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IASbaba’s Daily Current Affairs – 13th June 2017

NATIONAL

TOPIC:

General studies 2:

Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Issues relating to development and management of Social Sector or Services relating to Health, Education, Human Resources.

General studies 3:

Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Inclusive growth and issues arising from it.

Start Up India Pan- Taking it forward

Start Up Action Plan- Introduction:

The action plan with 19 measures focused on simplification and hand-holding, funding support and industry-academia partnership and incubation.

E-registration, self certification system.
A dedicated web portal and mobile app.
No inspection during the first 3 years.
80 percent reduction in the application fee of start up patent.
Easy exit policy.
Inclusion of Credit Guarantee Fund.
Relaxation in Income Tax for first three year.
Special Arrangement for Female applicants.
Introduction of Atal Innovation Mission.

Steps taken by the Government:

To facilitate ease of doing business, the government promised a compliance regime based on self-certification.
The Union Ministry of Environment, Forest and Climate Change has notified 36 industry sectors that are practically non-polluting as belonging to a white category.
A fast-track, low-cost intellectual property regime was promised. Now, a list of more than 400 empaneled patent and trademark registration agents has been published
The government is a huge buyer of goods and central ministries and departments have been directed to relax the turnover and experience criteria for public procurement, so as to promote purchases from start-ups.
Instituting of a Rs10,000 crore fund-of-funds. The Small Industries Development Bank of India has been given the task of operating and managing this fund, which will invest in alternate investment funds registered with the Securities and Exchange Board of India (Sebi).
The government also promised to build a start-up culture in the country. A call centre was operationalized to resolve queries and provide hand-holding support to start-ups. A website and mobile app were launched with information on the start-up action plan, incubators and IP facilitation.
An interactive online learning and development module to educate start-ups and aspiring entrepreneurs was launched.
Start-up fests were announced.
The Finance Act 2016 allowed exemptions to long-term capital gains if those are invested in units of specified funds. Exemption was also introduced for long-term capital gains arising upon transfer of a residential property if such gains were invested in an eligible start-up.
Exemption from “angel tax” was a more relevant sop as investment by residents in eligible start-ups stood to gain from this concession.

Issues:

The government’s initiative has had an impact on only a small section of start-ups.
Many of the steps taken by government is unlikely to have a meaningful impact unless the number of recognized starts-up is in the thousands.
So far, there have been only limited disbursements—commitments to the tune of about Rs600 crore have been made and there is a budget allocation of Rs1,100 crore. This is a small amount compared to the nearly Rs16,000 crore start-up funding in 2016.
The details of the promised credit guarantee fund for start-ups are not out yet except that it is intended to have a corpus of Rs2,000 crore, to be built over four years.
Since start-ups don’t make profits in their early period and the minimum alternative tax is still applicable, the benefits of a three-year tax holiday are only notional.

Way forward:

All start-ups, regardless of whether they are considered innovative by the government, should be able to enjoy the benefits, so as to encourage entrepreneurship and generate jobs. The government should not get into defining and deciding what innovation means.
Ease of closure– A critical measure to enable start-ups which could go on to fail (and a lot of them do) is the ease of closure. In this regard, the rules for voluntary liquidation are still in the works. The rules should be released and notified soon permitting start-ups to wind up business within 90 days.
Start Up festivals and The Grand Challenge award announced by government is welocme . But such hand-holding is the job of incubators and accelerators, and the government should focus on clarifying policy questions.

Conclusion:

It is commendable that the government thought of start-ups as a separate category, recognized their potential, and came out with a visionary plan to promote start-up culture and entrepreneurship in India. However, much of its efforts have been restricted by what we can term bureaucratic impediments, so progress has been limited. The government needs to review the policy soon, remove impediments and give a stronger impetus to start-ups. Importantly, it also needs to reduce the flight of successful start-ups to other jurisdictions. Thus a lot more needs to be done to provide a strong fillip to the start-up world.

Connecting with the dots:

While Start Up Action Plan launched by government is a welcome step, much more needs to be done to make it successful and establish a healthy Start Up culture in India. Discuss the challenges and elaborate and steps to be taken.

INTERNATIONAL

TOPIC: General Studies 2:

India and its International relations.

Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

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

Redefining India-Russia relationship

St. Petersburg Declaration:

Marking 70 years of diplomatic ties, Prime Minister Narendra Modi and Russian President Vladimir Putin signed the St Petersburg Declaration in June 2017, envisaging an action plan for deepening relations in all areas, including political and economic development of the two countries and also to ensure that their ties contribute to the establishment of a more peaceful and just world order.

