23 Jun 2022: UPSC Exam Comprehensive News Analysis

Quote for the day Set 5 05

CNA 23 June 2022:- Download PDF Here

TABLE OF CONTENTS

A. GS 1 Related
B. GS 2 Related
C. GS 3 Related
ECONOMY
1. Understanding bird strikes and aviation safety
D. GS 4 Related
E. Editorials
INDIAN SOCIETY AND SOCIAL ISSUES
1. The role of caste in economic transformation
ECONOMY
1. Towards a single low tax regime
2. Crypto came tumbling after
F. Prelims Facts
1. Four new corals recorded from Indian waters
2. Santhal tribe
G. Tidbits
1. Earthquake kills over 1,000 in east Afghanistan
2. Digital wearables can expose users to cyberattacks: IEEE
H. UPSC Prelims Practice Questions
I. UPSC Mains Practice Questions
FIP Magazine

Category: ECONOMY

1. Towards a single low tax regime

Syllabus: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

Mains: Concerns with the current GST system and recommendations to improve it

Background:

  • The introduction of the Goods and Services Tax system has been able to remove the barriers to free trade and economic growth and avenues for corruption as observed in the earlier regime of taxes and cesses.
  • However, many proposed reforms in the GST system to streamline it are yet to materialize. The proposal to end the multiple slabs and bring in a single standard rate under the GST system made as back as December 2018 is yet to be realized.

Concerns with the current GST system:

Complex and confusing:

  • The GST system is still a complicated tax regime with different slabs. It is not easy to comprehend or comply with.
  • Also, the addition of more categories every day and the need to categorize them under the differential tax slabs in the GST regime is open to interpretation, harassment and avoidable litigation. This goes against the spirit of improving the ease of doing business in India.

Higher taxes on some segments:

  • The imposition of high GST rates (often referred to as ‘Sin’ taxes) in some areas is not in the interest of sustainable economic growth and development.
  • The higher taxes on five-star hotels, automobiles, etc. fail to comprehend the effect that these segments could have on employment generation both direct and indirect and the economic ripple effect downstream, in a complex web of businesses that have symbiotic relationships.
  • Hence such taxes might be contradictory to the government’s policy of generating growth and creating jobs under ‘Make in India’.
  • A more moderate tax rate for these segments can spur their demand in the economy and result in a virtuous impact on economic growth and development.

Exemptions from GST:

  • Some items continue to remain exempt from GST. Petrol, diesel, and aviation turbine fuel are not under the purview of GST, but come under Central excise and State taxes.
  • This is not in line with the principle of simplifying the tax system in India as these goods account for a substantial share of taxes in India.

Recommendation:

  • The article calls for doing away with the multiple tax slabs and bringing in a single low tax regime along with a limited list of exempt items as observed in other countries with similar systems.
Nut Graf

A single low tax regime along with a limited list of exempt items under the GST system can help ensure better compliance, widen the tax net, improve ease of doing business, boost the economy, create jobs, increase tax collections, and reduce corruption.

2. Crypto came tumbling after

Syllabus: Issues relating to Mobilization of Resources, Growth and Development- Cryptocurrencies

Mains: Factors affecting the price of cryptocurrencies

Context:

  • Bitcoin has witnessed a steep fall in its price from a record high of $69,000 in November 2021 to around $20,000 in recent weeks. There has been a significant correction in the prices of Bitcoin in particular and cryptocurrencies in general in the recent past. This has resulted in huge losses to investors around the world and has raised questions over the financial viability of such cryptocurrencies.
  • In this context, the article analyzes the factors affecting the price volatility of cryptocurrencies.

Factors affecting the price of cryptocurrencies:

  • Cryptocurrencies are basically a form of asset that allows people to keep their money outside the formal financial system and make it accessible so that it can be used anywhere in the world. Hence their prices which depend on the demand for them are open to the influence of many factors including changes in the global liquidity conditions.
  • Most of the fluctuations in the price of Bitcoin are brought about by changes in the demand side as the asset’s supply is almost stagnant or moves very slowly given the enormous cost of mining an additional Bitcoin.
  • The boom in the price of crypto assets during the onset of the pandemic was because investors were looking to invest their funds in crypto assets in the absence of other reliable investment opportunities. With the pandemic slowing down and economies opening up, investors are looking to move their funds out of crypto assets into more profitable investment opportunities. This is leading to a decline in prices.
  • Recently, there have been changes in the price of an important class of assets: government bonds issued by the governments of developed countries. The policy interest rates on these bonds have been rising in recent times. These are considered safer investment options and the higher interest rates on them are adding to the investors’ interest in these assets. As a result, investors in crypto assets are shifting their investments out from crypto assets into government bonds. This has resulted in a fall in demand for crypto-assets and consequently has had a downward impact on the price of cryptocurrencies such as bitcoin.
Nut Graf

Given the nature of crypto assets and the interconnectedness of financial markets at the global level, the price of crypto assets will continue to remain sensitive to changes in the global liquidity conditions.

