Insta Secure Synopsis Mains Mission - 2022

INSIGHTSIAS IA SIMPLIFYING IAS EXAM PREPARATION

INSTA SECURE SYNOPSIS MAINS MISSION - 2022

GS- III AUGUST 2021

INSTA SECURE SYNOPSIS

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.

Table of Contents Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment...... 8 Central banks across the world have increased their attention to digital currencies. In this context examine the implications and limitations of introduction of Central Bank Digital Currency in India. (250 words) ...... 8 Discuss the International Monetary Fund’s forecast about India’s GDP growth and analyse its implications on RBI’s monetary policy. (250 words) ...... 10 Discuss the potential of India in becoming the capital of gig-workers of the world. (250 words) .. 12 World should not be in a hurry to shut the old economy into a new green economy, its essential to strive for a balance between the old and the new to achieve the goals. Elaborate with examples. (250 words) ...... 14 How far do you agree with scrapping of retrospective tax laws as the opportunity for correcting a momentous blunder in the contemporary history of taxation laws in India? Examine. (250 words) ...... 15 COVID 19 crisis had stretched State finances in many ways. In this context, examine the potential of Non-tax revenues source in strengthening the state finances in India. (250 words) ...... 18 Economic reforms must not only aim to improve efficiency of the Economy and achieve high rate of growth but achieve inclusive growth and sustainable development. Elucidate. (250 words) .... 21 What is central bank digital currency (CBDC)? How does it work? CBDC is slowly gaining momentum and acceptance across the world. Discuss its potential benefits and challenges in India. (250 words) ...... 23

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Even though their political demands were moderate, their economic demands were radical in nature. Elucidate with respect to the moderate phase of Indian National Congress. (150 words, 10 marks) ...... 26 The policymakers are adapting food security programmes to the malnutrition storm brought forth by the pandemic, but it is also crucial to consider the ‘hidden hunger’ aspect of it. Discuss. (150 words, 10 marks) ...... 28 Compare and contrast the Remission of Duties or Taxes on Export Products’ (RoDTEP) scheme and Merchandise Exports from India Scheme (MEIS). Do you think RoDTEP can boost exports and increase competitiveness of Indian goods globally? Comment. (150 words, 10 marks) ...... 31 The micro, small and medium enterprises (MSMEs) are indispensable to economic and social development of the country. MSME sector is required to be empowered to face the existing challenges for it to be truly a strategic asset for the economy of the country. Examine. (150 words, 10 marks) ...... 34 Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth ...... 38 Compare and contrast the Remission of Duties or Taxes on Export Products’ (RoDTEP) scheme and Merchandise Exports from India Scheme (MEIS). Do you think RoDTEP can boost exports and increase competitiveness of Indian goods globally? Comment. (250 words) ...... 38 The micro, small and medium enterprises (MSMEs) are indispensable to economic and social development of the country. MSME sector is required to be empowered to face the existing challenges for it to be truly a strategic asset for the economy of the country. Examine. (250 words) ...... 42 Government Budgeting...... 47 Creation of National Monetisation Pipeline (NMP) is a pioneering initiative to establish a roadmap for “monetisation ready” assets. How will asset monetisation help the country? What are potential bottlenecks to NMP? Explain. (250 words) ...... 47 Ujjwala 2.0 (Pradhan Mantri Ujjwala Yojana) is certainly a step in the right direction to improve access to LPG over its earlier version but unless the structural impediments are addressed the poor cannot properly benefit from it. Evaluate. (150 words, 10 marks) ...... 50 Major crops cropping patterns in various parts of the country, different types of irrigation and irrigation systems storage, transport and marketing of agricultural produce and issues and related constraints; e-technology in the aid of farmers ...... 53 A nascent movement to introduce more technology into the average Indian farm is gathering steam; in this context discuss how technology can enable smart farming in India. (250 words).... 53 National Mission on Edible Oils and Oil Palm (NMEO-OP) may achieve the much-desired self- reliance in palm oil but it has many underlying political, socio-economic and ecological concerns. Critically Analyse. (250 words) ...... 56 Issues related to direct and indirect farm subsidies and minimum support prices; Public Distribution System- objectives, functioning, limitations, revamping; issues of buffer stocks and food security; Technology missions; economics of animal-rearing...... 60 Account for the contributions of Dairy sector to climate crisis in India. (250 words) ...... 60

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How is the minimum price of sugarcane determined in India? Examine the issues with respect to fair and remunerative price (FRP) of sugarcane with special emphasis on profitability of sugar mills. (250 words) ...... 66 National Mission on Edible Oils and Oil Palm (NMEO-OP) may achieve the much-desired self- reliance in palm oil but it has many underlying political, socio-economic and ecological concerns. Critically Analyse. (250 words, 15 marks) ...... 69 Giving an account of land use changes in India, mention various factors driving them in the last few decades. Also discuss the consequences of changing land use pattern. (250 words ) ...... 72 Infrastructure: Energy, Ports, Roads, Airports, Railways etc...... 75 Elaborate upon the risks and concerns associated with nuclear energy future . (250 words) ...... 75 Explain the policy challenges faced by India with respect to crude oil import and utilisation. (250 words) ...... 78 Ensuring high standards of cybersecurity is essential for any country dealing with Central Bank Digital Currency. Justify. (250 words) ...... 82 Analyse the features of the Inland Vessels Bill 2021 in the development of Inland waterways in India. (250 words) ...... 84 Discuss in detail the issues related to Privatization of Indian Railways while suggesting solutions to address the same. (250 words) ...... 87 How are biofuels classified? Biofuels are a benevolent option that not only solves the energy security issue but also brings with it several possibilities for positive transformation. India must ensure it is not left behind in reaping its benefits. Comment. (250 words) ...... 90 Analyse the various risks posed by hydropower projects in the Himalayan region? Highlight the impact of climate change on further exacerbating the existing risks. Suggest measures needed to mitigate it. (250 words) ...... 96 Science and Technology- developments and their applications and effects in everyday life; Achievements of Indians in science & technology; indigenization of technology and developing new technology...... 100 What do you understand by food fortification? Discuss the various types of it while discussing the challenges and benefits associated. (250 words) ...... 100 Do you think shifting to electric vehicles means subsidizing the affluent? Are there better alternatives? Discuss. (250 words) ...... 104 Mixing the two types of vaccine may give the immune system multiple ways to recognize a pathogen. Two different vaccines may be more potent than either vaccine alone but mixing must be exercised with caution. Critically Analyse. (250 words)...... 107 India needs to recognize that the metaverse is almost upon us. We need to put in place regulations that encourage the development of these new virtual environments while ensuring that they can still function in an open, interoperable manner. Discuss. (250 words) ...... 109 Liberalisation of Drone Rules, 2021 marks a long overdue step towards ensuring growth in innovation & engineering and encouraging start-ups in a futuristic technology. Diligent implementation of safety, security and regulatory measures will be vital for its success. Discuss. (250 words) ...... 112

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The central and the state governments should go beyond policy guidelines and take steps to meet the future technological and infrastructural demands of Electrical Vehicles (EV). Discuss. (250 words) ...... 115 Conservation, environmental pollution and degradation, environmental impact assessment ...... 119 Looking at the Himalayas only through the prism of geopolitics and security concerns ignores it of its other crucial interests for humanity, comment. (250 words) ...... 119 What do you understand by carbon border tax? Also, assess the advantages and disadvantages that India is likely to face with the imposition of this tax. (250 words) ...... 121 Account for the role of traditional ecological practices as a sustainable solution to climate change problem. (250 words) ...... 124 Account for the risk that climate change poses to the financial stability of a country and in this backdrop discuss the possible role of RBI in mitigation of such risk. (250 words)...... 126 How far do you think the nature based solutions as viable option in dealing with climate change in India? Analyse with suitable illustrations. (250 words) ...... 129 Plastic waste is a key societal challenge; in this context discuss the challenges and opportunities of plastics management. (250 words) ...... 132 With traditional mitigation strategies not yielding desired results to tackle climate change, radical strategies such as geo-engineering must be given a serious thought. Critically Analyse. (250 words) ...... 134 Climate change mitigation requires collaboration and cooperation between the global north and south to move towards equitable cumulative emission targets rather than net zero emissions. Examine in the light of recent IPCC report. (250 words) ...... 138 As India stares at a grave water crisis, urgent interventions and measures are needed with a special focus on sustainable water management in agriculture to prevent acute water scarcity. Examine. (250 words) ...... 142 Disadvantaged groups will continue to be disproportionately impacted as climate change persists. In such a scenario, the idea of ‘climate justice’ will go a long way in achieving equity in sustainability. Analyse. (250 words) ...... 147 Critically Analyse India’s performance so far to achieve its Paris obligations. What policy and behavioural changes are further required to stay on course to achieve its targets by 2030? (250 words) ...... 150 What is polluters pay principle? It is time to give effect to the polluters pay principle in both letter and spirit to improve air quality in the country. Examine. (150 words) ...... 152 Disaster and disaster management...... 155 Account for the increased frequency of cyclones in India over the years, which are much severe and devastating than before. Suggest short term and long-term measures to mitigate the human and economic costs arising from them. (150 words, 10 marks) ...... 155 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...... 158

