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Insights Daily Current Affairs, 04 January 2016



Insights Daily Current Affairs, 04 January 2016


Paper 3 Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.


Startups brace up for legal war with Income Tax department


Startups that have been ordered to pay tax despite valuations being marked down in recent funding rounds are challenging the demands, complaining that the move runs counter to the government’s campaign to encourage entrepreneurial spirit.


What’s the issue?

Amid concerns over profitability and competition, valuations of startups have declined sharply. Last month, the tax department challenged such reductions at about 100 startups and issued orders seeking 33% tax at the elevated levels that prevailed earlier.

  • The tax demand has been made for the assessment years 2013-14 and 2014-15 under Section 56(2)(vii)(b) of the Income-Tax Act, 1961. Experts said the Section was actually introduced to curb money laundering and was being wrongly aimed at genuine investment in startups.
  • The tax department’s move appears to be antithetical to the government’s encouragement for startups.


Way ahead:

Some startups have moved the income-tax tribunal against the notices while others have approached their advisers and could seek legal recourse in the coming days.


What can be done now?

This move makes no sense having offered tax breaks to young companies. The tax department should rescind its move to levy the tax on startups whose valuations have fallen on the grounds that the first premium was higher than the firm’s fair value. The valuation rules must be simple and clear. Arbitrariness must be eschewed as investors need stability and certainty in tax policy. More so, when they take risks.

Sources: et.


Paper 2 Topic: Important aspects of governance, transparency and accountability, e-governance- applications, models, successes, limitations, and potential; citizens charters, transparency & accountability and institutional and other measures.


Finally, after a decade of RTI roll out 94% ministries declared statistics in last fiscal


Over a decade after the implementation of the Right to Information (RTI) Act, the government has finally fallen in line. After refusing to divulge statistics on RTI applications for years, a record 94% of central ministries and departments have followed the rulebook in 2015-16, the Central Information Commission (CIC) has revealed.

  • According to statistics collated by the CIC, 94% of the public authorities have reported in 2015-16 on how they have been implementing the RTI Act. This is the first time that the number of public authorities following the rulebook has crossed the 90% mark.



Every year, a department has to register itself with the CIC and submit four quarterly returns during a year for assessment of their performance These returns include the number of applications received, disposed of, applications rejected, grounds of rejection, number of first appeals filed and the pendency at each ministry. This reflects on the efficacy of the RTI system in the government. So far, the number of ministries which have reported on the implementation has declined steadily.


Key facts:

  • In the first year of the implementation of RTI Act 2005-06, the most number of public authorities had reported their implementation figures. In that year, 89.23% of the public authorities had submitted the statistics.
  • This has declined to an all-time low of 67.5% in 2010-11. It became a shade better last year when 75.27% of the ministries and departments submitted their quarterly returns.
  • The number increased after concerted efforts by the CIC, which put in place a system to ensure all public authorities registered and reported their statistics. A follow-up was done every month.

Sources: et.


Paper 2 Topic: Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and bodies constituted for the protection and betterment of these vulnerable sections.


Government finds scientific way to implement social welfare programmes, combat poverty


The government is embracing a more scientific way to implement social welfare programmes in a move to better combat poverty by weeding out underserving beneficiaries.


What is it?

The government is planning to adopt the Socio-Economic and Caste Census (SECC) instead of the poverty line-based method to identify recipients for its pro-poor schemes.


What’s good about SECC?

  • The SECC 2011 ranks households based on their socio-economic status to enable state governments to prepare a list of families living below the poverty line.
  • It also makes available information regarding the socio-economic condition and education status of various castes and sections of the population.
  • The data also provides age-wise classification matched with various deprivation parameters.
  • SECC data also provides for automatic exclusion of beneficiaries on the basis of 14 parameters, automatic inclusion on five parameters and grading of deprivation on the basis of seven criteria.


The Sumit Bose Committee formed to study the validity and efficiency of the SECC 2011 data in identifying the poor recently submitted its report, which is in favour of using the information for rural development schemes.

The committee also developed a formula based on deprivation parameters to identify beneficiaries for specific schemes. The greater the deprivation score, the higher will be the ranking of a household for getting government assistance.

Sources: et.


Paper 2 Topic: Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.


India’s great school education challenge: Crisis in BIMARU states


An IndiaSpend analysis of indicators on literacy, school enrolment, learning outcomes, and education spending across four states – with 43.6% of India’s school-age population between the ages of five and 14 – has revealed that India is unprepared to educate and train its young population.


BIMARU statesHighlights of the report:

  • By 2020, India will have the world’s largest working population– 869 million, but it is still unprepared to educate and train its young population.
  • Overall, India’s literacy rate has increased 8.66 percentage points to 74.04 per cent between 2001 and 2011, according to Census data, but wide variations exists across states.
  • The crisis in education is especially apparent in the four BIMARU states of Bihar, Madhya Pradesh (MP), Rajasthan and Uttar Pradesh (UP) — with 445.1 million of India’s 1.2 billion population and some of the lowest literacy rates in the country, according to Census 2011.
  • School outcomes are also lower in the four BIMARU states. In 2014-15, fewer students moved from grade V to grade VI in UP, with a transition rate of 79.1%, when compared to Goa, with a transition rate of almost 100% in 2014-15.
  • Currently, only 2.5% of school-age children between the ages of five and 14 live in the four states — Kerala, Mizoram, Tripura and Goa — with the highest literacy in India, compared to 43.6 %per cent in the four BIMARU states, according to Census 2011. Any reform in education in the BIMARU states would have the greatest impact for India.
  • BIMARU states also spend less on education than their more literate counterparts. For instance, MP spends Rs 11,927 ($175) per student, while Tamil Nadu spends Rs 16,914 per student, the Economic and Political Weekly reported in September 2016. The per student spending, at Rs 5,298, in Bihar is even lower.

Sources: et.


Facts for Prelims


West Bengal’s longest free WiFi-enabled road:

  • West Bengal”s longest free WiFi-enabled road has become operational.
  • Free WiFi will be available over the entire stretch on Biswa Bangla Sarani covering a distance of 13.5km.
  • The step has been taken to facilitate IT professionals who travel along the road to their workplaces.