IAS UPSC Prelims and Mains Exam – 24th March 2020

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(PRELIMS + MAINS FOCUS)

Finance bill passed in Lok Sabha

Part of: GS Prelims and GS-II and III – Polity and Economy

In News:

• The Lok Sabha was adjourned sine die after the passage of the Finance Bill, 2020 without any debate due to the situation arising out of the COVID-19 pandemic. 

Do you know?

• Finance Bill is introduced in the Lok Sabha immediately after the presentation of the annual budget, as directed by Article 110 (a) of the Constitution of India.
• This Bill encompasses all amendments required in various laws pertaining to tax, in accordance with the tax proposals made in the Union Budget.

Key takeaways:

• The government created room to raise the excise duty on petrol and diesel by as much as ₹8.
• India won’t tax non-resident Indians for domestic income of up to Rs. 15 lakh.
• The Finance Bill also proposed a more progressive personal income tax rate for people who do not avail of any tax incentives.
• The Finance Bill also widens the ambit of the “equalisation levy” introduced in 2016 on payments made to non-resident service providers for online advertisements or digital advertising space or facilities.
• This is expanded to include supply of services including online sale of goods, services or both by e-commerce operators.

Important Value Additions 

Financial Bills

• A Bill that contains some provisions related to taxation and expenditure, and additionally contains provisions related to any other matter is called a Financial Bill. Article 117 of Constitution deals with Financial bills.

Adjournment sine die 

• It means without assigning a day for a further meeting or hearing for an indefinite period. 

Equalisation Levy 

• It is a direct tax, which is withheld at the time of payment by the service recipient.

RBI advances second portion of OMO

Part of: GS Prelims and GS-III – Economy

In News:

• The Reserve Bank of India (RBI) has advanced its liquidity infusion plan by purchasing government bonds.
• The RBI has announced open market operations (OMOs) of Rs. 30,000 crore in March 2020.

Value Addition 

About Open market operations (OMOs)

• Open market operations are the sale and purchase of government securities and treasury bills by RBI or the central bank of the country.
• The objective of OMO is to regulate the money supply in the economy.
• When the RBI wants to increase the money supply in the economy, it purchases the government securities from the market and it sells government securities to suck out liquidity from the system.

• RBI carries out the OMO through commercial banks.

The Institute of Teaching and Research in Ayurveda Bill, 2020

Part of: GS Prelims and GS-II – Polity

In News:

• The Institute of Teaching and Research in Ayurveda was recently passed in the parliament.

Key takeaways:

• It shall be declared as an Institution of national importance for the promotion of quality and excellence in education, research and training in Ayurveda.

• The Bill states that the objectives of the Institute will be to: 

• develop patterns of teaching in medical education in Ayurveda and pharmacy.
• bring together educational facilities for training of personnel in all branches of Ayurveda.
• attain self-sufficiency in postgraduate education to meet the need for specialists and medical teachers in Ayurveda.
• to make an in-depth study and research in the field of Ayurveda.

Indian Institutes of Information Technology Laws (Amendment) Bill

Part of: GS Prelims and GS-II – Polity

In News:

• It was initiated by Human Resource and Development Ministry. 
• It declared five IIITs as institutes of national importance.

Key takeaways:

• The Government has decided to include five more institutes which have been subsequently established as societies.
• These are to be established at Bhagalpur (Bihar), Surat (Gujarat), Raichur (Karnataka), Bhopal (Madhya Pradesh) and Agartala (Tripura).

The Medical Termination of Pregnancy (Amendment) Bill, 2020

Part of: GS Prelims and GS-II – Polity

In News:

• The Medical Termination of Pregnancy (Amendment) Bill, 2020 was recently passed in the parliament.

Key takeaways:

• It provides for requirement of opinion of one registered medical practitioner for termination of pregnancy up to 20 weeks of gestation.
• Opinion of two registered medical practitioners is required for termination of pregnancy of 20 to 24 weeks of gestation.
• The provisions relating to the length of pregnancy shall not apply in cases where the termination of pregnancy is necessitated by the diagnosis of any of the substantial foetal abnormalities diagnosed by a Medical Board.
• Privacy of a woman, whose pregnancy has been terminated, must be protected.

Yakshagana

Part of: GS-Prelims and Mains GS-I- Art and Culture

In News: 

• Over 900 Yakshagana scripts are digitised through voluntary community efforts.

About Yakshagana

• Yakshagana is a traditional theatre form of Karnataka.
• It combines dance, music, dialogue, costume, make-up, and stage techniques with a unique style and form. 
• It is performed with massive headgears, elaborate facial make-up and vibrant costumes and ornaments.
• It is performed with percussion instruments like chenda, maddalam, jagatta or chengila (cymbals) and chakratala or elathalam (small cymbals). 
• Yakshagana is traditionally presented from dusk to dawn.
• It is believed to have evolved from pre-classical music and theatre during the period of the Bhakti movement
• Earlier days, the Yakshagana theatre was known as Bhagavatara attar, which revolved round the stories of Lord Krishna and Vishnu

World Tuberculosis Day

Part of: GS-Prelims and Mains GS-II- Health

• It is observed every year on 24th March, to commemorate the anniversary discovery of the TB bacteria by Dr. Robert Koch in 1882.

