Comprehensive Current affairs 30 July 2020

Modi stresses on boosting health infrastructure in villages.

Indian P.M Modi mentioned the need to develop new health infrastructure and boost the already existing health infrastructure facilities in the villages during the launch of three high throughput COVID-19 testing facilities yesterday.

Modi said that apart from developing the physical infrastructure, the country has also managed to swiftly ramp up human resources including paramedics, ASHA workers,Anganwadis among others. He said, as health workers, they played a significant part in controlling the spread of the pandemic.
He also spoke about the need to work on continuously attaching new and retired health professionals with the health system in order to prevent fatigue from setting in our Corona Warriors.
He forewarned people to be cautious during the celebrations of the festivals in order to keep the virus contained. He underlined that the benefits of PM GaribKalyan Anna Yojna should reach the poor on a timely basis.

He added that till the time a vaccine is not developed, people should adhere to the health guidelines following do gazdoori, wearing masks and hand sanitization.

The launch ceremony of the three high-throughput testing facilities was also attended by Indian Health Minister  Harsh Vardhan, Chief Ministers of UP, Maharashtra and West Bengal along with ICMR Director General Dr Balram Bhargava.

GOI claims India has one of the best weather service systems in the world.

Indian Health Minister Harsh Vardhan today said that Ministry of Earth Sciences is a unique organization in the world which looks holistically at all branches of Earth Science.

He said, India is the only country with a fully-dedicated ministry solely addressing all the aspects of Earth Sciences.

He added that this helps in developing an integrated approach in planning and resolving major concerns in a holistic manner with least time delay.

Harsh Vardhan was speaking at an event to celebrate the Foundation Day of the Ministry of Earth Sciences.
The Ministry was formed in 2006 by a merger of the India Meteorological Department, the National Centre for Medium Range Weather Forecasting, the Indian Institute of Tropical Meteorology, the Earth Risk Evaluation Centre and the Ministry of Ocean Development.

India holds defence ministerial dialogue with Indonesia.

Defence Ministers’ Dialogue between India and Indonesia was held in New Delhi.
Indian defence Minister led the Indian delegation while the Indonesian delegation was led by their Defence Minister General Prabowo Subianto.

The dignitary is in India for strengthening the ties between the two maritime neighbours.
During the talks,Indian D.M reiterated the long history of mutually beneficial interactions between

the two countries with a tradition of close political dialogue, economic and trade linkages as well as cultural and people to people interactions.

Conveying satisfaction on the military to military interactions, the Minister indicated that the defence cooperation between India and Indonesia has witnessed an upswing in the recent years.
This is in consonance with the Comprehensive Strategic Partnership between the two sides. Both the Ministers agreed to further enhance the bilateral defence cooperation in mutually agreed areas.
Potential areas of cooperation in the field of defence industries and defence technology were also identified by the two countries.

Both the Ministers committed themselves to further strengthen bilateral cooperation in these areas and take them to the next level of deliverables.

India and Bangladesh enhances bilateral trade and connectivity further.

Indian External Affairs Minister and Railways Minister flagged off virtually to Bangladesh ten Broad Gauge locomotives in a handing over ceremony held today.

The handing over of these locomotives, under grant assistance from India fulfills an important commitment made during the visit of Bangladesh Prime Minister Sheikh Hasina to India in October last year.

In keeping with the requirements of Bangladesh Railway, the locomotives have been suitably modified by the Indian side.These locomotives will help handle the increasing volume of passenger and freight train operations in Bangladesh.

Railway Minister of India underscored the significance of railway cooperation in enhancing bilateral trade and connectivity and in further boosting the economic partnership between the two countries.
In the recent times, India and Bangladesh have stepped up their rail cooperation in mitigating the impact of the COVID-19 pandemic, as trade via land border faced disruptions.

Rail as a cost effective and environmental friendly solution, has helped in transporting essential commodities across the border. Both sides saw the highest ever exchange of freight trains in the month of June.

India asks WTO members to find permanent solution to food stockholding.

India has asked the members of WTO to constructively engage in negotiations for a permanent solution to public stockholding for food security purposes, as committed in the ministerial conferences in Bali and Nairobi.

According to statements delivered by Ambassador and Permanent Representative of India to the WTO, BrajendraNavnit, at the meeting of General Council of WTO on July 22-23, a permanent solution to the issue, which is simple and can be used by developing countries, would go a long way in addressing their genuine concerns relating to food security of the most vulnerable sections of the society.

