Daily Prelims Notes 13 August 2021
- August 13, 2021
- Posted by: admin1
- Category: DPN
Daily Prelims Notes
13 August 2021
Table Of Contents
- Sovereign right to taxation
- Crypto tokens
- Demerit or sin goods Vs merit good
- Retail Inflation
- Port of Ningbo
- Liquidity Control by RBI
- GM soybean
- Status of the total renewable energy capacity in the country
- Emergency Use Listing
- Cryogenic engine:
- NISAR mission
- ‘SonChiraiya’ brand launched
- Plastic waste management amendment rules 2021 notified:
- ‘Operation Blue Freedom’
Context : Seven years after coming to power, the BJP-led government recently decided to withdraw the retrospective taxation amendment in the I-T Act introduced in March 2012, by Pranab Mukherjee, the then Finance Minister in the UPA government.
Sovereign right to taxation
- In India, the Constitution gives the government the right to levy taxes on individuals and organisations, but makes it clear that no one has the right to levy or charge taxes except by the authority of law.
- Any tax being charged has to be backed by a law passed by the legislature or Parliament.
- A document on the Ministry of Statistics and Programme Implementation website quotes the definition of tax as a “pecuniary burden laid upon individuals or property owners to support the government, a payment exacted by legislative authority”, and that a tax “is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority”.
- Taxes in India come under a three-tier system based on the Central, State and local governments, and the Seventh Schedule of the Constitution puts separate heads of taxation under the Union and State list.
- There is no separate head under the Concurrent list, meaning Union and the States have no concurrent power of taxation, as per the document.
Constitutional Provisions Regarding Taxation
- Article 265 provides that no tax shall be levied or collected except by the authority of law .No tax can be imposed by an executive order.
- Levy of duty or tax: Article 268 – duties levied by union but collected and appropriated by states. Example :stamps duties mentioned in union list shall be levied by central government but collected by the state
- Article 269 deals with taxes levied and collected by the union and assigned to the states that is money collected will not go to the consolidated fund but used and distributed among state in accordance with principle formulated by the parliament.
- Article 270 deals with the tax levied and collected by the state example: taxes and duties referred in the union list shall be distributed.
Grants in Aid:
- Article 273 grants in aid will be given to the states of Assam, Bihar and West Bengal in lieu of export of duty on the jute products.
- Article 275 empowers the parliament to make such grants.
- Article 275 empowers the parliament to make such grants.
- Article 282 –both the union and the state makes grant for any public purpose
- Article 274 deals with the prior recommendations of the president is required to bills affecting taxation in which states are interested
Taxes For The Purpose of State:
- Articles 276 and 277 are saving provisions .Article 276 empowers the state to impose taxes on profession, trades, callings and employment for the benefit of state or municipality, district board etc. But the provision of Article 277 does not extend to taxes levied under a law passed after the constitution came into force.
Taxes For The Purpose of the Union:
- Article 271 provides that if parliament at any any time increases any of the duties or taxes mentioned in Article 269 and 270 except Article 246A by imposing a surcharge.
- At last Article 279 deals with the calculation of net proceeds and Article 284 deals with custody of suitor’s deposits and other moneys received by public servants and courts. These are the constitutional provisions regarding taxation embodied in the constitution.
Context : Hackers pulled off the biggest ever cryptocurrency heist on Tuesday, stealing $613 million in digital coins from token-swapping platform Poly Network, only to return $260 million worth of tokens less than 24 hours later, the company said
- Poly Network is a decentralized finance (DeFi) platform that facilitates peer-to-peer transactions with a focus on allowing users to transfer or swap tokens across different blockchains
- Poly Network operates on the Binance Smart Chain, Ethereum and Polygon blockchains. Tokens are swapped between the blockchains using a smart contract which contains instructions on when to release the assets to the counterparties.
- Crypto tokens are a type of cryptocurrency that represents an asset or specific use and resides on their blockchain.
- Tokens can be used for investment purposes, to store value, or to make purchases.
- Cryptocurrencies are digital currencies used to facilitate transactions (making and receiving payments) along the blockchain
- A crypto token is a virtual currency token or a denomination of a cryptocurrency. It represents a tradable asset or utility that resides on its own blockchain, and allows the holder to use it for investment or economic purposes.
