DAILY NEWS ANALYSIS (UPSC) |21 Jan 2021| RaghukulCS

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DAILY NEWS ANALYSIS (UPSC) |21 Jan 2021| RaghukulCS

India Innovation Index

Context:Karnataka retained its leadership position in the major States category in thesecond edition of India Innovation Index released byNITI Aayog on Wednesday.

Topic in syllabus:Prelims – Reports and Indices

About India innovation index:

  • The study is an outcome of extensive research and analysis, which looks holistically at the innovation landscape of India by examining the innovation capabilities and performance of Indian states and union territories.
  • The aim is to create a holistic tool which can be used by policymakers across the country to identify the challenges to be addressed and strengths to build on when designing the economic growth policies for their regions.
  • The index attempts to create an extensive framework for the continual evaluation of the innovation environment of 29 states and seven union territories in India and intends to perform the following three functions- 1) ranking of states and UTs based on their index scores, 2) recognizing opportunities and challenges, and 3) assisting in tailoring governmental policies to foster innovation.
  • The India Innovation Index 2019 is calculated as the average of the scores of its two dimensions – Enablers and Performance.
  • The Enablers are the factors that underpin innovative capacities, grouped in five pillars: (1) Human Capital, (2) Investment, (3) Knowledge Workers, (4) Business Environment, and (5) Safety and Legal Environment. The Performance dimension captures benefits that a nation derives from the inputs, divided in two pillars: (6) Knowledge Output and (7) Knowledge Diffusion.

Secured Overnight Financing Rate

Context:State Bank of India (SBI)has executed two interbank short term moneymarket deals with pricing
linked to SOFR (SecuredOvernight Financing Rate).

Topic in syllabus: Prelims – Economy
About SOFR (Secured Overnight Financing Rate):
  • The secured overnight financing rate (SOFR) is a benchmark interest rate for dollar-denominated derivatives and loans that is replacing the London interbank offered rate (LIBOR).
  • SOFR is based on transactions in the Treasury repurchase market and is seen as preferable to LIBOR since it is based on data from observable transactions rather than on estimated borrowing rates.
  • The secured overnight financing rate, or SOFR, is an influential interest rate that banks use to price U.S. dollar-denominated derivatives and loans.
  • The daily secured overnight financing rate (SOFR) is based on transactions in the Treasury repurchase market, where investors offer banks overnight loans backed by their bond assets.
Important news in short
  • Farm union leaders will consider a proposal from the Union government to suspendthe implementation of thethree contentious farm reform laws for the next yearand­a­half while a committeeis formed to look into theirdemands. Union leaders saidthe Centre had also offeredto submit an affidavit to the
    Supreme Court to this effect .
  • The Supreme Court, in a majority view, dismissed a series of petitions seeking a review of its 2018 judgmentupholding the Lok SabhaSpeaker’s certification ofAadhaar law as a Money Bill
    and its subsequent passagein Parliament. However, Justice D.Y. Chandrachud dissented with the majority,saying the Aadhaar reviewpetitions should be keptpending.
  • India is a “bipartisan success story”, Antony Blinken,Secretary of State nomineeof U.S. President Joseph Biden, said at his confirmationhearing at the Senate Committee on Foreign Relations,making it clear that strategicties with India will remainstrong, especially on the Indo-­Pacific, with continuityin dealing with China’s aggressive actions from theTrump administration.
  • S. President Joe Bidenplans to kick off his new administration on Wednesdaywith orders to restore theU.S. to the Paris climate accord and the World HealthOrganization, aides said.Mr. Biden will sign 15 orders and actions just hoursafter being sworn in as theU.S. leader to break from thepolicies of departing President Donald Trump and setnew paths on immigration,the environment, fighting
    COVID­19 and the economy,they said.3
Content related to Ethics (GS-4) in today’s newspaper
  • Important points to write in answers from today’s editorial by KapilSibal
    • It is only when the bureaucracy, industry leaders, professional organisations are all brought to account, will we see a ray of hope for democracy to take root.
    • It is only when acts of all public institutions are pegged to the same “moral universe” will they be aligned to the values of our republic.
    • Democracy needs to be preserved not for perpetuation of power but for the perpetuation of democratic values.
    • Societal balance is built upon institutional frameworks that ensure that no one institution has primacy over others.

.

Editorial Analysis

(The Hindu & The Indian Express)

The cyber tax conundrum

Source:The Indian express

Written by:SuranjaliTandon(policy professionaland columnist)

Topic in syllabus:Economy– taxation (GS-3)

Analysis about:This editorial talks about the digital service taxes – its scope, issues at national and international level.

Introduction:

  • The taxation of digital companies has been a key concern for G20 countries.
  • The agenda to reform international tax law so that digital companies are taxed where economic activities are carried out was formally framed within the OECD’s base erosion and profit shifting programme.
  • Seven years since its inception, it is still work in progress. Worried they might cede their right to tax incomes, many countries have either proposed or implemented a digital services tax.

