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Insights Daily Current Affairs + PIB: 28 March 2019


Insights Daily Current Affairs + PIB: 28 March 2019


Relevant articles from PIB:

Paper 3:

Topics Covered:

  1. Achievements of Indians in science & technology; indigenization of technology and developing new technology.

 

What is Mission Shakti?

 

What to study?

  • For Prelims: Key features of A- SAT missile and significance of Mission Shakti.
  • For Mains: Need for such technologies and threats to outer space region.

 

Context: Indian scientists have successfully conducted Mission Shakti shooting down a live satellite target in the low earth orbit (LEO).

 

What is it?

Mission Shakti is a joint programme of the Defence Research and Development Organisation (DRDO) and the Indian Space Research Organisation (ISRO).

  • As part of the mission, an anti-satellite (A-SAT) weapon was launched and targeted an Indian satellite which had been decommissioned. Mission Shakti was carried out from DRDO’s testing range in Odisha’s Balasore.

 

Significance:

India is only the 4th country to acquire such a specialised and modern capability, and Entire effort is indigenous. Till now, only the US, Russia and China had the capability to hit a live target in space.

 

Does the test create space debris?

The test was done in the lower atmosphere to ensure that there is no space debris. Whatever debris that is generated will decay and fall back onto the earth within weeks.

 

What is low earth orbit (LEO) and why worry about satellites in the region?

Low earth orbit refers to an altitude up to 2,000 km. A satellite in the LEO can monitor activities on the ground and water surfaces. Such a satellite can be used for espionage and pose serious threat to the country’s security in the instances of war.

 

Background:

  • Space is being turned into a battlefront, making counter-space capabilities critical. In this light, India’s successful ‘kill’ with an A-SAT weapon is significant.
  • However, no country has used an A-SAT against another nation till date. In all the instances, the nations testing anti-satellite missiles have targeted one of their defunct satellites to showcase their space warfare capabilities.
  • A-SAT weapon is likely to be the most potent military tool for the armed forces over the next few decades, notwithstanding a revolutionary technological breakthrough.

Why do we need such capabilities?

India has a long standing and rapidly growing space programme. It has expanded rapidly in the last five years. The Mangalyaan Mission to Mars was successfully launched. Thereafter, the government has sanctioned the Gaganyaan Mission which will take Indians to outer space.

  • India has undertaken 102 spacecraft missions consisting of communication satellites, earth observation satellites, experimental satellites, navigation satellites, apart from satellites meant for scientific research and exploration, academic studies and other small satellites. India’s space programme is a critical backbone of India’s security, economic and social infrastructure.
  • The test was done to verify that India has the capability to safeguard our space assets. It is the Government of India’s responsibility to defend the country’s interests in outer space.

 

Implications:

  • Mission Shakti will not have any effect on India’s status in the MTCR (Missile Technology Control Regime) or other such treaties.
  • The acquisition of this A-SAT technology is also expected to have spinoffs that India can exploit for domestic and international commercial use. Mission Shakti’s success will help in strengthening India’s defence capabilities.

 

Way ahead:

Arms race in outer space should not be encouraged. India has always maintained that space must be used only for peaceful purposes. It is against the weaponisation of Outer Space and supports international efforts to reinforce the safety and security of space based assets.

India believes that Outer space is the common heritage of humankind and it is the responsibility of all space-faring nations to preserve and promote the benefits flowing from advances made in space technology and its applications for all.

 

What is the international law on weapons in outer space?

The principal international Treaty on space is the 1967 Outer Space Treaty. India is a signatory to this treaty, and ratified it in 1982. The Outer Space Treaty prohibits only weapons of mass destruction in outer space, not ordinary weapons.

 

Mains Question: Space technology has great potential to help social and economic development, especially in parts of the developing world, however, the potential remains untapped. Analyze.


Paper 3:

Topics Covered:

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

 

Country-by-country (CbC) reports

 

What to study?

For Prelims and Mains: What are CbC reports- brief background, need and their significance.

 

Context: India and the United States have signed an Inter-Governmental Agreement for Exchange of Country-by-Country (CbC) Reports.

  • The objective is to ensure that all tax authorities have access to the same information about an MNC’s value chain and the resulting tax consequences.

 

Significance:

  • This Agreement for Exchange of CbC Reports, along with the Bilateral Competent Authority Arrangement, will enable the countries to automatically exchange CbC Reports filed by the parent entities of Multinational Enterprises (MNEs) in the respective jurisdictions with effect from January 1, 2016.
  • It would also obviate the need for Indian subsidiary companies of US MNEs to do local filing of the CbC Reports, thereby reducing the compliance burden.
  • India has already signed the Multilateral Competent Authority Agreement (MCAA) for Exchange of CbC Reports, which has enabled exchange of CbC Reports with 62 jurisdictions.