Purpose of Tokens
Crypto tokens can be used to represent an investor’s stake in the company or they can be used for an economic purpose, just like legal tender. This means token holders can use them to make purchases or they can trade tokens just like other securities to make a profit. Bitcoin is a cryptocurrency, which has virtual tokens or coins that can be used to trade or make purchases.
Difference between a Crypto Coin and Token
- Crypto coins allow individuals to make payments using their digital currency.
- People can use tokens, though, for trading, to hold and store value, and, of course, to use as a form of currency. Tokens that reside on blockchains include reward tokens, currency tokens, utility tokens, security tokens, and asset tokens
Demerit or sin goods
- In economics, a demerit good is “a good or service whose consumption is considered unhealthy, degrading, or otherwise socially undesirable due to the perceived negative effects on the consumers themselves”. It is over-consumed if left to market forces.
- Examples of demerit goods include tobacco, alcoholic beverages, recreational drugs, gambling, junk food and prostitution. Because of the nature of these goods, governments often levy taxes on these goods (specifically, sin taxes), in some cases regulating or banning consumption or advertisement of these goods.
- GST on Sin/De-Merited Goods:The GST council also agreed to cap the cess on various so-called demerit (or sin and luxury) goods in the legislation. The cess on colas and cars has been capped at 15%, which means that the total tax incidence on sweetened drinks and cars cannot be more than 43% (tax rate of 28%+cess of 15%).
- These cess rates are an enabling provision and the actual tax incidence could be lower, depending on the decision of the GST council.
- The council has decided to bring in an enabling provision for levy of cess on all cars and not only on luxury cars.
- A merit good or service is something that adds to the welfare and well-being of society when it is produced and consumed.
- A merit good, the production of which the Government will want to encourage. Demerit goods or services, in contrast, are those known to cause clear harm when produced and consumed. The GST Council has bracketed four items into this category — high end cars, pan masala, aerated drinks and tobacco products. Consuming pan masala and tobacco products have serious negative health implications, aerated drinks have low nutritional value and high end cars guzzle fuel and cause environmental harm. This is probably why these goods have been bracketed under demerit goods.
- With four slabs in place (five, if you include the zero slab), the GST rates will depend on whether the government brackets them into the ‘merit’, ‘demerit’ or neutral category.
- An essential ‘merit’ goods may get taxed at a GST of 0 or 5 per cent.
- Most other goods and services will get taxed at standard rates of 12 or 18 per cent, and a items such as consumer durables (not expressly classified as ‘demerit’ goods) are likely to fall in the 28 per cent bracket.
- However, the four specifically identified ‘demerit’ goods will be taxed at much higher rates than even the top GST slab of 28 per cent, with a cess being added on to the basic tax on these items.
Context: Retail inflation cooled slightly to 5.6% in July, slipping below the central bank’s upper tolerance threshold of 6% for the first time in three months, even as industrial output growth halved from 28.6% in May to 13.6% in June, as base effects from the national lockdown of 2020 begin to fade.
Food prices at the consumer level played a substantive role in moderating the pace of price rise in July, with the National Statistical Office (NSO) estimating an inflation of 3.96%, compared to 5.15% in June
- The change in the consumer price index over a period of time is referred to as CPI-based inflation, or retail inflation.
- The CPI is an index measuring retail inflation in the economy by collecting the change in prices of most common goods and services used by consumers.
- The CPI is calculated for a fixed list of items including food, housing, apparel, transportation, electronics, medical care, education, etc.
- The CPI specifically identifies periods of deflation or inflation for consumers in their day-to-day living expenses.
The CPI is used as a:
- Macroeconomic indicator of inflation;
- Tool by the central bank and government for inflation targeting and for inspecting price stability; and
- Deflator in the national accounts.
Consumer Price Index in India
- In India, there are four consumer price index numbers, which are calculated, and these are as follows:
- CPI for Industrial Workers (IW)
- CPI for Agricultural Labourers (AL)
- CPI for Rural Labourers (RL) and
- CPI for Urban Non-Manual Employees (UNME)
- The Ministry of Statistics and Program Implementation collects CPI (UNME) data and compiles it but the remaining three are collected by the Labour Bureau in the Ministry of Labour.