Navnit said the current pandemic has shown how adversely the poor in developing countries are impacted, and developing governments have been struggling with the issues faced by the most vulnerable sections of the society, including agricultural farmers and labourers.
Further, he said India has underlined that special and differential treatment (S&DT) is a treaty embedded right at the WTO and it cannot be taken away based on certain arbitrary assumptions.

Resarch found that Covid Spike Protein changes it's form.

Recently, the researchers have found that the spike protein of SARS-CoV-2 changes its form after it attaches itself to a human cell, folding in on itself and assuming a rigid hairpin shape.

Highlights:
• It protrudes from the surface of a coronavirus, like the spikes of a crown or corona.
• It initiates the process of infection in a human cell, in the SARS-CoV-2 coronavirus.

• It attaches itself to a human enzyme (ACE2 receptor) before entering into the cell and makes multiple copies of itself.

Significance:
• The alternative shape may help keep SARS-CoV-2 from breaking down.

• The rigid shape may explain why the virus remains viable on various surfaces for various periods.

• It is speculated that the post fusion form may protect the SARS-CoV-2 from our immune system.

Pied Cuckoo.

The Wildlife Institute of India (WII) has recently decided to study the migration of the Pied Cuckoo Bird (Jacobin Cuckoo or Chaatak), by tagging the bird with satellite transmitters.

Highlights:
• The study will be conducted along with the Indian Institute of Remote Sensing (IIRS) and the Government of India’s Department of Biotechnology.

• The IIRS is a constituent unit of the Indian Space Research Organisation (ISRO). It is headquartered in Dehradun. It is the first study in the country that seeks to trace and observe the migratory routes of the pied cuckoo. It aims to gather data and information on
climate change and the monsoon.

• It is part of a larger project called the Indian Bioresource Information Network (IBIN) funded by the Government of India’s Department of Biotechnology (DBT), which aims to put relevant Indian bioresources information online.

About Pied Cuckoo:

•It is known for its close association with the monsoon in India.

•The Farmers have traditionally relied on the arrival of the pied cuckoo as a signal of arrival of monsoon and seed sowing.

• It is a bird with black and white plumage (pied) with a fancy crest on the head. Its scientific name is Clamator jacobinus. It is found in Africa and Asia.

• There are two types of pied cuckoos found in India. In central and northern parts of India, pied cuckoos are migratory, they are seen only from just before the monsoon to early winter.

It is believed that the pied cuckoos that come to the Himalayan foothills are from Africa.
• They have high site fidelity, that is, they come back to the same location year after year.

• Pied cuckoos are also found in southern India, but those are resident birds and not migratory. The bird is primarily arboreal, which means that it mostly lives on trees. It is a brood parasite i.e. It lays its eggs in nests that belong to other birds.

• It is one of the few species that come to India in the summer. Most other migratory species come in winter.

IUCN Status: Least Concerned.

Significance:
• The information about the migratory route can be invaluable for research on climatic variations taking place in the world, especially since the species has such a close association with the monsoon.
• It will give us information on the monsoon, changes in the monsoon and monsoon winds, erratic rainfall, seasonal fluctuations, water vapour pressure, etc.

• The extent of the effect of ecologies changing can be seen in the movement of species from a less favourable region to a more Favourable Region.

First Legislature Representative for Siddi Community.

The state government in Karnataka has nominated Shantaram Budna Siddi as a Member of the Legislative Council (MLC) recently.

• With the nomination, the backward Siddi community has got its first representative in the State legislature.
• Shantaram is the first graduate from the Siddi community, has been working among tribal communities in the State for the past three decades.

•There are around 50,000 Siddis, descendants of African people, in Karnataka.
• Considering their low numbers, the Siddis have never managed to get a political representative elected directly.

•They have been racially discriminated in the past and have historically not been part of mainstream society.

Siddi Community:

• Siddi Tribe in Karnataka mainly lives in Dharwad, Belagavi and Uttar Kannada districts.
• Classified under the list of Scheduled Tribes by the union government in 2003.

• The economically and socially backwards community is included in Centre’s list of Particularly Vulnerable Trial Groups (PVTGs).

• They were dependent on hunting and gathering traditionally, but at present, their main source of livelihood is labour and agriculture.

• Believed to be of African origin as they clearly show the Negroid racial strain in their physical features. Records show that Africans came to India as soldiers and as slaves.