Indian scenario:

  • India is amongst the first to have implemented an equalisation levy in 2016, which sought to tax payments made for online advertising services to a non-resident business by residents.
  • In March 2020, it expanded the scope of the existing equalisation levy to a range of digital services that includes e-commerce platforms.
  • Any payment made by non-residents in connection with an Indian user will now attract a 2 per cent levy.
  • Such an approach is often viewed as contrary to the ethos of international agreements. However, the proliferation of digital service taxes (DSTs) is a symptom of the changing international economic order.
  • Countries such as India which provide large markets for digital corporations seek a greater right to tax incomes.

Criticism of Indian digital service tax by U.S.:

  • According to a report, India’s equalisation levy is unreasonable for its sudden implementation and retrospective application, and is discriminatory since of the 119 companies to which it is likely applicable, 72 per cent are US-based.
  • It cannot be dismissed that the tax can result in over-taxation since the company will not be able to claim any credit for tax paid on Indian sales. the clarifications have not been made available. However, it is predominantly applicable to US companies since the market for digital services is dominated by US-based firms.
  • The law itself in no way discriminates based on size of operations or nationality, and has no retrospective element.
  • Any company that has a permanent residence in India is excluded since it is already subject to tax in India.
  • Experts suggest that such taxes can be passed on to consumers. While the Indian customer may not pay this as a tax, this could mean higher prices, contrary to the claim that it taxes the company.

Necessity of the digital service tax:

  • The core problem that the international tax reform seeks to address is that digital corporations, unlike their brick-and-mortar counterparts, can operate in a market without a physical presence.
  • The current basis for taxing in a particular jurisdiction is a notion of fixed place of business.
  • To overcome this challenge, countries suggested that a new basis to tax, say, the number of users in a country, could address the challenge to some extent.
  • The EU and India were among the advocates of this approach. In 2018, India introduced the test for significant economic presence in the Income Tax Act.

Conclusion:

  • As countries calibrate their response to competing demands for sovereignty to tax, DST is an interim alternative outside tax treaties. It possesses the advantage of taxing incomes that currently escape tax and creates space to negotiate a final, overarching solution to this conundrum.
Removing the creases in housework valuation

Source:The Hindu

Written by:Faizan Mustafa (Vice-Chancellor of NALSAR University of Law, Hyderabad.)

Topic in syllabus:Issues related to women, women empowerment(GS-1)

Analysis about:This editorial talks about why the work women perform for the family should be valued equally with men’s work during the continuance of marriage.

Introduction:

  • We go a step ahead and glorifyour women as goddesses but denythem equal rights, and under thelatest Uttar Pradesh and MadhyaPradesh Ordinances, even theright to choose their spouses.
The burden on women:
  • As in the 2011 Census, while 159.85 million women stated household work as their main occupation, a mere 5.79 men referred to it as their main occupation.
  • Indian women spend 299 minutes a day on unpaid domestic services for household members, men spend just 97 minutes.
  • A reportentitled ‘Women’s Economic Contribution through their UnpaidWork: A Case Study of India’
    (2009) had estimated the economic value of services by women tobe to the tune of a whopping$612.8 billion annually.
Some uncomfortable judicial observations:
  • In Arun Kumar Agrawal v. NationalInsurance Company (2010), the Supreme Court not only acknowledged the contribution of thehousewives as invaluable but alsoobserved that it cannot be computed in terms of money.
  • Similar observations wererecently made in Rajendra Singh(2020). But then these cases dealt
    with a limited question of compensation under the Motor VehiclesAct to calculate the compensation
    for the death of homemakers, andnot the recognition of a wife’s rightin her husband’s income duringthe subsistence of marriage.
  • Justice A.K. Ganguly in Arun KumarAgrawal (2010) referred to Census2001 that is carried out under anAct of Parliament and had categorised those who perform household duties — i.e. about 36 crore
    women in India — as non­-workersand clubbed them together withbeggars, prostitutes and prisoners
    (who are not engaged in economically unproductive work).
Arguments in favour of compensating women for house work:
  • Seventh century Islamic law clearlymandates husbands to pay wives ifthey decide to suckle their children and entitle them to spendcertain portions of husband’s money without his consent.
  • Home and market for centurieswere considered as two distinctspheres. American feminist economist Nancy Folbre rightly remarked, “themoral elevation of the home wasaccompanied by the economic devaluation of the work performedthere”.
    • The tendency of a “separate spheres” reasoning was thusto reinforce the legal ordering offamily life and justify a husband’scontrol of family assets.
  • Since the economy of the household is generally as much thesource of family wealth as the labor and enterprise of man, therefore the wife should, during life,have the same control over thejoint earnings as per husband, andthe right to dispose at her death ofthe same proportion of it as he”.
What are the efforts in India so far?
  • In India, the debate on jointproperty rights of married womenis not new though we still do not
    have joint matrimonial propertylaw.
  • A private member Billin 1994provided that a married womanshall be entitled to have an equalshare in the property of her husband from the date of her marriage and shall also be entitled todispose of her share in the property by way of sale, gift, mortgage,will or in any other manner whatsoever.
  • But in 2010, even registration of the National HousewivesAssociation as a trade union wasdenied as domestic work wastreated as neither trade norindustry.
  • The United Progressive Alliancegovernment, in 2012, had proposed to make it mandatory forhusbands to pay a monthly ‘salary’to their wives.
    • Theterm ‘salary’ as monthly paymentis indeed problematic as it indicates an employer­employee relationship, i.e., a relationship of subordination with the employerhaving disciplinary control overthe employee. Wives do not deserve a master servantrelationship.(argument against)
The way forward:
  • Matrimonial property laws do givewomen their share but only whenthe marital tie comes to an end.
    The time has come to insist thatthe work women perform for thefamily should be valued equally
    with men’s work during the continuance of marriage.
  • If women become a little assertive, prenuptialmarriage agreements can easilysolve this problem with the insertion of the clause on wives’ right inhusband’s earnings and propertiesbeing included in suchagreements.

