Are you Ready for Insta 75 Days Revision Plan (UPSC Prelims - 2020)?
SECURE SYNOPSIS: 11 JULY 2018
NOTE: Please remember that following ‘answers’ are NOT ‘model answers’. They are NOT synopsis too if we go by definition of the term. What we are providing is content that both meets demand of the question and at the same time gives you extra points in the form of background information.
General Studies – 1
Topic – Salient features of Indian Society, Diversity of India.
Why this question
Caste in South Asia is a strong institution to reckon with. A host of caste related discriminations, disadvantages are still common and violence against lower classes still takes place in India, even though the severity of the problem in the society as a whole has significantly fallen down. It would be interesting to see what happens to Indians who move out of India for a long time/ forever.
Key demand of the question.
The question wants us to dig deep into the relationship between Indian society and caste system. It wants us to extrapolate this relation to Indian diaspora, living under a different socio-economic context and a separate political and legal framework.
Discuss- we have to write in detail about the key demand of the question and mention any relevant and essential aspect of the question, so as to give a complete picture of the issue.
Structure of the answer
Introduction – write a few lines about the number of Indian diaspora and the diverse number of countries in which they have settled and flourished.
Discuss in detail about how caste manifests itself for Indian diaspora and to what extent. What are the discriminations faced in private and public life. E.g inter-caste marriages; denying employment opportunities based upon caste system; Dalit movements in foreign countries; caste consciousness as a tool to claim superiority etc. Mention the difference in severity of the problem in India and outside India- lack of violence and institutional bias in other countries; non-politicization of the issue; better chances of getting relief in case of any discrimination proved in a court of law; lack of social protection like ST atrocities act etc.
Also try to brainstorm and bring out the reasons as to why caste system in its milder form is still practised among Indian diaspora- e.g strong role of family and relatives in Indian society vis a vis other societies; sub-conscious acceptance of one’s superiority vis a vis lower castes; assertiveness of lower castes etc.
Conclusion– Based on your discussion, form a fair and a balanced conclusion on the given issue.
- The Indian diasporatoday constitutes an important, and in some respects unique, force in world culture.
- Recently US based organization, Equality Labs released data from a community-driven survey that highlighted how caste based practices are prevalent in South Asian institutions and society in the USA.
Reasons for caste discrimination in Indian diaspora :-
- In fact it’s happening globally, because wherever the diaspora go, they take their caste with them, and so, therefore, that discrimination goes with them.
- Dalit discrimination:-
- British Dalits who have been demanding protection from caste discrimination for many years, face opposition from savarna South Asian communities.
- Workplace discrimination:-
- Caste discrimination exists in the workplace, educational institutions and everyday interactions. So-called upper castes have refused to employ or work under Dalits in senior positions. Dalits have suffered ridicule of their caste-based names in schools, places of worship, and neighbourhoods.
- Indian matrimonial centers and websites that cater specially for the Indian Diaspora have classified prospective brides and grooms on the basis of castes and sub-castes.
- In North America, large meetings are held with the purpose of getting young people from the same caste to get to know each other. In Atlanta, the Patidar Samaj meeting drew 4,000 people and resulted in 100 marriages. Many people return to South Asia to marry someone from their own caste.
- Lower castes imitating upper castes:-
- Once they started getting wealthy, the Mochis in South Africa insisted that they were Kshatriyas and not low-caste cobblers. They adopted Rajput surnames like Chauhan, Chavda, Jagas and claimed Kshatriya status.
- They also turned to vegetarianism, essentially a higher caste (Brahminical) tradition.
- Due to the stigma that comes along with being a lower caste person, many are afraid to speak out publicly. Instead, they choose to isolate themselves from the Indian community in the UK and live among non-Indians who have little understanding of caste dynamics.
- Caste as a system of social organization has been exported from its regions of origin to Diaspora communities, yet despite the prohibition of caste-based discrimination in international human rights law caste is not recognized as a ground of discrimination in English law.
- There is no strong law like SC/ST atrocities act like in India
However the manifestation of caste system is different in India and abroad in the following ways:-
- Lack of violence and institutional bias in other countries unlike India
- This issue is not politicized in other countries like in India
- There are better chances of getting relief in case of any discrimination proved in a court of law
- United Nations has also lent a voice to the debate, urging the UK government to implement caste discrimination law.