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“Sectarian tribalism has been the bane of the North-eastern States”, in this context discuss the Assam-Mizoram Border and explain how it has unleashed latent regionalism recently. (250 words) ...... 158 The Internet has empowered society, but also created a new threat of disinformation against women. Do you agree? Comment. (250 words) ...... 161 Various Security forces and agencies and their mandate...... 166 The restructuring of the Indian armed forces into integrated theatre commands is a necessary reform as actors, threats and the environment will change in uncertain ways, but its structure must be simple, flexible and adaptable. Substantiate. (250 words) ...... 166

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Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment. Central banks across the world have increased their attention to digital currencies. In this context examine the implications and limitations of introduction of Central Bank Digital Currency in India. (250 words) Reference: The Hindu Why the question: The Reserve Bank of India is likely to soon kick off pilot projects to assess the viability of using digital currency to make wholesale and retail payments to help calibrate its strategy for introducing a full- scale central bank digital currency (CBDC). Key Demand of the question: Examine the implications and limitations of introduction of Central Bank Digital Currency in India. Directive: Examine – When asked to ‘Examine’, we must look into the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications. Structure of the answer: Introduction: Start with the context of the question. Body: The answer body must have the following aspects covered: Discuss first the need for Central Bank Digital Currency in India. Central Bank Digital Currency (CBDC) is nothing but a digital version of so-called “fiat money”. Fiat money is the regular currency a country uses, as established and regulated by its government. CBDC is a digital payment instrument that is denominated in a national currency. Discuss the pros and cons. Conclusion: Conclude suitably. Introduction

A Central Bank Digital Currency (CBDC), or national digital currency, is simply the digital form of a country’s fiat currency. Instead of printing paper currency or minting coins, the central bank issues electronic tokens. This token value is backed by the full faith and credit of the government.

The Reserve Bank of India is likely to soon kick off pilot projects to assess the viability of using digital currency to make wholesale and retail payments to help calibrate its strategy for introducing a full-scale central bank digital currency (CBDC).

Body

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 Sweden is conducting real-world trials of their digital currency (krona)

 The Bahamas already issued their digital currency “Sand Dollar” to all citizens

 China started a trial run of their digital currency e- RMB amid pandemic. They plan to implement pan-china in 2022. This is the first national digital currency operated by a major economy.

Need for a CBDC:

 The growth of cryptocurrencies such as Bitcoin, Ethereum etc has raised challenges to fiat currencies.

 Along with their other vulnerabilities made the central bank of each country explore the possibility of introducing their own digital currencies.

 A 2021 BIS survey of central banks, which found that 86% were actively researching the potential for such currencies, 60% were experimenting with the technology, and 14% were deploying pilot projects.

 The need for inter-bank settlement would disappear as it would be a central bank liability handed over from one person to another.

Viability of a CBDC:

 An official digital currency would reduce the cost of currency management while enabling real-time payments without any inter-bank settlement.

 India’s fairly high currency-to-GDP ratio holds out another benefit of CBDC — to the extent large cash usage can be replaced by CBDC, the cost of printing, transporting and storing paper currency can be substantially reduced.

 As the currency in digital form, it can provide an efficient way for financial transaction. Further, digital currency also solves the challenges with Cash and coins. Cash and coins require expenses in storage and have inherent security risks like the recent heist in the RBI currency chest.

 There are about 3,000 privately issued cryptocurrencies in the world. According to IMF, the key reason for considering national digital currency is to counter the growth of private forms of digital money.

 There is a possibility of these companies going bankrupt without any protection. This will create a loss for both investor and creditor. But the National Digital currency has government backing in case of any financial crisis.

 As the state-backed digital currency can provide investor/consumer protection, the private can confidently invest in the associated infrastructure without any doubts over its regulation. This will improve the services to people.

 The national digital currency will be regulated by the RBI. So, there will be less volatility compared to other digital currencies.

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 Current RBI’s work on inflation targeting can be extended to national digital currency also. Since India is planning to ban other cryptocurrencies, the RBI can better regulate digital and fiat currency. Thus, upgrading to digital currency and balancing the macroeconomic stability.

 With the introduction of CBDC in a nation, its central bank would be able to keep a track of the exact location of every unit of the currency, thereby curbing money laundering.

 Criminal activities can be easily spotted and ended such as terror funding, money laundering, and so forth

Concerns posed:

 India is already facing many cyber security threats. With the advent of digital currency, cyberattacks might increase and threaten digital theft like Mt Gox bankruptcy case.

 According to the Digital Empowerment Foundation in 2018 report, around 90% of India’s population is digitally illiterate. So, without creating enough literary awareness introduction of digital currency will create a host of new challenges to the Indian economy.

 Introduction of digital currency also creates various associated challenges in regulation, tracking investment and purchase, taxing individuals, etc.

 The digital currency must collect certain basic information of an individual so that the person can prove that he’s the holder of that digital currency. This basic information can be sensitive ones such as the person’s identity, fingerprints etc.

Conclusion:

There are crucial decisions to be made about the design of the currency with regards to how it will be issued, the degree of anonymity it will have, the kind of technology that is to be used, and so on. There is no doubt that the introduction of National Digital currency prevents the various threats associated with the private-owned cryptocurrencies and take India the next step as a digital economy. But the government has to create necessary safeguards before rolling out. India needs to move forward on introducing an official digital currency. Discuss the International Monetary Fund’s forecast about India’s GDP growth and analyse its implications on RBI’s monetary policy. (250 words) Reference: Indian Express Why the question: Later this week, on August 6, the Monetary Policy Committee of the Reserve Bank of India will unveil its latest monetary policy review. Thus the question. Key Demand of the question: The article brings to us the International Monetary Fund’s forecast about India’s GDP and growth. Directive: 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: The IMF cut India’s GDP growth forecast for 2021-22 (or FY22) by as much as three percentage points. In April, IMF expected India’s real GDP to grow by 12.5% this year; in July, it revised that forecast to just 9.5%. Body:

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IMF points to two broad sets of reasons why it dialed down India’s GDP growth forecast. The first is the inadequate levels of vaccination. See the chart below, which points out how emerging economies such as India have only 11% of their population fully vaccinated. And the second key factor is the kind of policy support that the Indian economy has received. Then discuss the implications of above forecast for RBI’s monetary policy. Conclusion: Take hints from the article and conclude suitably. Introduction

The latest update on the global economy by the International Monetary Fund (IMF) was released last week. India’s growth in GDP was cut down by 3% percentage points. The second wave disrupted India’s recovery and inadequate levels of vaccination translates to third wave becoming inevitable.

Body

IMF Forecast about India’s GDP growth

 The standout news in IMF’s World Economic Outlook update, at least from an Indian perspective, was that between its April report and the July one, the IMF cut India’s GDP growth forecast for 2021-22 (or FY22) by as much as three percentage points.

 In April, IMF expected India’s real GDP to grow by 12.5% this year; in July, it revised that forecast to just 9.5%.

 Emerging economies such as India have only 11% of their population fully vaccinated — far behind the 40% mark for advanced economies such as the US and UK.

 Simply put, even though in absolute numbers India has vaccinated a lot of its residents, the chances of another wave (and its severity) will likely depend on the percentage of people vaccinated — a metric in which India lags far behind.

 Another reason for low growth is the fiscal support of government that ceased in 2020. In the emerging market and developing economies most measures expired and they are looking to rebuild fiscal buffers,

Implications of forecast on RBI’s monetary policy

 The challenge with the RBI policy lately is that India’s GDP growth has been stalling even as the inflation rate has spiked.

 If it chooses to boost growth when inflation is also high, it runs the risk of further fuelling inflation.

 It is true that retail inflation, which is the primary target of RBI, is expected to stay outside or almost outside RBI’s comfort zone in 2021-22.

 CARE Ratings (see the chart below), for example, expects retail inflation to be 6% and wholesale inflation to be 10% this year.

 Still, RBI is unlikely to raise interest rates on August 6 because India’s economic recovery continues to be quite iffy.

