Daily Prelims Notes 29 March 2022
- March 29, 2022
- Posted by: OptimizeIAS Team
- Category: DPN
Daily Prelims Notes
29 March 2022
Table Of Contents
- Drug Pricing
- Paper Industry In India
- Crime and Criminal Tracking Network System (CCTNS)
- Criminal Procedure (Identification) Bill 2022
- What is the mandate of NCRB?
- Seven doctrines of cooperatives by International Cooperative Alliance
- US criticizes China for repressing Muslims, whereas OIC commends
- Inflation targeting
- Tax evasion vs tax avoidance
- Aluminum ore mining in India
- BOBLME project
Subject: Government Scheme and Policy
Context- The National Pharmaceutical Pricing Authority (NPPA) has announced an annual change of 10.76% in the Wholesale Price Index (WPI), which could translate into the steepest price increases in years for over 800 scheduled drugs and medical devices in the National List of Essential Medicines (NLEM).
Why has the NPPA announced the WPI increase?
- Based on the Wholesale Price Index data provided by the Office of the Economic Advisor, Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, the annual change in the WPI works out as 10.76607% during the calendar year 2021 over the corresponding period of 2020”.
- Every year, the authority announces the WPI change in accordance with The Drugs (Price Control) Order, 2013, or DPCO, 2013.
- While the NPPA sets the ceiling prices for the over 800 essential drugs, for several competitive drugs, companies tend to price them lower than the ceiling.
- The sharp raising of the ceiling may not necessarily translate into actual prices of all brands of formulations in the essential list going up by the same quantum.
The Drugs (Price Control) Order, 2013:
- Drug Price Control Orders (DPCO) are issued by the Government in exercise of the powers conferred under the Essential Commodities Act, 1955,for enabling the Government to declare a ceiling price for lifesaving medicines to ensure that these medicines are available at a reasonable price to the general public.
- Price controls are applicable to “Scheduled drugs” or “Scheduled formulations” i.e. those medicines which are listed out in the Schedule I of DPCO, also referred to as National List of Essential Medicines (NLEM).
- As per the price control order, the NPPA is empowered to fix the ceiling price of essential medicines and medical devices — 886 in number currently.
- The order also provides for a WPI-based price change every year that pharmaceutical companies are allowed to implement. NPPA not only fixes the prices of Essential Medicines, but it also ensures that the prices of the non-scheduled drugs do not increase by more than 10% every year
Which medicines and devices are included in the NLEM?
- Some of the most common drugs and medical devices, including paracetamol tablets, azithromycin tablets, oral rehydration salts, glucose injections, contraceptives like copper IUDs, condoms, insulin injections, Vitamin C tablets, and multivitamin tablets, are in the NLEM.
- These drugs constitute around 18% of India’s aggregate domestic pharmaceutical retail market of approximately Rs 1.5 lakh crore.
How are the Prices of Essential medicines fixed?
- The prices of the medicines are fixed based on Market pricing model.
- The ceiling price of the Essential drugs is the fixed by calculating the simple average price of all the brands having at least 1% of the market share.
- Further, under DPCO, the NPPA has been given the following exceptional powers:
- Fix the prices of even those drugs that are not listed under NLEM. Example: In pursuance of these powers, the NPPA has fixed the ceiling prices of Cardiac Stents and Knee implants.
- Increase or decrease the prices of the drugs listed under NLEM. In pursuance of these powers, the NPPA has recently increased the prices of the 21 essential medicines by almost 50%.
Section: Economic Geography
Context- A Kolkata-based paper industry analyst said prices have increased “exorbitantly” from ₹50-55 a kg before the Covid-19 pandemic set in.
About Paper Industry:
- The pulp and paper industry comprises companies that use wood as raw material and produce pulp, paper, paperboard, and other cellulose-based products.
- The pulp and paper industry is one of the largest industries in the world. It is dominated by North American, Northern European, and East Asian countries. Latin America and Australasia also have significant pulp and paper industries.
