DAILY NEWS ANALYSIS (UPSC) |28 Dec 2020| RaghukulCS

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  • DAILY NEWS ANALYSIS (UPSC) |28 Dec 2020| RaghukulCS
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DAILY NEWS ANALYSIS (UPSC) |28 Dec 2020| RaghukulCS

UPSC News Analysis

News

Context: The government has used financial innovation to recapitalise Punjab & Sind Bank by issuing the lender Rs 5,500-crore worth of non-interest bearing bonds valued at par. The funds raised through issuance of these instruments, which are a variation of the recapitalisation bonds issued earlier to public sector banks, are being deployed to capitalise the state-run bank. 
Topic in syllabus: : Prelims – Economy
What is zero coupon bond?
  • A zero-coupon bond is a debt security instrument that does not pay interest. 
  • Zero-coupon bonds trade at deep discounts, offering full face value (par) profits at maturity. 
  • The difference between the purchase price of a zero-coupon bond and the par value, indicates the investor’s return. 
  • These recapitalisation bonds are special types of bonds issued by the Central government specifically to a particular institution. 
  • Only those banks, whosoever is specified, can invest in them, nobody else. It is not tradable; it is not transferable. 
  • It is limited only to a specific bank, and it is for a specified period. it is held at the held-to-maturity (HTM) category of the bank as per the RBI guidelines. 
  • Since it is held to maturity, it is accounted at the face value (and) no mark-to-market will be there. 

      • News
      Context: Paying 1% GST in cash: The new rule restricts the use of input tax credit (ITC) for discharging GST liability to 99 per cent, effective January 1, 2021. It would apply only to risky or suspicious dealers who use a lot of fake credit and make no cash tax payment, they said. 
      Topic in syllabus: Prelims – Economy

      What is the motive behind the move? 

      • To curb tax evasion by way of fake invoicing, the Central Board of tax amended rules. 
      • After unearthing rampant use of fake invoices to evade goods and services tax (GST), the Central Board of Indirect Taxes and Customs (CBIC) had last week amended rules to make it mandatory for businesses with monthly turnover of over Rs 50 lakh to pay at least 1 per cent of their GST liability in
        cash. 
      • Dummy companies which generate fake ITC or are used to be a layer in multi-layer fake credit flow pay
        no tax in cash. 
      • Sources said the rules have been amended to curb the menaceof GST fake invoice frauds and fake
        firms/devious fly-by-night operators who avail and pass on input tax credit (ITC) wrongfully. The CBIC
        has booked about 12,000 cases of ITC fraud and arrested 365 persons in such cases so far.

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

      •  China has lowered the age of criminal responsibility for some serious crimes from 14 to 12, as it looks to combat juvenile crime committed by children. Under an amended law, children aged 12 to 14 will be held criminally liable for “intentional homicide or intentional injury that leads to death or causes others severe disabilities by extremely cruel means.” (Case study regarding juvenile crimes | Ethical concern regarding China’s decision)

      Important news in short

      • In his last Mann ki Baat broadcast of the year, Prime Minister Narendra Modi on Sunday urged people to make a New Year resolution to substitute foreign made products for indigenous goods in 2021 “for the sake of the country”. 
      • Union Home Minister Amit Shah on Sunday said the Inner-Line Permit (ILP) had been the Centre’s biggest gift to Manipur since its statehood. 
      • Implemented under the British era Bengal Eastern Frontier Regulation, the ILP is an official document issued to let an Indian citizen enter a protected area for a limited period. Pressure groups in the northeast view this permit as a shield against the entry of illegal immigrants.
      • The first indigenous vaccine against pneumonia, developed by the Serum Institute of India (SII), will be launched by Union Health Minister Harsh Vardhan on Monday, says information released by the Institute here on Sunday.

      Editorial Analysis

      [The Hindu & The Indian Express]

