DAILY NEWS ANALYSIS (UPSC) |08 Jan 2021| RaghukulCS

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  • DAILY NEWS ANALYSIS (UPSC) |08 Jan 2021| RaghukulCS
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DAILY NEWS ANALYSIS (UPSC) |08 Jan 2021| RaghukulCS

UPSC News Analysis

Anti-defection law

Context: The Supreme Court on Thursday asked the Centre and the Election Commission of India (EC) to respond to a plea to debar legislators, disqualified under the Tenth Schedule, from contesting by-elections during the rest of the tenure of the House.

Topic in syllabus: Prelims – Polity

What is in the petition?

·      Once a member of the House incurs disqualification under the Tenth Schedule, he cannot be permit
ted to contest again during the term for which he was elected.

·      Article 172 makes a membership of a House coterminus with the term of five years of the House except in circumstances mentioned there in.

What is Tenth Schedule?

The anti-defection law in India, technically the Tenth Schedule to the Indian Constitution, was enacted to address the perceived problem of instability caused by democratically elected legislators in India’s Parliamentary System of Government shifting allegiance from the parties they supported at the time of election, or disobeying their parties’ decisions at critical times such as during voting on an important resolution.

Provisions with regard to the disqualification of MPs and MLAs on the grounds of defection:

·      In what circumstances member can be disqualified?

·       If an independently elected member joins any party. 

·       If a member voluntarily gives up his membership of a political party. 

·       If he goes contrary to any direction issued by his political party while voting. 

·       If a nominated member joins any political party after 6 months.

·       The decision on defection & disqualification is referred to the Speaker or the Chairman of the House, and his decision is final. 

What are the exceptions?

  • In the situation where two-thirds of the legislators of a political party decide to merge into another party, no one will face disqualification.

First Advance Estimates (FAE)

Context: On Thursday, the Ministry of Statistics and Programme Implementation released the First Advance Estimates (FAE) for the current financial year. According to MoSPI, India’s gross domestic product (GDP) — the total value of all final goods and services produced within the country in one financial year — will contract by 7.7 per cent in 2020-21.

Topic in syllabus: Prelims – Economy

About First Advance Estimates (FAE):

What are the First Advance Estimates of GDP? What is their significance?

·      For any financial year, the MoSPI provides regular estimates of GDP. The first such instance is through the FAE. The FAE for any particular financial year is typically presented on January 7th.

·      Their significance lies in the fact that they are the GDP estimates that the Union Finance Ministry uses to decide the next financial year’s Budget allocations.

·      The FAE will be quickly updated as more information becomes available. On February 26th, MoSPI will come out with the Second Advance Estimates of GDP for the current year.

·      The first advance estimates of GDP, obtained by extrapolation of seven months’ data, are released early to help officers in the Finance Ministry and other departments in framing the broad contours of Union Budget 2021-22.

·      The second advance estimates of GDP will be released on February 26.

How are the FAE arrived at before the end of the concerned financial year?

·      The FAE are derived by extrapolating the available data. According to the MoSPI, the approach for compiling the Advance Estimates is based on Benchmark-Indicator method.

·      The sector-wise estimates are obtained by extrapolating indicators such as

·      #Index of Industrial Production (IIP) of first 7 months of the financial year

·      #Financial performance of listed companies in the private corporate sector available up to quarter ending September, 2020

·      #The 1st Advance Estimates of crop production,

·      #The accounts of central & state governments,

·      #Information on indicators like deposits & credits, passenger and freight earnings of Railways, passengers and cargo handled by civil aviation, cargo handled at major sea ports, sales of commercial vehicles, etc., available for first 8 months of the financial year.

Equalisation levy

Context: The USTR analysis has identified 119 companies likely subject to India’s DST, of which 86 (72 per cent) are US companies, followed by China and the UK with 7 companies each, France with 6 companies, and Japan with 5.  – Equalisation levy not discriminatory, will take appropriate action Indian government said.

Topic in syllabus: Prelims – Economy

About Equalisation levy:

·      Equalisation Levy is a direct tax, which is withheld at the time of payment by the service recipient. The two conditions to be met to be liable to equalisation levy:

o   The payment should be made to a non-resident service provider;

o   The annual payment made to one service provider exceeds Rs. 1,00,000 in one financial year.