- Over the next few years, it is expected that both India and China will become the key countries in the industry’s growth.
Paper Industry in India:
- Though the art of papermaking was introduced in India by Muslim rulers during the 10th century, it was flourishing as a cottage industry only.
- The first modern paper mill of course was established in 1832 at Serampore (West Bengal) which could not survive and the industry made a beginning again in 1870 at Ballygaunj( Royal Bengal paper mills) near Calcutta.
- The small sector accounts for 50% of the installed capacity and of production of paper in the country.
- Raw material: The location of the paper industry is dependent on the availability of bamboo, softwood. E.g. South Gujarat, Odisha, Madhya Pradesh
- Supply of abundant coal: Energy requirement and total transport cost of coal offset the disadvantage of the dearth of raw materials.
- Paper manufacturing started in Bengal due to the availability of coal.
- Nearness to the market: Some of the paper mills are located near the market where cheap labour is also available.
- For example, in Kolkata where raw material is brought from the North Eastern States. Here cheap labour, coal, water is readily available.
- Water Supply: The paper/pulp mills require clean water free from chemicals/pollutants. This is one of the reason why they are set up near forest locations away from polluted rivers.
Manufacturing of Paper:
- Paper is manufactured in 2 stages in India:
- First Stage: Pulp is extracted from cellulose raw material: In 1st stage gross raw materials is required due to which pulp manufacturing units are located in the midst of cellulose producing areas.
- Second Stage: Pulp is pressed to from paper: In 2nd stage pulp is the raw material and therefore, paper units can be located near urban markets.
- Pulp is drawn from variety of sources like wood, bamboo, sabai/salai grass, bagasse, and crop straw.
- Hence paper industry is widely distributed across different regions in India.
Advantages of the Indian paper industry:
- As compared to the western countries growth cycle of Indian tropical forests is 6 to 7 years whereas the growth of conifers of the west requires 50 years.
- Labour is cheap in India as compared to the Western world. Besides that Indian manpower of this industry is well trained and produces good quality paper with relatively low manpower cost.
- India being the largest producer of sugarcane holds huge potential in this regard.
On plea challenging the Centre’s power to notify minorities under the National Minorities Commission Act, 1992, and seeking minority status for Hindus in states where their numbers have gone below that of others.
What is the definition of minority under Indian laws?
- The expression “minorities” appears in some Articles of the Constitution, but is not defined anywhere.
What does the Constitution say about minorities?
- Article 29, which deals with the “Protection of interests of minorities”, says that “any section of the citizens residing in the territory of India or any part thereof having a distinct language, script or culture of its own shall have the right to conserve the same”, and that “no citizen shall be denied admission into any educational institution maintained by the State or receiving aid out of State funds on grounds only of religion, race, caste, language or any of them”.
- Article 30 deals with the “right of minorities to establish and administer educational institutions”. It says that all minorities, whether based on religion or language, shall have the right to establish and administer educational institutions of their choice. It says that “in making any law providing for the compulsory acquisition of any property of an educational institution established and administered by a minority…, the State shall ensure that the amount fixed by or determined under such law for the acquisition of such property is such as would not restrict or abrogate the right guaranteed under that clause”, and that “the state shall not, in granting aid to educational institutions, discriminate against any educational institution on the ground that it is under the management of a minority, whether based on religion or language”.
- Article 350(A) says there shall be a Special Officer for linguistic minorities to be appointed by the President. “It shall be the duty of the Special Officer to investigate all matters relating to the safeguards provided for linguistic minorities under this Constitution and report to the President upon those matters at such intervals as the President may direct, and the President shall cause all such reports to be laid before each House of Parliament, and sent to the Governments of the States concerned”.
So, who is a minority in India?
- Currently, only those communities notified under section 2(c) of the National Minorities Commission Act, 1992, by the central government are regarded as minority.
Which are the minorities notified by the Government of India?
