CNA 6th June 2021:- Download PDF Here
TABLE OF CONTENTS
A. GS 1 Related B. GS 2 Related INTERNATIONAL RELATIONS 1. The coming together of the powerful five C. GS 3 Related ECONOMY 1. G7 nations agree on uniform minimum corporate tax ENVIRONMENT AND ECOLOGY 1. Siltation affecting width of waterways in Mumbai: study 2. Study points to pileup of biomedical waste D. GS 4 Related E. Editorials INTERNATIONAL RELATIONS 1. A Chinese enclave in Sri Lanka? ECONOMY 1. U.S. delays tariffs against digital services tax F. Prelims Facts 1. Tigress under observation found dead in Tadoba 2. New database for missing persons 3. 114 killed in Burkina Faso attacks 4. Carbon storage G. Tidbits 1. ‘Bank NPAs set to rise, deposit growth outpacing credit flow’ H. UPSC Prelims Practice Questions I. UPSC Mains Practice Questions
A. GS 1 Related
Nothing here for today!!!
B. GS 2 Related
Category: INTERNATIONAL RELATIONS
1. The coming together of the powerful five
Context:
- In the light of India gearing up to host 2021’s BRICS summit, the article analyses the potential of the grouping while also discussing the challenges being faced by the group.
- BRICS is the acronym coined to associate five major emerging economies: Brazil, Russia, India, China, and South Africa.
Background:
History of BRICS:
- In 2006, leaders of the BRIC countries met in St. Petersburg, Russia, and the grouping was formalized.
- In 2009 the first BRIC summit was held in Yekaterinburg.
- South Africa was admitted in 2010 and attended the annual summit in 2011.
Challenges:
- The grouping is facing several challenges which have rendered the grouping ineffective in realizing its true potential.
Disputes between the member countries:
- There are multiple economic, territorial, and political disputes between the five constituent countries.
- Border tension between India and China.
Economic underperformance:
- As against the original conception of BRICs as economies that would drive global economic growth in the future, no member apart from China, have fulfilled their economic potential.
- South Africa’s debt-laden economy and the negative current account have led to predictions of an economic collapse in the next decade.
- Brazil’s poor handling during the Covid-19 crisis has ranked it amongst the world’s worst-affected countries, and its recovery is expected to be delayed.
- India’s economic slowdown has been a major concern.
Inherent divisions in the group:
- There is inherent differences between the members of the group with respect to the economic clout and power they enjoy in the global institutions.
- China economic prowess remains unmatched in the group. While Russia and China enjoy higher per capita income indicative of economic development the other three members of the group have much lower per capita income levels.
- Also given that China and Russia are already members of the UN Security Council, It remains to be seen how far they will go in advocating for the other BRICS members to be a part of a reformed Security Council.
Increasing alignment with the west:
- India, Brazil and South Africa have equal, if not stronger, strategic ties with western powers as compared to the other two members of the group- China and Russia.
- India’s membership of the U.S.-India-Australia-Japan Quadrilateral Strategic Dialogue (Quad) and India’s increasing alignment with the U.S. has cast a shadow over the future of the BRICS.
Lack of common vision:
- Disagreements between its members and lack of a common vision are major concerns in the grouping.
- China’s decision to launch the trillion-dollar Belt and Road Initiative in 2017 was opposed by India, and even Russia did not join the BRI plan, although it has considerable infrastructure projects with China.
Significance:
Equitable world order:
- BRICS was envisaged as an alternate grouping of emerging economies that challenge the post-War world order and establish a more equitable world order.
Significant initiatives:
- BRICS has created the New Development Bank (NDB), the BRICS Contingent Reserve Arrangement fund to deal with liquidity crunches, and a BRICS payment system proposing to be an alternative to the SWIFT payment system.
Political alignment:
- While the economic was the major Planck of cooperation between the member countries, political alignment has also been observed in certain instances.
- They have called for more inclusion in the multilateral world order, decrying U.S.-Europe backed military interventions, and expressing independent stances on several world events.
- The recent BRICS ministerial meeting came out with the first “standalone” joint statement on reforming multilateral institutions, including the UN and the UNSC, International Monetary Fund and World Bank and the World Trade Organization.
- The BRICS ministerial meeting also came out with an important agreement to support negotiations at the WTO for the waiver of trade-related intellectual property rights (TRIPs) for vaccines and medicines to tackle the Coronavirus pandemic. BRICS support at the WTO for the TRIPs waiver negotiations will be a boost for the effort.