Key Points:

Both the countries will work towards a higher level of military- to- military cooperation by holding regular joint land and sea military exercises and this year both the countries will conduct the first ever Tri-services exercise INDRA-2017.
Stating that the economies of India and Russia complement each other in the energy sector, it said that they would strive to build an ‘Energy Bridge’ and expand bilateral relations in all areas of energy cooperation, including nuclear, hydrocarbon, hydel and renewable energy sources and in improving energy efficiency.
According to the Declaration, the growing nuclear power partnership between India and Russia has opened opportunities for developing advanced nuclear manufacturing capabilities.
It said that connectivity must be strengthened, while reiterating their commitment to build effective infrastructure for the International North South Transport Corridor and implementation of the Green Corridor.
The Declaration said both India and Russia regard the establishment of the multi-polar global order in international relations and thus, they would enhance collaboration to democratize the system of international relations, based on the principles of the rule of law and the central role of the United Nations.
Russia reaffirmed its support for India’s bid for permanent membership in the UN Security Council and the Nuclear Suppliers Group.
Both countries strongly condemned terrorism in all its forms and manifestations.
Both the nations called for early conclusion of negotiations on the Comprehensive Convention on International Terrorism to strengthen the global counter-terrorism normative and legal framework to combat this scourge.

Convergence:

In specific areas such as defence hardware and technology, nuclear energy and oil and gas any cooperation is of mutual benefit.
There may even exist longer-term convergence in helping shape a multipolar international political and security architecture.

Divergence:

However, these shared interests must be balanced against divergences that are inherent in the very dramatic transformations which have taken place in the two countries themselves, and in the regional and global situation since the end of the Cold War, which have inevitably altered the overall context of our relations.

Shared China concerns

It is the shared perception of a Chinese threat which brought Delhi and Moscow together.
The end of the Cold War changed this, with Russia no longer looking at China as a current security threat. The early settlement of their border dispute, the expansion in their economic and trade relations and the emergence of China as a major recipient of Russian weapons and defence technologies brought about an asymmetry in perceptions of China between India and Russia.
But Russian perceptions of a long-term Chinese challenge to its interests persisted, and still do. For example, Russian nuclear experts have been reluctant to deep cuts in nuclear weapons in bilateral negotiations with the U.S. precisely because the gap with China’s expanding and qualitatively better nuclear arsenal is diminishing and this heightens Russian concerns.
Chinese inroads into Central Asia and Eastern Europe are also a concern for Russia, which regards both these regions as part of its strategic periphery.

What this means for India?

We need to adjust to a new and more positive phase in Russia-China relations, learn not to
We shouldn’t rely on Moscow to confront Chinese hostility towards India or support India against Pakistan.
We should seek to build a broader framework of relations based on the longer-term Russian concerns about the emergence of China.
Russia, like India, prefers a multipolar world and is unlikely to accept a junior league status in a Chinese-dominated world. For the same reason, Russia may welcome a higher-profile role by India in Eastern Europe and Central Asia. In this context, India should pursue the proposed Free Trade Agreement with the Eurasian Economic Union and seek to play a more active role in the Shanghai Cooperation Organisation as a member.
A more united and coherent European Union may well be open to re-engaging with Russia, and this should be encouraged by India. In an increasingly fluid international situation, an India which has strong relations with the U.S., Western Europe and Russia is in a unique position to play a larger geopolitical role. It can use its enhanced relations with each to upgrade its relations with the other major powers. This will also diminish Chinese pressures on India.

Defence, nuclear, energy ties

India and Russia should focus on maintaining and expanding their already considerable cooperation in the defence hardware and nuclear energy sector. Both sectors are important to Russia as well as to India.
The loss of the Indian market in these two areas would be a blow to Russia and they would deprive India of advanced technology not always accessible elsewhere.
Since the end of the Cold War, India sought to establish a strong, long-term energy partnership with Russia. While some important deals like the Sakhalin oil and gas project have been a success, the early promise of expanding cooperation in this sector has been mostly belied.
Russia has seen its interests better served by giving priority to Western Europe and China. India has been rather low on the radar.
In St. Petersburg, there was a reference to India and Russia setting up an “energy corridor” and another reference to the use of natural gas as a relatively clean and climate-friendly fuel. This must be followed up with some concrete and practical steps.

Conclusion:
Russia’s current closeness to China is tactical; its long-term interest both globally and in its neighborhood are not aligned with China. India should pursue its relations with Russia keeping this reality in mind. This 18th annual India-Russia summit appears to have been more substantive than the previous ones. The altered context has to be acknowledged by both sides and there should be an unsentimental reckoning of both the challenges and opportunities that could define India-Russia relations in the new millennium.

Connecting the dots:

This year India and Russia celebrated 70 years of diplomatic ties. Discuss how the altered global context calls for redefining India-Russia relationship.