- In the exercise of its powers under the Section 2(c) of the NCM Act, the Centre on October 23, 1993, notified five groups — Muslims, Christians, Sikhs, Buddhists and Parsis — as ‘minority’ communities. Jains were added to the list in January 2014.
What have courts said on the subject?
- TMA PAI: In ‘TMA Pai’, an 11-judge bench of the Supreme Court dealt with the question of the scope of right of minorities to establish and administer educational institutions of their choice under the Constitution.
- A majority ruling by six judges in 2002 referred to two other cases pertaining to the DAV College in Punjab, in which the SC had to consider whether Hindus were a religious minority in the State of Punjab. It said, “In DAV College v. State of Punjab …the question posed was as to what constituted a religious or linguistic minority, and how it was to be determined. After examining the opinion of this Court in the Kerala Education Bill case , the Court held that the Arya Samajis, who were Hindus, were a religious minority in the State of Punjab, even though they may not have been so in relation to the entire country.
- “In another case, DAV College Bhatinda v. State of Punjab …the observations in the first DAV College case were explained, and at page 681, it was stated that “what constitutes a linguistic or religious minority must be judged in relation to the State in as much as the impugned Act was a State Act and not in relation to the whole of India.”
- “This Court rejected the contention that since Hindus were a majority in India, they could not be a religious minority in the State of Punjab, as it took the State as the unit to determine whether the Hindus were a minority community. There can, therefore, be little doubt that this Court has consistently held that the unit to determine a religious or linguistic minority can only be the State.”
- BAL PATIL: In 2005, the SC in its judgment in ‘Bal Patil’ referred to the TMA Pai ruling, and said: “After the verdict in the eleven judges’ Bench in TMA Pai Foundation case (supra), the legal position stands clarified that henceforth the unit for determining status of both linguistic and religious minorities would be ‘state’….If, therefore, the State has to be regarded as the unit for determining “linguistic minority” vis-a-vis Article 30, then with “religious minority” being on the same footing, it is the State in relation to which the majority or minority status will have to be determined.
- “The minority for the purpose of Article 30 cannot have different meanings depending upon who is legislating. Language being the basis for the establishment of different States for the purposes of Article 30, a “linguistic minority” will have to be determined in relation to the State in which the educational institution is sought to be established. The position with regard to the religious minority is similar, since both religious and linguistic minorities have been put on a par in Article 30.”
Subject: Government schemes
Context: The idea of boosting investigative capabilities through technological interventions such as biological sample collection and iris scans in aid of fingerprints has been in the works for several years.
Steps towards integration of data
- The government has been digitising fingerprints with a plan to integrate all fingerprints available with states and the Centre into the Crime and Criminal Tracking Network System (CCTNS), the national database on crimes and criminals.
- After 2014, it embarked on a project to integrate IRIS scans and facial recognition systems too with it.
- In 2018, then National Crime Records Bureau (NCRB) Director said that investigating agencies should be allowed to access the fingerprint data of Aadhaar to identify criminals. NCRB is the nodal agency for the implementation of CCTNS.
- The Home Ministry is working on the integration of the fingerprint database of the Central Finger Print Bureau (CFPB), and get NIST Fingerprint Image Software (NFIS), a technology used by the United States Federal Bureau of Investigation (FBI), to match fingerprints.
What is CCTNS project?
Crime and Criminal Tracking Network and Systems, abbreviated to CCTNS, is a project under the Indian government for creating a comprehensive and integrated system for effective policing through e-Governance. The system includes a nationwide online tracking system by integrating more than 14,000 police stations across the country. The project is implemented by National Crime Records Bureau.
The concept of CCTNS was first conceived in the year 2008 in the aftermath of 2008 Mumbai attacks. This was then approved by the Cabinet Committee on Economic Affairs (CCEA) in 2009 and was allocated a fund of Rs. 2,000 crore.
Functioning of CCTNS:
CCTNS aims to integrate all the data and records of crime into a Core Application Software (CAS), which is presently spreading across 28 states and 9 union territories of India. CAS was developed by the Bangalore-based IT firm, Wipro. It needs to integrate different software and platforms followed by different states and to digitize records of those states which have not digitized their police records. The project also involves training of police personnel and setting up of citizen portal to provide services to citizens.
