INSIGHTS DAILY CURRENT AFFAIRS + PIB SUMMARY- 01 February 2020

INSIGHTS DAILY CURRENT AFFAIRS + PIB SUMMARY- 01 February 2020

Table of Contents:

GS Paper 2:

1. What is Dividend Distribution Tax?

2. Insurance cover on bank FDs, deposits increased to ₹5 lakh.

3. What Is in the New Brexit Deal?

GS Paper 3:

1. Yellow Rust.

2. What is Anticipatory bail?

Facts for Prelims:

1. P. flags off country’s first ‘fruit train’.

GS Paper  : 2

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

What is Dividend Distribution Tax?

What to study?

For Prelims and Mains: Meaning, significance, features and need.

Context: Dividend Distribution Tax shifted to individuals instead of companies, says FM.

What is it?

It is a tax levied on dividends that a company pays to its shareholders out of its profits.

How is it applied?

The Dividend Distribution Tax, or DDT, is taxable at source, and is deducted at the time of the company distributing dividends.

• The dividend is the part of profits that the company shares with its shareholders.
• The law provides for the Dividend Distribution Tax to be levied at the hands of the company, and not at the hands of the receiving shareholder.
• However, an additional tax is imposed on the shareholder, who receives over Rs. 10 lakh in dividend income in a financial year.

Is Dividend Distribution Tax applicable to private companies?

Under Section 115-O, the Income Tax Act, any domestic firm which is declaring or distributing dividend has to pay DDT at the rate of 15 per cent on the gross amount of dividend.

Is Dividend Distribution Tax fair?

Market participants, especially brokers, have been calling for long to scrap the DDT. The tax makes markets unattractive as it leads to significant taxation of corporate earnings, they argue.

Other than Dividend Distribution Tax (DDT), the Securities Transaction Tax (STT) and Long-Term Capital Gains (LTCG) tax are other major taxes levied on market instruments.

Sources: the Hindu.

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

Insurance cover on bank FDs, deposits increased to ₹5 lakh

What to study?

For Prelims: What is Deposit Insurance? How is it regulated?

For Mains: Reforms needed.

Context: In Budget 2020, finance minister Nirmala Sitharaman has proposed to increase the limit of insurance cover in case of bank failure on deposits to  ₹5 lakh from  ₹1 lakh. The proposal come in the wake of crisis at Mumbai-based urban cooperative bank, PMC Bank.

What is deposit insurance? How is it regulated in India?

Deposit insurance is providing insurance protection to the depositor’s money by receiving a premium.

• The government has set up Deposit Insurance and Credit Guarantee Corporation (DICGC) under RBIto protect depositors if a bank fails.
• Every insured bank pays premium amounting to 0.001% of its deposits to DICGC every year.

What happens to depositors’ money when a bank fails?

• When a bank is liquidated, depositors are entitled to receive an insurance amount of ₹1 lakh per individual from the Deposit Insurance and Credit Guarantee Corporation of India (DICGC).
• The ₹1 lakh insurance limit includes both principal and interest dues across your savings bank accounts, current accounts, fixed deposits and recurring deposits held with the bank. 

What is the procedure for depositors to claim the money from a failed bank?

The DICGC does not deal directly with depositors.

1. The RBI (or the Registrar), on directing that a bank be liquidated, appoints an official liquidator to oversee the winding up process.
2. Under the DICGC Act, the liquidator is supposed to hand over a list of all the insured depositors (with their dues) to the DICGC within three months of taking charge.
3. The DICGC is supposed to pay these dues within two months of receiving this list.

In FY19, it took an average 1,425 days for the DICGC to receive and settle the first claims on a de-registered bank.

Who are insured by the DICGC?

The corporation covers all commercial and co-operative banks, except in Meghalaya, Chandigarh, Lakshadweep and Dadra and Nagar Haveli. Besides, Only primary cooperative societies are not insured by the DICGC.

The DICGC does not include the following types of deposits:

1. Deposits of foreign governments.
2. Deposits of central/state governments.
3. Inter-bank deposits.
4. Deposits of the state land development banks with the state co-operative bank.
5. Any amount due on account of any deposit received outside India.
6. Any amount specifically exempted by the DICGC with previous approval of RBI.