F. Prelims Facts

1. Four new corals recorded from Indian waters

Syllabus: GS3; Biodiversity

Prelims: Azooxanthellate corals

Context

Scientists have discovered four species of corals for the first time in Indian waters.

Details

  • New species of Azooxanthellate corals were discovered in the waters of the Andaman and Nicobar Islands.
  • Scientists from the Zoological Survey of India (ZSI) said that all four groups of corals are from the same family, Flabellidae.
  • Truncatoflabellum crassum, T. incrustatum, T. aculeatum and T. irregulare under the family Flabellidae were earlier found in Japan, the Philippines and Australian waters, and only T. crassum was found in the Indo-West Pacific region.

Read more about – Corals Reefs

Azooxanthellate corals

  • The azooxanthellate corals are a group of corals that do not contain zooxanthellae and derive nourishment from capturing different forms of planktons and not from the sun.
  • Unlike the zooxanthellate corals, Azooxanthellate corals are not restricted to shallow waters. 
    • They live in the vast expanse of the ocean depths where there is less competition for space.
  • These corals are not limited by light or by temperature.
  • These are a group of hard corals and the newly found species are not only solitary but have a highly compressed skeletal structure.

2. Santhal tribe

Syllabus: GS1; Indian Society; Salient features of Indian Society, Diversity of India.

Prelims: Santhal Tribe

Context

  • As the National Democratic Alliance has nominated Droupadi Murmu for the Presidential election, the Santhal community has come under the spotlight.
  • If elected, Droupadi Murmu will be the first tribal person to become the President.

Santhal Tribe

  • Santhal is the third-largest Scheduled Tribe community in the country after Gond and Bhil.
  • According to the Scheduled Castes and Scheduled Tribes Research and Training Institute (SCSTRTI), Bhubaneswar, the word Santhal is derived from two words: 
    • Santha which means calm and peaceful 
    • Ala which means man
  • Earlier the Santhals led a nomadic life and eventually they settled down in the Chhotanagpur plateau.
  • Santhals speak “Santhali” which has its own script called “Ol Chiki” which was invented by Pandit Raghunath Murmu. 
    • Santhali in the Ol Chiki script has been included in the Eighth Schedule to the Constitution.
  • The Santhal population is mostly distributed in Odisha, Jharkhand and West Bengal.
  • In Odisha, Santhals are seen in Mayurbhanj, Keonjhar and Balasore.
    • Mayurbhanj has one of the largest concentrations of the tribe.
    • The literacy rate of the Santhals is very high as compared to other tribes in Odisha.

G. Tidbits

1. Earthquake kills over 1,000 in east Afghanistan

  • A powerful earthquake struck the rugged and mountainous region of eastern Afghanistan. The quake is said to be the deadliest in Afghanistan since 2002.
  • The Taliban in Afghanistan has appealed for international support after a devastating 6.1 magnitude earthquake.
  • The Indian Prime Minister expressed anguish and said that India is ready to provide all possible disaster relief materials at the earliest.

2. Digital wearables can expose users to cyberattacks: IEEE

  • The Institute of Electrical and Electronics Engineers (IEEE) warned that digital wearables such as smartwatches and fitness trackers pose threats to the security and privacy of customer data by connecting a wearable to an extended ecosystem.
  • Cybersecurity experts look at this as a supply chain that includes a data generator, an analytics engine and a service provider. Each link in the chain, including the connecting networks, presents a potential risk.
  • According to the IEEE experts, most criminal intrusions of computer networks have a financial motive as stolen health data can be valuable because it includes personally identifiable information such as birthdays, email addresses and other login information that can be used for theft purposes.
  • In recent years, India has been experiencing a massive adoption of wearable technology with shipments crossing 13.9 million devices in the first quarter of 2022.

H. UPSC Prelims Practice Questions

Q1. Consider the following statements: (Level – Easy)
  1. Article 174(2)(b) of the Constitution gives powers to the Governor to dissolve the Assembly on the aid and advice of the cabinet.
  2. However, the Governor can apply his mind when the advice comes from a Chief Minister whose majority could be in doubt.
  3. When the House is in session, it is the Speaker who can call for a floor test. But when the Assembly is not in session, the Governor’s residuary powers under Article 163 allow him to call for a floor test.