Conclusion

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Indian economy is in dire need of increased direct spending by the government. That’s because in a wide-ranging downturn all other economic agents in the economy have run out of reasons to spend. Individuals have lost incomes and jobs, and firms have lost business. Government is the only economic entity that can bypass a hard budget constraint. By spending money, the government can cut down the time required by the economy to recover its long-lost momentum. If the government dithers, the recovery may be painful and slow. Discuss the potential of India in becoming the capital of gig-workers of the world. (250 words) Reference: The Hindu Why the question: The article brings to us the potential of India in becoming the capital of gig-workers of the world. Key Demand of the question: Bring out the potential of India in becoming the capital of gig-workers of the world. Directive: 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: Start with what a Gig-economy is. Body: You can start by highlighting the changes that the pandemic has brought in the economy in general and in what way it has proved to be a blessing in disguise for the gig- workers. Explain how gig –economy is evolving; an inclination towards flexible work is being driven by factors such as freedom, technology up gradation, skill focus, additional income and human capital. Gig economy allows task ownership, convenience and flexibility. Based on tastes and preferences, you can determine the number and type of projects you work on, the quantum of your earnings, and thus, the work-life balance. Discuss the potential of India in becoming the capital of gig-workers of the world. Conclusion: Conclude suitably. Introduction

A gig economy is a free market system in which temporary positions are common and organizations contract with independent workers for short-term engagements. Examples of gig employees in the workforce could include freelancers, independent contractors, project-based workers and temporary or part-time hires.

An estimated 56% of new employment in India is being generated by the gig economy companies across both the blue-collar and white-collar workforce. According to the Oxford Internet Institute’s ‘Online Labor Index’, India leads the global gig economy with a 24% share of the online labor market, with demand for software developers, creative and marketing professionals.

Body:

The potential of India in becoming the capital of gig-workers of the world:

 Industry bodies have been conducting several studies on this parallel economy and just before the advent of the pandemic had predicted India’s gig economy to grow at a compounded annual growth rate of 17 per cent to touch $455 billion in the next three years.

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 India at present has around 15 million freelance workers engaged in projects in sectors like IT, HR, and designing. In comparison, there are almost 53 million independent workers in the US.

 The present Covid-19 scenario would push more of the conventional workforces towards the gig economy in India.

 India’s workforce is adding almost four million people every year, this would have a big impact on the gig economy in the near future.

 Even in India, firms are shrinking in size, giving rise to a large number of start-ups specialized in taking up non-core activities on contractual basis.

 The recent Periodic Labour Force Survey from the Ministry of Statistics and Programme Implementation shows unemployment rate at a 45-year high, at 6.1%; the highest levels of joblessness is among urban youth.

 Other reports show that over the past two years’ domestic consumption has reduced, industrial growth has flatlined, private investments are lower, and market volatility has hit drivers of employment.

 And so, not surprisingly, many, including undergraduates and diploma holders, now look at the gig economy as a stop-gap solution until the market turns.

 Human resources firm Team Lease estimates that 13 lakh Indians joined the gig economy in the last half of 2018-19, registering a 30% growth compared to the first half of the fiscal year.

 Better Place, a digital platform that does background verification and skill development in the informal sector, estimates that of the 21 lakh jobs that will be created in the metros in 2019-20, 14 lakhs will be in the gig economy.

 Food and e-commerce delivery will account for 8 lakh positions and drivers will account for nearly 6 lakh positions, says the report, based on 11 lakh profiles in over 1,000 companies.

 Delhi, Bengaluru and other metros are expected to be the biggest drivers of this sector. And two-thirds of this workforce will be under the age of 40.

Key Challenges:

 This workforce has limited employment rights like minimum wages, health benefits, sick leaves or even retirement benefits to fall back on.

 Also, the payment is assured only on the completion of the project giving a sense of financial insecurity.

 The lack of any kind of protection was also deterring several talented workers against participating in the economy

 The Central government recently passed the social security code which could cover gig worker as well.

 One of the key proposals includes the creation of a social security fund which is around 1 per cent of the aggregators’ annual turnover.

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 This fund would be used primarily for the welfare of the unorganized and the gig workforce

Way Forward:

 The government needs to come out with some more regulations to protect the workforce of the gig economy.

 Also, at present, there is no mechanism to address the issue of redress of disputes.

 It could also mean countries coming together to set up a platform to extend their labour protection to the workforce who are working part-time in their country.

 Companies employing the workforce on a temporary basis should also be made responsible to contribute to their insurance and social obligation other than just their tax commitment.

Conclusion:

The scope of the gig economy in a country like India is enormous. The government needs to come out with a comprehensive legislation to empower and motivate many to take this path. The gig economy and its workforce cannot be overlooked when we talk about the future of employment. World should not be in a hurry to shut the old economy into a new green economy, its essential to strive for a balance between the old and the new to achieve the goals. Elaborate with examples. (250 words) Reference: Times of India Introduction The world faces a growing paradox in the campaign to contain climate change. The harder it pushes the transition to a greener economy, the more expensive the campaign becomes, and the less likely it is to achieve its aim, to limit the worst effects of global warming. Body Governments around the world are focused on driving up the demands of materials required to build a clean economy. They are also curbing the supply of sources that are contributors to carbon. For instance, discouraging investment in mines, smelters etc. Paradox of containing climate change: The harder the world pushes the transition to a greener economy, the more expensive the campaign becomes. Greenflation: New government-directed spending is driving up demand for materials needed to build a cleaner economy. While tightening regulation is limiting supply by discouraging investment in mines, smelters, oil fields, or any source that belches carbon. The unintended result is greenflation – rising prices for metals and minerals such as copper, aluminium and lithium, which are essential to solar and wind power, electric cars, batteries and other renewable technologies. More consumption of fossil fuels:In the past, the transition to a new energy source provided a big boost to the old one. The advent of steam power inspired the makers of sailing ships to innovate more in 50 years than they had in the previous 300. Now, building green economies will consume more oil in the transition period, but producers aren’t responding the same way because political and regulatory resistance has darkened the future of fossil fuels. Rising green metal prices:which include metals like copper and aluminium. Aluminium is one of the dirtiest metals to produce, as bad as iron ore. Yet, it is also one of the metals most vital to solar and other green energy projects. Renewable technologies require more wiring than the fossil-fuel variety. Solar or wind power plants and electric cars use two to six times more copper than the technologies they aim to replace.

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Since the low point early last year, copper prices are up by more than 100%, aluminium by 75%. Increased Greenium:Limiting supply threatens to raise what Bill Gates calls the “greenium” – the premium the world must be prepared to pay for climate-friendly infrastructure. Retaliated by ESG movement:Investment in these green metals (aluminium, copper) has also been depressed by ESG – environmental, social and governance issues. Forty per cent of the world’s copper supply comes from the two largest producers, Chile and Peru, and in both countries, mining projects that used to take five years can now take ten or more. Suggestions The World will not be able to meet the rising demand for Green construction materials. So they require using more technology in order to facilitate them. For instance, The US has joined China in its commitment to carbon neutrality. Governments have announced Green spending plans Conclusion Solving this conundrum – how to supply enough dirty old material to build a new green economy – will require balance. Governments, and greens, in particular, need to recognise that trying to shut down the old economy too fast threatens to push the price of building a cleaner one out of reach.

How far do you agree with scrapping of retrospective tax laws as the opportunity for correcting a momentous blunder in the contemporary history of taxation laws in India? Examine. (250 words) Reference: The Hindu Why the question: Finance Minister Nirmala Sitharaman recently introduced the Taxation Laws (Amendment) Bill in the Lok Sabha to nullify the tax clause provision that allows the government to levy taxes retrospectively. Key Demand of the question: Examine the positives of scrapping of retrospective tax laws. Directive: Examine – When asked to ‘Examine’, we must look into the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications. Structure of the answer: Introduction: Start with the context of the question. Body: The answer body must have the following aspects covered: First explain in detail the existing norms of retrospective tax laws and policies that are in force in the country. Enlist the genesis of the retrospective tax imbroglio that India has been facing. Discuss the proposed changes that the government intends to bring, highlight their positives. Conclusion: Conclude with way forward. Introduction

The Government of India recently introduced The Taxation Laws (Amendment) Bill, 2021 in the Lok Sabha. The bill seeks to withdraw tax demands made using a 2012 retrospective legislation to tax the indirect transfer of Indian assets. It seeks to nullify the tax clause provision that allows the government to levy taxes retrospectively.

The government has been fighting legal cases against Vodafone and Cairn Energy on taxes it has claimed retrospectively on transactions these entities entered into relating to operations in the country. Both the U.K.-based companies have won international arbitration rulings that held the Telegram: https://t.me/insightsIAStips Page 15 Youtube: https://www.youtube.com/channel/UCpoccbCX9GEIwaiIe4HLjwA Facebook: https://www.facebook.com/insightsonindia INSTA SECURE SYNOPSIS

Indian government in breach of bilateral investment protection agreements with the Netherlands and the U.K. respectively.

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Retrospective Taxation allows a country to pass a rule on taxing certain products, items or services and deals and charge companies from a time behind the date on which the law is passed. Countries use this route to correct any anomalies in their taxation policies that have, in the past, allowed companies to take advantage of such loopholes. Apart from India, many countries including the USA, the UK, the Netherlands, Canada, Belgium, Australia and Italy have retrospectively taxed companies.

The proposed changes in the Taxation Laws (Amendment) Bill:

 The Bill says that it is argued that such retrospective amendments militate against the principle of tax certaintyand damage India’s reputation as an attractive destination.