Context: The launch of commercial 5G in India has the potential to increase the median download speed by up to 10 times compared to the download speeds offered currently by 4G- LTE (long term evolution) networks, global internet testing Ookla said in a report
As per global internet testing Ookla said in a report
- 5G will bring a considerable bump to overall speeds in the country
- The operator’s median download speeds have increased from 5.96 Mbps in March 2021 to 13.08 Mbps in June
- The adoption of Open RAN system by the Indian operators will further aid in bringing down the overall cost of 5G rollout.
- 5G or fifth generation is the latest upgrade in the long term evolution (LTE) mobile broadband networks.
- The first generation of networks allowed only mobile voice calls to be made, while the second generation allowed mobile voice calls as well as sending of short text messages.
- It was the third generation or 3G network which allowed web browsing on mobile devices, the speed and latency of which improved with fourth-generation or 4G networks.
- The 5G networks will have even faster speeds with latency down to between 1-10 milliseconds.
- Note: Latency is the time a device takes to communicate with the network, which stands at an average of up to 50 milliseconds for 4G networks across the world.
How does 5G work?
- All 5G networks chiefly operate on three spectrum bands.
- The low-band spectrum has been proven to have great coverage and works fast even in underground conditions. However, the maximum speed limit on this band is 100 Mbps (Megabits per second).
- In the mid-band spectrum, though the speeds are higher, telcos across the world have registered limitations when it comes to coverage area and penetration of telephone signals into buildings.
- The high-band spectrum offers the highest speed but has extremely limited network coverage area and penetration capabilities.
- The telcos using this band rely on the existing LTE networks and will need to install a number of smaller towers to ensure adequate coverage and high-speed performance.
Where does India stand on the deployment of 5G?
- Companies, both telecom service providers and their equipment vendors, have completed lab trials of 5G network components but are yet to commence field trials, which were initially scheduled to happen last year.
- For the same, telecom companies are awaiting allocation of test spectrum from the Department of Telecommunications (DoT).
- The service providers have already tied up with equipment makers like Nokia, Ericsson, etc for deploying their 5G networks
Context: In what could potentially threaten global supply chains and impact maritime trade, China has partially shut down the world’s third-busiest container port after a worker there tested positive for Covid-19. The Meishan terminal at Ningbo-Zhoushan port, which is south of Shanghai, accounts for over a fourth of the container cargo handled at the Chinese port.
- The Port of Ningbo-Zhoushan is a port that is the busiest in the world in terms of cargo tonnage. It handled 888.96 million tons of cargo in 2015.
- The port is located in Ningbo and Zhoushan, on the coast of the East China Sea, in Zhejiang province on the southeast end of Hangzhou Bay, across which it faces the municipality of Shanghai
- Ningbo Port was established in 738. During the Tang Dynasty (618-907), it was known as one of the three major seaports for foreign trade under the name “Mingzhou”, along with Yangzhou and Guangzhou
- The port is at the crossroads of the north-south inland and coastal shipping route, including canals to the important inland waterway to interior China, the Yangtze River, to the north.
- The port consists of several ports which are Beilun (seaport), Zhenhai (estuary port), and old Ningbo harbor (inland river port). T
- The Port of Ningbo-Zhoushan complex is a modern multi-purpose deep water port, consisting of inland, estuary, and coastal harbors.
Context: The economy has not yet bounced back to levels where the Reserve Bank of India (RBI) can start draining out the liquidity, Finance Minister Nirmala Sitharaman has said
The relationship between the Government and the RBI is both are working as partners to address the issue of the economy. If the RBI and its monetary policy have been keeping the momentum in the right direction, the fiscal side has been taken care of by the Ministry of Finance.
