a larger scale in 1992 and since 2000, have been used in all Lok Sabha and State Assembly elections.
  • Statement 2 is correct, The ECI along with two PSUs developed the Voter Verified Paper Trail Audit (VVPAT) machine to have a paper trail in the voting process.Β 
    • The use of VVPATs has become universal in elections since mid-2017.
  • Statement 3 is correct, The ECI sends the EVM software to two foreign chipmakers (in the U.S. and Japan) to burn into the CPU and the manufactured chips are then sent to India for assembly into machines by the two PSUs (BEL and ECIL).
    • This means that the manufacturers cannot read back the contents of the software to ensure its integrity is intact.
Q2. Consider the following statements with respect to CoP (Conference of Parties): 
(Level – Medium)
  1. The government of the host country holds the presidency of the COP for one year, till the conference is concluded.
  2. While the COP president does have an influential role, the final decisions are always taken by consensus.
  3. The COP meets in Paris, the seat of the secretariat, unless a Party offers to host the session.

Which of the statements given above 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: a

Explanation:

  • Statement 1 is correct, The government of the host country holds the presidency of the COP for one year, till the conference is concluded and the host country usually names one of its ministers as the president.
  • Statement 2 is correct, While the COP president does have an influential role, the final decisions are always taken by consensus. Thus the COP president or the host country cannot force or impose any decision on others.
  • Statement 3 is not correct, The COP meets in Bonn, the seat of the secretariat, unless a Party offers to host the session.
Q3. Which of the following is the most apt description of recession? (Level – Easy)
  1. It involves the overall output in an economy contracting for at least two consecutive years
  2. It involves the overall output in an economy contracting for at least two consecutive quarters
  3. It involves the overall output in an economy contracting for at least four consecutive quarters
  4. None of the above
CHECK ANSWERS:-

Answer: b

Explanation:

  • There is no official definition of recession, but generally, recession refers to a period of decline in economic activity.Β 
  • Recession can be practically defined as a situation which involves overall output in an economy for at least two consecutive quarters, along with job losses and a reduction in overall demand.Β 
Q4. Consider the following statements with regard to the New Pension System (NPS) and 
the Old Pension Scheme (OPS): (Level – Easy)
  1. Under the OPS, retired employees received 50 per cent of their last drawn salary as monthly pensions.
  2. NPS is mandatory for central government employees joining services on or after January 1, 2004, and almost all state governments have adopted it for their employees.
  3. NPS, regulated by the Pension Fund Regulatory and Development Authority (PFRDA), is a contributory pension scheme under which employees contribute 10 percent of their salary (Basic + Dearness Allowance).

Choose the correct code:

  1. 1 & 2 only
  2. 2 & 3 only
  3. 1 & 3 only
  4. All of the above
CHECK ANSWERS:-

Answer: d

Explanation:

  • Statement 1 is correct, Under the Old Pension Scheme (OPS), retired employees received 50% of their last drawn salary as monthly pensions.Β 
  • Statement 2 is correct, New Pension System (NPS) is mandatory for central government employees joining services on or after January 1, 2004, and almost all state governments have adopted it for their employees.
  • Statement 3 is correct, NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) and is a contributory pension scheme under which employees contribute 10% of their salary (Basic + Dearness Allowance).
Q5. What are the advantages of fertigation in agriculture? (Level – Medium) 
[PYQ (2020)]
  1. Controlling the alkalinity of irrigation water is possible.
  2. Efficient application of Rock Phosphate and all other phosphatic fertilizers is possible.
  3. Increased availability of nutrients to plants is possible.
  4. Reduction in the leaching of chemical nutrients is possible.

Select the correct answer using the code given below:

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

Answer: c

Explanation:

  • Fertigation involves mixing water-soluble fertilizers and delivering them through drip irrigation.Β 
  • Advantages of fertigation include:
    • Fertigation can synchronize nutrient supply and crop nutrient requirement.
    • Enhances water-use efficiency, nutrient-use efficiency, and yield.
    • Reduces nutrient losses via leaching, ammonia volatilization, denitrification and weed pressure.
  • However, when an element forms a precipitate with another substance commonly found in irrigation water, it is not advisable to use this method.Β 
    • Phosphorus and anhydrous ammonia may form a precipitate in water with high calcium and magnesium content. So they are not used in fertigation.

Hence, statement 2 is not correct.

CNA 18 Jan 2023:- Download PDF Here

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