- Being educated also does not solve this problem. So there is need for attitudinal changes in the mindset of the people.
Topic-Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Why this question
Gold is a highly valued and sought out commodity which also acts as a easy to manage and highly liquid reserve of wealth. Indian is the second largest consumer of Gold and gold smuggling has been a perennial problem in India. However, recently there has been a sharp spurt in the cases of illegal smuggling as well as some decrease in gold imports.
Key demand of the question.
The question wants us to discuss in detail about the recently witnessed increased incidences of gold smuggling and bring out the reasons as to why this is happening and what are the reasons behind this phenomena.
Structure of the answer
Discuss- This is an all-encompassing directive which mandates us to write at length about the key demand of the question and bring out a complete picture of the issue in hand.
Structure of the answer
Introduction– Write a few lines about India’s gold consumption, imports and the recently witnessed sharp spurt in cases of illegal import of gold along with decreased imports (legal) and consequent revenue losses.
Bring out the role of introduction of GST as a different regime on gold imports- both legal and illegal. Discuss how introduction is responsible for the observed phenomena. E.g GST exemption on purchase of old gold jewellery from an unregistered individual under which the gold jeweller can import gold through illicit channels and show that in his books as purchase of old gold and evade tax; complicated structure and many compliance requirements which forces migration to alternate (including illegal) routes; a strong American economy and a hike in interest rates by the US Federal Reserve made the US dollar stronger etc.
Conclusion- Form a fair, concise and a balanced conclusion on the above issue in the form of a way-forward- like a comprehensive and effective tracking system, popularizing other instruments of wealth, curbing illegal imports through stronger and better intelligence gathering etc.
- Gold imports have fallen suggests demand for the yellow metal is being met elsewhere. Smuggled gold accounts for over a third of the demand in India, the world’s second largest gold importing nation after China. This potentially causes a revenue loss of $1.3 billion to the central government
- Increased seizures by tax officials, especially at major airports clearly indicate that illegal trade of gold has been on an upswing not only in South India but in other parts of the country as well.
- Illegal business in goldhas become widespread ever since GST has kicked in
Reasons behind illegal gold imports:-
- Import duty and GST:-
- Gold smuggling has been rife ever since import duty of 10 per cent was imposed by the Centre in 2013. Now, 10 per cent customs duty, three per cent GST, and three per cent on making charges makes a total tax load of 16 per cent.
- India is second largest consumer:-
- Given that India is the second largest consumer of gold and gold imports have remained muted in recent months, it indicates that gold transactions are taking place through unorganized channels.
- Old jewellery:-
- Traders are taking advantage of a loophole in the rules for buying old gold jewellery. Since there is a GST exemption on purchase of old gold jewellery from an unregistered individual, the gold jeweller can import gold through illicit channels and show that in his books as purchase of old gold and evade tax.
- External factors:-
- A strong American economy and a hike in interest rates by the US Federal Reserve made the US dollar stronger etc
- Proper tracking system needs to be set in place to find out the movement of gold from the suppliers through jewellery makers to customers end.
- Proper tracking system also detects the source of transactions and makers of the product, and ensures tax compliance, BIS (Bureau of Indian Standards) hallmarking, etc.
General Studies – 2
Topic:Part of static series under the heading – “Comparison of powers of Lok Sabha and Rajya Sabha”
3)In recent years, role of Rajya Sabha has come under the scanner as an obstructionist house. Examine how the constitution makers had envisaged the role of Rajya Sabha vis a vis Lok Sabha. (250 words)
Key demand of the question
The question expects us to explain how the role of Rajya Sabha is much more than obstruction. It expects us to compare the powers of Rajya sabha vis a vis Lok Sabha and discuss the role that it is expected to play.
Examine – Here we have to compare the powers of Rajya sabha vis a vis Lok sabha , analyze the role that the upper house is supposed to play.
Structure of the answer
Introduction – Discuss the first statement, why rajya sabha is seen as obstructionist in recent times.
Body – Compare the powers of Rajya Sabha vs Lol sabha. Examine where the upper house acts as a check, how it has been cast into the role of a revisory house. Also bring out how in certain matters lok sabha does hold precedence like in the case of money bills. Examine the role that constitution makers had expected the upper house to play and an evaluation of its performance.