For more related information refer to:
UPSC Comprehensive News Analysis 26th April 2020 – For BRICS, challenges and opportunities
C. GS 3 Related
1. G7 nations agree on uniform minimum corporate tax
Context:
- Finance Ministers from the Group of Seven (G7) nations have reached a landmark agreement in London setting a global minimum corporate tax rate.
Details:
- The Group of Seven nations have backed a minimum global corporation tax rate of at least 15%.
- They also seek to put in place measures to ensure that taxes are paid in the countries where businesses operate based on the principle of ‘Significant Economic Presence’.
How would a global minimum tax work?
- The global minimum tax rate would apply to overseas profits of a multinational.
- The envisaged framework allows individual governments to set whatever local corporate tax rate they want.
- But if companies pay lower rates in a particular country, their home governments could “top-up” their taxes to the minimum rate, thus eliminating the advantage of shifting profits.
Reasons for the move:
- A global minimum corporate tax will allow the major economies to discourage multinationals from shifting profits — and tax revenues — to low-tax countries.
- This proposal from the major economies aims to reduce tax base erosion without putting their firms at a financial disadvantage, allowing competition on innovation, infrastructure and other attributes.
Significance:
Reduce tax base erosion:
- This measure will help close cross-border tax loopholes used by some of the world’s biggest companies, thus will help limit base erosion and profit sharing (BEPS).
- Increasingly, income from intangible sources such as drug patents, software and royalties on intellectual property has migrated to the low tax jurisdictions, allowing companies to avoid paying higher taxes in their traditional home countries.
- As per some estimates, countries are losing $427 billion every year to tax havens. India suffers an annual loss of $10.3 billion from global tax abuse.
In tune with changed pattern of economy:
- This agreement marks a much necessary reform of the global tax system to make it fit for the current global digital age where cross-border digital services are gaining prominence.
End the so called race to the bottom and its negative consequences:
- The introduction of a global minimum corporate tax will contribute to ending the decades-long “race to the bottom on corporate tax rates”, in which countries have resorted to ultra-low tax rates and tax exemptions to lure multinationals companies to invest.
- Such measures have cost such countries hundreds of billions of dollars whereas the corporate entities have only grown richer.
Form the basis of a global pact:
- This landmark agreement could form the basis of a worldwide deal.
- The Organization for Economic Cooperation and Development has been coordinating tax negotiations among 140 countries on rules for taxing cross-border digital services and curbing tax base erosion, including a global corporate minimum tax. The OECD and G20 countries aim to reach consensus on both by mid-year.
Move towards more equitable taxing rights:
- The agreement has committed to reaching an equitable solution on the allocation of taxing rights. It will focus on protecting the interest of the market countries by awarding such countries certain degree of taxing rights on the profits of the multinational enterprises.
- This will help ensure that MNCs would pay taxes where they operate and record their profits from based on the concept of ‘Significant Economic Presence’.
Challenges:
- Any final agreement could have major repercussions for low-tax countries and tax havens and is bound to be opposed by such countries.
- Though there seems to be broad agreement on the framework of a global minimum corporate tax, there continue to be differences over the rate of such a tax.
- The inclusion of investment funds and real estate investment trusts under such a system could also lead to some differences during the negotiations
For more related information refer to:
Category: ENVIRONMENT AND ECOLOGY
1. Siltation affecting width of waterways in Mumbai: study
Context:
- A recent study based on satellite data has noted rapid changes in the coastal ecosystem of the Mumbai Metropolitan Region (MMR) and the Konkan region.
Details:
- The study notes the siltation at the mouth of the rivers, causing shrinking of width of creeks and waterways.
- The costal inundation has led to the loss of substantial area of waterways and agricultural land and have been converted into mudflats or mangrove areas.
- This observation brings to light the critical impact of coastal inundation due to rising sea levels.
Concerns with respect to coastal inundation:
Increased vulnerability to flooding:
- The study predicts excessive flooding due to the altered coastal ecosystem.
- The shrinking creek will lead to substantial decrease in the drainage capacity of the city during monsoon, leading to excessive flooding. It will also become more vulnerable to high tide water.
Salt water ingression:
- Incursion of saline water into the local aquifiers will further strain the already strained fresh water resources of the region.
- The salt water ingress will also render the agricultural landscapes non cultivable.
Conclusion:
- A comprehensive plan for conservation and restoration of the ecosystem should be undertaken urgently.
