05 Mar 2020: UPSC Exam Comprehensive News Analysis

A. GS 1 Related
B. GS 2 Related
POLITY AND GOVERNANCE
1. T.N.’s outreach to neighbours raises river-linking expectations
C. GS 3 Related
ECONOMY
1. SC frees trade in crypto-currencies, annuls RBI curb
2. Nod for changes to Companies Act for decriminalising offences
3. Amid din, Lok Sabha approves tax resolution Bill
4. Telcos still owe Centre Rs. 1.30 lakh cr. in AGR dues
D. GS 4 Related
E. Editorials
POLITY AND GOVERNANCE
1. UN Human Rights chief to move SC over CAA
2. Caught in a bureaucratic web
INTERNATIONAL RELATIONS
1. The sum and substance of the Afghan deal
F. Prelims Facts
G. Tidbits
1. Cabinet allows NRIs to take 100% in Air India
2. COVID-19: govt. for universal screening
3. ‘IBC Bill discriminates against homebuyers’
4. Public sector bank mergers get approval
H. UPSC Prelims Practice Questions
I. UPSC Mains Practice Questions

A. GS 1 Related

Nothing here for today!!!

B. GS 2 Related

Category: POLITY AND GOVERNANCE

1. T.N.’s outreach to neighbours raises river-linking expectations

Context:

Tamil Nadu Chief Minister’s outreach to his Andhra Pradesh and Telangana counterparts over the linking of Cauvery and Godavari rivers has raised expectations of the project taking off soon.

Details:

• The National Water Development Agency (NWDA) is a Central government organisation entrusted with the task of preparing proposals for linking rivers.
• As per NWDA’s draft detailed project report (DPR), Tamil Nadu will get 83 thousand million cubic feet (tmc ft) at its border with Andhra Pradesh.
• The quantum will be 57 tmc ft at the Grand Anicut — a major regulator on the Cauvery.
• The NWDA’s draft report talks of diverting, through a canal-cum-pipeline, the surplus water of the Godavari, either from the Inchampalli barrage or the Janampet barrage, from where water will be conveyed to the Nagarjuna Sagar on the Krishna and then to the Somasila dam on the Pennar.
• The proposed alignment will also pass through Swarnamukhi, Araniar, Palar and Pennaiyar rivers before terminating at the Grand Anicut on the Cauvery.
• Four other States: Karnataka, Odisha, Madhya Pradesh and Chhattisgarh are also involved in the river-linking project.

 

Also read about the proposed National Interlinking of Rivers Authority (NIRA) covered in 4^th March 2020 Comprehensive News Analysis.

C. GS 3 Related

Category: ECONOMY

1. SC frees trade in crypto-currencies, annuls RBI curb

Context:

The Supreme Court has set aside an April 6, 2018, circular of the Reserve Bank of India (RBI) that prohibited banks and entities regulated by it from providing services in relation to virtual currencies (VCs).

Virtual Currencies:

• VCs are digital currencies in which encryption techniques are used to regulate the generation of the currency units and verify the transfer of funds, operating independently of a central bank.
• Virtual currency is the larger umbrella term for all forms of non-fiat currency being traded online.
• Virtual currencies are mostly created, distributed and accepted in local virtual networks.
• Cryptocurrencies, on the other hand, have an extra layer of security, in the form of encryption algorithms.
• Cryptographic methods are used to make the currency as well as the network on which they are being traded, secure.
• Most cryptocurrencies now operate on the blockchain or distributed ledger technology, which allows everyone on the network to keep track of the transactions occurring globally.

Read more about Bitcoins.

Why did the RBI ban virtual currencies?

• Owing to the lack of any underlying fiat, episodes of excessive volatility in their value, and their anonymous nature which goes against global money-laundering rules, the RBI initially flagged its concerns on trade and use of the currency.
• Risks and concerns about data security and consumer protection on the one hand, and far-reaching potential impact on the effectiveness of monetary policy itself on the other hand, also had the RBI worried about virtual currencies.