• Many of these slaves were freed in the 18th century and it is speculated that they found their way to the jungles in today’s north-west Karnataka.

Honey Testing LabLab was inaugurated.

Indian Minister of Agriculture and Farmers’ Welfare inaugurated the World Class State of Art Honey Testing Laboratory in Anand, Gujarat with support of National Bee Board.

Highlights:
•The Lab was established by National Dairy Development Board (NDDB) in Anand with support of National Bee Board.

• It has all the facilities based on the parameters notified by FSSAI and the test methods/protocols developed, have been accredited by National Accreditation Board for
Testing and Calibration Laboratories (NABL).

• Honey is being adulterated with high fructose corn syrup or rice, tapioca, sugarcane and beet syrup that are cheaper and resemble honey in physico-chemical properties.

• Honey Testing Laboratory will help in quality production of honey and its export to other countries.
National Bee Board:

• The National Bee Board is registered as a society under the Societies Registration Act, 1860 in 2000 by Small Farmers’ Agri-Business Consortium (SFAC).

• The overall development of Beekeeping by promoting Scientific Beekeeping in India to increase the productivity of crops through pollination.

• Increase the Honey production for increasing the income of the Beekeepers/ Farmers.
National Bee Keeping and Honey Mission:

• National Beekeeping and Honey Mission is a Central Sector Scheme (100% funded by Central Govt.).
• It is aimed at overall promotion & development of scientific beekeeping and production of quality honey & other beehive products.

• National Bee Board under the Department of Agriculture, Cooperation & Farmers Welfare, will be a National Level Nodal Agency for Implementation of Activities.

Focus on mains.

Topic: Polity

Need for Reforms in Anti-Defection Law.

The Political Horse trading in Rajasthan has widely put to display the ineffectiveness of the Anti-Defection Law.

The Tenth Schedule of Indian Constitution is popularly known as the Anti-Defection Act. Original constitution had no such provisions. It was included in the Constitution in 1985.

The main intent of the law was to deter “the evil of political defections” by legislators motivated by the lure of office or other similar considerations.

•The grounds for disqualification under the Anti-Defection Law includes

a)      If an elected member voluntarily gives up his membership of a political party.

b)       If he votes or abstains from voting in such House contrary to any direction issued by his political party or anyone authorized to do so, without obtaining prior permission.

c)      Going against the party whip.

• As a pre-condition for his disqualification, his abstention from voting should not be condoned by his party or the authorized person within 15 days of such incident.

•Articles 102 (2) and 191 (2) deals with anti-defection.

• The law disallows MPs/ MLAs to switch parties after elections, make the members follow the whips issued by their party.

• It also applies to a nominated member if he/ she join a political party after 6 months of nomination and to an independent candidate if he/she joins a party after the election.

What is not a Defection?

• A split in a political party won’t be considered a defection if a complete political party merges with another political party.

• If a new political party is created by the elected members of one party
• If he or she or alternative members of the party haven’t accepted the merger between the two parties and opted to perform as a separate group from the time of such a merger.

What are the loop-holes?

•Resignation as MLA was not one of the conditions.

• Exploiting this loophole, the 17 rebel MLAs in Karnataka resigned, their act aimed at ending the majority of the ruling coalition and, at the same time, avoiding disqualification.
• However, the Speaker refused to accept the resignations and declared them disqualified.

This was possible as the legislation empowers the presiding officer of the House (i.e. the Speaker) to decide on complaints of defection under no time constraint.

•The law originally protected the Speaker’s decision from judicial review.

• However, this safeguard was struck down in Kihoto Hollohan v. Zachillhu and Others (1992).
While the SC upheld the Speaker’s discretionary power, it underscored that the Speaker functioned as a tribunal under the anti-defection law, thereby making her/his decisions subject to judicial review.

• This judgment enabled judiciary to become the watchdog of the anti -defection law, instead of the Speaker, who increasingly had become a political character contrary to the expected
neutral constitutional role.

• The same could be witnessed in Shrimanth Balasaheb Patel & Ors vs. Speaker Karnataka Legislative Assembly & Ors (2019), where the three-judge SC bench upheld the then Karnataka Speaker’s decision of disqualification of the 17 rebel MLAs.

• However, it struck down his ban on the MLAs from contesting elections till 2023, negating the only possible permanent solution to the problem.