      Editorial

      Title:  Towards an effective vaccination distribution policy
      Written by: Bhaskar Dutta (Professor of Economics, Ashoka University)
      Topic in syllabus: Issues Relating to Development and Management of Social Sector/Services relating to Health (GS-2)
      Introduction:
            • India plans to vaccinate 300 million people against COVID-19 over the next 67 months. The government plans to give priority to healthcare workers and other frontline workers, followed by everyone who is above 50 years of age. This will mean that roughly 20% of the population will be vaccinated by July or August 2021. 
            • A few issues are worth discussing. Perhaps the most important is the principle underlying the triage scheme adopted by the government. A different and somewhat contentious issue is whether the government will allow private players any space in the vaccination process. 
            Who gets priority? 
                  • The government’s strategy of giving priority to frontline workers and elderly people is in line with the practice being followed in the U.K. and the U.S. 
                  • The rationale for this is to protect those who are most likely to be infected in the future as well as those who are most vulnerable to the health consequences of the infection. 
                  What are the concerns?
                        • The priority given to older people may not actually minimise the total social and economic cost inflicted by the virus in the long run. The elderly are less mobile, have a lower level of social interaction, and are hence less likely to spread the virus. 
                        • The government’s procurement strategy seems to depend entirely on domestic sources. It also plans to rely entirely on public resources for distribution without involving private hospitals. Moreover, the government plans to bear the entire cost of vaccination. 
                        • Any approval for vaccine from the government will enable the affluent to jump the vaccination queue. This will inevitably attract the charge that the government is catering to the interests of the richer groups in the population. 
                        • There is concern that private suppliers will request government permission to import & distribute vaccine in India. 
                        What are the suggestion? 
                        • A vaccination drive such as this should have two distinct objectives: one, providing protection to those vaccinated, and two, to minimise or at least slow down the speed and spread of the viral transmission. Ideally, a vaccine distribution programme should keep both these in mind. 
                        • Densely populated areas — for instance, the Dharavi slum — should receive far more attention than they are likely to get under the current strategy. 
                        • Allowing the private sector to provide additional supplies of the vaccine would not really be a bad policy decision after all — even when the interests of the poor are taken into account. The most important consideration that has to be kept in mind is that this would not decrease the availability of the vaccine to the poor. 
                        • Government should follow its own distribution policies if the additional sources of supply do not exist. It has to ensure that there is no reduction in the availability of the vaccine for the poor. 
                          Conclusion: 
                                • The potential benefit accruing to the entire population is that the larger the numbers who get vaccinated, the lower will be the speed of virus transmission amongst the non-vaccinated. 
                                • Some centralised purchasing will be essential in order to exploit the bargaining power associated with the size of the market. But this should not be particularly hard to achieve. 

                                Explained

                                Title:  Governor’s role in calling an Assembly session: what the law, courts say
                                Topic in syllabus: Polity – Issues related to cooperative federalism, role of Governor (GS-2)
                                Introduction:
                                          •  In yet another tug-of-war between Kerala Governor Arif Mohammad Khan and Chief Minister Pinarayi Vijayan, the Governor has turned down a request to summon a special sitting of the Assembly to debate the new three central farm laws. 
                                          • The state government’s Cabinet had written to the Governor last week and, after the denial, is mulling approaching him again with the same request. The episode raises questions on the role of a Governor and the contours of the powers he or she has under the Constitution.

                                            Who can summon a session of the Assembly? 

                                            • “The Governor shall from time to time summon the House or each House of the Legislature of the State
                                              to meet at such time and place as he thinks fit…” says Article 174 of the Constitution. 
                                            • The provision also puts on the Governor the responsibility of ensuring that the House is summoned at least once every six months. 
                                            • Although it is the Governor’s prerogative to summon the House, according to Article 163, the Governor is required to act on the “aid and advice” of the Cabinet. 

                                            Can the Governor refuse the aid and advice of the Cabinet? 

                                            • When the Chief Minister appears to have lost the majority and the legislative members of the House propose a no-confidence motion against the Chief Minister, then the Governor can decide on his or her own on summoning the House. But the actions of the Governor, when using his discretionary powers can be challenged in court. 

                                            How have the courts ruled? 

                                            • A number of rulings by the Supreme Court has settled the position that the Governor cannot refuse the request of a Cabinet that enjoys majority in the House unless it is patently unconstitutional. 
                                            • The latest in the line of rulings is the landmark 2016 Constitution Bench ruling in which the Supreme Court looked into the constitutional crisis in Arunachal Pradesh after the Governor had imposed President’s Rule in the state. 
                                            • “In ordinary circumstances during the period when the Chief Minister and his council of ministers enjoy the confidence of the majority of the House, the power vested with the Governor under Article 174 to summon, prorogue and dissolve the house(s) must be exercised in consonance with the aid and advice of the chief minister and his council of ministers. 
                                            • In the above situation, he is precluded [from taking] an individual call on the issue at his own will, or in his own discretion,” the verdict said. 
                                            • The court read the power to summon the House as a “function” of the Governor and not a “power” he enjoys. 
                                            • The Sarkaria Commission of 1983, which reviewed the arrangements between the Centre and the states, had said that “so long as the Council of Ministers enjoys the confidence of the Assembly, its advice in these matters, unless patently unconstitutional must be deemed as binding on the Governor. 
                                            • It is only where such advice, if acted upon, would lead to an infringement of a constitutional provision, or where the Council of Ministers has ceased to enjoy the confidence of the Assembly, that the question arises whether the Governor may act in the exercise of his discretion”. 

                                            What happens if the Kerala government insists on holding the special session? 

                                            • Since the Governor’s powers are limited with regard to summoning the House, there can be no legal
                                            • ground to deny a request for summoning the session. 
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