IASbaba’s TLP 2016 [25th March]: UPSC Mains GS Questions [HOT]: Synopsis

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IASbaba’s TLP 2016 [25th March]: UPSC Mains GS Questions [HOT]: Synopsis

1. Increasing the probability of detecting and punishing corrupt offenders by enforcing the anti-corruption laws impartially and reducing the delay in prosecuting offenders must be the topmost priority for the anti-corruption strategy of India. Discuss.

• Intro:

Corruption is the cancer which slowly corrodes the faith of citizens in the systems of governance, it is a symptom of underlying moral rot.

• Body:
• Tackling corruption needs multi pronged strategy with many stages of checks and corrective measures, broadly it can be divided into 3 stages:
• Identification of areas and processes which are susceptible for corrupt practices
• Designing of laws, rules, institutions and structures, for fast and impartial application of law.
• Prosecution of those who indulge in corrupt practices.

• Identification and detection:

1. Some departments and ministries are more prone to corruption than others. Eg- revenue, police ,income tax etc., systems should be designed for early detection for corrupt practices ,for this
2. Digitization of all processes which will help in reducing the human interface.
3. Simplifying the laws, rules and regulations to curtail discretion in the hands of bureaucracy, India was placed at 76th in transparency international corruption index far behind Bhutan
4. Bringing political parties under the purview of RTI in order to bring on transparency in funding and promoting internal democracy
5. Making CVC and other state vigilance agencies more proactive and giving them more powers will help.
6. In elections, EC must be given powers to curb the influence of money and muscle power, as a corrupt elected representative will coerce bureaucracy to bend or break rules for his gains. In 2009 nearly 25% of MPs were accused of corruption practice.
7. Protecting the whistle blowers in case of PSUs and private industries, for this suitable amendments have to be made to Whistleblower protection Act.

• Enforcing of laws:

1. Prevention of corruption act, benami transaction act etc. must be impartially enforced for this,
2. State CID, CBI , Lokayukta ,Lokpal institutions must be strengthened.
3. Investigating agencies must be insulated from political interference, in order to carryout impartial investigations.
4. Corruption in these institutions must be strictly punished e.g.KarnatakaLokayukta fiasco ,and CBI directors biasness in Coalgate scam.
5. Staffing of these agencies is a big problem as they are severely understaffed making it difficult to deliver in time bound manner.

• Prosecution and convictions

Indian has one of the lowest conviction rates in corruption cases, this has to rectified by

1. Completing the investigation in a time bound manner without any favor or bias.
2. Hearing corruption cases on a daily basis for speedy justice.
3. Creating evening courts or special courts to expedite these cases.

• Conclusion:

Write briefly your opinion and conclude the answer.

Best answer: MACHIAVELLI

from willful violation of oath of office , squandering of public money to abuse of office and power , corruption in India is deeply seated and has institutionalized itself . While various laws have been passed their impartial application and timely execution is must for better handling of corruption.

prevention of corruption act 1988 is all powerful to punish the offenders but various clause provided to safeguard honest official are acting as a barrier .

– need for sanction from competent authority leads to inordinate delay.

– no mention of which authority will sanction prosecution against MPs and MLAs.

– summoning sanctioning authority leads to delay in proceedings ,thus his presence could be obviated.

– ‘Burden of proof ‘ must lie with the charged person to prevent easy escape.

similarly vigilance agencies needs to be empowered and given independence to handle corruption at high level.

–CVC and SVC s must be given more teeth .

– autonomy of CBI is must for impartial probe.

– Lokpal and Lokayukta act to be strictly implemented across all states.

– Fast track courts for quick disposal and preventing tempering of evidences.

on the same line Information and technology will be very crucial in preventing corruption .

– Citizens’ charter in every office.

– minimum discretion to officers.

– increased transparency through online tenders etc.

– official websites of politician with their background information as well as assembly records if any

– social audit is another popular means .

Thus prevention of corruption act though need some amendment is still powerful to address the corruption provided political will and integrity .

2. One of the supporting arguments given for the GST is that tax base will increase substantially after it is introduced. Do you agree with this argument? Substantiate.

Introduction:

Briefly explain the GST: GST is a tax that will subsume various indirect taxes as one tax, to ease the tax procedure and increase compliance. In Indian context of dual GST, it will subsume CENVAT and service tax at central level, state-VAT and various consumption tax. Central Sales tax will be removed. Almost 150 countries follow a similar uniform taxation structure. For India, GST will be the most important step towards tax reforms in India catering to streamlining in-direct taxation where Centre and State have different powers to levy taxes.