 The country today stands at a juncture when quick recovery of the economyafter the COVID-19 pandemic is the need of the hour and foreign investment has an important role to play.

 The Bill proposes to do away with retrospective taxationon the sale of assets in India by foreign entities executed before May 2012, with a caveat, the companies that will benefit from the amendment must withdraw all legal cases against the government and forfeit interest, costs and any damages.

 The government, on its part, is willing to refund any tax dues it may have collected or seized.

Rationale behind the bill:

 In May 2007, Vodafone bought Hong Kong-based Hutchison’s controlling stake in Hutchison Essar for $10.9 billion.

 The transaction took placein the Cayman Islands where Hutchison’s unit which in turn was acquired by Vodafone’s Netherlands-based Vodafone International Holdings.

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 That September, India’s Income Tax Department served a notice on Vodafone for failing to deduct tax at sourcefrom the amount it paid to Hutchison in lieu of the capital gains tax it contended the seller Hutchison was liable for. The case went to court.

 In January 2012, India’s Supreme Court backed Vodafone, ruling that indirect transfer of shares to a non-Indian company would not attract tax in India.

 Separately, in 2006-07, Cairn Energy U.K. had reorganised its Indian oil and gas exploration business ahead of a planned IPO in India and subsequently sold part of its stake in Cairn India Ltd., first to Malaysia’s Petronas, and then the Vedanta Group during the 2009-11 period.

 In the Union Budget of 2012,the then Finance Minister, introduced an amendment to the Finance Act, which allowed the government to retrospectively tax such transactions.

 In 2014, the Income Tax Department froze Cairn’s remaining shares in Cairn India. The next year, Cairn initiated international arbitration against the government under the India-U.K. bilateral investment treaty.

 Though the government had raised tax demands in 17 such cases, Vodafone and Cairn attracted the most attention.

 Both initiated international arbitration under bilateral agreements.

 Vodafone got a favourable ruling in September 2020 at the Permanent Court of Arbitration at The Haguein the ₹22,000-crore case.

 In December, an Arbitral Tribunalruled in favour of Cairn, awarding it $1.2 billion plus interest and costs in damages, which came to $1.7 billion in total.

Importance of the bill:

 The bill marks a step in the direction of addressing the long-pending demand of foreign investors seeking the removal of retrospective tax for the sake of better tax clarity.

 This would help in establishing an investment-friendly business environment,which can increase economic activity and help raise more revenue over time for the government.

 This could help restore India’s reputation and improve ease of doing business.

Way forward:

 Government argued that Taxation Laws (Amendment) Billintroduced will only encourage more international investments into India and is a welcome relief for companies who have long invested in the country.

 The government has informed Parliament that at least 17 companies will benefit from the move including Cairn Energy Plc and telecom giant Vodafone.

 Some experts welcomed the move as it will end the spectre of policy uncertainty for potential investors who have seen the Vodafone and Cairn cases unfold over the past decade.

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 The amendments may put an end to arbitration cases from the past“which have created great embarrassment for India in international circles”, while most observers lamented that the issue had been allowed to linger for far too long.

 This could help restore India’s reputation as a fair and predictable regimeapart from helping put an end to unnecessary, prolonged and expensive litigation.

COVID 19 crisis had stretched State finances in many ways. In this context, examine the potential of Non-tax revenues source in strengthening the state finances in India. (250 words) Reference: The Hindu Why the question: The article discusses the impact of covid-19 led pandemic upon the State finances. Key Demand of the question: Examine the potential of Non-tax revenues source in strengthening the state finances in India. Directive: Examine – When asked to ‘Examine’, we must look into the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications. Structure of the answer: Introduction: The Covid crisis has stretched State finances by impacting both GST and cess collections. This, along with the imminent end of GST compensation in July 2022, has forced States to look at other revenue options. Body: The answer body must examine the potential of Non-tax revenues source in strengthening the state finances in India. Discuss first what are the sources of non-tax revenue in India? Analyse the impact of covid-19 pandemic on the State finances. Suggest what needs to be done. Conclusion: Conclude with way forward. Introduction

The slowdown in GDP growth in 2020-’21 on account of the Covid-19 lockdown will result in considerable revenue losses for both the Central and state governments. Several state governments have reported huge shortfall in their revenue collection during the first two months of 2020-’21. The fiscal stress on state governments due to revenue loss will be further aggravated by the decline in tax devolution by the Union government. Lower tax collection by the Union government would mean lower devolution to states. This, along with the imminent end of GST compensation in July 2022, has forced States to look at other revenue options.

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Major reasons for States’ dwindling finances:

 Increasing dependency on Centre:

o States have been too dependent on the tax revenues while non-tax revenues are not insignificant at around 10 per cent of States’ total revenue collection

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o The dependency of states on the Centre for revenues has increased, with the share of the revenue from own sources declining from 55% in 2014-15 to 50.5% in 2020- 21.

o While part of this is inherent in India’s fiscal structure, wherein states are the big spenders and the Centre controls the purse strings, the situation has been exacerbated by the introduction of the GST.

o Barring a few exceptions, such as petroleum products, property tax, and alcohol excise, indirect taxes have, to a large degree, been subsumed under the GST regime, eroding the ability of states to raise their own revenues.

 Shortfall in devolution:

o Adding to state woes is the significant divergence in past periods between the amount of GST compensation owed and the actual payments made, including for states such as Uttar Pradesh, Bihar and Jharkhand that need greater fiscal support.

o Even before Covid-19 hit, 11 states estimated a revenue growth rate below the estimated 14% level, implying higher amounts will be owed as GST compensation.

o With the bulk of the states’ GST coming from goods such as electronics, fashion, and entertainment — all of which have been impacted by the pandemic — these revenues are likely to decline further.

Potential of Non-tax revenues source in strengthening the state finances in India:

 Non-tax revenue is charged against services provided by the government. It also includes interest charged on loans advanced by the government for various purposes.

 The three main administrative non-tax receipts heads — general services, social services and economic services — account for about 80 per cent of States’ own non-tax revenue.

 To augment additional revenues from non-tax sources, the fees/user charges for the various services provided by the State government need to be reformed.

 The State must focus on meeting the cost of public services through proper pricing, wherever feasible.

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 Services such as education and health are merit in nature and involve a degree of positive externality and, to some extent, subsidization may be justified. The extent of subsidization and its pattern over time need to be examined.

 It is essential to understand and appraise the performance of some of the non-tax sources of States with a view to examining their trends, identifying the factors responsible for their growth or lack of growth, exploring the scope for rationalizing their price structures and, thereby, improving the overall budgetary position of the States as well as efficiency in resource use.

Way forward:

 States must be allowed to lead in terms of reviving economy, generating income support, jobs while contain the virus at the same time.

 The State governments should strengthen the State Finance Commissions and ensure they have proper resources, adequate administrative support for their smooth functioning.

 SFC’s must be provided adequate time for carrying out the task assigned to them so as to ensure timely submission of reports to the government.

 A strengthened State Finance Commission would ensure that States get the benefit of appropriate distribution of resources to their Panchayati Raj institutes and also periodic recommendations for augmenting own source of revenues.

 Thus, it is important that States become more proactive in raising revenues as in the times to come they will have to make substantial investments in the health and education sectors which are going to be critical for growth.

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Economic reforms must not only aim to improve efficiency of the Economy and achieve high rate of growth but achieve inclusive growth and sustainable development. Elucidate. (250 words) Reference: The Hindu

Introduction

The Indian economy has travelled through an eventful period through the last three decades. In the post-independence economic history of our country, 1991 stands out as a watershed year. This was the year in which the economy was faced with a severe balance of payments crisis. In response, we launched a wide-ranging economic programme, not just to restore the balance of payments but to reform, restructure and modernise the economy. A near tragedy was averted and a new path was laid out before the country.

The COVID Pandemic has again disrupted the Indian economy leading to imbalances in the growth and development of the country.

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Need for Growth and Reforms to go hand in hand:

 Growth requires more than reforms. Reforms are, in the words of economists, only a necessary condition. It is not sufficient.

 In a developing economy, in the final analysis, growth is driven by investment. It is the decline in investment rateof nearly five percentage points since 2010-11 that has led to the progressive decline of the growth rate.

 Reforms normally create a natural climate for investment. But ‘animal spirits’ are also influenced by non-economic factors such as social cohesion.

 Reforms supplemented by a careful nurturing of the investment climateare needed to spur growth again. This should become the sole concern of policy makers.

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Priorities looking ahead:

 The economy is clearly recovering from the contraction induced by the pandemic, but how quickly it will recover is uncertain.

 Much depends upon whether we are hit by a third wave, and more importantly on how severe it is. The priority now must be to get the vaccination coverage expanded as soon as possible.

 This will create conditions conducive to a return to normalcy. The government has set an ambitious target of covering the entire adult population by end-December.

