Insights Daily Current Affairs, 10 October 2017

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Insights Daily Current Affairs, 10 October 2017


 

Paper 2:

 

Topic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

 

Group of Ministers set up to make GST composition scheme more attractive

 

 

The GST Council, chaired by finance minister Arun Jaitley and consisting of his state counterparts, has constituted a group of ministers or GoM under Assam finance minister Himanta Biswa Sarma to make the composition scheme more attractive and to revisit the goods and services tax rates on restaurants.

 

Background:

Businesses with turnover of up to Rs 1 crore can opt for the composition scheme and they can pay taxes in the range of 1-5% and file returns quarterly. However, only 15.5 lakh of the total 98 lakh businesses have registered under the GST regime opting for the composition scheme.

 

Terms of reference:

  • The GoM has been tasked with revisiting tax structure of different categories of restaurants with a view to rationalising or reducing the rates. Currently, GST is levied at 12% on non-AC restaurants while it is 18% in case of airconditioned ones.
  • The GoM will examine whether the AC restaurants pass on the benefit of cost reduction under GST to consumers and if they don’t, whether they should be disallowed input tax credit claims.
  • To make the composition scheme more attractive, the GoM will look into whether turnover of exempted goods can be excluded from the total turnover threshold for levying tax under the composition scheme.
  • It will also examine whether the scheme can be extended to taxpayers dealing in inter-state supplies of goods and whether the manufacturers opting for it can be given the benefit of input tax credit.

 

What you need to know about the Composition scheme?

The composition scheme is an alternative method of levy of tax designed for small taxpayers whose turnover is up to Rs 75 lakh — Rs 50 lakh in the case of eight north-eastern states and the hilly state of Himachal Pradesh. The objective behind it is to bring simplicity and reduce the compliance cost for small taxpayers.

  • The scheme is optional under which manufacturers other than those of ice cream, pan masala and tobacco products have to pay a 2% tax on their annual turnover. The tax rate is 5% for restaurant services and 1% for traders.
  • As per the Central GST Act, businesses are eligible to opt for the composition scheme if a person is not engaged in any inter-state outward supplies of goods and not into making any supply of goods through an electronic commerce operator who is required to collect tax at source.
  • While a regular taxpayer has to pay taxes on a monthly basis, a composition supplier is required to file only one return and pay taxes on a quarterly basis. Also, a composition taxpayer is not required to keep detailed records that a normal taxpayer is supposed to maintain.

 

Sources: pib.


 

Topic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

 

Sovereign Gold Bond Scheme–Series-III

Sovereign Gold Bond Scheme–Series-III

The government has launched the Sovereign Gold Bond Scheme 2017-18 – Series-III, which will be issued by the Reserve Bank India on behalf of the Government of India.

 

About the Sovereign Gold Bond Scheme:

The sovereign gold bond was introduced by the Government in 2015. While the Government introduced these bonds to help reduce India’s over dependence on gold imports, the move was also aimed at changing the habits of Indians from saving in physical form of gold to a paper form with Sovereign backing.

 

Key facts:

Eligibility: The bonds will be restricted for sale to resident Indian entities, including individuals, HUFs, trusts, universities and charitable institutions.

Denomination and tenor: The bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram. The tenor will be for a period of 8 years with exit option from the 5th year to be exercised on the interest payment dates.

Minimum and Maximum limit: The minimum permissible investment limit will be 1 gram of gold, while the maximum limit will be 4 kg for individual, 4 kg for HUF and 20 kg for trusts and similar entities per fiscal (April-March) notified by the government from time to time.

Joint Holder: In case of joint holding, the investment limit of 4 kg will be applied to the first applicant only.

Collateral: Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.

 

Sources: the hindu.


 

Paper 3:

 

Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

 

Nobel Economics Prize

Nobel Economics Prize

US economist Richard Thaler won the 2017 Nobel Economics Prize for his contributions in the field of behavioural economics.

The economics prize, officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established in 1968. It was not part of the original group of awards set out in dynamite tycoon Nobel’s 1895 will.

 

Contributions of Richard Thaler:

His empirical findings and theoretical insights have been instrumental in creating the new and rapidly expanding field of behavioural economics, which has had a profound impact on many areas of economic research and policy.

  • By exploring the consequences of limited rationality, social preferences, and lack of self-control, he has shown how these human traits systematically affect individual decisions as well as market outcomes.
  • In total, Richard Thaler’s contributions have built a bridge between the economic and psychological analyses of individual decision-making.

 

So, what is behavioural economics?

The field of behavioral economics blends insights of psychology and economics, and provides some valuable insights that individuals are not behaving in their own best interests. Behavioral economics provides a framework to understand when and how people make errors. Systematic errors or biases recur predictably in particular circumstances. Lessons from behavioral economics can be used to create environments that nudge people toward wiser decisions and healthier lives.

  • This branch looks at the impacts of social, psychological and emotional factors in making decisions about money that aren’t in a person’s best interest. It’s kind of the opposite to the rational decision makers that are usually described in economic theory.
  • Thaler’s research has expanded economic analysis by considering three psychological traits: limited rationality, perceptions about fairness and lack of self-control.

 

Sources: the hindu.


 

Topic: Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

 

Uday Kotak Committee suggests changes in corporate governance rules

 

A corporate governance comittee was formed by the Sebi in June 2017, under the chairmanship of Uday Kotak, MD, Kotak Mahindra Bank, with a view to enhance the standards of this regime of listed entities in India. The committee recently submitted its report.