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, Article 174(2)(b) of the Constitution gives powers to the Governor to dissolve the Assembly on the aid and advice of the cabinet. 
  • Statement 2 is correct, The Governor can apply his mind when the advice comes from a Chief Minister whose majority could be in doubt. 
  • Statement 3 is correct, When the House is in session, the Speaker can call for a floor test. 
    • However, when the Assembly is not in session, the Governor’s residuary powers under Article 163 allow him to call for a floor test.
Q2. Consider the following statements with regards to taxation on Virtual Digital 
Assets in India: (Level – Difficult)
  1. A tax deducted at source (TDS) of 1 per cent will be levied on the transfer of VDAs effective July 1 if the value of transactions exceeds Rs 10,000 in a year.
  2. The CBDT has defined four primary VDAs — bitcoin, ether, USD Tether and USD Coin — for the purpose of tax deduction on lesser-known cryptocurrencies.
  3. If two different cryptocurrencies, say bitcoin and ether, are being exchanged, both the persons would be considered buyers as well as sellers. Therefore, none of them would pay any tax with respect to the transfer of the cryptocurrency.

Choose the correct code:

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

Answer: a

Explanation:

  • Statement 1 is correct, With the introduction of Section 194S in the Income-tax Act through the Finance Act, 2022, a tax deducted at source (TDS) of 1 per cent will be levied on the transfer of VDAs effective July 1 if the value of transactions exceeds Rs 10,000 in a year.
  • Statement 2 is correct, the CBDT has defined four primary VDAs namely bitcoin, ether, USD Tether and USD Coin for the purpose of tax deduction on lesser-known cryptocurrencies.
  • Statement 3 is not correct, if two different cryptocurrencies say bitcoin and ether, are being exchanged, both the persons would be considered buyers as well as sellers.
    • Therefore, both will need to pay tax with respect to the transfer of the cryptocurrency.
Q3. Consider the following statements with regards to Corals: (Level – Medium)
  1. The azooxanthellate corals are a group of corals that do not contain zooxanthellae and derive nourishment not from the sun but from capturing different forms of planktons.
  2. The Gulf of Kutch in the northwest has some of the most northerly reefs in the world.
  3. Andaman and Nicobar Islands and Lakshadweep Islands are rich with flourishing island corals.

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, The azooxanthellate corals are a group of corals that do not contain zooxanthellae and derive nourishment from capturing different forms of planktons and not from the sun. 
  • Statement 2 is correct, Marine National Park in the Gulf of Kutch contains some of the most northerly coral reefs in the world.
  • Statement 3 is correct, Andaman and Nicobar Islands and Lakshadweep Islands are rich with flourishing island corals.
Q4. Consider the following statements with regards to Keibul Lamjao National Park: 
(Level – Easy)
  1. The KNLP is home to the endangered brow­ antlered deer (Sangai).
  2. The KNLP is located in the Bishnupur district of Meghalaya.
  3. The national park is characterized by floating decomposed plant material locally called phumdi.

Choose the correct code:

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

Answer: c

Explanation:

  • Statement 1 is correct, The Keibul Lamjao National Park is home to the endangered brow­ antlered deer (Sangai).
  • Statement 2 is not correct, The Keibul Lamjao National Park is located in the Bishnupur district of Manipur.
  • Statement 3 is correct, The national park is characterized by floating decomposed plant material locally called Phumdi.
    • Phumdis are a series of floating islands, exclusive to the Loktak Lake in KNLP. 
Q5. Bollgard I and Bollgard II technologies are mentioned in the context of 
(Level – Difficult) PYQ (2021)
  1. Clonal propagation of crop plants
  2. Developing genetically modified crop plants
  3. Production of plant growth substances
  4. Production of bio-fertilisers
CHECK ANSWERS:-

Answer: b

Explanation:

  • Bollgard1 and Bollgard 2 help in developing genetically modified crop plants. 
  • Bollgard cotton provides in-built protection for cotton against destructive Bollworm infestations, and contains an insecticidal protein from a naturally occurring soil microorganism, Bacillus thuringiensis (Bt).
  • Bollgard Bt cotton (single-gene technology) is India’s first biotech crop technology approved for commercialization in India in 2002.
  • Bollgard II technology contains a superior double-gene technology – Cry1Ac and Cry 2Ab which provides protection against bollworms and Spodoptera caterpillar.

CNA 23 June 2022:- Download PDF Here

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