Details:

• The court in its recent order has held that the ban did not pass the “proportionality” test.
  • The test of proportionality of any action by the government, the court held, must pass the test of Article 19(1)(g), which states that all citizens of the country will have the right to practise any profession, or carry on any occupation or trade and business.
• In the judgement, it was observed that RBI had, till date, not come out with a stand that any of the entities regulated by it namely, nationalised banks/scheduled commercial banks/cooperative banks/NBFCs, had suffered any loss or adverse effect directly or indirectly, on account of VC exchanges.
• Besides, the court found that the RBI did not consider the availability of alternatives before issuing the circular.
• The court also referred to the Centre’s failure to introduce an official digital rupee despite two draft Bills and several committees.
• It also pointed to the two draft Bills, both of which advocated exactly opposite positions.
  • In November 2017, the Centre constituted an Inter-Ministerial Committee, which initially recommended the ‘Crypto-token Regulation Bill of 2018’.
    • This Bill found a complete ban on VCs an “extreme tool” and suggested regulatory measures.
    • At that point, the Committee was fine with the idea of allowing the sale and purchase of digital crypto assets at recognised exchanges.
  • In February 2019, the Inter-Ministerial Committee went on to recommend a “total ban” on private cryptocurrencies through a proposed legislation called ‘Banning of Cryptocurrency and Regulation of Official Digital Currency Act’.
    • This proposed law contemplated the creation of a digital rupee as official currency and a legal tender by the Central government in consultation with the RBI.
    • Had this law come through, there would be an official digital currency.
    • The Centre and the RBI would have had a monopoly over its creation and circulation.

 Conclusion:

• Even as virtual currency investors and businesses welcomed the Supreme Court’s order on cryptocurrency, the relief for such players may be only temporary given that the Centre, in a draft law, has proposed to ban all private cryptocurrencies.
• Organisations across the globe have called for caution while dealing with virtual currencies, while also warning that a blanket ban of any sort could push the entire system underground, which in turn would mean no regulation.
• Industry bodies believe that banning virtual currency is not the solution and that a risk-based framework must be developed to regulate and monitor cryptocurrencies and tokens.
• The RBI must reconsider its approach to cryptocurrency and come up with a calibrated framework that deals with the reality of these technological advancements.

Read more about Banning of Cryptocurrency and Regulation of Official Digital Currency Bill.

2. Nod for changes to Companies Act for decriminalising offences

Context:

The Union Cabinet has approved a proposal to amend 65 sections of the Companies Act 2013.

Details:

• The Centre has proposed to amend the Companies Act, in a bid to decriminalise a number of offences and ease corporate social responsibility (CSR) requirements, especially for smaller companies.
• The amendment bill will also enable the listing of Indian companies on stock exchanges in foreign jurisdictions.
  • This is expected to give Indian firms greater access to capital, a broader investor base and better valuations.
• The government will also exclude a certain class of companies from the definition of “listed company” mainly for listing of debt securities in consultation with Securities and Exchange Board of India (SEBI), to reduce their compliance burden.
• The Finance Minister outlined proposed changes to 52 out of 66 compoundable offences under the Act, either removing them entirely, downgrading penalties from jail sentences to fines or suggesting alternative adjudication mechanisms.
  • The Centre proposed to recategorise 23 offences so that they can be dealt with through an in-house adjudication framework, while five types of offences will be dealt with under different alternative frameworks.
  • For 11 kinds of offences, the provision of imprisonment will be removed, limiting punishment to fines only.
  • Six offences that had already been decriminalised earlier will see a further reduction in the quantum of penalties.
• The proposed amendments will also ensure that companies which have an obligation to spend Rs. 50 lakh per annum or less on Corporate Social Responsibility (CSR) are no longer required to have a CSR committee.
  • Companies that spend more than the mandatory 2% on CSR in a particular year can carry it forward as credit for fulfilment of CSR obligations for the next few years as well.
• A new section, 129A, is proposed to be added for prescribed classes of unlisted companies, which will file results on a periodic basis in addition to the annual filing.
  • It would make the periodic economic data more scientific.
• The Bill extends exemptions from filing certain resolutions to a particular class of non-banking financial companies and housing finance companies.
  • This is expected to reduce compliance burden for routine lending activities.
• It also proposes to allow payment of adequate remuneration to non-executive directors in the case of inadequate profits, by aligning it with the provisions for remuneration for executive directors.

Conclusion:

• If passed by Parliament, these would be the second set of amendments to the Act over the last year, as the law was already amended in July 2019.
• The changes are expected to significantly enhance the confidence of Indian corporates in the government’s resolve to provide greater ease [of doing business] and accord highest respect to honest wealth creators in the country and reduce the burden on the justice system.

3. Amid din, Lok Sabha approves tax resolution Bill

What’s in News?

The Direct Tax Vivad se Vishwas Bill that seeks to expedite resolution of pending tax disputes has been passed by the Lok Sabha, with a view to increase its scope to cover litigation pending in various debt recovery tribunals (DRTs).

Background:

• The Bill was introduced in the Lok Sabha with the aim of reducing litigation related to direct taxes.
• It was proposed to cover tax disputes pending at the level of commissioner (appeals), Income Tax Appellate Tribunals (ITAT), high courts and the Supreme Court.