1. Do you agree?

Give your stand clearly. (Affirmative stand)

Substantiate:

1. Destination based taxing on point of sale- elimination of source & transit taxes- less cost on end user
2. Equitable distribution of tax revenue between manufacturing & service sector.
3. Division of tax burden between centre (CGST) & state (SGST) is 12% & 8% : both collected at point of sale.
4. PAN linking compulsory on high value transactions – transparency & audit friendly to trail paperwork.
5. Mandatory invoicing of goods & services – increased tax ambit.
6. Pruning of negative & exemption lists.
7. Abolition of multiple taxes viz. service tax, VAT, freight, octroi, excise, cesses etc – simple & consumer as well manufacturer friendly regime.
8. Proposal to include petroleum & electricity in later stages.

2. Do you agree?

Negative stand.

Substantiate:

a)States are in favour of revenue neutral tax rate, which will be very high and thus, tax evasion will continue and tax base will not increase.

b)Exemptions to liquor, diesel, ATF etc. will not allow harmonising the system and unorganised sector will flourish.

c)Varied economic situations of states like Gujarat and Chattisgarh will force to have different Revenue Neutral Rates destroying the whole purpose of GST and not increasing tax base.

d)A number of items like alcohol, petroleum and real property are kept outside the purview of GST.

e)A large number of businesses may be kept out of its purview by virtue of their profits being lower than the lower limit.

f)Indian tax base is low because of ill practices like under invoicing or no invoicing at all. GST or any other taxation cannot stop these practices.

Conclusion:

The effects of GST is mixed and whether the tax base will increase substantially or not is a debated issue. The increase may be marginal. This reforms has both pros and cons, but in order to make the economy progress, we need to incorporate the GST.

Best answer: CSE2016 Aspirant

 Goods and Services Tax (GST) bill has become the bone of contention between the government and opposition. There has been several supporting arguments given for GST regime. Studies say that it can bring about 0.9-1.5% growth in GDP. One of the argument has been that introduction of GST will substantially increase the tax base, which is indeed very true.

Factors supporting the argument :

(1) Elimination of cascading effect :

—–> In digital world, goods and services cannot be distinguished many a times.

—–> Tax will be levied on the combined goods and services production, hence will eliminate taxes on tax.

—–> Lower taxation will increase the willingness of citizens to pay taxes.

—–> For eg. bribes to tax inspectors will end, which citizens used to pay to avoid high taxes.

(2) Requirement of credit invoices :

—–> In order to reimburse tax paid on the input, it will be required to have an invoice from the entity providing input.

—–> This will make taxation transparent and tax evasion will diminish.

—–> For eg. Car manufacturer will require steel producer to provide invoice to get reimbursement.

(3) Ease in tax payment :

—–> GST will simplify the tax payment.

—–> Will improve India’s ease of business index attracting more foreign investment and businesses, which in turn will increase the tax base.

(4) Lower costs of the goods and services :

——> It will result in increase the demand, which will increase production and subsequently tax base.

——> Higher savings of the households will lead to more deposits in saving account, which can be used in building infrastructure. Since, it will result in more employment and business, tax base will increase.

(5) Mental fear of lot of indirect taxes levied will be eliminated.

——> On seeing variety of taxes like ‘service tax’, ‘VAT’, ‘Educational cess’ together, customer may feel exploited.

However, there are certain issues with proposed GST which need to addressed to further increase the tax base.

(1) Many products like diesel, alcoholic liquor, aviation turbine engines, etc. will not have GST levied on them.

—–> Government earns approx. 40% revenue from these products. Absence of these items in GST will defeat the above purpose.

(2) No GST on inter-state trade and commerce :

—–> This will affect seamless movement of goods and ease in business.

Hence, GST certainly will help increase the tax base. No doubt, more than 100 countries have GST because of the above advantages. But, certain amendments in GST bill are required to further strengthen this claim. 

3. What do you understand by ‘ease of doing business’ index? Why so much significance is attached to this index? What are the parameters that determine the index? Discuss.

The ease of doing business index (EODBI) is an index created by the World Bank Group. Economies are ranked on their ease of doing business, from 1–189. A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm.