True empowerment of the electricity consumer

Source:The Hindu
Written by:Manabika Mandal &Sreekumar Nhalur
Topic in syllabus:Economy(GS-3) | Governance – Consumer protection
Analysis about:This editorial talks about issues associated with recent Electricity rules,2020.
Introduction:
  • Did electricity consumers truly get “empowered” this December? This was theclaim of the Union Power Ministryas the “Electricity (Rights of Consumers) Rules, 2020 was promulgated in December, almost twoyears since the declaration of universal electrification.
  • There are many issues related to these new provisions, they are discussed below:
Issue of supply quality:
  • Many States have not been able toprovide quality supply, especiallyto rural and small electricity consumers. The enactment of consumer centric rules does spark public debate that brings the rights of
    consumers to the fore.
  • In this vein,the Rules lay an emphasis on national minimum standards for theperformance parameters of electricity distribution companies(DISCOMs), without urban ruraldistinction, especially for new
    connections, metering and billing.
  • It needs to be recognisedthat providing quality supply isprimarily the responsibility ofStates and DISCOMs. Similar (orbetter) provisions by various StateElectricity Regulatory Commissions (SERCs) already exist in theStandards of Performance (SoP)regulations. Such regulations havebeen in place for two decades inmost States.
Lack of accountability:
  • It is not because of a lack of rulesor regulations that quality supplyis not provided; rather, it is on account of a lack of accountabilitysystems to enforce them.
  • Guarantee of round the clocksupply is a provision that the Rulesemphasise, which might be missing in State regulations. But thereare doubts on the efficacy of automatic compensation payments towards such a guarantee. This is because the availability of powersupply is inadequately monitored.Hence, it isnot clear how the failure of powersupply is going to be recorded.
Weakening provisions:
  • Further, the Rules, in few cases, dilute progressive mechanisms that exist in State regulations.
  • Consider the case of electricity meter related complaints. The Rules say that faulty meters should be tested within 30 days of receipt of a complaint. Compared to this, regulations that were published as early as 2004, 2007 and 2012 in Andhra Pradesh, Bihar, and Madhya Pradesh, respectively, say that such testing needs to be conducted within seven days.
  • The Rules saythat the forum — constituted to remedy complaints against DISCOMs as per existing laws and regulations — should be headed by asenior officer of the company. Thisis a regressive provision thatwould reduce the number of casesthat are decided in favour of consumers, thereby eroding its credibility.
    • State regulations in Delhihave different eligibility criteria,strictly mentioning that a DISCOMemployee, who was in service inthe last two years, cannot be appointed as a forum member. Maharashtra, Telangana and Bihar,among others, have the option ofappointing a retired senior judicialofficer or other independentmembers as the chairperson.
  • The Rules are not forward looking either, given the government’sintent to promote rooftop solar
    They guarantee net metering for a solar rooftop unit lessthan 10 kW, but there is no clarity
    if those above 10 kW can also availnet metering. This could lead to achange in regulations in many
    States based on their own interpretations.
    • The possible litigation that followswould be detrimental to investments in rooftop solar units, andwould discourage medium andlarge consumers to opt for an environment friendly, cost-effectiveoption.
What is the way forward?
  • A useful way to protect consumers would be to nudge SERCs to assess the SoP reports of DISCOMs and revise their regulations more frequently. Also, SERCs should organise public processes to help consumers raise their concerns.
  • DISCOMs could be directed to ensure automatic metering at least at the 11 kV feeder level, making this data available online. The Forum of Regulators — a central collective of SERCs — could come up with updated model SoP regulations.
  • The Central Electricity Authority of India could be directed to collect supply quality data from DISCOMs, publicly host them on online portals and prepare analysis reports. Such effortsneed to go beyond the quality of information that is currently hosted on portals such as the National Power Portal.
  • The central governmentcould disburse funds for financialassistance programmes based onaudited SoP reports.With a focused one­time effort,electrification drives could provide connections across the country. But ensuring round the clocksupply will require continuous efforts.

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