Conclusion – mention the importance of the upper house in our democracy and discuss some reforms through which it’s performance can be improved further.
- Ever since its inception, the role played by the Rajya Sabha for strengthening
parliamentary democracy amply proves the wisdom of the founding fathers of
- Success of bicameralism in India owes a lot to the way the Rajya Sabha has redeemed itself as a democratic institution with proven record of its relevance not only for the body polity but also for our society and people.
- Its performance in the legislative field and in the formulation and influencing the Government policies has been quite significant.
Constitution makers view on Rajya Sabha :-
- The justifications for the Second Chamber are as under:
- Second look at legislations:-
- A Second Chamber facilitates a second look at legislations that may sometimes be the result of purely political compulsions of the ruling majority in the popular House.
- Wider scrutiny of legislative proposals:-
- Also, a two-house legislative body allows scope for more talent and expertise and, therefore, wider scrutiny of legislative proposals. In other words, the Second Chamber acts as a check on hasty and ill-conceived legislations.
- Sharing the burden of the lower chambers:-
- Legislatures, the world over, are grappling with increasing demand to legislate on newer areas. The Second Chambers have, therefore, become much more useful in sharing the burden of the Lower Chambers.
- Greater accountability:-
- A Second Chamber provides more opportunities for scrutiny and creates an enabling atmosphere for securing greater executive accountability.
- Debates on public issues:-
- A Second Chamber can hold debates on matters of wide ranging public issues which otherwise may not be held in a single chamber.
- It also has the advantage of having some people who have excelled in different areas of life and who may not like to face the rough and tumble of the electoral politics. Such Members participate in the
debates with an amount of authority and learning.
- Guardian of federal polity:-
- In a federation, a Second Chamber can give representation to the component units. It can legitimately hold itself as the guardians of the state-interests in a federal polity.
- The makers of Indian Constitution envisaged the role of the Rajya Sabha along three axes:
- As a legislative chamber of elders discussing, revising or delaying legislation as per need
- As an institution where interests of the states of the Indian Union could be projected and safeguarded and
- As a deliberative chamber where greater and diverse experience is brought to bear on questions of significance. The essence of democracy is participatory governance. Experience the world over has shown that this ensures responsiveness and transparency.
- Second look at legislations:-
Why Rajya Sabha is considered as a obstructionist house :-
- During the last two decades, India is witnessing intellectuals and academics being replaced by politicians with dubious motives. It is for this reason the quality of debates has degenerated over time and bears little resemblance to the debates that took place
- Parliament is seeing seeing shouting and slanging matches between political parties.
- The frequent stalling of proceedings in the Upper House, where the ruling party does not have a majority, has already cost the exchequer several crores this year.
- With political battle lines drawn between major political parties, the Upper House has become a hindrance to the speedy legislative process that the country urgently requires for economic growth and progress.
- Over the past 10 years it has become an avenue for political parties to accommodate their defeated politicians in the parliamentary system. The quality of debate in both houses has degenerated vastly as a result.
- Many of the Upper House members don’t take up issues pertaining to the states they represent.
The necessity of Rajya sabha :-
- Apart from the coordinate powers it enjoys with the Lok Sabha, the Constitution vests some special powers in the Rajya Sabha to exercise its federal mandate as it represents States and Union territories in Parliament. Such special powers lend credence to its status as an Upper House vis-à-vis the Lok Sabha.
- Legislation on State matters :-
- As a federal chamber, it can initiate Central intervention in the State Legislative field. Article 249 of the Constitution provides that the Rajya Sabha may pass resolution, by a majority of not less than two-thirds of the Members present and voting, to the effect that it is necessary or expedient in the national interest that Parliament should make laws with respect to any matter enumerated in the State List.
- Creation of All India Services:-
- Another exclusive power of the Rajya Sabha is contained in Article 312 of the Constitution wherein if the Rajya Sabha passes a resolution by a majority of not less than two-thirds of the members present and voting declaring that it is necessary or expedient in the national interest to create one or more All India Services common to the Union and the States, Parliament will have the power to create by law such services.