Details:

• The Bill states that 4.83 lakh tax disputes are pending in various appellate fora such as Commissioner (Appeals), Income Tax Appellate Tribunal, the High Courts and the Supreme Court.
• As much as Rs. 9.5 lakh crore is locked in these disputes.
• Under the proposed scheme, a taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty if the amount is paid by March 31, 2020.

Disputes not covered: 

The proposed mechanism will not cover certain disputes.  These include disputes:

• Where prosecution has been initiated before the declaration is filed.
• Which involve persons who have been convicted or are being prosecuted for offences under certain laws (such as the Indian Penal Code), or for enforcement of civil liabilities.
• Involving undisclosed foreign income or assets.

4. Telcos still owe Centre Rs. 1.30 lakh cr. in AGR dues

Issue:

The Centre has said that it had till now received only Rs. 15,896.51 crore from telecom firms as payment towards their adjusted gross revenue-related dues. This is just about 11% of the total estimated dues.

This issue has been comprehensively covered in 25^th October 2019 Comprehensive News Analysis. Click here to read.

D. GS 4 Related

Nothing here for today!!!

E. Editorials

Category: POLITY AND GOVERNANCE

1. UN Human Rights chief to move SC over CAA

Context

• The Office of the United Nations High Commissioner for Human Rights “intends to file” an Intervention Application in the Supreme Court of India over the Citizenship (Amendment) Act (CAA).
• The UN official seeks to intervene as amicus curiae (third party) in the petitions against CAA pending before the top court.

On what grounds is the UN body seeking to intervene in a case regarding a domestic Indian law?

The Office of the High Commissioner for Human Rights (OHCHR) is the leading UN entity on human rights. It has the mandate to promote and protect all human rights for all people.

• The application says that successive High Commissioners “have filed amicus curiae briefs on issues of particular public importance within proceedings before a diverse range of international and national jurisdictions, including at the international level, the European Court of Human Rights, the Inter-American Court of Human Rights, the International Criminal Court, and at the national level, the United States Supreme Court and final appeal courts of States in Asia and Latin America”.

What does the intervention application say?

The application asks whether excluding people on the basis of their religion is “objective and reasonable”.

• The OHCHR has welcomed as “commendable” the CAA’s stated purpose, “namely the protection of some persons from persecution on religious grounds, simplifying procedures and requirements and facilitating the granting of citizenship to such persons, including migrants in an irregular situation, as well as refugees, from certain neighboring countries”.
• The CAA, it says, raises “important human rights issues, including its compatibility in relation to the right to equality before the law and nondiscrimination on nationality grounds under India’s human rights obligations”.
• The application questions the reasonableness and objectivity of the criterion of extending the benefits of the CAA to Buddhists, Sikhs, Hindus, Jains, Parsis and Christians from Afghanistan, Bangladesh and Pakistan alone.

India’s response

• The Ministry of External Affairs said in a statement, “The Citizenship Amendment Act is an internal matter of India and concerns the sovereign right of the Indian Parliament to make laws. We strongly believe that no foreign party has any locus standi on issues pertaining to India’s sovereignty.”
• The MEA spokesperson said that India was clear that the CAA is “constitutionally valid and complies with all requirements of (India’s) constitutional values”, and “is reflective of our long-standing national commitment in respect of human rights issues arising from the tragedy of the Partition of India”.

F. Prelims Facts

Nothing here for today!!!

G. Tidbits

1. Cabinet allows NRIs to take 100% in Air India

What’s in News?

The Union Cabinet has decided to allow Non-Resident Indians (NRIs) who are Indian nationals to own up to 100% stake of Air India, which is bound for disinvestment. The move is aimed at liberalising FDI policy.

• The amendment was meant to ‘liberalise and simplify the FDI policy to provide ease of doing business in the country’, the statement said.
• The government is in the process of selling the national carrier, having invited preliminary bids recently.
• Union Information and Broadcasting Minister said that the Cabinet, at a meeting chaired by the Prime Minister, had decided to increase the maximum stake for NRIs from 49% to 100%.
• The FDI (foreign direct investment) policy would be amended to allow NRIs who are Indian nationals to own up to 100% of Air India ‘under automatic route’, a government statement said.

Note:

While FDI inflows stood at $45.15 billion in 2014-2015, the provisional figures for FDI have increased to $62 billion in the financial year 2018-2019.

2. COVID-19: govt. for universal screening

What’s in News?

Principal Secretary to the Prime Minister chaired a crucial meeting called to discuss ways to combat the deadly COVID-19, where it was decided to introduce universal screening at all international airports in the country.