Features of Crime and Criminals Tracking Network and Systems (CCTNS)
- The Project will interconnect about 15000 Police Stations and additional 5000 offices of supervisory police officers across the country
- It will digitize data related to FIR registration, investigation, and charge sheets in all police stations.
- It would help in developing a national database of crime and criminals
- The total outlay for the project is 2000 crore rupees, and also includes the Operation and Maintenance phase for additional five years up to March 2022.
- The Full implementation of the Project with all the new components would lead to a Central citizen portal having linkages with State level citizen portals that will provide a number of citizen friendly services like Police Verification for various purposes including passport verification, reporting a crime including cyber-crime and online tracking of the case progress
- The project will enable National level crime analytics to be published at increased frequency, which will help the policy makers as well as lawmakers in taking appropriate and timely action, it will also enable Pan-India criminal/accused name search in the regional language for improved inter-state tracking of criminal movement. This would lead to development of a national database of crimes and criminals.
Context: The government introduced the Criminal Procedure (Identification) Bill, 2022 in Lok Sabha on Monday
Features of the Bill
- Define “measurements”: To include finger impressions, palm-print and foot-print impressions, photographs, iris and retina scan, physical, biological samples and their analysis, etc.;
- Empower the National Crime Records Bureau (NCRB): To collect, store and preserve the record of measurements and for sharing, dissemination, destruction and disposal of records;
- Empower a Magistrate: To direct any person to give measurements; a Magistrate can also direct law enforcement officials to collect fingerprints, footprint impressions and photographs in the case of a specified category of convicted and non-convicted persons;
- Empower police or prison officers: To take measurements of any person who resists or refuses to give measurements
- Authorises police to record signatures, handwriting or other behavioural attributes: Referred to in section 53 or section 53A of the Code of Criminal Procedure, 1973, for the purposes of analysis.
Who does the law apply to?
It proposes that the law apply to three categories of individuals:
- Those convicted of an offence punishable under any law for the time being in force.
- Those involving “suspected criminals” or “habitual offenders” with a view to preventing crime.
- Those arrested in connection with an offence punishable under any law in force or detained under any preventive detention law. This would include the National Security Act or the Public Safety Act.
Additionally, the Bill states that except for those accused of offences committed against a woman or a child, or for any offence punishable with imprisonment for a period that is not less than seven years, a person accused of any other offence can refuse to allow taking of his biological samples under the Bill.
How will this data be stored?
- NCRB can collect the record of measurements from the state government or Union Territory Administration concerned, or any other law-enforcement agencies, and will have the power to store, preserve and destroy the record of measurements at national level and share and disseminate such records with any law enforcement agency.
- The Bill says that even if such data is collected from the accused, it can be destroyed from the records unless a magistrate in writing directs otherwise, after the accused is released without trial or discharged or acquitted by a court.
What are the issues being raised about the Bill?
- Lack of clarity: Several provisions are not defined in the Bill itself.
- For instance, the statement of objects says it provides for collection of measurements for “convicts and other persons” but the expression “other persons” is not defined.
- It does include those accused of certain offences, but it can be argued that the police could use the law to expand it to others.
- Conflict with Fundamental Rights:
- The proposed law will be debated against Article 20(3) of the Constitution, which is a fundamental right that guarantees the right against self-incrimination. It states that “no person accused of any offence shall be compelled to be a witness against himself”.
- The Supreme Court’s landmark ruling in Puttaswamy v Union of India, which recognised the right to privacy as a fundamental right, made it clear that any state action infringing on the right needs to be backed by legislation.
- Contentious provisions: The Bill proposes to collect samples even from protesters engaged in political protests.