• The Supreme Court played the role of a neutral umpire in this political slugfest.
• But, the spectacle of MLAs hoarded in a bus, and being sent to a resort, openly exposed not just the absence of ideological ties between a leader and his party, but also her/his weak
moral character.

• It was also upsetting to see public acceptance of such malpractices as part of politics, with some even calling it Chanakya Niti.

Is there any safeguard for anti- defection?

• The Anti-Defection Law provided a safeguard for defections made on genuine ideological differences.
• It accepted “split” within a party if at least one-third of the members of the legislative party defect, and allowed the formation of a new party or “merger” with other political party if not less than two-thirds of the party’s members commit to it.

• he 91st Constitutional Amendment introduced in 2003 deleted the provision
allowing split.

• The 91st Amendment also barred the appointment of defectors as Ministers until their disqualification period is over or they are re-elected, whichever is earlier.

•But, obviously, such laws have not put to rest the trend of defections.

What should be done?

• The main issue, as witnessed in Karnataka, is that the defectors treat disqualification as a mere detour, before they return to the House or government by re-contesting.

This can only be stopped by extending the disqualification period from re-contesting and appointment to Chairmanships/Ministries to at least six years.

• The minimum period limit of six years is needed to ensure that the defectors are not allowed to enter the election fray for least one election cycle, which is five years.

• Of course, MLAs can still be bought from the ruling dispensation to bring it to a minority by being paid hefty sums, simply to stay at home for Six Years.

Contradictory Reforms to the Law:

• Nowadays, no real democratic discussions happen inside political parties about major issues affecting the country. Individual MPs and MLAs need to be empowered to think independently.
• Anti-defection law should be applied only to confidence and no-confidence motions (Dinesh Goswami Committee on electoral reforms, 1990) or only when the government is in danger (Law Commission (170th report, 1999).

• The rationale that a representative is elected on the basis of the party’s programme can be extended to pre-poll alliances.

• Instead of making Speaker the authority for disqualification, the decision should be made by the president or the governor on the advice of the Election Commission. This would
make the process similar to the disqualification procedure as given in Representation of Peoples Act (RPA). There can be additional penalties for defectors as well.

comprehensive current affairs 28 july 2020

India gets a new education policy after 34 years.

The GOI on Wednesday approved the new National Education Policy (NEP) that is expected to set the roadmap for the sector keeping in mind present employment scenario.

This is the third NEP after policies that came in 1968, and 1986. Though the government amended the 1986 policy in 1992, it was largely the same.

The new NEP, is expected

➡To change the name of the human resource development ministry to education ministry.

➡Promote multi-disciplinary education

➡To bring foreign education players to India to operate independently

➡Lay down rules for a higher education spending by the government.

➡The new policy promised more autonomy to higher educational institution.

This policy is also expected to set the ball rolling for regulatory reforms in the educational sector.

➡The draft has suggested solutions for early childhood and primary education. The focus on basic understanding of language, and mathematics will help in improving the quality.

➡Besides, the new policy will promote diversity and comprehensive education structure to top universities and institutions and set up a research fund to promote Resarch and development.

➡The new policy bats for extension of the right to education (RTE) act to all schools from pre-school to standard 12 instead of Class 1-8. It redraws the schooling system on a 5+3+3+4 formula instead of the current 10+2 model. Students in the age group of 3-8 years will be part of the foundation stage, 8-11 age group for preparatory schooling, 11-14 years for middle school and 14-18 for secondary level.

Jammu Ropeway Project Launched, 25 Years After It Was Planned.

The much-awaited Jammu ropeway project, aimed at boosting tourism in the winter capital of the Union territory, was launched by Lieutenant Governor Murmu.

Planned back in 1995, the project faced dozens of delays in its start, execution and date of completion. However, the people of Jammu are now happy that a prestigious project has seen the light of day after 25 years.

The project would go a long way in promoting tourism in the Jammu region, giving a fillip to the local economy by creating jobs.

Initially, the project was to be operated from Bahu Fort to Mubarak Mandi Complex when it was proposed back in 1995. It was modified and the route relocated when both places were declared protected monuments.

The cable car corporation had successfully conducted the trial run of the first phase of the project in April last year.

The 1.66-km-long cable car project has two phases, first from Bahu Fort to Mahamaya Park and second from Mahamaya to Peer Kho over the Tawi river, with a total length of 1,118 metres.

GOP to table ICJ review ordinance in Senate today.