Sources: the Hindu.

Topics Covered: Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.

Brexit Deal 

What to study?

For Prelims and mains: What is Brexit? Why does Uk wants it? Implications and challenges ahead, overview of the deal.

Context: Britain has officially left the European Union (EU) and has become the first country to leave the 28-member bloc.

The UK stopped being a member of the European Union (EU) after 23:00 GMT on 31 January 2020.

What is the European Union?

The EU is an economic and political union involving 28 European countries. It allows free trade, which means goods can move between member countries without any checks or extra charges. The EU also allows free movement of people, to live and work in whichever country they choose.

The UK joined in 1973 (when it was known as the European Economic Community) and it will be the first member state to withdraw.

What happens after Brexit day?

After the UK formally leaves the EU, there is still a lot to talk about and months of negotiation will follow.

While the UK has agreed the terms of its EU departure, both sides still need to decide what their future relationship will look like.

During the 11-month transition period, the UK will continue to follow all of the EU’s rules and its trading relationship will remain the same.

 What needs to be agreed?

• The transition period is meant to give both sides some breathing space while a new free trade agreement is negotiated.
• This is needed because the UK will leave the single market and customs union at the end of the transition. A free trade agreement allow goods to move around the EU without checks or extra charges.
• If a new one cannot be agreed in time, then the UK faces the prospect of having to trade with no deal in place. That would mean tariffs (taxes) on UK goods travelling to the EU and other trade barriers.

 Aside from trade, many other aspects of the future UK-EU relationship will also need to be decided. For example:

1. Law enforcement, data sharing and security.
2. Aviation standards and safety.
3. Access to fishing waters.
4. Supplies of electricity and gas.
5. Licensing and regulation of medicines.

What caused Brexit to happen?

So far, there seem to be three theories for what drove so many people to vote Brexit:

1. Immigrants: Faced with rising immigration locals worried about their jobs and the erosion of the English way of life wanted their government to clamp down on immigration. This was a revolt against unrestricted immigration from poorer Eastern European states, Syrian refugees residing in the EU and millions of Turks about to join the EU.
2. Elites: Faced with decades of economic malaise, stagnant real wages and economic destitution in former industrial heartlands ever since the rise of “Thaterchism” and the embrace of Neoliberal policies by Tony Blair’s New Labour the non-Londoners have decided to revolt against the elite. This isn’t just about being against the EU as it stands, and its free market and free movement of peoples.
3. Bureaucracy: Faced with Brussel’s asphyxiating amount of red tape the English people decide to “take back control” of their country’s bureaucracy.

The three theories are obviously intertwined at times and contradictory at others, that’s why it matters who is going to be negotiating the post-Brexit relationship between the UK and the EU.

What is the Brexit deal?

The transition period and other aspects of the UK’s departure were agreed in a separate deal called the withdrawal agreement.

Most of that was negotiated by Theresa May’s government. But after Mr Johnson replaced her in July 2019, he removed the most controversial part – the backstop.

• The backstop was designed to ensure there would be no border posts or barriers between Northern Ireland and the Republic of Ireland after Brexit. If needed, it would have kept the UK in a close trading relationship with the EU.
• Under Mr Johnson’s deal, a customs border will effectively be created between Northern Ireland and Great Britain. Some goods entering Northern Ireland from Great Britain will be subject to checks and will have to pay EU import taxes (known as tariffs).
• These would be refunded if goods remain in Northern Ireland (ie are not moved to the Republic of Ireland).

Sources: the Hindu.

GS Paper  : 3

Topics Covered: Major crops cropping patterns in various parts of the country.

Yellow Rust

What to study?

For Prelims and Mains: What is Yellow Rust, how it occurs, spread, impact and prevention?

Context: Yellow Rust was recently detected in wheat crops in parts of Punjab and Haryana.

What is Yellow Rust?

It is a disease that appears as yellow stripes of powder or dust on leaves and leaf sheaths of the wheat crop.

How it occurs?

This occurs when the rust colonies in the leaves drain the carbohydrates from the plant and reduce the green leaf area.

Rain, dew and fog favour the disease’s development.

Spread:

The disease can spread rapidly under congenial conditions and affects crop development, and eventually the yield.