Section: National organisation
Context: Criminal Procedure (Identification) Bill, 2022 empowers NCRB to collect, store and preserve the record of measurements and for sharing, dissemination, destruction and disposal of records;
NCRB was set-up in 1986 to function as a repository of information on crime and criminals so as to assist the investigators in linking crime to the perpetrators based on the recommendations of the Tandon Committee, National Police Commission (1977-1981) and the MHA’s Task force (1985).
- NCRB was entrusted with the responsibility for monitoring, coordinating and implementing the Crime and Criminal Tracking Network & Systems (CCTNS) project in the year 2009. The project has connected 15000+ police stations and 6000 higher offices of police in the country.
- On 21st August 2017, NCRB launched National Digital Police Portal.It is a master police portal which caters both to the citizens as well as to the police personnel. It allows police personnel to search for a criminal / suspect on the CCTNS database, besides access to many other police utilities like Cri-MAC, NDSO, CyTrain etc. To citizens, it provides various services like filing of complaints online and seeking antecedent verification of tenants, domestic helps, drivers etc., and newly launched citizen services like, search for missing persons, NOC for purchase of second hand vehicle and information on Proclaimed Offenders.
- The Bureau has also been entrusted to maintain National Database of Sexual Offenders (NDSO) and share it with the States/UTs on regular basis.
- NCRB has also been designated as the Central Nodal Agency to manage technical and operational functions of the ‘Online Cyber-Crime Reporting Portal’ through which any citizen can lodge a complaint or upload a video clip as an evidence of crime related to child pornography, rape/gang rape.
- NCRB has also launched CyTrain, a portal for online training of different stakeholders in cybercrime investigations and prosecution.
- NCRB also maintains Counterfeit Currency Information and Management System (FICN) and Integrated Monitoring on Terrorism (iMoT) applications.
- Cri-MAC (Crime – Multi Agency Centre) is yet another IT tool launched by NCRB this year as per the recommendation of DGPs/IGPs Conference 2018, for sharing of information on Crime / Criminals – sending alerts on Inter-State Criminals / Gangs to States/UTs, etc. and providing email/sms based communication module for inter agency / unit co-ordination.
- NCRB also compiles and publishes National Crime Statisticse. Crime in India, Accidental Deaths & Suicides and also Prison Statistics. These publications serve as principal reference point by policy makers, police, criminologists, researchers and media, both in India and abroad..
- The Central Finger Print Bureau under NCRB is a national repository of all fingerprints in the country and has more than one million ten-digit finger prints database of criminals both convicted and arrested and provides for search facility on Fingerprint Analysis and Criminal Tracing System (FACTS). Through the proposed NAFIS System to be commissioned by the year end, all States will be able to upload and search finger prints directly to/from NCRB national database. This will improve efficiency of fingerprint storage and search drastically and prove to be a game changer in police investigations. Further, NCRB publishes ‘Finger Prints in India’ annually and organizes the annual conference of Directors of Finger Print Bureaux of all the states to deliberate on topical issues related to the use of fingerprint science in police investigations.
- NCRB also assists various States in capacity building in the area of Information Technology, CCTNS, Finger Prints, Network security and Digital Forensics through its training centers in Delhi, Kolkata. It also assists four Regional Police Computer Training Centres (RPCTC) at Hyderabad, Gandhi Nagar, Lucknow and Kolkata.
Section: Government Schemes
Context: Focus on cooperatives
The International Cooperative Alliance unites, represents and serves cooperatives worldwide.
Founded in 1895, it is one of the oldest non-governmental organisations and one of the largest ones measured by the number of people represented: 1 billion cooperative members on the planet.
It is the apex body representing cooperatives, which are estimated to be around 3 million worldwide, providing a global voice and forum for knowledge, expertise and co-ordinated action for and about cooperatives
Seven doctrines of cooperatives by International Cooperative Alliance
(1) voluntary and open membership,
(2) democratic member control,
(3) member economic participation,
(4) autonomy and independence,
(5) education, training, and information,
(6) cooperation among cooperatives,
(7) concern for the community
Section: International organisation
The US, on March 22, announced visa restrictions as part of sanctions on Chinese officials for their actions to repress ethnic and religious minorities both inside and outside the country.
