29 May 2022: UPSC Exam Comprehensive News Analysis

C. GS 3 Related

Category: SECURITY

1. Twin hurdles hinder India’s maritime role

Syllabus: Various Security forces and agencies and their mandate. 

Mains: Challenges associated with India’s Maritime capabilities and the way forward.

Context

This article talks about the challenges that have limited India’s ability to expand its ability in maritime security and surveillance.

Background

• Recently the QUAD grouping (India, Japan, Australia and the US) proposed the  Indo-Pacific Maritime Domain Awareness (MDA) initiative aimed at information sharing and maritime surveillance in the region.
  • The Indo-Pacific MDA initiative is designed to work with the regional allies to respond immediately to humanitarian and natural disasters and combat illegal fishing.
  • The Indo-Pacific MDA initiative will work in consultation with Indo-Pacific nations and regional Information Fusion Centres in the Indian Ocean, Southeast Asia and the Pacific Islands and extend technology and training to ensure improved maritime domain awareness that promotes stability and prosperity.
  • IPMDA initiative plans to build a faster, wider, and more accurate maritime landscape of real-time activities in partners’ waters and integrate three key regions in the Indo-Pacific namely the Pacific Islands, Southeast Asia, and the IOR.
  • IPMDA is in line with Quad’s vision of “catalysing joint efforts towards concrete results that help to make the region more stable and prosperous”.
• Also, there has been an increased interest and requests from many countries to deploy International Liaison Officers (ILO) at the Indian Navy’s Information Fusion Centre-Indian Ocean Region (IFC-IOR). 

Twin challenges that hinder advancing India’s maritime role

• Infrastructure constraints
  • Despite the increased interest from other countries to post ILOs at IFC-IOR, the Centre is unable to induct them due to infrastructure constraints.
  • Approval from the Defence Ministry for the expansion has been pending for two years.
• Delays in deploying Indian LOs at other centres
  • Posting Indian Liaison Officers at other facilities in other countries is equally important, but there is a huge delay currently in such postings.
  • Proposals to deploy Indian naval LO at the Regional Maritime Information Fusion Centre (RMIFC) in Madagascar, the Regional Coordination Operations Centre in Seychelles and the European-led mission in the Strait of Hormuz (EMASOH) in Abu Dhabi have been pending for a long time.

The need for addressing these challenges

• The sphere of information sharing for MDA has significantly increased among the QUAD countries and other littoral states in the wake of the increasing naval influence of China in the region.
• Posting ILOs play a key role as they bring in local expertise and in enhancing collaboration and cooperation with other agencies in their home countries.
• It is important that nations in the neighbourhood join India’s information-sharing framework as it increases India’s strategic influence and showcases to the world that these nations are aligning with India for their security needs.
• The overall improvement in the linkages of the IFC-IOR with the other IFCs will ultimately help IFC-IOR become the database for all maritime information in the IOR.

E. Editorials

Category: ECONOMY

1. Price rise and GST

Syllabus: GS III, ECONOMY, Issues related to planning, growth, development

Prelims: GST, GST Council

Mains: The role of GST in strengthening the Centre-State relationship and maintaining the tax buoyancy. 

Context: The article puts forth a profound analysis of the need to revise the Goods and Services Tax rates and the impact of price rise on the tax inflows. 

An Overview:

• The Goods and Services Tax was introduced as an indirect tax levied on the supply of goods and services with the motto of one nation, one tax.
• Gradually, there were questions raised on the stability and structure of the GST that invited intervention by the Supreme Court. 
• Moreover, there is inadequate clarity on the actual jurisdiction of the GST Council. 
• The court ruled that the decisions taken by the GST Council are recommendations with persuasive values and are not binding. 

Read more about the issue in CNA dated 25th May 2022.

• There were discussions of revising the GST regime to address the issues of complex taxes imposed on different products due to structural anomalies and to reduce the multiple tax slabs. 
• The GST council was tasked to offer a roadmap and suggest changes in the GST rate structure in the short and long terms. 

Concerns about the existing GST structure:

• The existing GST structure entails five broad tax rates of zero, 5%, 12%, 18% and 28% with a cess levied over and above the 28% on some ‘sin’ goods. 
  • Sin goods are those which cause harm to society and deteriorate the health of their consumers. 
  •  Goods like alcohol, tobacco, candies, drugs, soft drinks, coffee, sugar, fast foods, and so on are categorised under sin goods. 
  • Some sin goods like cigarettes, pan masala, and aerated drinks, have a tendency to attract cess. 
• The multiple tax rates increase the complexity of the tax regime and are compounded by aberrations in the duty structure through their supply chains with some inputs taxed more than the final product. 
• There were reports that observed an increase in the GST revenues which were termed as a sign of recovery by the government due to measures taken to tighten the regulations imposed on tax evaders. However, there is another factor for the record-breaking collection of GST revenues which is the uncontrolled price rise.
• The wholesale price inflation, which captures producers’ costs, has been over 10% for a year and peaked at 15.1%. 
• The rise in inflation faced by consumers has been at an eight-year high of 7.8%.
• The government had put forth that the new indirect tax system was based on a revenue-neutral tax rate of 15.5% but the actual revenues were nosedived and took the effective tax rate to 11.6%. 
• Irregular rate cuts approved by the council impacted the collection of revenues. 

Ways Suggested: 

• The government must calibrate its policies to bring effective tax reforms in the country that will contribute to economic growth. 
• It is expected that the government will provide top priority to collect more revenues apart from just simplifying the tax structure in the hope of boosting compliance. 
• The actual fiscal space of the states will be determined once the period for assured compensation to the states expires. There will be two sets of Group of Ministers (GoMs):
  • To examine more schemes and technologies available to improve tax compliance.
  • To rationalise tax rates to correct the anomalies and consider the merger of different tax slabs. 
• Experts emphasised that higher GST revenues shall not be confused with a rise in consumption which is reported to be 2% above the pre-pandemic levels. 
• It has been further illustrated that the rise in prices of commodities served as the single most important factor for higher tax inflows along with higher imports, compliance tweaks and a boon in the consumption of goods and services. 
• The process of rationalisation of the GST regime will have to consider several factors like the maintenance of high GST rates is imperative for high revenue collections. 
• Any merger of GST rates might impose high taxes on some products resulting in the ripple effects on prices. 
• This is why there is a need to identify the proper time to rationalise the tax slabs and structure. 
• The issue of inflation is a substantial hurdle that the Council needs to address and tackle. 
• There are macro-level compulsions rooted in the aftermath of the pandemic, and the disruption in the supply chain due to the Russian invasion of Ukraine, for which the prices of goods and services are anticipated to stay high.  
• It is evident that the enforcement of a simpler GST regime will take a longer time.