- Equal right with the Lok Sabha in the election and impeachment of the President (Articles 54 and 61)
- Equal right with the Lok Sabha in the election of the Vice-President (Article 66)
- Equal right with the Lok Sabha to make law defining parliamentary privileges and also to punish for contempt (Article 105)
- Equal right with the Lok Sabha to approve the Proclamation of Emergency (issued under Article 352), Proclamations regarding failure of the Constitutional machinery in States (issued under Article 356) and even a sole right in certain circumstances
- Equal right with the Lok Sabha to receive reports and papers from various statutory authorities, namely:
- (a) Annual Financial Statement [Article 112(1)]
- (b) Audit Reports from the Comptroller and Auditor General of India [Article 151(1)]
- (c) Reports of the Union Public Service Commission. [Article 323(1)]
- (d) Reports of the Special Officer for the Scheduled Castes and Scheduled Tribes [Article 338(2)]
- (e) Report of the Commission to investigate the conditions of the Backward Classes [Article 340(3)]
- (f) Report of the Special Officer for Linguistic Minorities [Article 350 B(2)].
- Panel consisting of the Chief Justice of India, Speaker, members of major political parties, should be vested with powers to select eminent persons to the Upper House.
- Joint sitting should be held, without waiting for six months to elapse, to overcome deadlock between the two houses.
- The President should call a joint session whenever he finds that a deliberate attempt is being made by vested interests to stall Parliament.
- The Constitution needs to be amended to consider even constitutional amendments in the joint session (under Article 118 of the Constitution, a joint session can be called only in matters that do not relate to the amendment of the Constitution).
- Lessons from other nations:-
- In this regard, India has much to learn from the functioning of parliaments in Europe and Australia, where if the bill is rejected twice in the Upper House (House of Lords/Senate), a joint sitting of both the houses is held, where the bills are passed by an absolute majority.
Topic-mechanisms, laws, institutions and Bodies constituted for the protection and betterment of these vulnerable sections.
Why this question
The article discusses the impact that DPCO 2013 has had and whether there is a need to bring about a shift in how we ensure accessibility to medicines. The topic is in news recently with NPPA fixing price of 22 drug formulations and certain shortages that have come to light. Hence this question.
Key demand of the question
The question expects us to discuss the pros and cons of the current price control architecture of DPCO 2013. How effective it has been in attaining it’s objectives is the focus of the question.
Discuss – This is an all-encompassing directive – you have to debate on paper by going through the details of the issues concerned by examining each one of them. You have to give reasons for both for and against arguments.
Structure of the answer
Introduction – Explain DPCO 2013 and its purpose.
Body – Examine some of the recent moves of DPCO that has brought the focus on this topic such as the move to control price of stents, coming out with price control measures of 22 essential drug formulations. Discuss what objective is served through these steps. Examine whether benefits are being accrued by the beneficial. Discuss the cons such as the impact it is having on research, availability etc.
Conclusion – Mention your view and the way forward.
- India’s domestic pharma market sales is about Rs 1.3 lakh crore per year. Less than 11 per cent is under price control. Health sector saw major initiatives to bring down and cap prices of essential medicines through price control, coupled with moves to expand a network of cheaper drug dispensaries in the recent years.
Price deformities in pharma markets:-
- Several distortions have crept in because of the failure of pharma markets. The same medicine is sold at prices ranging from Re 1 to Rs 10 in some cases Rs 100.
- Arguments about the cost of R&D to explain the high prices hold no water because at least 95 per cent of the medicines sold by Indian companies are out of patent
- To ensure that vital drugs are available at affordable prices, the Government exercises control over the prices of certain drugs it defines as ‘essential’. The Drug Pricing Policy 2013 provides the framework through which ceiling prices for these essential drugs are worked out. These price limits are given effect by passing the order referred to as the DPCO.
- Under the provisions of DPCO 2013, only the prices of drugs that figure in the National List of Essential Medicines (NLEM) are monitored and controlled by the regulator, the National Pharma Pricing Authority. Under the earlier avatar of the DPCO (1995), 74 drugs were subject to price control. In the 2013 version, the number of drugs under the price control was expanded .
- The DPCO 2013 covers only 376 essential medicines in specific presentations and strengths.
- Came out with the price control measures of 22 essential drug formulations.