• Two major changes have been made to further enhance the government’s level of preparedness.
• These include introduction of universal screening at all international airports and sea-ports through use of thermal imagery equipment and mandatory filing of declaration forms of places visited by tourists and travellers returning from abroad.
• It was also decided to rapidly implement opening of proper testing, isolation and quarantine facilities down to the district level, in partnership with State governments.
• While efforts to contain the spread were appreciated, it was decided to enhance the effectiveness of the steps taken by adopting a pan-government approach, in partnership with the States.
• The Ministry of Information and Broadcasting is entrusted with disseminating information in a timely manner, including relevant advisories and ‘dos and don’ts’.

3. ‘IBC Bill discriminates against homebuyers’

 What’s in News?

Three panel members have filed a dissent note on the report on the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019 tabled by the Standing Committee on Finance.

• The dissent note states that the IBC Bill, 2019, is discriminatory as it does not treat homebuyers on par with other financial creditors and that it violates a Supreme Court ruling.
• The Bill has introduced a new clause that sets a threshold of 100 homebuyers, or 10% of the buyers, in a residential project, whichever is less, as a requirement to jointly take the developer to an insolvency court.
  • This means that an individual homebuyer, who is a financial creditor, cannot file an insolvency application.
• This clause is believed to be against the interest of homebuyers as it puts unreasonable conditions on them, destroys level playing field which currently exists, making the law lopsided in favour of real estate developers.
• It was also observed that no relief had been offered to homebuyers from repayment of bank loans if the developer failed to deliver.

4. Public sector bank mergers get approval

What’s in News?

The merger of public sector banks (PSBs) will become effective from April 1, 2020, with the Cabinet giving nod to the proposal.

• The consolidation of 10 PSBs into four includes the merger of Oriental Bank of Commerce and United Bank of India into Punjab National Bank, the amalgamation of Syndicate Bank into Canara Bank, the merger of Andhra Bank and Corporation Bank into Union Bank of India, and the amalgamation of Allahabad Bank into Indian Bank.
• The banks have submitted their scheme of amalgamation to Cabinet, which has been approved.
• According to the Finance Minister, they are on course to complete the amalgamation without affecting any of their core banking functions.

This topic has been covered in 4^th March 2020 PIB Summary and Analysis. Click here to read.

Also read: Big Bank Reform: RSTV – Big Picture.

H. UPSC Prelims Practice Questions

Q1. Which of the given states is/are involved in the Cauvery and Godavari River linking 
project?

1. Andhra Pradesh
2. Odisha
3. Chhattisgarh
4. Madhya Pradesh
5. Karnataka

Choose the correct option:

1. 1, 2 and 5 only
2. 1, 2, 3 and 4 only
3. 1, 4 and 5 only
4. 1, 2, 3, 4 and 5

See

Q2. Consider the following statements:

1. Blockchains are data structures that are cryptography-based and distributed across a network.
2. Blockchains eliminate the need for an intermediary to handle financial services.
3. Blockchain technology supports cryptocurrencies and the transfer of any data but not the transfer of digital assets.

Which of the given statement/s is/are incorrect?

1. 2 only
2. 3 only
3. 1 and 3 only
4. 2 and 3 only

See

 Q3. National Water Development Agency (NWDA) is:

1. A Central government organisation entrusted with the task of preparing proposals for linking rivers.
2. It is an autonomous organization established under the Societies Registration Act.
3. It is also entrusted with the completion of water resources projects under Pradhan Mantri Krishi Sinchai Yojana (PMKSY).

Which of the given statement/s is/are correct?

1. 1 and 2 only
2. 2 and 3 only
3. 1, 2 and 3 only
4. 1 and 3 only

See

 Q4. Consider the following statements with respect to National Anti-profiteering 
Authority (NAA):

1. The NAA is the statutory mechanism under GST law.
2. The aim of the NAA is to ensure the benefits of reduction or lower taxes under the GST regime are passed onto the end consumers.
3. In the event of a business failing to pass on the benefit of lower taxes under GST to the customer, NAA does not have the authority to deregister the entity.

Which of the given statement/s is/are correct?

1. 1 and 2 only
2. 2 and 3 only
3. 1 and 3 only
4. 1, 2 and 3 only

See

I. UPSC Mains Practice Questions

1. Massive build-up of tax disputes in India is due to poor drafting of laws and multiple interpretations. Explain the various initiatives taken by the Government of India to expedite resolution of pending tax disputes. (15 Marks, 250 Words).
2. What are the risks and challenges posed by the use of cryptocurrencies as an alternative to traditional currencies? (15 Marks, 250 Words).