|Quantitative Tool||Qualitative tool|
|1. Bank rate is the rate at which banks can borrow from the RBI||1. Rationing of credit: RBI fixes a credit amount to be granted for commercial banks. Credit is given by limiting the amount available for each commercial bank|
|2. Cash Reserve Ratio (CRR) – percentage of demand and time liabilities to be kept with RBI by the commercial banks.||2. Rationing of consumer credit: In this instrument, consumers’ credit supply is regulated through the instalment of sale and hire purchase of consumer goods. Here, features like instalment amount, down payment, loan duration, etc., are all fixed in advance, which helps to check the credit and inflation in the country.|
|3. Statutory Liquidity ratio (SLR) – The amount a commercial bank needs to keep in the form of cash, gold and government approved securities (liquid assets) before providing credit to customers (based on percentage of demand and time liabilities)||3. Moral suasion–It refers to the suggestions to commercial banks from the RBI that helps in restraining credits in the inflationary period. RBI implies pressure on the Indian banking system without taking any strict action for compliance with rules.|
|4. Open market operations – buying and selling of government securities with banks to increase or decrease amount of liquidity in the market|
|Repo (repurchase) – Buying of bond by RBI from banks at an interest rate. Reduction of Repo will Increase liquidity in the economy.|
Reverse repo rate – selling of bonds to banks. This will reduce liquidity in the market
Subject: Science and Technology
Context : With the soya prices soaring, crossing the ₹1 lakh (a tonne) mark, poultry breeders have written an SOS to the Government, asking for permission to import GM soyameal from the US, Brazil and Argentina
- GM soybean is one of the most widely planted genetically modified plants in the world today. The GM soybean, otherwise called as the Roundup Ready (RR) soybean, was developed by the biotech giant Monsanto and made it commercially available to farmers in 1996.
- It was developed to make the plant survive being sprayed on with the non-selective herbicide, Roundup, which can kill conventional soybean plants.
- GM Soybean was developed by introducing a copy of a gene from the Agrobacterium sp. strain CP4.
- Conventional soybean has a similar gene in its DNA but is sensitive to glyphosate, the active ingredient of the herbicide Roundup.
- With the insertion of the CP4 version of the gene, the GM soybean was able to develop resistance to the Roundup herbicide.
- The rising prices of soyameal has put the poultry industry in a fix as it constitutes about 25 per cent of all the feed needs of a poultry farm
- The outbreak of COVID-19 has created a massive crisis which led to an initial depletion of demand in chicken products owing to false news abut the linkage between the virus and poultry products
Approval Process for GM crops in India:
- The Union Ministry of Fisheries, Animal Husbandry and Dairying early this month, seeking permission to import about 1.5 million tonnes of soya de-oiled cake/meal extracted from the GM soya seed.
- The Environment Ministry said that it didn’t have any objection (to import soya meal) since it didn’t contain any living modified organism.
- In India, the Genetic Engineering Appraisal Committee (GEAC) is the apex body that allows for commercial release of GM crops.
- Use of the unapproved GM variant can attract a jail term of 5 years and fine of Rs. 1 lakh under the Environment Protection Act, 1986.
- Food Safety and Standards Authority of India (FSSAI) is the authorised body to regulate the imported crops in India. The FSSAI said that anything which is non-food (not consumed by humans) is not under our purview
- The Union government has allowed poultry breeders to import 1.5 million tonnes of de-oiled cake made of genetically modified soya
Context: There has been a marked increase in new capacity additions of wind and solar, particularly rooftop solar, in the first quarter of FY21.
- Total renewable energy capacity in the country was, as of July 31, a shade under the 1-lakh MW mark, which means it could have well touched the mark as of today.
- The performance of the rooftop solar sector, where the achievement of 1,924.44 MW is 96.2 per cent of the annual target
- The total grid-connected installations at 5,099 MW.
- With these installations, India’s cumulative renewable energy capacity, at 98,882.73 MW, accounts for 25.2 per cent of the country’s total energy capacity, crossing the 25 per cent mark for the first time.
- It is not all of non-fossil fuel energy, because it doesn’t count the large hyrdo capacity, which is another 46,367 MW.
- Together with wind and solar, total non fossil fuel-based electricity installed capacity accounts for 37.54 per cent of the total installed capacity of 3,86,888.15 MW.
- It is pertinent to note that in the 2015 Paris Agreement, one of the three commitments of India was that by 2030, 40 per cent of its electricity capacity would be of non-fossil fuels.
- If the government’s policy on net-metering is more conducive, India could see rooftop installations of 5GW annually. Net metering is the system of netting-off any sale of surplus energy from a solar plant against the plant owner’s consumption. The safeguard duty on imports from China has expired and the 40 per cent basic customs duty on solar modules will kick in from April 2022
Subject: Science and Technology
Context: The World Health Organisation (WHO) may decide on giving an emergency authorisation for Covaxin in September, said S Jaishankar, Minister of External Affairs
- COVAXIN is an inactivated vaccine, created from a strain of the infectious SARS-CoV-2 virus that has shown promise in preclinical studies demonstrating extensive safety and effective immune responses.