The government of Pakistan will table the International Court of Justice (Review and Reconsideration) Ordinance, 2020 — formulated in relation to Indian spy Kulbhushan Jadhav's appeal against his sentence — today in the Senate.

Federal Law Minister Farogh Naseem will present the ordinance in the upper house of the parliament.Earlier, the bill was presented before the National Assembly, where a heated debate took place between the government and opposition benches on the subject.

The government of Pakistanon July 22 had approached the Islamabad High Court to appoint a legal representative for Jadhav.

The move was made in the light of the International Court of Justice's July 17, 2019 decision, following which the International Court of Justice (Review and Reconsideration) Ordinance, 2020 was enacted to implement the court's verdict.

According to the petition, Jadhav refused to file a petition against his sentence and the Indian spy cannot appoint a lawyer in Pakistan without India's assistance, while New Delhi is also reluctant to avail the facility under the ordinance.

The federal government in the petition, has asked the court to appoint a legal representative for Jadhav so that Pakistan can fulfil its responsibility to see to the implementation of the ICJ's decision.

On July 17, Pakistan had offered Jadhav consular access for a third time, after the second opportunity was not fully availed.

Jadhav and ICJ verdict

Kulbhushan Jadhav — an Indian Navy officer working for Indian covert agency Research and Analysis Wing (RAW) — was arrested on March 3, 2016, from Balochistan after he entered Pakistan from Iran.

On 10th April 2017, Jadhav was tried in a military court, which sentenced him to death for espionage and subversive activities. On May 18, 2017, the ICJ ordered Pakistan to halt the execution of Jadhav until a final decision was made in the proceedings.

On July 17, the court rejected India's appeal for Jadhav's release and asked Pakistan to suspend the execution. It ruled that Pakistan will have to review the entire process of trial and conviction of Jadhav and provide India with consular access. Over the past few days, Pakistan granted consular access to India thrice.

Turkey's new social media law.

Turkey's parliament passed a controversial bill giving the government greater control of social media.

Under the new law, social media giants such as Facebook and Twitter have to ensure they have local representatives in Turkey and to comply with court orders over the removal of certain content.

The legislation targets social networks and servers with Turkish users' data must be stored locally.

If companies refuse to comply, they will face fines and restriction of bandwidth making the platform unusable.

Human rights groups and the opposition are worried over what they call the erosion of freedom of expression in Turkey, with thousands of people subject to criminal proceedings for "insulting" President Recep Tayyip Erdogan on social media.They argue that increased control of social media will also limit Turkish access to independent or critical information in a country where the news media is in the hands of government-friendly businessmen or controlled by the state.

No obstacle

Ibrahim Kalin, Erdogan´s spokesman, brushed off fears the law would hamper free speech.He said "There is no obstacle to social media users freely expressing their opinion,"

"Here is the rule: whatever is a crime in real world is also a crime in cyber world ... there must be a limit to criticism." he pointed.

Turkey previously blocked Twitter and YouTube in 2014 after audio recordings were posted implicating the president, then prime minister, and his inner circle in an alleged corruption scandal.

Erdogan´s aversion of social media also dates back to anti-government protests in 2013, which were often mobilized by Twitter and Facebook posts.

A Turkish court in January lifted a ban on the online encyclopaedia Wikipedia after almost three years.

According to Twitter´s latest "transparency report" for the first half of 2019, Turkey ranked number one for seeking content removal with more than 6,000 requests.

Indias Currency Swap Facility with Sri Lanka

• The Reserve Bank of India has agreed to a $400 million currency swap facility for Sri Lanka till November 2022.

• Sri Lanka owes $960 million to India.

• Currency swaps are used to obtain foreign currency loans at a better interest rate than

Could be got by borrowing directly in a foreign market.

• The RBI’s action follows a recent bilateral technical discussion on rescheduling Colombo’s

Outstanding debt repayment to India.

What is a Currency Swap?

• It is a transaction in which two parties exchange an equivalent amount of money with each

Other but in different currencies.

• Currency swaps are often offsetting loans, and the two sides often pay each other interest

On amounts exchanged.

• The purpose is to avoid exposure to exchange-rate risk, to speculate on currency moves, or

To reduce the cost of borrowing in a foreign currency.

Students from Gujarat India spot an asteroid heading towards Earth.

➡An asteroid which is slowly moving towards Earth is reported was recently discovered by two Indian schoolgirls.

The asteroid in question is shifting its orbit, which will eventually cause it to potentially cross paths with earth.