Additional information:
- The National Centre for Coastal Research (NCCR), under the Ministry of Earth Sciences has developed an Integrated Flood warning system, i-flows, for Mumbai for flood mitigation during monsoons and extreme events.
2. Study points to pileup of biomedical waste
Context:
- The report titled, “State of India’s Environment 2021,” released by the Centre for Science and Environment.
Bio-medical waste:
- Bio-medical waste means “any solid and/or liquid waste including its container and any intermediate product, which is generated during the diagnosis, treatment or immunization of human beings or animals or research activities pertaining thereto or in the production or testing of biological or in health camps.
Categorization:
- Under the existing rules by CPCB, biomedical waste is segregated into four categories. While the yellow category is for waste that is classified as “highly infectious” — such as human, animal, anatomical, and soiled — red/orange is for contaminated recyclable waste generated from disposable items like tubing, bottles tubes, syringes.
- Sharp objects like needles, syringes with fixed needles are segregated into the white category and broken or discarded and contaminated glassware, including medicine vials are categorised into the blue category.
Details:
- The report notes that that over two lakh kilograms of biomedical waste was generated each day in May 2021 by hospitals in India dealing with COVID-19 patients.
- India witnessed a deadly second wave of coronavirus pandemic in April and May.
Concerns:
- Biomedical waste poses hazard due to two principal reasons – the first is infectivity and other
- Biomedical waste is a threat to global public environmental health.
D. GS 4 Related
Nothing here for today!!!
E. Editorials
Category: INTERNATIONAL RELATIONS
1. A Chinese enclave in Sri Lanka?
Context:
- Recently, Sri Lanka passed the Colombo Port City Economic Commission Bill despite wide opposition to it.
Details:
- The Colombo Port City Economic Commission Bill governs the China-backed $1.4 billion Colombo Port City project.
- The Colombo Port City is an artificial island that would be reclaimed from Colombo’s seafront.
- Being pitched as a “world-class city for South Asia”, there is a proposal to develop an international financial hub in the island.
- The project is financed chiefly through Chinese investment amounting to $1.4 billion, via CHEC Port City Colombo, a unit of the State-owned China Communications Construction Company (CCCC). In return, the company will receive some portion of the developed land on a 99-year lease.
Domestic opposition to the project:
- The China-backed Colombo Port City project has been opposed by the Opposition and citizens of Sri Lanka.
- Opponents to the project have warned against the creation of a “Chinese enclave” in Sri Lanka given the fact that the bill provides the Port City and the powerful Commission that will run it substantial “immunity” from Sri Lankan laws. This the opponents argues goes against Sri Lanka’s sovereignty.
- The bill also offers huge tax exemptions and other incentives for investors. This could adversely affect the already fragile finances of the island nation.
- The Colombo Port City project has faced opposition from environmentalists and fisherfolk, who fear that the project would affect marine life and livelihoods.
- Trade unions have also opposed the project, contending that labour rights had no protection under the proposed framework
Concerns for India:
Location of the project:
- The Colombo Port City strategic location adjacent to the Colombo Port, the country’s main harbour has raised suspicions of the Chinese intentions.
- This seems like an attempt of the Chinese to increase its presence and foothold in the Indian Ocean region, considered India’s zone of influence. This seems to be a continuation of the Chinese policy of encirclement of India.
Increasing Chinese presence of the Chinese in Sri Lanka:
- The Colombo Port City would be the third major port-related infrastructure project in Sri Lanka where China has a significant stake. The other two include an 85% stake in the Colombo International Container Terminals Ltd. (CICT) at the Colombo Port and the Hambantota Port in the Southern Province, where China holds a 99-year lease.
Increasing alignment of Sri Lanka with China:
- The inclusion of Sri Lanka as a partner in China’s ambitious Belt and Road Initiative, would only push the strategically located island location of Sri Lanka into sphere of influence.
1. U.S. delays tariffs against digital services tax
Context:
- The United States had recently announced a 25% tariff on $2 billion of imports from six countries, namely India, Austria, Italy, Spain, Turkey, and the United Kingdom.
- The tariff was subsequently suspended for up to 180 days to give space for ongoing international tax negotiations to continue.
Details:
Imposition of the tariff as a retaliatory measure:
- The proposed tariff was aimed as a retaliatory measure against the concerned countries’ imposition of a digital services tax impacting the tech corporations based in the U.S.