Who are Uighurs?
- The Uighurs are a predominantly Muslim minority Turkic ethnic group, whose origins can be traced to Central and East Asia.
- The Uighurs speak their own language, similar to Turkish, and see themselves as culturally and ethnically close to Central Asian nations.
- The Uighurs are considered to be one of the 55 officially recognized ethnic minority communities in China.
- However, China recognises the community only as a regional minority and rejects that they are an indigenous group.
- Currently, the largest population of the Uighur ethnic community lives in Xinjiang region of China.
- A significant population of Uighurs also lives in the neighbouring Central Asian countries such as Uzbekistan, Kyrgyzstan and Kazakhstan.
- Xinjiang is technically an autonomous region within China — its largest region, rich in minerals, and sharing borders with eight countries, including India, Pakistan, Russia and Afghanistan.
What is Organisation of Islamic Cooperation (OIC)?
- The Organisation of Islamic Cooperation (OIC) is the second largest intergovernmental organization after the United Nations with a membership of 57 states.
- It is the collective voice of the Muslim world. It endeavors to safeguard and protect the interests of the Muslim world in the spirit of promoting international peace and harmony among various people of the world.
- It was established upon a decision of the historical summit which took place in Rabat, Kingdom of Morocco on the 25th of September 1969.
- Headquarters: Jeddah, Saudi Arabia.
- India is not a member of the OIC.
Where is Xinjiang?
- Xinjiang lies in the north-west of China and is the country’s largest region.
- Like Tibet, it is autonomous, meaning – in theory – it has some powers of self-governance.
- But in practice, both regions are subjected to major restrictions by the central government.
- Xinjiang is a mostly desert region and produces about a fifth of the world’s cotton.
- In December 2020, research seen by the BBC showed that up to half a million people were being forced to pick cotton in Xinjiang. There is evidence that new factories have been built within the grounds of the re-education camps.
- The region is also rich in oil and natural gas and because of its proximity to Central Asia and Europe is seen by Beijing as an important trade link.
- In the early 20th Century, the Uyghurs briefly declared independence for the region but it was brought under the complete control of China’s new Communist government in 1949.
Section: Monetary Policy
The world economy is currently passing through a growth-inflation configuration. The downside risks to growth have been accentuated globally for multiple reasons — low investments, high input costs, productivity slowdown, Ukraine crisis and related supply chain disruption, higher inflation due to ultra loose monetary policy
Challenges to monetary policy to control inflation
Inflation control being the overriding objective of monetary policy under the flexible inflation targeting regime, it would be difficult for the MPC to credibly pursue an accommodative monetary policy stance in the current situation:
- Inflation, mainly cost-push caused by supply chain disruption-Russia-Ukraine conflict and high crude oil prices are the two immediate factors contributing to upside risks to inflation.
- Fiscal-monetary conflict– as tightening monetary policy would increase cost of borrowing for government
- Crowd out effect of tight monetary policy- as cost of borrowing would rise leading to decline in private consumption and investment.
- Output gap is still negative– as output is below full-capacity production due to COVID pandemic.
- Drain out excess liquidity by selling foreign exchange when the rupee is depreciating.
- Pro-growth measure — a reduction in fuel taxes by both Central and State governments to neutralise the adverse impact of the rise in international crude oil prices on the wake of record collections in the GST.
Inflation Targeting is a monetary policy framework wherein the Central Bank of a country focuses only on maintaining the rate of Inflation within a targeted range.
The principle of inflation targeting is based on the belief that long-term economic growth is best achieved by maintaining price stability, and price stability is achieved by controlling inflation.
Inflation targeting was first adopted by New Zealand and subsequently, a large number of countries including India have been following Inflation Targeting as their core element of monetary policy.