➡10th Standard students Radhika and Vaidehi stumbled upon the asteroid in the midst of a school project which they named the asteroid HLC2514.

➡Both the students are based in Gujarat’s city of Surat, on the eastern coast of India. They were working on a project by Space India and NASA. As part of this, students had access to telescopic images from the University of Hawaii when they then analysed.

➡Space India’s astronomer told CNN that the girls were able to identify the body using a software which analysed images captured by NASA’s PAN Star telescope.

➡Currently, the asteroid is circling Mars, and does not remain a threat to Earth. However, in over a million years, it will move closer to Earth. Even though it may not cause any harm to our planet, it still remains a potential hazard. The estimated distance between the asteroid and Earth a million years from now will still be more than 10 times the distance between Earth and the Moon.

➡Asteroids are small rocky objects that usually orbit the sun, but may change their course over time.

Assessment of Climate Change Over Indian Region .

• Recently, the ‘Assessment of Climate Change over Indian Region’ was released by the Indian Ministry of Earth Sciences.

Highlights:

• The average temperature over India is projected to rise by 4.4°C, relative to the average temperature during 1976-2005, By the end of the 21st century.

• In coming decades, the average duration of heatwaves during April-June is projected to double, and their frequency to rise by 3 to 4 times compared to 1976-2005.

• It is projected to witness a considerable rise in the mean, extreme and inter-annual variability of rainfall associated with monsoon.

• The Flood risks are higher over the east coast, West Bengal, eastern Uttar Pradesh, Gujarat, Konkan and cities like Mumbai, Chennai and Kolkata. The Himalayan flood basins are projected to greater floods, due to the faster glacial and snow melting.

• The Eastern India could face two more droughts per decade compared to what was experienced during 1976-2005, while the Southern Peninsula is projected to experience one or two droughts fewer.

• In an extreme climate scenario, a risk of inundation looms over Andhra Pradesh and Ganga- Brahmaputra -Meghna delta basins. By 2030, some 340 million coastal residents of

the North Indian Ocean and its islands would be exposed to coastal hazards.

• The Storms in the Arabian Sea are gaining more strength and the trend is projected to continue.

• The number of extremely severe cyclonic storms formed in the Arabian Sea has increased in the last 20 years.

• The Hindukush Himalayas are projected to be warmer by 2.6-4.6°C, by the end of the century.

KURMA App was launched for turtle conservation.

• Recently, the KURMA is a mobile-based application aimed at turtle conservation. It was launched on the occasion of World Turtle Day.

It is developed by the Indian Turtle Conservation Action Network (ITCAN) in collaboration with the Turtle Survival Alliance-India and Wildlife Conservation Society- India.

• It has a built-in digital field guide covering 29 species of freshwater turtles and tortoise of India, and information on turtle identification, distribution, vernacular names, and  threats.

• Its objective is to provides users a database to identify a species.

• It also provides the location of the nearest rescue centre for turtles across the country.

• It will start identifying species automatically through artificial intelligence. Tortoise and  freshwater turtles are among the most trafficked in the country.

• They are also not aware of their protection status in accordance with CITES (Convention on International Trade in Endangered Species) and the Wildlife Protection Act, 1972.

About Turtle Survival Alliance:

• It was formed in 2001 as an International Union for Conservation of Nature (IUCN) partnership for sustainable captive management of freshwater turtles and tortoises.

• It arose in response to the rampant and unsustainable harvest of Asian turtle populations to supply Chinese markets, a situation known as the Asian Turtle Crisis.

• Its mission is ‘Zero Turtle Extinctions in the 21st Century’.

Report finds Indian economy to continue facing inflationary pressures

➡The Indian economy is likely to face inflationary pressures in the near term, as factors like supply chain disruption and lack of low-wage workers are expected to offset the deflationary pressures from subdued demand in the economy, says a report.

➡According to Dun & Bradstreet's latest Economy Forecast, inflationary pressures are building up both from the demand and the supply side.

➡Dun & Bradstreet expects the Consumer Price Inflation (CPI) to have increased from 5.7 per cent to 5.9 per cent during July 2020.As per government data, retail inflation had increased to 6.09 per cent in June, mainly on account of higher prices of food items.

➡According to the report, inflationary pressures from supply disruptions, less availability of low wage labour, high tariffs on some imported commodities, and larger than adequate liquidity in the banking system might offset the deflationary pressures from subdued demand in the economy.