- Price control played a major role in enhancing savings on medicines, which constitute at least 40% of an household’s expenditure on health.
- Apart from price capping, the government also worked on opening AMRIT and Jan Aushadhi stores to make generic drugs available at a discounted price.
- Government has also brought stents under price control, providing a major relief to patients suffering from heart disorders.
Issues with imposing price control:-
- Unviable for pharma companies:-
- Consumers may be happy at a cut in medicine bills but the government’s price control measures have forced many brands out of the “unviable” pharmaceutical market, resulting in a drastic slowdown in new launches.
- Rural India:-
- With lower margins in price-controlled medicines, there is also less incentive to reach out to rural markets.
- While the objective behind price control of medicines was primarily to increase affordability and accessibility, the industry argues that the move has failed to achieve these objectives.
- Market concentration:-
- The DPCO 2013 has resulted in an increase in market concentration (fewer brands are now listed) and a decrease in competitive intensity (the average number of new brands have gone down since 2013)
- Criticism to government’s stand on pricing of stents and other medical implants:-
- Stent price capping has resulted in eliminating the choice of stents Furthermore, there have been multiple reports that hospitals have cited no significant increase in the number of angioplasty procedures performed, after the move on stent price control.
- According to DoP, only about 850 drugs are under price control as against the more than 6,000 medicines available in the market of various strengths and dosages.
- Lack of innovation and research:-
- Decreasing profit margin will discourage the pharmacy industries for innovative technological development.
- Drug firms must be incentivised to innovateand invest in research and development. India needs to increase GDP being spent by the government on healthcare.
- Centralised drug procurement has been effectively used in states like Tamil Nadu to bring down costs. Rest of the states can emulate that.
- A well-functioning generics market is required to give the poor access to inexpensive drugs.
- Only way to decrease out-of-pocket expenses on health by the average Indian is to hold true to the promise of universal, affordable, and accessible healthcare in a welfare state.
General Studies – 3
Topic– Indian agriculture – issues
Why this question
Since the time government has raised the MSP, the topic has come under intense discussion. While the move is being appreciated for it is in sync with several committee recommendations, the overall impact of MSP in alleviating farmers issues is being questioned. The article explores this issues and suggests alternatives.
Key demand of the question
The question expects us to compare the effectiveness of MSP vis a vis PDPS. For this, we need to highlight the issues faced with MSP regime and the pros and cons of MSP and PDPS. We need to give a fair and balanced view in the end.
Critically examine – When you are asked to examine, you have to probe deeper into the topic, get into details, and find out the causes or implications if any. When ‘critically’ is suffixed or prefixed to a directive, all you need to do is look at the good and bad of something and give a fair judgement.
Structure of the answer
Introduction – You can provide the context to the whole debate by mentioning the step of the government to raise MSP, and the debate that it has led to.
- Explain MSP and PDPS
- Highlight the issues with MSP as pointed out by several committees in the past such as Ramesh Chand committee, Shanta Kumar Committee etc
- Examine how PDPS can be an improvement over MSP regime. Discuss the experience of its implementation in MP
- Discuss the lacunae in PDPS
Conclusion – Give a fair and balanced view on the utility of MSP vis a vis PDPS and what according to you should be the way forward.
- Recently NITI Aayog has suggested ‘Price Deficiency Payment’ system to address the gaps in Minimum Support Price (MSP) based procurement of crops.
‘Price Deficiency Payment’ system :-
- PDPS is a system in which the farmer is free to sell in the open market and, if the market price falls below the MSP, the government steps in and makes a deficiency payment which is equal to the difference between MSP and the market price.
- As this system does not involve public procurement, the costs on account of procurement, storage and distribution are avoided.
- Also, the system retains the incentive effects of MSP.
Issues with MSP:-
- Imposition of MSP beyond some point is market distortingas it severs the link between prices and demand-supply. This can also be inflationary and out of sync with the physical market dynamics.
- Support price does not come with a commitment to buy whatever farmers offer. Actual procurement will be limited by the fiscal room available, especially at a time when a significantly higher fiscal deficit could lead to further pressure on the rupee.
- RBI has highlighted the announcement of higher MSPs as being one of the major risk factors this year for inflation. This is significant as the government has spoken of providing a mark-up of 50% on cost for all products when deciding on the MSPs for FY19.