According to the World Bank, the rankings are an assessment of the regulatory performance in each country and a measure of how each improves over time. The ranking is based on several indicators, which include the ease of starting a business, registering a property, procuring credit, paying taxes, trading across borders and resolving insolvency.

Great significance is attached to this index because – (Choose any 3-4 points)

• EODBI represents particular country’s image (the country’s business environment) globally. If index is better, then more multinational investors will be attracted to invest (FDI and FIIs) in the country. The Foreign investment will create jobs and employment opportunities & develop infrastructure which will boost economic growth & can help in tackle the challenges like unemployment, poverty etc. Also more investment in infrastructure etc will reduce Govt spending and fiscal deficit.
• Leads to substantial benefits for Indian entrepreneurs — along with potential gains in economic growth and job creation
• Creates a more business—friendly environment and hence, fosters an environment more supportive of private sector activity. Future of initiatives like Make in India and Start up India which requires private investors and global companies also attached with this index.
• The ranking has a great role to bring small investors in form of joint ventures and R&D facilities etc. This will help in to find out sustainable technological solutions to reduce environmental pollution and to achieve energy security. It can also help in to tackle several health issues by using new technology & research.
• It plays a role in bargaining power of a country in world economic platforms which in turn help in its foreign exchange reserves and capital account convertibility.
• The index is also indicative of the degree of red-tapisms prevalent in the bureaucracy.

Parameters that determine the index (Write 6-8 parameters)

A nation’s ranking on the index is based on the average of 10 parameters:

• Starting a business – Procedures, time, cost and minimum capital to open a new business
• Dealing with construction permits – Procedures, time and cost to build a warehouse
• Getting electricity – procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse
• Registering property – Procedures, time and cost to register commercial real estate
• Getting credit – Strength of legal rights index, depth of credit information index
• Protecting investors – Indices on the extent of disclosure, extent of director liability and ease of shareholder suits
• Paying taxes – Number of taxes paid, hours per year spent preparing tax returns and total tax payable as share of gross profit
• Trading across borders – Number of documents, cost and time necessary to export and import
• Enforcing contracts – Procedures, time and cost to enforce a debt contract
• Resolving insolvency – The time, cost and recovery rate (%) under bankruptcy proceeding

Appropriate Conclusion (if you have space)

Best Answer: CSE2016 aspirant

‘Ease of doing business’ is the index to measure business friendliness of an economy and is published by the World Bank. It is the aggregate figure which uses the scores of different economies on parameters related to ease of conducting business. India is currently ranked 130th on this index in the world.

Significance of this index and higher rank in the list :

(1) Investment flow
—-> Higher rank will attract more foreign investment in form of FDI and FII.
—-> Overall effect will be achievement of higher growth rate of GDP.

(2) Industrial sector will prosper.
—-> ‘Make in India’ initiative will get the required impetus.

(3) Innovative ideas can be incubated by attracting young and talented minds of entrepreneurs.
—-> Will boost ‘Start Up’ India initiative.

(4) Reputation of the country will grow in the world.
—-> The regional dominance of India in South East Asia will get strengthened.

(5) Generation of employment and skill
—-> Labour will be required for any business set up in India.
—-> Skill development can happen —-> Contribution to ‘Skill India’ mission.

Parameters involved in determining the index :

(1) Ease of starting business :
—-> India made it easy to open business by eliminating the need of certain capital and certain regulations. Business now can be started in fewer days.

(2) Electricity connection :
—-> India made impressive improvement in this index jumping 26 positions to 70th place.

(3) Interest of minority investors :
—-> India has held outstanding 8th position here.

(4) Construction permit :
—-> This is the sector which needs improvement.
—-> Easier permits to construct factories and offices from municipal authorities is needed.

(5) Getting credits :
—> India has dropped 6 positions down to 42 on this parameter.
—-> Financial inclusion schemes like MUDRA should be properly executed.

(6) Enforcing contracts :
—> India fare poorly in this department.
—> Commercial dispute resolution should be improved.

(7) Tax payment :
—> Tax paying mechanism needs to be revamped. GST bill should be quickly passed after making proper amendments in the bill.

(8) Registering property :
—> Efficient mechanism to register property should be enforced so s to reduce time, cost and efforts to register property in India.

India is aiming to break into top 50 list of the index. India will need to work on various serious issues like insolvency laws, efficient debt recovery. Economic survey showed that although entry to business has been improved, but the Chakravyuh problem of sick firms not able to exit and hence making the whole economy sick needs to be solved.