 Achieving this target or getting as close to it as possible will make the best contribution possible for a quick recovery.

 Global supply/production chainsnot only destroyed the manufacturing base in developed and developing countries; they also resulted in loss of jobs and poor working conditions in these sectors.

 Developing countries were asked to ease their labour protection lawsto facilitate global production and supply chains popularly known as global value chains.

 As a result, people were forced to work in precarious working conditions without any social security net.

 This created an unorganised army of labourersand is preventing many developing country governments from effectively offering relief.

 A virus has made us rethink our obsession with the economic efficiency theory. It implores us to put in place an industrial policy to maintain core capacity in health products so that we can face the next crisis more decisively.

Way Forward: Need for continuity of reforms agenda:

 The reform agenda must continue. It will be incremental in character. It has to be. Policymakers should be clear about the directions in which they should move.

 First of all, there is a need to move in the same directionin which we have been moving in the past three decades.

o Policymakers should identify the sectors which need reformsin terms of creating a competitive environment and improving the performance efficiency.

o From this angle, we need to take a relook at the financial system, power sector and governance. Centre and States must be joint partners in this effort.

 Second, in terms of government performance, there should be increased focus on social sectors such as health and education.

o In terms of the provision of services, the emphasis must be not just on quantitative expansion but also quality.

o To achieve the quality is even more difficult. The advent of COVID-19 has clearly shown our inadequate health facilities and preparedness.

Conclusion:

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Reforms are necessary to improve the productivity of the economy and achieve higher growth. But the story does not end there. We cannot ignore equity considerations. Growth and equity must go together. They must not be posed as opposing considerations. They are truly interdependent. It is only in an environment of high growth; equity can be pushed aggressively.

Thus, the crisis was converted into an opportunity to bring about fundamental changes in the approach and conduct of economic policy. The words of Charles Dickens in somewhat reverse order seem appropriate: “It was the worst of times, it was the best of times, it was the winter of despair, it was the spring of hope.” What is central bank digital currency (CBDC)? How does it work? CBDC is slowly gaining momentum and acceptance across the world. Discuss its potential benefits and challenges in India. (250 words) Difficulty level: Moderate Reference: Live Mint Why the question: RBI Deputy Governor T. Rabi spoke briefly about the central bank’s plan to introduce a digital rupee, or its own version of CBDC, in the near future. Key Demand of the question: To explain about CBDC, the technology behind it, its potential benefits and challenges. Directive word: 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: Start by explaining the emerging concept central bank digital currency (CBDC) Body: In the first part, explain the technology behind CBDC – Blockchain giving rise to secure digital instruments. Also, mention from where CBDC will derive its value from. Mention the growing acceptance of CBDC in India. Next, write about potential benefits that India can accrue from CBDC. financial inclusion, the cashless society, decrease the cost of printing, expanding the digital economy and empowering citizens etc. Next, write about potential challenges with regards to CBDC. User adoption, security, complexity, domination by Chinese and Opportunity cost due to RBI’s reluctance etc. Conclusion: Conclude with way forward as to how India should step up to CBDC. Introduction

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According to the Bank for International Settlements, more than 60 countries are currently experimenting with the CBDC. There are few Countries that already rolled out their national digital currency. Such as, Telegram: https://t.me/insightsIAStips Page 23 Youtube: https://www.youtube.com/channel/UCpoccbCX9GEIwaiIe4HLjwA Facebook: https://www.facebook.com/insightsonindia INSTA SECURE SYNOPSIS

 Sweden is conducting real-world trials of their digital currency (krona)

 The Bahamas already issued their digital currency “Sand Dollar” to all citizens

 China started a trial run of their digital currency e- RMB amid pandemic. They plan to implement pan-China in 2022. This is the first national digital currency operated by a major economy.

Need for a CBDC:

 The growth of cryptocurrencies such as Bitcoin, Ethereum etc has raised challenges to fiat currencies.

 Along with their other vulnerabilities made the central bank of each country explore the possibility of introducing their own digital currencies.

 The need for inter-bank settlement would disappear as it would be a central bank liability handed over from one person to another.

Working of CBDC:

 CBDCs use distributed ledger technology (DLT), which is typically deployed in a hybrid architecture i.e. existing central bank and payment infrastructure + DLT for movement, transparency, workflow and audit trail or tracing of funds (value).

 This technology helps in efficiency (speed), security (encryptions) and also other aspects like smart contracts which execute buy and sell transactions based on a pre-defined criteria and opens up the possibility of ‘programmable’ money.

 CBDC can be in different forms like token or account/ digital wallet form.

 The underlying technology used for CBDCs can vary from DLT or a mix of existing payment rails and systems at one layer and DLT at the second layer. In order to keep track of money,

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banks need to store financial records, such as how much money a person has and what transactions they’ve made.

 While digitising the money supply chain from central banks to commercial banks to consumers of wholesale and retail CBDCs, complimenting the existing infrastructure and investment is important.

Potential of a CBDC:

 An official digital currency would reduce the cost of currency management while enabling real-time payments without any inter-bank settlement.

 The national digital currency will be regulated by the RBI. So, there will be less volatility compared to other digital currencies.

 With the introduction of CBDC in a nation, its central bank would be able to keep a track of the exact location of every unit of the currency, thereby curbing money laundering.

 Criminal activities can be easily spotted and ended such as terror funding, money laundering, and so forth

Concerns posed:

 India is already facing many cyber security threats. With the advent of digital currency, cyberattacks might increase and threaten digital theft like Mt Gox bankruptcy case.

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 Introduction of digital currency also creates various associated challenges in regulation, tracking investment and purchase, taxing individuals, etc.

Conclusion:

The phase of the Indian National Congress or the Indian national movement during the first twenty years of its history is roughly referred to as moderate phase. They were people who believed in British justice and were loyal to them. They believed in peaceful and constitutional methods to demand and fulfil those demands. Their method has been called 3P – Prayers, Petition and Protest.

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The moderate leaders included Dadabhai Naoroji, WC Bonnerjee, G Subramanya Aiyer, GK Gokhale, SN Bannerjee, Rash Behari Ghosh, R C Dutta, M G Ranade, Pherozeshah Mehta, P R Naidu, Madan Mohan Malaviya, Ananda Charlu, S Subramania Iyer and William Wedderburn.

Political demands of the moderates were moderate:

 From 1885 to 1892, their main demand continued to be expansion and reform of the Legislative Councils, the membership of the Councils for elected representatives of the people and also an increase in the powers of these Councils.

 Holding the ICS exam in India along with England to allow more Indians the opportunity to take part in the administration.

 the separation of the Judiciary from the executive

 Freedom of speech and expression.

 Freedom to form associations.

 Repealing the Arms Act of 1878.

 Increasing spending on education of Indians.

However, Economic demands of moderates were radical:

 The most notable part of Moderates political work was their systematic and factual criticism of the economic policy of British rule through press and publication.

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 The focal point of the nationalist critique of colonialism was the drain theory. For instance, Dadabhai Naoroji put forward the idea that Britain was draining and ‘bleeding’ India.

 Other nationalist leaders, journalists and propagandists followed in the foot-steps of Dadabhai Naoroji. R.C. Dutt, for example, made the drain the major theme of his Economic History of India.

 They demanded Indian control over the public purse and raised the slogan that had earlier been raised by the Americans during their War of Independence, ‘No taxation without representation’.

 Moderates strictly demanded to reduce the military expenditure and increase the allocation of money for activities such as health and education.

 They demanded the reduction of land revenue and abolition of the salt tax and supported the imposition of income tax and import duties on products which the rich and the middle classes consumed.

 Dadabhai Naoroji in his famous economic critique ‘Poverty and un-British rule in India’ popularly put it, foreign capital represented the ‘despoilation’ and ‘exploitation’ of Indian resources.

o Similarly, the editor of the Hindustan Review and Kayastha Samachar described the use of foreign capital as ‘a system of international depradation’.

 They demanded for the development and protection of Indian Industries through increased tariffs on imports and government aid for these industries.

 After seeing the failure of the Government in this regard the nationalists popularised the idea of Swadeshi or use of Indian goods and boycott of British goods as a means of promoting Indian industries.

 An enquiry into India’s growing poverty and famines.

 They organized powerful intellectual agitations against nearly all the important official economic policies. They used these agitations to both understand and to explain to others the basis of these policies in the colonial structure.

Conclusion

The Indian leaders advocated basically anti-imperialist economic policies. They laid stress on basic changes in the existing economic-relations between India and England. They vehemently opposed the attempts of foreign rulers to convert India into supplier of raw materials and a market for British manufacturers. They criticised the official policies on tariff, trade, transport and taxation. These were regarded as hampering rather than helping the growth of indigenous industry.

Value addition:

Aims and demands of the moderates:

 Education of the masses and organising public opinion, make people aware of their rights.

 Indian representation in the Executive Council and in the Indian Council in London.