- Farmers have got negative returns in several crops prompting many economists to question the usefulness of MSP’s.
- Input costs:-
- The cost of cultivation varies across states while MSP’s are based on a weighted all India average so farmers don’t get guaranteed profits.
- MSP’s have failed to keep pace with input costs.
- Only a selected few states such as Punjab, MP, Haryana etc have well developed procurement infrastructure
- Government procurement at MSP is benefiting the large traders than farmers.
- More than three fourths of farming households don’t produce any marketable surplus and hence cannot really benefit from price support.
- There is no provision in the budget to increase the ambit of farmerswho are covered by MSP and that is a problem in addition to how the MSP is calculated
- Its reach is limited, in terms of both the crops and the geographical area it covers:-
- Farmers also argue that MSP is only announced for 25 crops, while for other crops they have to deal with market volatility. There is no MSP for fruits and vegetables.
- Only a fraction of the farmers actually have access to MSP.
- MSP often does not reach farmersas the government does not procure on time and the farmer has to make distress sales at rates lower than the MSP.
- In the recent budget ,government has decided to keep MSP for all the unannounced crops of kharif at least at one and half times of their production cost .There is no clarity on how the implementation takes place.
- There are concerns whether all states would agree with that cost
- Also as MSP and Inflation highly co-related and any increase in MSP will eventually resulted into price hike of many agricultural products.
- India’s price support programme is also promoting cultivation of water intensive crops like paddy and sugarcane even in water deficit regions such as Punjab ,Haryana and Maharashtra
- Farmers keep producing the same varieties as cropping pattern is hardly changed in some regions.
- Higher MSP’s over incentivize production leading to supply glut.
- Hikes in MSP’s also adversely affect exports by making Indian farm goods uncompetitive especially when international market prices are lower.
Why is PDPS important?
- The key benefit from the price deficiency payment is that it will reduce the need for the government to actually procure food crops, transport and store them and then dispose of them under PDS.
- The difference between the support and market prices can instead simply be paid in cash to the farmer.
- Price deficiency payment can also keep India’s bill on food subsidies under check
- More effective than MSP:-
- PDP system may be more effective than MSPs at ensuring that cropping patterns in India respond to consumer needs. It may also ensure that more farmers actually benefit from price support.
- Monoculture also results in soil degradation and makes crops susceptible to pest and weed, leading to higher usage of chemical fertilisers and pesticides. The price deficiency system may incentivise farmers to diversify beyond the conventional cereals. The crops with effective MSPs such as rice, wheat and sugarcane, where support prices are effective now, are also water-intensive.
- It can also address to an extent the world nations concern on India’s procurement subsidies being trade-distorting.
Constraints with PDPS:-
- Difficult to operationalise the system effectively:-
- For example, there needs to be a record of the quantity and price of each sale and since the farmer is free to sell anywhere it becomes practically impossible to collect and collate this data for millions of farmers.
- Therefore, it becomes necessary to restrict sales in a designated location to, say, a mandi. Even then, the mandi price will keep fluctuating through the season, and even during a single day.
- Thus, the deficiency payments will be different for different farmers larger for farmers who sell at lower prices and vice-versa. This has two adverse effects
- The farmer will have little incentive to look for the best possible price in the market since he will be compensated for the difference
- The farmers may sell inferior products under the PDPS, which is likely to fetch a lower price or may even result in them remaining unsold in an open market
- A major limitation of PDPS is that it is a counter-cyclical payment (the farmer gets a higher payment when market price is low and vice-versa). This insulates farmers from the market and may not help in market development or improving the market price for farmers. This implies that government intervention in the market needs to be continuous.
- Since the demand side is completely ignored (because of the assured price), the farmer is unlikely to adjust supply in accordance with demand. This may result in frequent instances of supply outstripping demand, which can create problems for finding market outlets.
- Madhya Pradesh implemented a variant of PDPS on a pilot basis, called the Bhavantar Bhugtan Yojana, during the kharif season of 2017-18. The evidence from this confirms many of the issues discussed above.
- Government needs to allow agro trading companies to buy more in the Indian market, especially given the limitations of the Food Corporation of India.
- Procurement system of the government needs to be streamlined.