 

Provisions wrt CbC reports:

  • The Income Tax Act requires Indian subsidiaries of multinational companies to provide details of key financial statements from other jurisdictions where they operate. This provides the IT department with better operational view of such companies, primarily with regards to revenue and income tax paid.
  • The provision was a part of the base erosion and profit shifting action plan, and later incorporated in IT Act also.

 

What is a Country-by-Country (CbC) Report?

The Base Erosion and Profit Shifting (BEPS) Action 13 report (Transfer Pricing Documentation and Country-by-Country Reporting) provides a template for multinational enterprises (MNEs) to report annually and for each tax jurisdiction in which they do business the information set out therein. This report is called the Country-by-Country (CbC) Report.

  • A Country-by-Country (CbC) Report contains aggregated country-by-country information relating to the global allocation of income, the taxes paid, and certain other indicators of a multi-national company.
  • It also contains a list of all the constituent entities of the multi-national company operating in a particular jurisdiction and the nature of the main business activity of each constituent entity. This information enables an enhanced level of assessment of tax risk by both tax administrations.

 

Relevant articles from various News Papers:

Paper 3:

Topics Covered:

  1. Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
  2. Inclusive growth and issues arising from it.

 

RBI plans a regulatory sandbox

 

What to study?

For Prelims and Mains: Regulatory sandbox- meaning, features, need and significance.

 

Context: The Reserve Bank of India (RBI) will issue guidelines within two months for fintech companies to test their new products on a small group of users before scaling up.

 

What is a regulatory sandbox?

A regulatory sandbox is a safe harbour, where businesses can test innovative products under relaxed regulatory conditions. Typically, participating companies release new products in a controlled environment to a limited number of customers for a limited period of time.

 

Significance and benefits of a regulatory sandbox:

  1. The “regulatory sandbox” will help fintech companies launch innovative products at a lower cost and in less time.
  2. The sandbox will enable fintech companies to conduct live or virtual testing of their new products and services.
  3. These companies will also be able to test the viability of the product without a wider and expensive rollout.
  4. It will help companies to experiment with fintech solutions, where the consequences of failure can be contained and reasons for failure analysed.

 

Need:

According to NITI Aayog, India is one of the fastest growing fintech markets globally, and industry research has projected that $1 trillion, or 60% of retail and SME (small and medium sized enterprises) credit, will be digitally disbursed by 2029.

  • The Indian fintech ecosystem is the third largest in the world, attracting nearly $6 billion in investments since 2014. Fintech or financial technology companies use technology to provide financial services such as payments, peer-to-peer lending and crowdfunding, among others.
  • Therefore, in order to protect customers and safeguard the interests of all stakeholders, and streamline their influence on the financial system, there is need for a regulatory and supervisory framework for fintech firms.

 

Way ahead:

Regardless of their specific terms, structures or mandates, regulatory sandboxes clearly work. They act as an impetus to innovation, build trust among stakeholders, protect consumers and result in sensible and forward-looking regulations. By introducing a sandbox for payments, the RBI could achieve the much-needed balance between innovation and regulation and help the Indian fintech industry achieve its full potential.

 

Sources: the hindu.


Paper 2:

Topics Covered:

  1. Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
  2. Transparency & accountability and institutional and other measures.

 

Banning of Unregulated Deposit Schemes Ordinance, 2019

 

What to study?

  • For Prelims: Key features and significance of the Bill.
  • For Mains: Need for a legislation on this, recent issues and concerns associated with such schemes.

 

Why in News? Tax practitioners have clarified that the Centre’s recent ordinance banning unregulated monthly deposit schemes will not affect the ongoing monthly schemes operated by jewellery and chit fund firms.

 

Background:

The Union Cabinet, last month, approved promulgating an ordinance with regard to the Banning of Unregulated Deposit Schemes Bill, to protect gullible investors from Ponzi schemes.

The lower House, or the Lok Sabha, had passed the Bill on the last day of the budget session by a voice-vote, but could not get the approval of the Rajya Sabha.

 

Significance and impact:

  • The Ordinance will immediately tackle the menace of illicit deposit-taking activities in the country launched by rapacious operators, which at present are exploiting regulatory gaps and lack of strict administrative measures to dupe poor and gullible people of their hard-earned savings, an official statement said.
  • It will altogether ban unregulated deposit taking schemes, and the law has adequate provisions for punishment and disgorgement or repayment of deposits in cases where such schemes nonetheless manage to raise deposits illegally.

 

Key provisions of the Bill:

Substantive banning clause which bans Deposit Takers from promoting, operating, issuing advertisements or accepting deposits in any Unregulated Deposit Scheme. The Bill bans unregulated deposit taking activities altogether, by making them an offence ex-ante rather than the existing legislative-cum-regulatory framework which only comes into effect ex-post with considerable time lags.