In case of India, the flexible Inflation targeting was introduced through the Monetary Policy Framework Agreement signed between the RBI and Government in 2015. As per terms of the agreement, RBI’s primary objective would be to maintain price stability, while keeping in mind the objective of growth. The RBI is required to maintain a rate of inflation of 4% with a deviation of 2% i.e. inflation has to be maintained between 2% to 6%.
The Reserve Bank of India Act, 1934 was amended to provide a statutory basis for a FTI framework. The amended Act provides for the inflation target to be set by the Government, in consultation with the RBI, once every five years.
Monetary Policy Committee
It is a statutory and institutionalized framework under the Reserve Bank of India Act, 1934, for maintaining price stability, while keeping in mind the objective of growth.
The Governor of RBI is ex-officio Chairman of the committee. The MPC determines the policy interest rate (repo rate) required to achieve the inflation target (4%).
Strict inflation targeting is adopted when the central bank is only concerned about keeping inflation as close to a given inflation target as possible, and nothing else.
Flexible inflation targeting is adopted when the central bank is to some extent also concerned about other things, for instance, the stability of interest rates, exchange rates, output and employment.
Accommodative and Tight Monetary Policy
To avoid inflation, most central banks alternate between the accommodative monetary policy and the tight monetary policy in varying degrees to encourage growth while keeping inflation under control.
- Accommodative monetary policy is adopted when central banks expand the money supply to boost the economy. These measures are meant to make money less expensive to borrow and encourage more spending.
- A tight monetary policy is implemented to contract economic growth. Converse to accommodative monetary policy, a tight monetary policy involves increasing interest rates to constrain borrowing and to stimulate savings.
Section: Fiscal Policy
Context: Tax evasion by companies
Tax liability of an individual can be reduced by tax avoidance, tax planning and tax evasion. Whereas, tax planning and tax avoidance are legal means, tax evasion are completely illegal means.
The objective of Tax avoidance is to reduce tax liability by applying the script of law whereas Tax evasion is done to reduce tax liability by exercising unfair means. Tax planning is done to reduce the liability of tax by applying the provision and moral law.
The basic differences are as follows:
Tax Avoidance means an attempt to reduce tax liability through legal means, i.e. to regulate one’s financial affairs in such a way that one pays the minimum tax imposed by the law.
Tax avoidance is an activity of taking unfair advantage of the shortcomings in the tax rules by finding new ways to avoid the payment of taxes that are within the limits of the law. Tax avoidance can be done by adjusting the accounts in such a manner that there will be no violation of tax rules. Tax avoidance is lawful but in some cases it could come in the category of crime.
Common tax avoidance techniques include:
- Deducting a charitable donation
- Deducting Health Savings Account contributions
- Putting money into a 401(k)
- Using a student loan interest deduction
Transfer pricing itself is not a means of tax avoidance if transfer price matches what the seller entity would charge to an unrelated customer (called customer at arm’s length). However, since lowering or increasing the prices between parent-daughter entities doesn’t affect the whole organization, the companies artificially increase or decrease the transfer price to avoid corporate tax. This processing of using unusual transfer pricing to avoid tax is called Base Erosion and Profit Sharing (BEPS).
Tax evasion is the use of illegal methods of concealing income or information from the IRS or other tax authority to reduce or avoid tax burden. Tax evasion can result in fines, penalties and/or prison time.
Tax Evasion is a criminal activity for which the assessee is subject to punishment under the law. It involves acts like:
- Deliberate misrepresentation of material facts.
- Hiding relevant documents.
- Not maintaining complete records of all the transactions.