- COVAXIN has been developed by Bharat Biotech in collaboration with the Indian Council of Medical Research (ICMR) and the National Institute of Virology (NIV).
- The SARS-CoV-2 strain was isolated in NIV, Pune and transferred to Bharat Biotech. The indigenous, inactivated vaccine will be developed and manufactured by Bharat Biotech’s BSL-3 (Bio-Safety Level 3) High Containment facility located in Genome Valley, Hyderabad, India.
- Bharat Biotech’s track record in developing Vero cell culture platform technologies has been proven in several vaccines for polio, rabies, rotavirus, Japanese Encephalitis, Chikungunya and Zika.
Emergency Use Listing
- Emergency Use Listing (EUL) is the procedure to streamline the process by which new or unlicensed products can be used during public health emergencies.
- The EUL replaces the Emergency Use Assessment and Listing (EUAL)procedure, which was used during the West Africa Ebola outbreak of 2014-2016.
- The WHO established its emergency use listing (EUL) process to help poorer countries without their own regulatory resources quickly approve medicines new diseases like Covid-19, which otherwise could lead to delays.
Subject: Science and Technology
The launch of Indian Space Research Organisation (ISRO)’s much-anticipated geostationary earth observation satellite, EOS-03, resulted in an unsuccessful mission after the GSLV’s cryogenic upper stage failed to ignite in space and carry the payload to its designated orbit.
What is a cryogenic engine?
- Cryogenic engines are typically very powerful and carry liquid propellant at extremely low temperatures.
- They are complex but highly efficient and provide better thrust for each kilogram of fuel burnt when compared to the traditional solid and liquid propellant rocket stages.
- Cryogenic engines were a crucial part of National Aeronautics and Space Administration (NASA)’s Apollo missions to the moon, and were also used by the GSLV for the Chandrayaan-2 mission.
- Only six countries have developed their own cryogenic engines: the US, France/European Space Agency, Russia, China, Japan, and India.
- Cryogenic engine typically makes use of liquid oxygen (LOX), which liquifies at -183 deg C, and liquid hydrogen (LH2), which liquefies at -253 deg C. LH2 acts as the fuel while LOX acts as the oxidiser that explosively reacts with the hydrogen, producing thrust. When the engine ignites, the two liquids are pushed into a combustion chamber by booster pump continuousl.
- ISRO’s cryo stage, called the C25, came after the successful flights of the earlier versions developed for previous GSLV launchers. It was designed by the Liquid Propulsion Systems Center, in collaboration with Vikram Sarabhai Space Centre, ISRO Propulsion Complex and Satish Dhawan Space Centre.
- C25’s tanks carry over 27,000 kg of fuel and fire for approximately 720 seconds. During this time, the engine develops a thrust of 73.55kN in vacuum.
Impact of failure of cryogenic engine
Missions like Gaganyaan and Chandrayaan-3 will be launched on GSLV Mk-III, a more advanced version of the GSLV rocket that is designed to carry much heavier payloads into space. GSLV Mk-III too uses an indigenously-developed cryogenic engine in the upper stage, but, unlike the one in Mk-II, this is not a reverse-engineered Russian engine.
Instead, the cryogenic engine used in GSLV Mk-III, called CE20, has been the result of over three decades of research and development, starting from scratch, and uses a different process to burn fuel. It is closer to the designs used in the Arianne rockets that were used by ISRO earlier to send its heavier satellites into space.
Subject: Science and Technology
Thursday’s failure, however, is a big cause of worry for the NISAR mission
- NISAR stands for NASA ISRO Synthetic Aperture Radar Mission
- It aims to study the hazards and global environmental changes and slated to launched in 2020-21.
- NISAR is a dual frequency (L & S Band) Radar Imaging Satellite. It will be the first radar imaging satellite to use dual frequency.
- Will be launched in a Sun Synchronous Low -Earth
- It is designed to observe and take measurements of some of the planet’s most complex processes, including ecosystem disturbances, ice-sheet collapse, sea level rise, and groundwater and natural hazards such as earth quakes, tsunamis, volcanoes and land slides and will support a host of other applications
- NISAR will observe Earth’s land and ice-covered surfaces globally with 12-day regularity on ascending and descending passes, sampling Earth on average every 6 days for a baseline 3-year mission.