- The Finance Bill, 2021 of India had introduced an amendment imposing a 2% digital service tax on trade and services by non-resident e-commerce operators with a turnover of over ₹2 crore.
- A “Section 301” investigation initiated by the previous U.S. administration had found digital services taxes imposed by each of these countries to be discriminatory against U.S. tech firms.
- Under Section 301 of the Trade Act of 1974, the Office of the United States Trade Representative (USTR) enjoys a range of responsibilities and authority to investigate and take action to enforce U.S. national interests under trade agreements and respond to certain foreign trade practices.
Temporary suspension of the proposal:
- The Biden administration’s move to temporarily suspend the proposal seems to be an attempt to hold up the threat of USTR sanctions while allowing some space for tax negotiations with the nations concerned.
Concerns:
Global concerns:
- The previous administrations use of Section 301 powers on China, had led to an escalatory tariff war and tectonic shifts in global supply chains leaving many economies in a weakened condition. The U.S.’s trade war with China had an adverse impact for the whole global economy.
- The global economy which has been severely impacted by the pandemic and are only limping back on a feeble post-COVID-19 recovery. A new trade war front could be damaging not only to them, but also to the broader global economy.
Indian concerns:
- Any move to abolish or reduce the digital services taxes in India will dent the government’s revenue prospects.
- India’s digital service tax could yield approximately $55 million annually.
- If the U.S. chooses to go ahead with its retaliatory tariffs, close to $118 million of India’s exports to the U.S. would be subject to it. This would dent Indian products competitive pricing ability and subsequently reduce its trade competitiveness.
- The proposed tariff would impact 26 high value categories of goods, including basmati rice, cigarette paper, cultured pearls, semi-precious stones, certain gold and silver jewellery items and specific types of furniture products.
Way forward for India:
- India will have to balance between the two prerogatives of avoiding getting into any escalating matrix of retaliatory taxation with the U.S that would damage its economic recovery process while also ensuring that it does not yield on its intent to tax global tech firms which is not only the right thing to do but also an financial necessity for India.
F. Prelims Facts
1. Tigress under observation found dead in Tadoba
- The Tadoba Andhari Tiger Reserve is located in the Chandrapur district of Maharashtra state in India. The reserve includes the Tadoba National Park and the Andhari Wildlife Sanctuary.
2. New database for missing persons
- The Interpol has launched a new global database named ‘I-Familia’ to identify missing persons.
- This would make use of the DNA of relatives to identify missing persons or unidentified human remains around the world.
3. 114 killed in Burkina Faso attacks
Burkina Faso:
- Burkina Faso is a landlocked countryin West Africa and is bordered by Mali to the northwest, Niger to the northeast, Benin to the southeast, Togo and Ghana to the south, and the Ivory Coast to the southwest.
- Ouagadougou is the capitalof Burkina Faso.
Context:
- Suspected fundamentalists linked to Al-Qaeda and Islamic State have killed at least 114 civilians in Burkina Faso near the borders with Mali and Niger
Carbon capture and storage:
- Carbon capture and storage (CCS) is the process of capturing emitted carbon dioxide, and depositing it where it will not enter the atmosphere. The aim is to mitigate the effects of climate change by removing the greenhouse gases.
- Though it is possible for CCS to result in net negative emissions, they suffer from economic viability to the huge costs involved in its operations. There is the need to build economic viability in the CCS functioning.
Context:
- Researchers from Universities of Sydney and Toronto have designed advanced electrolysers to convert captured carbon into building blocks of everyday materials and even produce ethylene.
G. Tidbits
1. ‘Bank NPAs set to rise, deposit growth outpacing credit flow’
- As per the Reserve Bank of India’s assessment in its latest Financial Stability Report (FSR), Gross non-performing asset (GNPA) ratios of scheduled commercial banks (SCBs) are expected to increase in the coming quarters. This despite the regulatory interventions providing relief to both borrowers and lenders.
- Notably the credit growth has been on the decline while the deposit growth has quickened pointing out to the deteriorating health of the financial sector.
H. UPSC Prelims Practice Questions
Q1. Consider the following statements:
- India has five Tiger landscapes
- TraMCA is a software-based monitoring system launched by National Tiger Conservation Authority (NTCA)
- Tadoba-Andhari Tiger reserve is in the State of Maharashtra
Which of the above statements is/are correct?