➡As per Dun & Bradstreet's business credit scores derived from the 2019 financial performance, 71 per cent of Indian businesses fall under the "slightly greater than average risk" category.

Special focus on mains

Topic covered: Economy

Delayed GST Compensation

• Lower GST revenues have translated into delayed and pending compensation payments to states, an issue which will be central to the discussions of the GST Council meeting slated to be held later this Month.

GST:

• The Centre will levy and collect the Central GST.

• States will levy and collect the State GST on the supply of goods and services within a state.

• The Centre will levy the Integrated GST (IGST) on the interstate supply of goods and services, and apportion the state’s share of tax to the state where the good or service is consumed.

• The states have been guaranteed 14 per cent annual growth in GST revenue over the base year of 2015-16.

• Any shortfall has to be compensated from the receipts of Compensation Cess imposed on selected commodities that attract a GST of 28 per cent .

• At present, the cess levied on sin and luxury goods such as tobacco and automobiles flows into the Compensation Fund.

GST Compensation Issue:

• The pandemic effect: The Goods and Services Tax (GST) collections recorded a 41 per cent decline in the April-June quarter.

• Compensation pending: The increase in revenue in 2019-20 has been a meagre 3.8 per cent compared to the previous year.

• The result is that even after paying Rs 1.2 lakh crore as compensation, the due payments are more than Rs 1 lakh crore already.

• This raises a fundamental question: How can the gap between fund availability and fund requirement be bridged?

• Market borrowing has been discussed as one of the possible solutions for meeting the compensation gap in the GST Council though the legality of the Council to borrow will need to be explored.

Issues:

• High 14% rate: The required amount to pay states started rising with a compounded 14 per cent rate which is inordinately high as compensation collections remained around the  same level for two consecutive years.

• It gives states no incentive to make tax efforts of their own. Nor does it make an allowance for an economic downturn, such as the one caused by covid.

• Adamant states: All states are unanimous on sticking to the 14 per cent assured rate for compensation.

• Compensation fund limited to cess only: In the Budget for 2020-21, the Finance Minister had said that thereafter, transfers to the fund would be “limited only to collection  by way of GST compensation cess”.

• This declaration is against the federal consensus between the Centre and states, and the constitutional guarantee enshrined after an elaborate process.

• Section 10(1) of the Act allows for “other amounts” also to be credited to the Compensation fund with the approval of the GST Council.

• Restructuring possible after pandemic only: Tinkering of rates of rate structure under GST cannot be done till the effects of pandemic-induced slowdown continue.

• Hiking the cess rate or lowering of the guaranteed compensation rate have featured in the discussions of the GST Council meetings, but states are not in favour of either of the options.

• The bureaucratic tinkering with rates: The most recent example is that of packaged parotta being levied 18% GST, whereas its north Indian cousin, the parantha, is taxed at 5%. Such arbitrariness has resulted in confusion, uncertainty and litigation.

• Uninformed decisions: The pre-election sharp reductions in tax rates without serious examination of the revenue implications have also contributed to the fall in revenue. The  current rates are not revenue neutral.

• Alcohol and Petroleum: The states remain addicted to special levies on these to fill their coffers. It creates hindrances in achieving single GST slab.

Way Forward:

• Borrowing from the market by the GST Council and crediting it to the compensation fund:

• The GST Council or the Compensation Fund must be empowered to borrow funds from the market and compensate the states.

The Advantage:

Since the loans are not taken by the Centre, it has no fiscal deficit  Implications. And the liabilities would be liquidated automatically from the collection of the Cess during the extended period.

• Options for Meeting Compensation Gap: A paper by Vijay Kelkar (Chairman, 13th Finance Commission) has listed out following options —

✓ Lowering the guaranteed rate of compensation,

✓ Increasing the compensation cess,

✓ Increasing the state’s share (SGST),

 GST reforms:

✓ A restructuring of the GST model should be considered if the losses for states continue.

✓ Review of complex structure of Integrated GST

✓ Inclusion of petroleum products under GST

✓ Simplification of GST rates and minimising exemptions,

• Independent GST Council Secretariat:

✓ GST Council’s decisions should be based on

1. An estimate of the tax base,

2. The tax elasticity of the commercially important goods,

• The loss anticipated by such reduction and the anticipated increase in buoyancy through reform measures.

• This can only occur through the creation of an independent GST Council Secretariat which would provide neutral, unbiased, and pertinent advice on all the Matters.