 Reform of the legislative councils.

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 Separation of the executive from the judiciary.

 Decreased land revenue tax and ending peasant oppression.

 After 1892, raised the slogan, “No taxation without representation.”

 Reduced spending on the army.

 Abolishing salt tax and duty on sugar.

Limitations of Moderate phase:

 However British rule, to most of them seemed to be an act of providence destined to bring in modernization.

 The moderate politicians could not or did not organize an agitation against British rule because of them still shred an intrinsic faith in the English democratic liberal political tradition.

 Their politics was very limited in terms of goals and methods. They were secular in their attitudes, though not always forthright enough to rise above their sectarian interests. They were conscious of the exploitative nature of British rule, but wanted its reforms and not expulsion.

 They equated liberty with class privilege and wanted gradual or piecemeal reforms.

 Early Congressman had an implicit faith in the efficacy of peaceful and constitutional agitation as opposed to popular mean of agitation.

 The movement was confined to the educated classes only. Did not try to employ the masses.

 Believed in Petition, Prayer and Protest. They did not go for mass mobilisation. The basic weakness of the early national movement lay in its narrow social base. It did not penetrate down to the masses. In fact, the leaders lacked faith in the masses.

 Their immediate demand was not for full self-government or democracy. They demanded democratic rights only for the educated members of the Indian society, who would substitute for the masses.

The policymakers are adapting food security programmes to the malnutrition storm brought forth by the pandemic, but it is also crucial to consider the ‘hidden hunger’ aspect of it. Discuss. (150 words, 10 marks) Introduction

According to the Global hunger Report, when Government provides only free or subsidised wheat and rice, then the hunger gets eliminated only from the energy intake angle. The deficiency in vitamins and minerals still continues and this is called Hidden Hunger.

It occurs when the quality of food people eat does not meet the nutrient requirements, so the food is deficient in micronutrients such as the vitamins and minerals that need for their growth and development.

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India’s effort to achieve food security:

 Integrated Child Development Services (ICDS), with its network of 1.4 million Anganwadi Centres, reaching almost 100 million beneficiaries who include pregnant and nursing mothers and children up to 6 years;

 Mid-day meals (MDM) that reach almost 120 million children in schools; and

 Public Distribution System (PDS) that reaches over 800 million people under the National Food Security Act.

 The recently announced flagship program of the Ministry of Women and Child Development will be anchored through the National Nutrition Mission (NNM), or Poshan Abhiyaan, with its own specific budget of ₹9,046 crore and a proposed World Bank loan of $200 million, to ensure convergence among the various programmes of the government.

 Additionally, NITI Aayog has worked on a National Nutrition Strategy (NNS), isolated the 100 most backward districts for stunting and prioritised those for interventions.

 The National Nutrition Strategy (NNS) has set very ambitious targets for 2022 and the Poshan Abhiyaan has also specified three-year targets to reduce stunting, under-nutrition and low birth weight by 2% each year, and to reduce anaemia by 3% each year.

 IYCF(Infant and Young child feeding), Food and Nutrition, Immunization, Institutional Delivery, WASH(Water, Sanitation and Hygiene), De-worming, ORS-Zinc, Food Fortification, Dietary Diversification, Adolescent Nutrition, Maternal Health and Nutrition, ECCE(Early Childhood care and Education), Convergence, ICT-RTM(Information and Communication. Technology enabled Real Time Monitoring), Capacity Building.

Hidden hunger is a major challenge for India:

 Global Hunger Index 2020-India ranks 94/ 107 countries.

 As per India’s 2015-16 health survey, one in every three children in the country is stunted, more than 50% of adolescent girls and pregnant women are anaemic, and almost 80% mothers do not receive full antenatal care during their pregnancy.

 Data from phase one of the National Family Health Survey-5, 2019-20 also points to a gloomy reality.

 According to FAO estimates in‘State of Food Security and Nutrition in the World 2020’, 2 million people are undernourished in India.

 According to the report 7% childrenaged under five in India are stunted (too short for their age), while 20% suffer from wasting, (weight is too low for their height).

 Iron deficiency and anaemia are well-recognized and persistent problems in India.

 Nearly one third of the food producedin the world for human consumption every year gets lost or wasted.

 40 percent of the fruits and vegetables, and 30 percent of cereals produced, arelost due to inefficient supply chain management.

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 Many, in fact, argue that the NFSA’s focus on wheat and rice has forced millets — traditional source for iron and minerals — out of the market.

 Studies show that an alarming 90% of households reported suffering a reduction in food intake and 66% had less to eat than before the pandemic.

 Schools continue to remain shut, disrupting access to mid-day meals for the underprivileged and weekly iron and folic acid supplementation.

 The availability of nutritious food and micronutrient supplements supplied through India’s social safety net programmes have become erratic as a result of disrupted supply chains.

 Lack of sanitation and clean drinking water are the reasons high levels of malnutrition persists in India despite improvement in food availability

Concerns associated with Hidden Hunger

 Women and Children at the highest risk:

o The highest numbers of women and children sufferingfrom “hidden hunger” live in South Asia, especially India.

 Serious health effects:

o Its adverse effects on child health and survival are particularly acute, from conception to the age of two, resulting in serious physical and cognitive consequences.

 Economic Toll:

o Impose a significant burden on the affected persons and societies in terms of health costs, lost human capital and reduced economic productivity.

Measures needed:

 Early life-cycle interventions targeting the first 1,000 days of a child’s life are crucial for reducing a child’s susceptibility to infections, and breaking the link between undernutrition, disease and mortality.

 Direct nutrition interventions can reduce stunting only by 20%; indirect interventions, for example, access to water, sanitation and hygiene, must tackle the remaining 80%.

 The Swachh Bharat Abhiyan should be used to leverage policy complementarities with household sanitation, and behavioural change encouraged through social messaging and information-education-communication activities for pregnant and lactating mothers.

 Policy must deliver universal, rights-based nutrition services, which overcome disparities across gender, communities and geographical regions.

 The Global Hunger Index report recommends returning to traditional diets comprising locally available, biodiverse food to overcome growing under-nutrition.

 To combine fragmented efforts, a nodal government body should be established with responsibility for meeting time-bound nutrition targets, and coordinating multi-sectoral programmes, including the ICDS, the National Rural Health Mission, the midday meal scheme, and the public distribution system.

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 Food fortification of staples (including wheat, flour, rice and edible oils) represents a cost- effective and scalable solution to enhance nutrient intake. Standards for food fortification should be established, and guidelines changed to promote the use of fortified inputs in ICDS- provided hot cooked meals.

 Increasing dietary diversity is the preferred way of improving the nutrition of a population because it has the potential to improve the intake of many food constituents like antioxidants and probiotics not just micronutrients simultaneously.

 There are several low-cost, food-based measures that can be promoted at the community level to improve micro nutrient status.

 Culturally appropriate dietary modifications should be developed to help people identify concrete actions that can improve both dietary supply and the absorption of micronutrients. This information needs to be disseminated to the public through traditional information channels.

 The government should facilitate public-private partnerships in the sector. Private sector engagement can leverage technological solutions for scaling up food fortification initiatives, and complement the government’s outreach efforts through mass awareness and education campaigns in communities.

Conclusion:

Prioritizing early childhood nutrition is key to ensuring India’s development rests on strong and steady shoulders. India’s ability to harness long-term demographic dividends rests on it prioritizing nutrition in its health agenda, and reforming the institutional framework through which interventions are delivered. Compare and contrast the Remission of Duties or Taxes on Export Products’ (RoDTEP) scheme and Merchandise Exports from India Scheme (MEIS). Do you think RoDTEP can boost exports and increase competitiveness of Indian goods globally? Comment. (150 words, 10 marks) Introduction

The Indian government has announced a WTO-compliant scheme called Remission of Duties or Taxes On Export Product (RoDTEP) which replaced MEIS starting 1 January, 2021. The finance ministry had set up a committee under the chairmanship of former commerce and home secretary GK Pillai to finalise the rates under RoDTEP that will allow reimbursement of all embedded taxes including local levies paid on inputs by exporters.

However, after much delay of 8 months the Government recently notified the rules and rates based on which exporters can claim rebates on taxes paid on their outbound cargo.

Body:

Key differences between MEIS and RoDTEP:

Similarities between MEIS and RoDTEP:

 Both the schemes aim to boost exports by way of providing rewards and incentives.

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 Both the schemes help to offset infrastructural inefficiencies and associated costs involved in exporting goods which are manufactured in India, including products manufactured by the MSME Sector.

 Both MEIS and RoDTEP seek to free up working capital of exporters.

 Both will be issued in the form of transferable scrips.

Impact of RoDTEP on exporters:

 At present, GST and import/customs duties for inputs required to manufacture exported products are either exempted or refunded. However, certain taxes/duties/levies are outside GST, and are not refunded for exports.