·      The NDA government had moved an amendment in the Finance Bill 2020-21 imposing a 2 per cent digital service tax (DST) on trade and services by non-resident e-commerce operators with a turnover of over Rs 2 crore, effectively expanding the scope of equalisation levy that, till last year, only applied to digital advertising services.

·      According to the Commerce and Industry Ministry, the 2 per cent equalisation levy is not discriminatory, instead seeks to ensure a level-playing field with respect to e-commerce activities undertaken by entities resident in India as well as those not residents in India or without permanent establishment in India.

·      The purpose of the equalisation levy is to ensure fair competition, reasonableness and exercise the ability of governments to tax businesses that have a close nexus with the Indian market through their digital operations.

Important news in short

·      The U.S. Congress confirmed Democrat Joe Biden as the presidential election winner early on Thursday after a violent mob loyal to President Donald Trump stormed the Capitol in a stunning attempt
to overturn the presidential election, undercut the nation’s democracy and keep Mr. Trump in the White

·      Jammu and Kashmir Lieutenant Governor Manoj Sinha on Thursday announced a ₹28,400 crore
“Industrial Development Package­2021”, aimed at creating 4.5 lakh jobs and attracting ₹20,000 crore
investments in the Union Territory (UT).

·      The government’s three top committees on nutrition responsible for providing policy directions, monitoring the implementation of various schemes and reviewing the nutritional status of various
States and Union Territories have failed to meet even once since the COVID­19 pandemic broke out, though they are required to meet every quarter. This is despite global warnings of rising levels of hunger, malnutrition and child mortality.

o   The three top committees are: the National Nutrition Council (NNC); the Executive Committee (EC) of the National Nutrition Mission; and the National Technical Board on Nutrition (NTBN).

Examples related to Ethics (GS-4) in today’s newspaper

·      Judges should not be “hypersensitive” about criticism, former Supreme Court Judge Justice Madan B. Lokur has said. It was high time judges sat down for an introspection on what had gone wrong and what was to be done, he said. (Objectivity | Tolerance)

·      Trump supporters attack USA Parliament, after he refuses to accept the defeat in election & incites mob to do so. Police are also accused of not taking action on time. (Against constitutional ethics)

UPSC Editorial Analysis

(The Hindu & The Indian Express)

Misunderstanding the MSP

Source: The Indian Express

Written by: Pritam Singh, Shruti Bhogal (Singh is Professor Emeritus, Oxford Brookes Business School, Oxford. Bhogal is with PDRA, Centres for International Projects Trust, Delhi.)

Topic in syllabus: Issues related to Direct and Indirect Farm Subsidies and Minimum Support Prices (GS-3)

Analysis about: This editorial talks about how properly thought out resolution is require to untangle many aspects of farm laws.


How is MSP calculated in India?

·      As per the A2 method, MSP is set 50% higher than the amount farmer spends on farming including spending on seeds, fertilisers, pesticides, and labour.

·      C2 method on the other hand makes the calculation by including a wider range of inputs

·      The present MSP has been calculated based on the A2+FL method.

·      What is A2+FL?

o   The MSP is usually based on the recommendations by the Commission for Agricultural Costs and Prices. This estimation is usually done based on three types of calculation methods. These are A2 method, A2+FL method and C2 method.

o   As per the A2 method, MSP is set 50% higher than the amount farmer spends on farming including spending on seeds, fertilisers, pesticides, and labour.

o   C2 method, on the other hand, makes the calculation by including a wider range of inputs. This includes besides factors used to calculate A2, the economic value of the efforts of family members working on the farm and the value of other spending including rent and other assets. After calculating these, MSP is set at 50% above the derived amount.

o   While the National Commission on Farmers (NCF) headed by MS Swaminathan opted for this method to calculate MSP, it was not the one that was finally chosen.

o   The present MSP has been calculated based on the A2+FL method. The method is a middle ground between the other methods were the MSP is set 50% higher than the amount that derives from adding the amount farmer spend on farming including spending on seeds, fertilisers, pesticides, and labour and the value of labour provided by the family members for agriculture.