Creation of three different types of offences, namely, running of Unregulated Deposit Schemes, fraudulent default in Regulated Deposit Schemes, and wrongful inducement in relation to Unregulated Deposit Schemes.

Severe punishment and heavy pecuniary fines to act as deterrent.

Provisions for disgorgement or repayment of deposits in cases where such schemes nonetheless manage to raise deposits illegally.

Attachment of properties / assets by the Competent Authority, and subsequent realization of assets for repayment to depositors.

Clear-cut time lines have been provided for attachment of property and restitution to depositors.

Creation of an online central database, for collection and sharing of information on deposit-taking activities in the country.

 

The Bill defines “Deposit Taker” and “Deposit” comprehensively:

“Deposit Takers” include all possible entities (including individuals) receiving or soliciting deposits, except specific entities such as those incorporated by legislation.

“Deposit” is defined in such a manner that deposit-takers are restricted from camouflaging public deposits as receipts, and at the same time, not to curb or hinder acceptance of money by an establishment in the ordinary course of its business.

 

Why do we need a comprehensive law on this?

To deal with the menace of illicit deposit taking schemes, as in the recent past, there have been rising instances of people in various parts of the country being defrauded by illicit deposit taking schemes.

The worst victims of these schemes are the poor and the financially illiterate, and the operations of such schemes are often spread over many States.

 

Sources: the hindu.


Paper 2:

Topics Covered:

  1. Parliament and State Legislatures – structure, functioning, conduct of business, powers & privileges and issues arising out of these.

 

Electoral bond scheme

 

What to study?

  • For Prelims: Key features of Electoral Bonds and highlights of the scheme.
  • For Mains: Significance of the scheme, benefits and concerns associated.

 

Context: The Election Commission of India (ECI) has told the Supreme Court that the electoral bonds, wreck transparency in political funding. In its affidavit submitted to the Supreme Court, the EC pointed to the amendments made to key laws, with dangerous consequences.

 

EC’s observations:

  1. Coupled with the removal of cap on foreign funding, electoral bonds invite foreign corporate powers to impact Indian politics.
  2. Donations received through electoral bonds would cause a “serious impact” on transparency in funding of political parties.
  3. Amendments would pump in black money for political funding through shell companies and allow unchecked foreign funding of political parties in India which could lead to Indian politics being influenced by foreign companies.

 

Background:

The Election Commission of India has time and again voiced the importance of declaration of donations received by political parties and also about the manner in which those funds are expended by them for better transparency and accountability in the election process.

 

How govt defends its move?

  • Electoral bonds have been introduced to promote transparency in funding and donation received by political parties.
  • The scheme envisages building a transparent system of acquiring bonds with validated KYC and an audit trail. A limited window and a very short maturity period would make misuse improbable.
  • The electoral bonds will prompt donors to take the banking route to donate, with their identity captured by the issuing authority. This will ensure transparency and accountability and is a big step towards electoral reform.

 

About Electoral bonds:

What are electoral bonds? Electoral bonds will allow donors to pay political parties using banks as an intermediary.

Key features: Although called a bond, the banking instrument resembling promissory notes will not carry any interest. The electoral bond, which will be a bearer instrument, will not carry the name of the payee and can be bought for any value, in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore.

Eligibility: As per provisions of the Scheme, electoral bonds may be purchased by a citizen of India, or entities incorporated or established in India. A person being an individual can buy electoral bonds, either singly or jointly with other individuals. Only the registered Political Parties which have secured not less than one per cent of the votes polled in the last Lok Sabha elections or the State Legislative Assembly are eligible to receive the Electoral Bonds.

Need: The electoral bonds are aimed at rooting out the current system of largely anonymous cash donations made to political parties which lead to the generation of black money in the economy.

 

How will the Bonds help?

The previous system of cash donations from anonymous sources is wholly non-transparent. The donor, the donee, the quantum of donations and the nature of expenditure are all undisclosed

  • According to government the system of Bonds will encourage political donations of clean money from individuals, companies, HUF, religious groups, charities, etc. After purchasing the bonds, these entities can hand them to political parties of their choice, which must redeem them within the prescribed time.
  • Some element of transparency would be introduced in as much as all donors declare in their accounts the amount of bonds that they have purchased and all parties declare the quantum of bonds that they have received.

 

Concerns expressed:

  • The move could be misused, given the lack of disclosure requirements for individuals purchasing electoral bonds.
  • Electoral bonds make electoral funding even more opaque. It will bring more and more black money into the political system.
  • With electoral bonds there can be a legal channel for companies to round-trip their tax haven cash to a political party. If this could be arranged, then a businessman could lobby for a change in policy, and legally funnel a part of the profits accruing from this policy change to the politician or party that brought it about.
  • Electoral bonds eliminate the 7.5% cap on company donations which means even loss-making companies can make unlimited donations.
  • Companies no longer need to declare the names of the parties to which they have donated so shareholders won’t know where their money has gone.