 The sequence of introduction of the scheme across sectors, prioritisation of the sectors to be covered, degree of benefit to be given on various items within the rates set by the committee will be decided and notified by the department of commerce. MEIS benefits would be discontinued on such tariff line/item for which benefit under RoDTEP Scheme is announced.

 The RoDTEP Scheme aims to refund all those taxes and levies which are presently disallowed, for example:

 Central & state taxes on the fuel (Petrol, Diesel, CNG, PNG, and coal cess, etc.) used for transportation of export products

 The duty levied by the state on electricity used for manufacturing

 Mandi tax levied by APMCs

 Toll tax & stamp duty on the import-export documentation

 Tax assessment is set to become fully automatic for exporters.

 Exporters will enjoy lower rates of interest on capital loans, higher insurance cover, financial incentives on exports

 Increased loan availability for exporters and provision of credit at reduced interest rates to MSMEs

 The Ministry of Finance will be working towards reducing the clearance time at airports and ports decrease delays in exports. Exporters will be able to monitor the clearance status real- time via a digital platform.

Conclusion:

Value addition:

Merchandise Exports from India scheme (MEIS):

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MEIS was introduced in the Foreign Trade Policy (FTP) for the period 2015-2020. The MEIS was launched as an incentive scheme for the export of goods. The rewards are given by way of duty credit scrips to exporters. The MEIS is notified by the DGFT (Directorate General of Foreign Trade) and implemented by the Ministry of Commerce and Industry.

 MEIS replaced the various export incentive schemes which gave different types of duty credit scrips namely, Focus Market Scheme (FMS), Focus Product Scheme (FPS), Vishesh Krishi Gramin Udyog Yojana (VKGUY), Market Linked Focus Product Scheme (MLFPS) and Agri Infrastructure incentive scheme.

 MEIS intended to incentivise exports of goods manufactured in India or produced in India. The incentives are for goods widely exported from India, industries producing or manufacturing such goods with a view to making Indian exports competitive. The MEIS covers goods notified for the purpose of the scheme.

 The incentives under the schemes are calculated as a percentage, which is 2%, 3% or 5% of the realised FOB (free-on-board) value exports in free foreign exchange or FOB value of exports as per shipping bills in free foreign exchange. The incentives are allotted through a MEIS duty credit scrip. The ‘free foreign exchange’ will include foreign exchange earned through international credit cards and other instruments allowed by the Reserve Bank of India (RBI).

 The duty credit scrips can be utilised to pay customs duties on import of inputs or goods, safeguard duty, anti-dumping duty and any other customs duty under FTP 2015-20. The scrips can also be transferred as well as used for importing goods against them.

 Exporters can request for a split of the duty credit scrip with a condition of each scrip valuing to at least Rs 5 lakh. The request can also be made after the issue of scrip, with the same port of registration as applicable for the original scrip. However, the procedure is applicable only in respect of EDI (Electronic Data Interchange) enabled ports. In the case of non-EDI ports, a duty credit scrip cannot be split after it is issued.

 The scheme provides the flexibility of import and payment to exporters and has removed many structural inefficiencies of the earlier incentive schemes.

Remission of Duties or Taxes on Export Products scheme (RoDTEP):

RoDTEP is a new scheme to replace the existing MEIS scheme for exports of goods from India, which aims to reimburse the taxes and duties incurred by exporters such as local taxes, coal cess, mandi tax, electricity duties and fuel used for transportation, which are not getting exempted or refunded under any other existing scheme. The rebate would be claimed as a percentage of the Freight On Board (FOB) value of exports.

The Indian government has recently approved this scheme and will be notified in a phased manner and accordingly Items will be shifted from existing scheme MEIS to RoDTEP with proper monitoring &audit mechanism.

This scheme will incentivise exporters at an estimated cost of Rs. 50,000croreto the exchequer.

Objectives of RoDTEP scheme:

 To boost exports Scheme for enhancing Exports to International Markets.

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 To make Indian exports cost competitive and create a level playing field for Indian exporters in International market.

 To give a boost to employment generation in various sectors.

 It aims to boost dwindling outward shipments

Features of RoDTEP:

 Presently only 30% of total actual indirect taxes incurred by the exporters are refunded through existing MEIS scheme.

 Under the WTO rules, certain duties like state taxes on power, oil, water, and education cess are allowed to be refunded.

 In this backdrop, RoDTEP scheme framed in accordance with WTO guidelines which reimburses the taxes/ duties/ levies, at the central, state and local level, which are currently not being refunded under any other mechanism, but which are incurred in the process of manufacture and distribution of exported products and the following taxes will be refunded through this scheme.

 Taxes include VAT, Central excise duties on fuel used for transportation, electrical duties, which are not getting exempted or refunded under any other existing mechanism.

 Earlier incentives are provided in the form of transferable Scrips, but this new scheme aims at creating an Electronic credit ledger in the customs system which enables digital refund to exporters, duties and taxes levied at the centre, state and local levels.

The micro, small and medium enterprises (MSMEs) are indispensable to economic and social development of the country. MSME sector is required to be empowered to face the existing challenges for it to be truly a strategic asset for the economy of the country. Examine. (150 words, 10 marks) Introduction

Micro, Small & Medium enterprises (MSME) termed as “engine of growth “for India, has played a prominent role in the development of the country in terms of creating employment opportunities. The Covid-19 pandemic has left its impact on all sectors of the economy but nowhere is the hurt as much as the Medium, Small and Micro Enterprises (MSMEs) of India.

The government, in conjunction with the Reserve Bank of India (RBI), has now launched a series of measures to alleviate their distress.

Body:

MSME sector is indispensable for India’s growth:

 Contribution to GDP: The share of MSMEs in the country’s gross value added is estimated to be about 32%.

 Leveraging Exports: It also contributes about 40% to total exports and 45% to manufacturing output.

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 Employment Opportunities: It employs 60 million people, creates 1.3 million jobs every year and produces more than 8000 quality products for the Indian and international markets.

 Diversity: There are approximately 30 million MSME Units in India and is quite diverse in terms of its size, level of technology employed, range of products and services provided and target markets.

 Fostering Inclusive Growth: MSME is constructing inclusive growth in numerous ways through promoting non- agricultural livelihood at least cost, unbiased regional development, large female participation, and providing a protection against deflation.

The challenges and concerns associated with the growth of MSME sector:

 Access to Credit:

o According to Economic Survey (2017-18), MSME sector faces a major problem in terms of getting adequate credit for expansion of business activities.

o The Survey had pointed out that the MSME received only 17.4 per cent of the total credit outstanding.

o Most banks are reluctant to lend to MSMEs because from the perspective of bankers, inexperience of these enterprises, poor financials, lack of collaterals and infrastructure.

o According to a 2018 report by the International Finance Corporation, the formal banking system supplies less than one-third (or about Rs 11 lakh crore) of the credit MSME credit need that it can potentially fund

o most of the MSME funding comes from informal sources and this fact is crucial because it explains why the Reserve Bank of India’s efforts to push more liquidity towards the MSMEs have had a limited impact.

 Poor Infrastructure:

o With poor infrastructure, MSMEs’ production capacity is very low while production cost is very high.

 Access to modern Technology:

o The lack of technological know-how and financial constraints limits the access to modern technology and consequently the technological adoption remains low.

 Access to markets:

o MSMEs have poor access to markets. Their advertisement and sales promotion are comparatively weaker than that of the multinational companies and other big companies.

o The ineffective advertisement and poor marketing channels makes it difficult for them to compete with large companies.

 Legal hurdles:

o Getting statutory clearances related to power, environment, labour are major hurdles.

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o Laws related to the all aspects of manufacturing and service concern are very complex and compliance with these laws are difficult.

 Lack of skilled manpower:

o The training and development programs in respect of MSME`S development has been. Thus, there has been a constant crunch of skilled manpower in MSMEs

Other issues:

 Low ICT usage.

 Low market penetration.

 Quality assurance/certification.

 IPR related issues.

 Quality assurance/certification.

 Standardization of products and proper marketing channels to penetrate new markets.

Measures needed:

 Government of India and banks should design plans and measures to widen easy, hassle-free access to credit.

 The RBI should bring stringent norms for Non-Performing Assets (NPA) and it will help curbing loan defaulters and motivate potential good debts. Further, according to critics, the Credit Guarantee Scheme for MSME (CGTMSE) run by SIDBI is a growing contingent liability and needs to be examined with urgency

 Government should provide enhanced development and upgradation of existing rail & road network and other infrastructure facilities in less developed and rural areas to boost growth and development of MSMEs

 There should proper research and development in respect of innovative method of production and service rendering. Further, the government should promote and subsidise the technical know-how to Micro and small enterprises.

 Government should encourage procurement programme, credit and performance ratings and extensive marketing support to revive the growth of sick units.

 Skill development and imparting training to MSME workers is a crucial step to increase the productivity of the sector. The government should emphasise predominantly on skill development and training programs

 With Aatmanirbhar Bharat, the Centre has taken several steps redefining MSMEs, credit access, subordinate debt, preference in government tenders towards ‘energising the MSME sector’.