• Objective: To build public awareness about the global epidemic of tuberculosis (TB).

• UN has marked 2030 as a global target to eliminate TB worldwide
• National Strategic Plan for Tuberculosis Elimination (2017-2025) by Union Ministry of Health & Family Welfare aims to eliminate the prevalence of TB by 2025

Prelims Value Addition

• Nikshay Poshan Yojana (NPY) is a direct benefit transfer (DBT) scheme for nutritional support to TB patients rolled out in April 2018 by Ministry of Health and Family Welfare.

• Under the Yojana, financial incentive of Rs.500/month is to be provided for each notified TB patient (registered on NIKSHAY portal) for duration during which the patient is on anti-TB treatment.
• NPY is a Centrally Sponsored Scheme under National Health Mission

• ‘TB Harega Desh Jeetega’ Campaign was launched in Sep 2019 consisting of three pillars – clinical approach, public health component and active community participation – as a part of strategy to eliminate TB by 2025

(MAINS FOCUS)

INDIAN ECONOMY/GOVERNANCE

Topic: General Studies 2 and 3:

• Statutory, regulatory and various quasi-judicial bodies.
• Indian Economy and related issues 

The promotion of competition is vital to Indian Economy

Context: Draft Competition (Amendment) Bill, 2020 proposed by the government

Competition Act, 2002, which replaced “The Monopolies and Restrictive Trade Practices Act of 1969, provided for the establishment of a Competition Commission so as

• To prevent practices having adverse effect on competition
• To promote and sustain competition in markets
• To protect the interests of consumers and 
• To ensure freedom of trade carried on by other participants in markets

Key institutional challenges that competition authorities around the world face are:

• Preserving their independence, which is considered necessary to perform core policymaking functions

• Diagnosing problems of competition accurately and fixing them 

• Displaying legitimacy and effectiveness in the face of public doubts about the value of fair markets 
• The quality of public administration

In  Oct 2018, Competition Law Review Committee (CLRC) headed by Injeti Srinivas was set up by Ministry of Corporate Affairs, to comprehensively review the Competition Act and suggest substantive and procedural amendments for a robust competition regime.

Majority of the recommendation of the committee was accepted in the draft amendment bill. Some of the key features of the Bill are:

1. Change in the regulatory structure of the CCI

• CCI had been wearing many hats since its inception. It had been vested with adjudicatory, advisory, investigative, quasi-legislative, and advocacy functions
• The bill proposes an overarching governing board that would have general superintendence, direction and management powers over the CCI. 
• The Governing Board will consist of 13 members including
  • A Chairperson
  • Six whole-time members
  • Two government representatives (from the Ministries of Finance and Corporate Affairs) as ex-officio members
  • Four part-time members appointed by the government
• The rationale for such a composition of Board: 
  • To enable better coordination between the CCI and the government, 
  • Enable expert external assistance to the commission in undertaking key functions, 
  • Have structural consistency with other regulators like SEBI & RBI

Criticism of the Board:

• Members of the commission together effectively act as its board even without the explicit nomenclature.
• There is no such precedent anywhere in the world. 
• Given that ex-officio and part-time members of the governing board will be appointed by the government, unnecessary state intervention in its functioning is expected

2. Definition of a cartel:

• Presently, the Competition Act defines cartels as an association of producers, sellers, or service providers who limit or control the production, distribution or price of goods and services. 
• The Draft Bill amends this definition of cartels to include buyer cartels. 

3. New thresholds for merger control: 

• The Bill empowers the CCI and Central Government to define new thresholds (other than those based on turnover or value of assets) for merger notifications.
• It will now enable the CCI to make sector specific thresholds based on deal value or size of transaction or any other criterion
• This provision is in furtherance of the CLRC’s recommendation to capture transactions in the digital market.

Concerns with this provision:

• Given the dynamic nature of the digital markets, application of this power requires exercise of caution. 
• This may result in increasing compliance costs for businesses and impact the ease of doing business.
• The sector specific thresholds should be backed with proper data & logic and needs to be put out in the public domain

4. The regime of settlements and commitments:

• The Bill introduces a system for settlements and commitments permitting the CCI to close the investigation on basis of such an application by the investigated party.
• Such an application will have to be made after the Director General (appointed for inquiries under the Act) has submitted the investigation report to the CCI and before the CCI has passed the final order.

5. CCI will now issue guidelines on imposition of penalty 

• Earlier penalty system was left to the discretion of CCI member and was ambiguous in its character.
• The new guidelines which will be released by CCI will ensure more transparency and faster decision making that encourages compliance by businesses.

However, there were additional provisions, suggested by the CLRC, that has been left out in the draft bill

• Introducing a dedicated bench in NCLAT for hearing appeals under the Competition Act. This would have greatly assisted in faster disposal of competition cases.
• Greater emphasis on awareness generation and capacity creation to foster competition. 

• A national competition policy that could help fix policy-induced market distortions which hampers fair rivalry in the market

Conclusion

• The CCI is engaged in assessing many policies and laws on competition principles, but for the desired outcomes to materialize, the exercise needs the backing of government policy.