- The satellite is likely to be launched from India aboard an Indian launch vehicle.
Subject: Government Schemes
- “SonChiraiya”brand has been launched by Secretary, Ministry of Housing and Urban Affairs. It is a brand for marketing of urban Self-Help Group (SHG) products.
- Under the aegis of MoHUA, it has focussed on equipping the urban poor women with adequate skills and opportunities, and to enable them to promote sustainable micro enterprises.
- It mobilises women from urban poor households into SHGs and their federations to create a support system for these women.
- Over 5.7 lakh SHGs have been formed across various States/ UTs with almost 60 lakh members. Many of these SHGs are engaged in livelihood activities, producing goods such as handicrafts, textiles, toys, eatables and so on. These were being sold primarily in local neighbourhood markets and often faced barriers in achieving visibility and wide market access.
- To overcome these challenges, Ministry entered into Memorundum of Understandings (MoUs) with leading e-Commerce Portals viz. Amazon and Flipkart, with an underlying narrative of women empowerment.
- This initiative will certainly prove as a step towards increased visibility and global access for the products made by urban SHG women. Ministry expects to link many more such SHG members, with variety of professionally packaged, hand-crafted ethnic products, reaching the doorsteps of the customers globally.
Ministry of Environment, Forest and Climate Change, Government of India, has notified the Plastic Waste Management Amendment Rules, 2021, which prohibits identified single use plastic items which have low utility and high littering potential by 2022.
Pollution due to single use plastic items has become an important environmental challenge confronting all countries. India is committed to take action for mitigation of pollution caused by littered Single Use Plastics.
In the 4th United Nations Environment Assembly held in 2019, India had piloted a resolution on addressing single-use plastic products pollution, recognizing the urgent need for the global community to focus on this very important issue. The adoption of this resolution at UNEA was a significant step.
- The manufacture, import, stocking, distribution, sale and use of following single-use plastic, including polystyrene and expanded polystyrene, commodities shall be prohibited with effect from the 1st July, 2022:-
- ear buds with plastic sticks, plastic sticks for balloons, plastic flags, candy sticks, ice-cream sticks, polystyrene [Thermocol] for decoration;
- Plates, cups, glasses, cutlery such as forks, spoons, knives, straw, trays, wrapping or packing films around sweet boxes, invitation cards and cigarette packets, plastic or PVC banners less than 100 micron, stirrers.
- In order to stop littering due to light weight plastic carry bags, with effect from 30th September, 2021, the thickness of plastic carry bags has been increased from fifty microns to seventy five microns and to one hundred and twenty microns with effect from the 31st December, 2022. This will also allow reuse of plastic carry due to increase in thickness.
- The plastic packaging waste, which is not covered under the phase out of identified single use plastic items, shall be collected and managed in an environmentally sustainable way through the Extended Producer Responsibility of the Producer, importer and Brand owner (PIBO), as per Plastic Waste Management Rules, 2016.
- For effective implementation of Extended Producer Responsibility the Guidelines for Extended Producer Responsibility being brought out have been given legal force through Plastic Waste Management Amendment Rules, 2021.
Subject: Government Schemes
- It is a special initiative by Ministry of Social Justice and Empowerment.
- Under this initiate people with disabilities from across the country will undertake an expedition till Siachen Glacier to create a new World Record for the largest team of people with disabilities to reach the world’s highest battlefield.
- The team of people with disabilities trained by ‘Team CLAW’ a team of Armed Forces veterans.
- The Siachen Glacieris a glacier located in the eastern Karakoram range in the Himalayas at about 421226°N 77.109540°E, just northeast of the point NJ9842 where the Line of Control between India and Pakistan ends.
- At 76 km (47 mi) long, it is the longest glacier in the Karakoram and second-longest in the world’s non-polar areas.
- At 76 km (47 mi) long, it is the longest glacier in the Karakoram and second-longest in the world’s non-polar areas.
- The Siachen Glacier lies immediately south of the great drainage divide that separates the Eurasian Plate from the Indian subcontinent in the extensively glaciated portion of the Karakoram sometimes called the “Third Pole”. The glacier lies between the Saltoro Ridge immediately to the west and the main Karakoram range to the east.