They have potential to load the dice heavily in favour of the ruling party as the donor bank and the receiver bank know the identity of the person. But both the banks report to the RBI which, in turn, is subject to the Central government’s will to know.

 

Sources: the hindu.


 

Topics Covered:

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

 

India’s Official Secrets Act

 

What to study?

For Prelims and Mains: Key features of the act, concerns over certain provisions and the need for review.

 

Why in News? The Ministry of Home Affairs (MHA) issued five prosecution sanction orders last year under the Official Secrets Act (OSA), 1923.

 

About Official Secrets Act:

  • The law meant for ensuring secrecy and confidentiality in governance, mostly on national security and espionage issues.
  • The Indian Official Secrets Act, 1904 was enacted during the time of Lord Curzon, Viceroy of India from 1899 to 1905.
  • One of the main purposes of the Act was to muzzle the voice of nationalist publications.
  • The Indian Official Secrets Act (Act No XIX of 1923) replaced the earlier Act, and was extended to all matters of secrecy and confidentiality in governance in the country.

 

Ambit of the Act:

The secrecy law broadly deals with two aspects — spying or espionage, which is dealt with in Section 3 of the Act, and disclosure of other secret information of the government, which is dealt with in Section 5. The secret information can be any official code, password, sketch, plan, model, article, note, document or information.

 

Need for review:

  1. Since the classification of secret information is so broad, it is argued that the colonial law is in direct conflict with the Right to Information Act.
  2. Under Section 5, both the person communicating the information, and the person receiving the information, can be punished by the prosecuting agency.
  3. The SARC report states that as the OSA’s background is the colonial climate of mistrust of people and the primacy of public officials in dealing with the citizens, it created a culture of secrecy.
  4. Another contentious issue with the law is that its Section 5, which deals with potential breaches of national security, is often misinterpreted. The Section makes it a punishable offence to share information that may help an enemy state. The Section comes in handy to book journalists when they publicise information that may cause embarrassment to the government or the armed forces.

 

Sources: the hindu.


Facts for Prelims:

 

In News- NCLAT:

About NCLAT:

  1. National Company Law Appellate Tribunal (NCLAT) was constituted under Section 410 of the Companies Act, 2013 for hearing appeals against the orders of National Company Law Tribunal(s) (NCLT), with effect from 1st June, 2016.
  2. NCLAT is also the Appellate Tribunal for hearing appeals against the orders passed by NCLT(s) under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC).
  3. NCLAT is also the Appellate Tribunal for hearing appeals against the orders passed by Insolvency and Bankruptcy Board of India under Section 202 and Section 211 of IBC.
  4. NCLAT is also the Appellate Tribunal to hear and dispose of appeals against any direction issued or decision made or order passed by the Competition Commission of India (CCI).

 

Composition:

The President of the Tribunal and the chairperson and Judicial Members of the Appellate Tribunal shall be appointed after consultation with the Chief Justice of India.

The Members of the Tribunal and the Technical Members of the Appellate Tribunal shall be appointed on the recommendation of a Selection Committee consisting of:

  • Chief Justice of India or his nominee—Chairperson.
  • A senior Judge of the Supreme Court or a Chief Justice of High Court— Member.
  • Secretary in the Ministry of Corporate Affairs—Member.
  • Secretary in the Ministry of Law and Justice—Member.
  • Secretary in the Department of Financial Services in the Ministry of Finance— Member.

 

In News- Central Water Commission (CWC):

About CWC: Central Water Commission is a premier Technical Organization of India in the field of Water Resources and is presently functioning as an attached office of the Ministry of Water Resources, River Development and Ganga Rejuvenation, Government of India.

Functions: The Commission is entrusted with the general responsibilities of initiating, coordinating and furthering in consultation of the State Governments concerned, schemes for control, conservation and utilization of water resources throughout the country, for purpose of Flood Control, Irrigation, Navigation, Drinking Water Supply and Water Power Development. It also undertakes the investigations, construction and execution of any such schemes as required.

 

President Kovind honoured with Croatia’s highest civilian order:

Context: President Ram Nath Kovind was recently honoured with Croatia’s highest civilian order – The Grand Order of the King of Tomislav.

Key facts:

  • Croatian state order is awarded to heads of state for their important contribution towards the development of state relations between Croatia and their respective countries.
  • The Grand Order of King Tomislav is the highest civilian order of Croatia.
  • It is named after King Tomislav of Croatia.