- There need to be reforms in APMC acts to ensure farmer selling directly to farmers
- Based on Telangana experience it is time to consider a transparent ,crop neutral and easier to implement income support programme.
- The state government gives a payment of Rs.10000 per hectare of cultivable land to all farmers irrespective of the crops they raise.
- The ambitious projects like e-NAM, doubling farmer’s income by 2022, price stabilisation fund, implementation of Swaminathan and Shanta Kumar committee is required.
- Perhaps limited procurement will help in lifting the market price and may help limit the fiscal costs of PDPS. A carefully-designed PDPS, with partial procurement and a dovetail with e-NAM in mind, is probably the correct direction to proceed in.
Topic – Indian Economy – Issues
Why this question
GST has recently celebrated its anniversary. As the tax regime gets implemented, certain key provisions of GST regime and their impact are being discussed. One of the key provision is reverse charge mechanism. The article discusses this topic.
Key demand of the question
The question expects us to explain what reverse charge mechanism is, the rationale behind this and assessment of the impact that it is having.
Discuss – Here in your discussion, you have to debate the pros and cons of Reverse Charge mechanism.
Structure of the answer
Introduction – Explain what GST is and the revolution it has brought in indirect tax regime of India.
- Explain what Reverse charge is – section 9(3) and 9(4) of CGST Act and section 5(3) and 5(4) of IGST Act specifies certain categories of supply and unregistered taxpayers respectively in whose case the burden of taxation falls on supplier of goods/service in place of recipient.
- Explain why it was brought into force – ease of administration, protecting revenue, facilitating small businesses.
- Examine its impact as discussed in the article and from other sources – the pros and cons
Conclusion – Mention how it can be improved to further benefit small businesses.
Reverse charge mechanism in GST:-
- Reverse charge is a mechanism where the recipient of the goods and/or services is liable to pay GST instead of the supplier.
- Section 9(3) and 9(4) of CGST Act and section 5(3) and 5(4) of IGST Act specifies certain categories of supply and unregistered taxpayers respectively in whose case the burden of taxation falls on supplier of goods/service in place of recipient
- The concept of reverse charge is not new. It has been in practice from the time service tax was introduced and was first applied to the insurance sector
- It was followed by covering mutual funds under its purview and gradually extending to goods transporters, works contracts, sponsors and brand ambassadors.
- In the first two cases, the purpose of tax collection was met to a certain extent because the nature of the industry is such where receipts are few and there are many providers. For the rest, it was implemented because these industries were highly unorganized.
- The levy of reverse charge got extended from a few services to all unregistered goods suppliers and services providers falling under the GST ambit.
When is Reverse Charge Applicable?
- Supply from an Unregistered dealer to a Registered dealer
- If a vendor who is not registered under GST, supplies goods to a person who is registered under GST, then Reverse Charge would apply. This means that the GST will have to be paid directly by the receiver to the Government instead of the supplier.
- Services through an e-commerce operator
- If an e-commerce operator supplies services then reverse charge will be applicable to the e-commerce operator. He will be liable to pay GST.
- Supply of certain goods and services specified by CBEC
- CBEC has issued a list of goods and a list of services on which reverse charge is applicable.
Why was it brought into effect:-
- The government suspects large tax evasion, especially by small and medium enterprises, and feels this would help check it.
- For plugging revenue leakage the reverse charge mechanism is necessary.
- Ease of administration, protecting revenue, facilitating small businesses.
- It failed to widen the tax base and added to the compliance burden of companies already struggling to adjust to the new tax regime. So, it had to be temporarily shelved.
- Despite GST now being implemented for more than six months, businesses continue to grapple with a slew of challenges, raising doubts about the success of the reverse charge implementation at this time.
- While the number of registrations might rise once reverse charge is implemented, it would not generate additional revenue for the government because tax paid by the recipient company on behalf of an unregistered supplier will be given as input credit to the former.
- Tools like e-way bills and reverse charge will tighten the government’s ability to track transactions, making survival for some small businesses difficult, while increasing the cost of doing business for others.
- Those against it argue that the amount of tax collected through this route is negligible and hence it can be done away with to help smaller players.
- The reintroduction of reverse charge on transactions with unregistered dealers would result in businesses having to make process and compliance changes. Many businesses which are below the threshold may end up taking registration in order to ensure business continuity.