- Making false statements.
|Minimization of tax liability, by taking such means which do not violate the tax rules, is Tax Avoidance
|Reducing tax liability by using illegal ways is known as Tax Evasion.
|What is it?
|Hedging of tax
|Concealment of tax
|Immoral in nature, which involves bending the law without breaking it.
|Illegal and objectionable, both in script and moral.
|Taking unfair advantage of the shortcomings in the tax laws.
|Deliberate manipulations in accounts resulting in fraud.
|Use of Justified means
|Use of such means that are forbidden by law
|Before the occurrence of tax liability.
|After tax liability arises.
|Type of act
|Deferment of tax liability
|Penalty or imprisonment
Section: Economic Geography
A committee of India’s parliament has recently India is yet to fully explore over 80 percent of its reserves of bauxite (an aluminium ore)
- At present Aluminum is limited primarily to the electric and electronic sectors in India. Multiple initiatives of the Indian government, such as 100 percent rural electrification, Housing for All, Smart Cities, national infrastructure pipeline, renewable energy and scheme for electric vehicles will boost the consumption of the metal (aluminium) in the country.
- In its report on the development of aluminium and copper industries in the country, the committee observed that only 17 percent (656 million tonnes) of bauxite is under ‘proven and probable’ category while the remaining 3,240 million tonnes are yet to be fully explored. There are a total of 3,896 million tonnes of bauxite resources across the country.
- According to the report, aluminium represents the second-largest metals market in the world after iron and steel. The total domestic production of aluminium metal during 2020-21 stayed at about the same level of 3.61 million tonnes (nearly 5.5 percent of global production) as in 2019-20.
- The import of aluminium, however, has remained “consistently high” as the panel noted that the total aluminium imports including scrap during FY 2020-21 stood at 2.06 million tonnes compared to 2.15 million tonnes in the previous financial year.
- India’s primary aluminium industry consists of three major players – National Aluminium Company Limited (NALCO), Hindalco Industries and Vedanta Ltd. – that together have a total production capacity of about four million tonnes. The committee asked the government to make extra efforts for overall improvement in the sector to make India self-reliant for aluminium metal.
- Bauxite is basically an aluminous rock containing hydrated aluminium oxide as the main constituent and iron oxide, silica and titania in varying proportions.
- Hydrated aluminium oxides present in the bauxite ore are diaspore and boehmite, Al2o3, H2O, (Al2O3 -85%; Al -45%); gibbsite or hydrargillite, Al2O3, 3H2O (Al2O3 -65.4%; Al -34.6%) , and bauxite (containing colloidal alumina hydrogel), Al2O3, Al2O3, 2H2O (Al2O3 -73.9%; Al -39.1%). The iron Oxide in bauxite ore is present as hematite or goethite, silica as clay and free quartz, and titania as leucoxene or ruthile.
- Bauxite is an essential ore of aluminium which is one of the most important non ferrous metals used in the modern industry.
- It is also an essential ore for refractory and Chemical industries. The country has abundant resources of bauxite which can meet both domestic and export demand
- Bauxite is a sedimentary rock with relatively high aluminium content.
- It is the world’s main source of aluminium and gallium.
- Bauxite is primarily used to produce alumina through the Bayer process.
- It is an oxide of aluminium. It is not a specific mineral but a rock consisting mainly of hydrated aluminium oxides.
- Bauxite appears dull in luster and is reddish-brown, white, or tan in color.
- Australia is the largest producer of bauxite, followed by China.
Aluminium is the third most abundant element in the Earth’s crust, but does not occur as a metal naturally. The first step in producing aluminium is mining its ore bauxite.
Bauxite is generally extracted by open cast mining, being almost always found near the surface
Bauxite occurs mainly in tropical and sub-tropical areas, like Africa, the West Indies, South America, Australia & India there are some small deposits located in Europe.
Section: Sustainable development
Context: BIMSTEC MEETING
The BOBLME Project includes Bangladesh, India, Indonesia, Malaysia, Maldives, Myanmar, Sri Lanka and Thailand. The project aims to improve the lives of the coastal populations through better regional management of the Bay of Bengal environment and its fisheries.
The BOBLME Project is funded principally by the Global Environmental Facility (GEF), Norway, the Swedish International Development Cooperation Agency, FAO, participating Governments and the National Oceanic and Atmosphere Administration (NOAA) with a total estimated budget of $USD 31 million over five years.
It is g launched by the FAO with funding from the Global Environmental Facility (GEF) and others.