 It has also launched the MSME Udyam portal for registration, though this is not mandatory. Information asymmetry on government schemes and incentives on registration must be addressed.

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 MSMEs need to be better integrated into the digital economy to expand their market access, diversify their customer base and solidify their supply chain.

 Industry and the Indian economy along with MSMEs would reap the benefits of leveraging technology, that will have positive ripple effects on the nation’s GDP and the creation of more jobs.

Way forward:

 The traditional concept of apprenticeship, which involves part-time work and is a widely accepted skilling practice, especially in weaving, handicraft and manufacturing units, does not find mention in India’s wage-protection rule-books. This oversight can be fixed via coverage by either the wage code or social security code rules, or perhaps the Shops and Establishments Act rules, as deemed appropriate

 Efforts need to focus on quality manufacturing, with the use of automation to enhance operations, and the exploration of new markets through e-commerce.

 This would require a holistic approach of hand-holding existing manufacturers in the sector, equipping both managers and their workforces with appropriate skills, and educating them on new technologies and standardization norms, even as we expose them to new market avenues and instil confidence in them that the country’s ecosystem would assist them in their expansion plans.

 New MSMEs, especially, should be encouraged to start off with this advantage.

 Skilling plans in accordance with sector-wise requirements will enable us to create appropriate job opportunities not just in India but also across the globe, as various developed economies need skilled manpower in a swathe of industries that cover manufacturing, software and healthcare.

 Indian policies need to be revisited so that discrepancies are removed and we encourage small units to take advantage of e-com platforms.

Conclusion:

Thus, Indian MSME sector is the backbone of the national economic structure and acts as a bulwark for Indian economy, providing resilience to ward off global economic shocks and adversities. Given the important role played by the sector in the economy, issues faced by it must be addressed on an urgent basis to revive the economy battered by the pandemic. Apart from the fiscal stimulus, the sector requires a political-economy approach that prioritizes MSME interests. India needs to ease the regulatory burden of small units and aid their survival through fiscal support. Above all, they need a level-playing field vis-à-vis big businesses.

Value addition:

Impact of COVID on MSME sector:

 A recently conducted survey finds that production in SMEs has fallen from an average of 75% to 13%.

 With 110 million employed by Indian SMEs, it is crucial to ensure adequate institutional support, failing which we might see an even larger impact on livelihoods.

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 SMEs also account for a third of India’s GDP, 45% of manufacturing output and 48% of exports and hence are crucial to manufacturing and export competitiveness.

 With SMEs’ operational challenges exacerbated by Covid-19, it is all the more important to focus on this sector.

 SMEs will be vital in absorbing a significant proportion of the 600 million entrants to the labour market in EMEs by 2030.

 With a large proportion of these entrants bound to be from India, it is imperative that the Union and state governments ensure financial and institutional support for SMEs.

 In terms of location, SMEs are relatively evenly distributed in comparison to larger organisations.

 Rural areas account for 45%, while the remaining are in urban areas. Hence, SMEs are well- poised to address poverty in both the cities and villages.

 Although the proportion of urban poverty has declined over the years, it has increased in absolute terms.

 In 2018, Kolkata, Delhi, and Mumbai had anywhere between 42-55% of their population living in slums. This number is certain to have increased in the pandemic.

Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth Compare and contrast the Remission of Duties or Taxes on Export Products’ (RoDTEP) scheme and Merchandise Exports from India Scheme (MEIS). Do you think RoDTEP can boost exports and increase competitiveness of Indian goods globally? Comment. (250 words) Difficulty level: Moderate Reference: The Hindu Why the question: In a major move aimed at boosting exports and offering relief to exporters, the government has notified the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme scheme guidelines and rates. Key Demand of the question: To compare and contrast RoDTEP and MEIS as well as to comment on the potential of RoDTEP in boosting exports. Directive word: Compare and contrast – provide for a detailed comparison of the two types, their features that are similar as well as different. One must provide for detailed assessment of the two. Comment– here we have to express our knowledge and understanding of the issue and form an overall opinion thereupon. Structure of the answer: Introduction: Begin by mentioning the aims and objectives of RoDTEP scheme which replaced the MEIS. Body: You can draw a table to compare RoDTEP and MEIS. You can use parameters such as nature of incentives offered, WTO Compliance, Incentive Percentage, Mode of Issuance and Transferability.

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Next, mention how RoDTEP will support domestic industry and make it more competitive in the international markets. Export centric industries will be reformed and introduced to better mechanisms so as to boost exports, generate employment and contribute to the overall economy. Also, mention some concerns with the RoDTEP scheme – Rate of tax reimbursement, pandemic related bottlenecks and leveraging on future opportunities etc. Suggest steps to address these concerns. Conclusion: Summarise how if properly executed RoDTEP can achieve ambitious target of achieving $1 trillion in exports by 2025. Introduction

However, after much delay of 8 months the Government recently notified the rules and rates based on which exporters can claim rebates on taxes paid on their outbound cargo.

Body:

Merchandise Exports from India scheme (MEIS):

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only in respect of EDI (Electronic Data Interchange) enabled ports. In the case of non-EDI ports, a duty credit scrip cannot be split after it is issued.

 The scheme provides the flexibility of import and payment to exporters and has removed many structural inefficiencies of the earlier incentive schemes.

Remission of Duties or Taxes on Export Products scheme (RoDTEP):

This scheme will incentivise exporters at an estimated cost of Rs. 50,000croreto the exchequer.

Objectives of RoDTEP scheme:

 To boost exports Scheme for enhancing Exports to International Markets.

 To make Indian exports cost competitive and create a level playing field for Indian exporters in International market.

 To give a boost to employment generation in various sectors.

 It aims to boost dwindling outward shipments

Features of RoDTEP:

 Presently only 30% of total actual indirect taxes incurred by the exporters are refunded through existing MEIS scheme.

 Under the WTO rules, certain duties like state taxes on power, oil, water, and education cess are allowed to be refunded.

 Taxes include VAT, Central excise duties on fuel used for transportation, electrical duties, which are not getting exempted or refunded under any other existing mechanism.

Key differences between MEIS and RoDTEP:

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Similarities between MEIS and RoDTEP:

 Both the schemes aim to boost exports by way of providing rewards and incentives.

 Both MEIS and RoDTEP seek to free up working capital of exporters.

 Both will be issued in the form of transferable scrips.

Impact of RoDTEP on exporters:

 The RoDTEP Scheme aims to refund all those taxes and levies which are presently disallowed, for example:

 Central & state taxes on the fuel (Petrol, Diesel, CNG, PNG, and coal cess, etc.) used for transportation of export products

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 The duty levied by the state on electricity used for manufacturing

 Mandi tax levied by APMCs

 Toll tax & stamp duty on the import-export documentation

 Tax assessment is set to become fully automatic for exporters.

 Exporters will enjoy lower rates of interest on capital loans, higher insurance cover, financial incentives on exports

 Increased loan availability for exporters and provision of credit at reduced interest rates to MSMEs

Conclusion:

Implementation of the scheme would make India a WTO-compliant exporter in the international market and the process that is promised by GOI seems to be a simpler and more transparent one for exporters, improving efficiencies in collection of refunds as well. However, the question of applicable rates remains open as of now, which may well form the crux of exporters’ concerns about the change and that is needed to be addressed. Then only the exporters can accrue true benefits from the scheme. The micro, small and medium enterprises (MSMEs) are indispensable to economic and social development of the country. MSME sector is required to be empowered to face the existing challenges for it to be truly a strategic asset for the economy of the country. Examine. (250 words) Difficulty level: Moderate Reference: Live Mint Why the question: As per the MSME Ministry data, India has approximately 6.3 crore MSMEs. A policy realignment is needed to get the best of them to achieve its aims and objectives. Key Demand of the question: To write about contribution of MSME in India’s growth, the issues affecting MSMEs and changes that are needed to Revamp them. Directive word: Examine – When asked to ‘Examine’, we must investigate the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications. Structure of the answer: Introduction: Begin by giving factual status of proportion of MSME vis-à-vis the population dependent on it also adding the dimension of the demographic demand of India. Body: Elaborate upon the importance of MSMEs in socio-economic development of the country. GDP growth, Job creation, exports and entrepreneurship etc. Mention about the challenges of the MSMEs such as skilling, linkage with the e commerce industries, upgrading of marketing skills and meeting new market needs. Mention the steps that are needed to address the above issues. Telegram: https://t.me/insightsIAStips Page 42 Youtube: https://www.youtube.com/channel/UCpoccbCX9GEIwaiIe4HLjwA Facebook: https://www.facebook.com/insightsonindia INSTA SECURE SYNOPSIS

Conclusion: Conclude by writing a way forward and summarising the overall impact of MSMEs in socio-economic development of India. Introduction