Connecting the dots:

• IPR Policy and India
• Emergence of Duopolies in Online marketplace & Telecom sector – Impact on market Competition

HEALTH/GOVERNANCE

Topic: General Studies 2:

• Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
• Health issues 

COVID-19: A pandemic, an economic blow and the big fix

Context: Impending economic crisis due to COVID-19 pandemic

India is lagging when compared to other countries in announcing economic package:

• US has announced a trillion-dollar economic recovery package.
• U.K. announced biggest economic recovery package in its history, as an antidote to the crisis with no fixed cost to it. 
• Germany too announced ‘unlimited government financing’ for the disruptions due to the outbreak
• France, Spain, Italy and the Netherlands have all launched a half-a-trillion dollars combined in recovery measures.

Impending Crisis in Indian Economy:

• One-third of all restaurants could shut down in the formal sector alone and shed more than 20 lakh jobs, in the coming months. 

• Entire automotive sector is in the danger of complete halt, putting at risk the incomes of a million people employed in this sector.

• Banking Crisis: When businesses close down, they default on their commercial obligations to their financiers which leads to increase in Bank NPAs

• Vicious Cycle: Rising NPAs will further freeze up credit flow to the businesses further leading to halting of production. This leads to job losses and drying up of incomes and decreased demand in the economy pulling into recession.

• No Scope for recovery in exports because this is now a global crisis and the condition is similar in other countries as well

India thus needs a comprehensive recovery package that will first cushion the shock and then help the economy recover. Some of the key suggestions are:

1. COVID-19 Economic Recovery Package for India

Government should soon announce an economic package which is based on four pillar:

• Providing a safety net for the affected – Through a direct cash transfer of ₹3,000 a month, for six months, to the 12 crore, bottom half of all Indian households. This will cost nearly ₹2.2-lakh crore

• Addressing disruptions in the real economy – Especially the provision of essential services and announcing sector specific packages ex: Textiles, Construction, Automobiles, MSMEs.
• Unclogging the impending liquidity squeeze in the financial system – Nudging the RBI to announce easy monetary Policy. RBI needs to set up a credit guarantee fund for distressed borrowers for credit rollover and deferred loan obligation.

• Incentivising the external sector of trade and commerce – through reduced export taxes and forging better trade treaties with other nations, especially in the neighbourhood

2. Reforming the Right to Work framework

• MGNREGA to be expanded and retooled into a public works programme, to build hospitals, clinics, rural roads and other infrastructure. 
• One possible way is by integrating MGNREGA with the Pradhan Mantri Gram Sadak Yojana and the roads and bridges programme. 
• These three programmes together have a budget of nearly ₹1.5 lakh crore. 
• This must be doubled to ₹3 lakh crore so as to serve as a true ‘Right to Work’ scheme for every Indian.

3. Provision of Foodgrains

• The Food Corporation of India is currently overflowing with excess rice, wheat and unmilled paddy stocks 
• This excess stock can be used to provide 10kg rice and wheat to every Indian family, free of cost, through the Public Distribution System.

4. Expansion of COVID testing Infrastructure:

• COVID-19 testing, treatment, medical equipment and supplies capacity to be expanded through the private sector and be reimbursed directly for patient care
• This will need a budget of ₹1.5- lakh crore 
• This will help create a large number of jobs in the private health-care sector, with trickle-down benefits.

In sum, the total incremental expenditure for the recovery package will be between ₹5-lakh crore to ₹6-lakh crore for FY2021.

The package can be funded largely thorough three sources — 

• Reallocation of some of the budgeted capital expenditure, 
• Expenditure rationalisation
• Utilizing the oil bonanza.

Conclusion

It is time for India to think big, bold and radical to pull the economy out of this crisis. 

Connecting the dots:

• Universal Basic Income – pros & cons

(TEST YOUR KNOWLEDGE)

Model questions: (You can now post your answers in comment section)

Note: 

• Correct answers of today’s questions will be provided in next day’s DNA section. Kindly refer to it and update your answers. 

• Comments Up-voted by IASbaba are also the “correct answers”.

Q 1. Consider the following statements

1. The Finance Bill is introduced in the Lok Sabha immediately after the presentation of the annual budget, as directed by Article 110 (a) of the Constitution of India.
2. Since the introduction of GST, there is no amendment to indirect taxes in the Union Budget as that is under the purview of the GST Council.

Which of the statement(s) given above is/are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Q 2. Yakshagana is associated with which State of India?

1. Karnataka
2. Kerala
3. Tamil Nadu
4. Telangana

Q 3. Consider the following statements about Nikshay Poshan Abhiyan

1. It is a direct benefit transfer (DBT) scheme for nutritional support to TB patients
2. It is a Central Sector Scheme by Ministry of Health & Family Welfare

Which of the statement(s) given above is/are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Q 4. Consider the following statements:

1. Open market operations (OMO) are the sale and purchase of government securities.
2. OMO is carried out by RBI through public directly.

Which of the above is/are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

ANSWERS FOR 23 March 2020 TEST YOUR KNOWLEDGE (TYK)

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