- 1 and 2 only
- 2 and 3 only
- 1 and 3 only
- 1, 2 and 3
CHECK ANSWERS:-
Answer: c
Explanation:
- India’s five tiger landscapes are: Shivalik Hills and Gangetic Plains, Central Indian Landscape and Eastern Ghats, Western Ghats, North-East Hills and Brahmaputra Plains, and the Sundarbans.
- M-STrIPES, short for Monitoring System for Tigers – Intensive Protection and Ecological Status is a software-based monitoring system launched across Indian tiger reserves by the Indian government’s National Tiger Conservation Authority (NTCA) in 2010.
- TraMCA is a region of high biodiversity that extends along south-eastern Bhutan and northeastern India. TraMCA stands for Transboundary Manas Conservation Area.
- The Tadoba Andhari Tiger Reserve is located in the Chandrapur district of Maharashtra state in India. The reserve includes the Tadoba National Park and the Andhari Wildlife Sanctuary.
Q2. Which one among the following statements is incorrect about Burkina Faso?
- It is a landlocked country in West Africa
- It is part of Africa’s semi-arid Sahel region
- Equator passes through Burkino Faso
- The major ethno linguistic group of Burkina Faso is the Mossi
CHECK ANSWERS:-
Answer: c
Explanation:
- Burkina Faso is a landlocked country in West Africa lying in Africa’s semi-arid Sahel region. It is bordered by Mali to the northwest, Niger to the northeast, Benin to the southeast, Togo and Ghana to the south, and the Ivory Coast to the southwest. Ouagadougou is the capital of Burkina Faso.
- The Equator does not pass through Burkino Faso.
- The Mossi are the largest ethnic group in Burkina Faso, constituting more than 40% of the population, or about 6.2 million people. Other ethnic groups include the Gurunsi, Senufo, Lobi, Bobo and Fulani.
Q3. Biomedical wastes are divided into four color categories, which of the following is/are correctly matched?
- Yellow- Human anatomical waste, animal anatomical waste
- Orange- Contaminated plastic bag, bottles
- White- Scalpels, blades, needles
- Blue- Broken Glassware or metallic body implant
Options:
- 1, 2 and 3 only–
- 1, 3 and 4 only
- 2, 3 and 4 only
- 1, 2, 3 and 4
CHECK ANSWERS:-
Answer: d
Explanation:
Bio-medical waste:
- Bio-medical waste means “any solid and/or liquid waste including its container and any intermediate product, which is generated during the diagnosis, treatment or immunization of human beings or animals or research activities pertaining thereto or in the production or testing of biological or in health camps.
Categorization:
Q4. Which of the following statements is/are correct?
- H10N3 is a rare strain of a virus that normally infects poultry.
- H5N1 is the most common virus causing bird flu, or avian influenza. Though largely restricted to birds, it can cross over to other animals, but not humans.
Options:
- 1 only
- 2 only
- Both
- None
CHECK ANSWERS:-
Answer: a
Explanation:
- H10N3 is a rare strain of a virus that normally infects poultry. However, China has recently confirmed the first instance of human infection from H10N3.
- H5N1 is the most common virus causing bird flu, or avian influenza. Though largely restricted to birds, and often fatal to them, it can cross over to other animals, as well as humans.
Q5. Which of the following can be said to be essentially the parts of ‘Inclusive Governance’? (UPSC 2012)
- Permitting the Non-Banking Financial Companies to do banking
- Establishing effective District Planning Committees in all the districts
- Increasing the government spending on public health
- Strengthening the Mid-day Meal Scheme
Select the correct answer using the codes given below:
- 1 and 2 only
- 3 and 4 only
- 2, 3 and 4 only
- 1, 2, 3 and 4
CHECK ANSWERS:-
Answer: c
Explanation:
- Establishing effective District Planning Committees in all the districts allows for decentralized planning which facilitates more inclusive governance.
- Increasing the government spending on public health will help ensure universal access to healthcare facilities thus ensuring inclusive governance
- Strengthening the Mid-day Meal Scheme will help ensure nutritional security for the poor children and thus amounts to an inclusive governance measure.
I. UPSC Mains Practice Questions
- The passing of the Colombo Port City Economic Commission Bill may assist China in encirclement strategy that India must counter. Examine. (10 marks, 150 words)[GS-2,International Relations]
- What is indemnity for vaccine makers? Discuss how its waiver will impact the COVID-19 vaccine process in India. (10 marks, 150 words)[GS-2,Health]
Read the previous CNA here.
CNA 6th June 2021:- Download PDF Here
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