- Reverse charge on other categories like import of services is fine because it is a global concept to pay tax on imports under reverse charge.
- The intention of RCM was to check tax evasion and expand tax the base through self-policing by taxpayers.
- The first few months of GST rollout witnessed sharp expansion in indirect taxpayer base mainly due to the presence of the reverse charge feature. Scrapping this feature will lead to the tax base shrinking again.
- Retaining RCM will not only help expand the tax base but also improve transparency by making available data on the unorganised segment to the Centre. This data can be used to formulate policies for this segment.
- Expanding tax base
- This effect of the RCM provision was visible on two fronts during the GST rollout.
- One, all the larger companies ensured their suppliers registered on the GSTN.
- Buying from unregistered buyers would mean that the buying entity would be liable to pay the tax.
- The other impact of RCM was that smaller vendors who wished to supply to larger clients, voluntarily registered on the GSTN. They were afraid that if unregistered, larger clients might spurn them.
- By asking taxpayers to check if their vendors are registered and paying tax on time, the workload on the tax department reduces significantly.
- The Centre can consider implementing RCM in a staggered manner, over 2-3 years. Since smaller companies have been complaining about lack of resources and funds for complying with RCM, it might be a good idea to apply reverse charge on larger companies, with turnover above 100 crores , initially.
- Very small enterprises with turnover of less than 10 crore can be left out of this clause.
General Studies – 4
Topic :Public/Civil service values and Ethics in Public administration: Status and problems; ethical concerns and dilemmas in government and private institutions;
Why this question
It is quite logical to view competition as a source of remarkable human progress and growth. However, it also brings several undesired ethical problems along with it.
Key demand of the question
The question wants us to explain the meaning and relevance of healthy competition vis a vis how an unhealthy competition can be a cause of worry for any organisation.
What- it simply directs that we should define and briefly explain the term.
Comment- we have to form a personal opinion on the issue but that opinion should be based upon a proper presentation in the form of our knowledge and understanding of the issue.
Structure of the answer
Introduction – Give a simple but a complete definition of the term, healthy competition.
- Discuss whether competition can be a source of worry for an organisation. Why / why not. E.g Discuss what is competition and its types; Competition as an intrinsic source of motivation; its benefits in the short run and problems posed in the long run. Take the help of the article attached to the question and also other relevant study material, to frame your answer.
- Discuss healthy competition further and discuss how it can be inculcated in an organization.
Conclusion– Bring out a summary of your above discussion and state them in slightly different words but the conclusion in itself should not introduce anything not already discussed in the answer.
- Unhealthy competition encourages children to be better than someone else. The primary goal is to win.
- Healthy competition, on the other hand, is more intrapersonal. The focus is on improving ourselves beating our personal record, learning something new. Healthy competition:
- Motivates us to improve
- Encourages teamwork
- Builds a strong work ethic
- Teaches the importance of preparation
- Instills discipline
Competition can be cause of worry:-
- Use of unrestrained means by the competitors (or rivals) into achieving the final end. That is, attention is drawn to the final end rather than to the means of achieving it.
- When you are competing just to compete you are putting yourself in the same category as the other average competitors. You are too focused on what others are doing and end up doing the same things in the same way.
However Competition motivates people to achieve more, to push past their limits. Competition also inspires innovation and improves quality.
Competition builds emotional intelligence (EQ) and social intelligence (SI), both of which are necessary to build and consolidate relationships.
Competition teaches you to bounce back from failure and respond positively to pressure and challenges, and then adapt to move forward towards greater success.
Competition teaches preparation. Competition teaches people about goal setting. Creating and setting goals is an important part of being in any competitive landscape.
How to promote healthy competition:-
- Competition can create conflict between and among employees. Jockeying for limited resources may cause tension. However, when a team’s members understand how to have healthy debate and share their opinions openly, competition becomes a catalyst for innovation and improvement.
- Your employees should compete not just with others in your organization or your organization’s competitors, they should compete against their previous efforts. Continuously raising the bar and setting loftier goals will help your employees be their best.
- Telling an employee when he or she does well or else misses the mark will increase performance. Employees need both rewards and consequences to perform well.
- Encourage your child to focus on improvement