  • In an attempt to support and enable sustainable growth of enterprise, while safeguarding interests of various stakeholders, the committee has come out with various recommendations.

 

Important recommendations made by the committee:

Minimum number of board of directors: The Committee has proposed that now board of directors shall comprise not less than six directors. Also board of directors shall have an optimum combination of executive and non-executive directors with at least one woman as an independent director and not less than 50% of the board of directors shall comprise of non-executive directors.

Minimum number of board meetings: These board shall meet at least 4-5 times a year, with a maximum time gap of one hundred and twenty days between any two meetings and at least once a year. Under this meeting, the board shall specifically discuss strategy, budgets, board evaluation, risk management, ESG (environment, sustainability and governance) and succession planning. Listed entity shall, at least once every year, undertake a formal interaction between the non-executive directors and the senior management.

Minimum compensation and remuneration: Top 500 listed entities by market capitalisation shall pay compensation to each independent director as Rs 5 lakh per annum, whether through sitting fees or profit linked commissions. Provided that, this provision will not apply in case of inadequacy of profits in accordance with Section 197 of Companies Act, 2013 – minimum sitting fees for every board meeting of Rs 50,000 for top 100 entities by market capitalisation and Rs 25,000 for next 400 entities.

 

Way ahead:

If these proposals are implemented, at least 256 companies on NSE will need to increase their board size and 637 will have to appoint a woman director. Also, the ministry of corporate affairs (MCA) has opposed 12 out of the 24 key proposals and said the changes are not feasible and in many instances will cause a regulatory overlap and unnecessarily make the functioning of boards tougher.

 

Sources: the hindu.


 

Topic: Conservation, environmental pollution and degradation, environmental impact assessment.

 

Namami Gange Programme

Namami Gange Programme

National Mission for Clean Ganga has approved eight projects worth Rs. 700 crore, out of which four pertain to sewage management in Uttar Pradesh, Bihar and West Bengal, three are related to treatment of drains through bio-remediation and one of inventorization and surveillance of river Ganga.

 

About Namami Gange Programme:

Namami Gange programme was launched as a mission to achieve the target of cleaning river Ganga in an effective manner with the unceasing involvement of all stakeholders, especially five major Ganga basin States – Uttarakhand, Uttar Pradesh, Jharkhand, Bihar and West Bengal.

The programme envisages: River Surface Cleaning, Sewerage Treatment Infrastructure, River Front Development, Bio-Diversity, Afforestation and Public Awareness.

 

Implementation:

The program would be implemented by the National Mission for Clean Ganga (NMCG), and its state counterpart organizations i.e., State Program Management Groups (SPMGs).

  • In order to improve implementation, a three-tier mechanism has been proposed for project monitoring comprising of a) High level task force chaired by Cabinet Secretary assisted by NMCG at national level, b) State level committee chaired by Chief Secretary assisted by SPMG at state level and c) District level committee chaired by the District Magistrate.
  • The program emphasizes on improved coordination mechanisms between various Ministries/Agencies of Central and State governments.

 

Sources: pib.


 

Topic: Conservation, environmental pollution and degradation, environmental impact assessment.

 

SC bans sale of crackers in Delhi

SC bans sale of crackers in Delhi

The Supreme Court has suspended the sale of firecrackers in Delhi and NCR till November 1, 2017 in a bid to test whether a Deepavali without firecrackers this year will have a “positive effect” on the health of citizens and a steadily deteriorating air quality.

 

Background:

There are evidences of deterioration of air quality at alarming levels in Delhi. Burning of these firecrackers during Deepavali in 2016 had shot up pm [particulate matter] levels by three times, making Delhi the worst city in the world, insofar as air pollution is concerned. Direct and immediate cause thereof was burning of crackers during Deepavali.

 

Opposing view:

Few experts see court’s decision to re-impose a ban on the sale of firecrackers in Delhi and surrounding towns till November 1 as extreme, unjustified and, perhaps, inadequately thought move.

  • To begin with, the ban is on the sale of firecrackers, not their use. So those who already have firecrackers, or, presumably, are able to obtain them from outside Delhi would be free to let them off.
  • Equally importantly, the Supreme Court decision only applies to Delhi and nearby towns. The rest of India is exempt. For now Mumbai, Kolkata, Chennai, Bangalore, Hyderabad are not of equal concern.
  • Also, has the court considered what this will do to the firecracker industry and, more importantly, to the livelihood of thousands of shopkeepers and traders, many of whom are small roadside vendors or corner shops? It could very well bankrupt and impoverish them.
  • This raises the moral question: Is the court right to experiment with Diwali? Firecrackers do create an environmental and health hazard. For those with asthma and other breathing problems, this can be very serious. Therefore, the case for controlling and restricting is undeniable. But the Supreme Court has gone further and attempted a ban.

 

Why not have a blanket ban on firecrackers’ sale in Delhi?

However, a total ban on firecrackers’ sale in Delhi NCR is too “radical a step” and a graded, gradual approach to a complete ban should be adopted — would be effective from November 1.

 

What can be done?

The problem of firecrackers in Delhi has been around for decades. That’s ample time for the Court to have devised a more thoughtful response than a last minute arbitrary ban. It could have imposed a stricter timeframe, reducing the 10 pm limit to 9 or even 8 pm. It could have asked the government to stage firework displays in a handful of strategic locations, broadcast by TV channels, so people can do without their own. London does this on New Year’s Eve. Finally, it could have asked the government to pay for those who suffer from firecracker displays to leave the city for 48 hours and add the cost as an additional tax on firecrackers.

 

Sources: the hindu.