·      A fundamental gulf exists between the government’s view that its suggested amendments will address these flaws, and the farmers’ view that the amendments do not change the faulty structure of these laws and, therefore, the laws themselves need to be repealed. 

·      On minimum support price (MSP), the most important of the many contentious issues, the government position is riddled with so many irresolvable contradictions that a mere amendment — and less so an assurance on maintaining MSP — cannot resolve the matter.

What are the issues?

·      If you have MSP but not compulsory public procurement system (PPS), the support price becomes redundant. Similarly, if you have MSP and PPS/APMC mandi but not strict time-bound purchase of the product brought to the PPS, the deal will fail — especially if the product is a perishable commodity.

·      The government’s “assurance” that MSP/APMC can co-exist with the big agro-business-controlled private markets is not tenable, because a farmer who has reached a contract, say for three years, with a private trader will not be legally allowed to take the product to APMC if the APMC mandi offered him/her a better price than that contracted with the trader.

·      The agro-business entity will take the non-compliant farmer to court, where the dispute resolution mechanism is stacked against the farmer due to the structural inequities of legal resources and social-cultural capital.

·      The proposed dispute resolution mechanism increases the choice of the trader to trade and not of the farmer to sell.

·      The government system of announcing and implementing MSPs is inadequate. MSPs are announced for 23 crops but since the other two components of the procurement package, compulsory and timely public procurement, are provided mainly for two crops, wheat and rice, the support price does not work for the remaining 21 crops.

·      The definition of MSP is a hugely contested issue. Farmers’ organisations are insisting on the Swaminathan Committee formula of C2+50 per centThe MSP announced by the government is based on the A2+Fl+50 per cent formula, which, unlike the C2+50 per cent formula, does not cover all the costs of farming.

Why MSP & PPS are important?

·      To maintain food self-sufficiency because crop diseases and weather conditions such as droughts, especially due to global heating, can lead to food shortages.

·      To ensure a reasonable, assured income to the farmers. This second purpose is critical for the 86 per cent of India’s farming households who are either marginal (cultivating less than one hectare of land) or small (cultivating between one hectare and two hectares of land) and who sell their produce immediately after harvest.


·      The farmers’ recognition of the necessity to repeal these laws is rational. Agrarian reforms that recognise the importance of ecologically and economically sustainable agriculture are an absolute necessity.

·      Such reforms would require more than merely changing the trade emphasis of existing laws. They will involve the creation of inclusive, transparent and well-informed laws compatible with these reforms.

Business of diversity

Source: The Indian Express

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

Analysis about: This editorial talks about how Germany’s quota for women in corporate boardrooms is significant & why India’s private sector must set itself similar goals.


·      Germany’s cabinet has approved a law that makes it mandatory for large listed firms in the country to have at least one woman on their boards.

·      The ruling Christian Democratic Union, which had so far resisted forcing the hand of private companies, said it gave in because of slow progress on gender equality in the boardroom.

Concerning data about women:

·      Women make up only 12 per cent of management boards in Germany, behind countries such as the US (28.6 per cent), UK (24.5 per cent) and France (22.2 per cent).

·      In 2015, it had legislated a 30 per cent quota for women on supervisory boards of listed companies, which, however, entailed only a non-executive role.

Do legally binding quotas work or do they run the risks of state meddling in private enterprise?

·      Germany’s experience suggests that while expanding the pool of innovators, talent and perspectives is in the obvious self-interest of industries, the gender bias wired into corporate structures is what keeps the glass ceiling in place.

·      Countries that do better on gender parity than others — Norway, Sweden, Italy — set themselves either informal targets or commit to legal quotas.

·      In India, SEBI regulations make it mandatory for listed firms to have at least one woman director on their boards.

·      Despite that, the proportion of women board directors in Nifty 500 companies does not even touch 20 per cent, according to a report by Institutional Investor Advisory Services last year.


·      Inequality, whether of gender, caste or income, is a systemic feature of many Indian institutions — and the private sector is no exception.

·      Though it has resisted pressures for affirmative action so far, it must get to work on mechanisms that ensure more women in the boardroom. 

·      India’s private sector must set itself similar goals like Germany.

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