Yield due to the disease can affected by between 5 and 30 per cent.

Where else is it observed in India?

In India, it is a major disease in the Northern Hill Zone and the North-Western Plain Zone and spreads easily during the onset of cool weather and when wind conditions are favourable.

Disease management:

Breeding resistant varieties is the most cost-effective method to control this rust.

These resistance genes, however, have become ineffective due to the acquisition of virulence to that particular resistance gene rendering the variety susceptible.

Sources: the Hindu.

Topics Covered: Challenges to internal security through communication networks, role of media and social networking sites in internal security challenges, basics of cyber security; money-laundering and its prevention.

What is Anticipatory bail?

What to study?

For Prelims and Mains: Meaning, features, significance and issues involved.

Context: A constitution bench of the Supreme Court has ruled that an anticipatory bail cannot be limited to a fixed time period and can continue till the end of the trial.

 Background:

The judgment came in a reference made by a three-judge bench in the case of Sushila Aggarwal v. State of NCT of Delhi regarding the scope of Section 438 of the Code of Criminal Procedure (CrPC) which provides for grant of anticipatory bail.

Observations made by the Court:

1. If there are any special circumstances necessitating a limit on the tenure of anticipatory bail, it is open for the court to do so. Nothing in Section 438 CrPC compels or obliges courts to impose conditions limiting relief in terms of time.
2. When Parliament has not thought it appropriate to curtail the rights of the citizens, it would be not appropriate for the SC to curtail powers granted to courts with regard to anticipatory bail.
3. Anticipatory bail application could be moved by a person even before filing of FIR.
4. The court, while granting anticipatory bail, should examine seriousness and gravity of the offence to impose any condition on the petitioner, if necessary.

Need:

Arbitrary arrests continue to be a pervasive phenomenon in the country and therefore, discretionary power of courts to grant anticipatory bail should not be curtailed and the protection should continue till end of trial.

Besides, the spectre of arbitrary and heavy-handed arrests, too often to harass and humiliate citizens.

What is Anticipatory Bail?

The provision of anticipatory bail under Section 438 was introduced when CrPC was amended in 1973.
Section 438 is a procedural provision concerned with personal liberty of each individual, who is entitled to the benefit of the presumption of innocence.

As opposed to ordinary bail, which is granted to a person who is under arrest, in anticipatory bail, a person is directed to be released on bail even before arrest made.

Who can apply?

1. 438 of the Code of Criminal Procedure, 1973, lays down the law on anticipatory bail.

Sub-section (1) of the provision reads: “When any person has reason to believe that he may be arrested on an accusation of having committed a non-bailable offence, he may apply to the High Court or the Court of Session for a direction under this section; and that Court may, if it thinks fit, direct that in the event of such arrest, he shall be released on bail.”

The provision empowers only the Sessions Court and High Court to grant anticipatory bail.

Significance:

The reason for enactment of Section 438 in the Code was parliamentary acceptance of the crucial underpinning of personal liberty in a free and democratic country.

Parliament wished to foster respect for personal liberty and accord primacy to a fundamental tenet of criminal jurisprudence, that everyone is presumed to be innocent till he or she is found guilty.

Life and liberty are the cherished attributes of every individual. The urge for freedom is natural to each human being.

In the 1980 Gurbaksh Singh Sibbia vs State of Punjab case, a five-judge Supreme Court bench led by then Chief Justice Y V Chandrachud ruled that S. 438 (1) is to be interpreted in the light of Article 21 of the Constitution (protection of life and personal liberty).

Sources: the Hindu.

Facts for Prelims

A.P. flags off country’s first ‘fruit train’

• A ‘fruit train’, said to be the first of its kind in the country, was recently flagged off from Tadipatri Railway Station in Andhra Pradesh.
• The fruit train was carrying a load of 980 metric tonnes of locally grown bananas to the Jawaharlal Nehru Port in Mumbai, from where the consignment will be exported to Iran.
• This is the first time in India that an entire train is being sent to the gateway port (JNPT) for export.
• This helps save both time and fuel as 150 trucks would have been required to send a consignment of this size by road to JNPT, which is over 900 km away, before the temperature-controlled containers are loaded on ships.