Syllabus

• Prelims & Mains – Current Event , Mobilisation of resources

Context: The chairman of Indian Overseas Congress, Sam Pitroda’s comments on the inheritance tax, have raised the spectre of wealth redistribution, almost four decades after the very same Congress party under Prime Minister Rajiv Gandhi had abolished it.

Background:-

• India did have an inheritance (or death) tax once. The tax, which was known as estate duty, was introduced in 1953, and was abolished in 1985 by the government of Rajiv Gandhi.
• India also had a wealth tax and a gift tax, which were abolished in 2015 and 1998 respectively.

Ways to tax wealth

• Taxes are levied on the flow of income on wealth or at the time of transfer of wealth or on the stock of wealth linked to the value of owned assets as a one-time levy.
• There can be a capital levy on income from wealth or ownership of assets resulting in capital gains, transfer taxes in the form of wealth tax, inheritance tax, estate tax, or gift tax at the time of transfer of wealth or assets.
• Taxes can also be levied on a combination of income and wealth.Biden Administration (USA) has proposed legislation for a ‘Billionaire Minimum Income Tax’ of at least 25% on their full income, including unrealised gains.

The taxes in India

• The now abolished estate duty was inheritance tax with a threshold of Rs 1 lakh, and progressive rates from 5% to 40% on the principal value of the estate exceeding Rs 20 lakh. The Estate Duty Act, 1953 was amended in 1958 to change the definition of accountable person, lower the applicable threshold, and redefine slabs.
• Even after its abolition, the idea of inheritance tax remained alive and was part of official and unofficial discussions.
• In December 2018, then Finance Minister Arun Jaitley said at a public event that hospitals, universities, and other institutions in developed countries receive large endowments due to factors like inheritance tax, but this practice is not prevalent in India.
• The Narendra Modi government announced the abolition of wealth tax and its replacement with a surcharge on the super rich in the Budget for 2015-16. Jaitley said while wealth tax was 1% on assets of Rs 30 lakh and above (excluding equities, bonds, and first house), the total wealth collection in 2013-14 was only Rs 1,008 crore. An additional surcharge of 2% was levied on individuals with taxable income of Rs 1 crore and above, which was expected to bring revenues of Rs 9,000 crore.
• Wealthy taxpayers are seen as being sensitive to high rates of taxation, which often results in flight of capital and investment to tax havens or tax jurisdictions with favourable tax rates.
• Also, high tax rates do not make sense if the cost of collection and administration of these taxes are high compared to the revenues that arise.
• In the initial years of estate duty, collections were lower than the budgeted estimates. The high cost of collection and double taxation in various forms of wealth tax were cited as reasons for abolishing estate duty.
• In his Budget speech of 1985-86, then Finance Minister V P Singh said the existence of two separate laws for tax on property — wealth tax before death and estate duty after death — amounted to “procedural harassment” of taxpayers. “While the yield from estate duty is only about Rs 20 crore, its cost of administration is relatively high. I, therefore, propose to abolish the levy of estate duty in respect of estates passing on deaths occurring on or after 16th March, 1985,” Singh said.
• The issue with wealth tax was the same. “Should a tax which leads to high cost of collection and a low yield be continued or should it be replaced with a low cost and higher yield tax? The rich and wealthy must pay more tax than the less affluent ones. I have therefore decided to abolish the wealth tax and replace it with an additional surcharge of 2% on the super rich with a taxable income of over Rs 1 crore,” Arun Jaitley said in his Budget speech for 2015-16.
• The gift tax was abolished in 1998 citing lower revenues. Gift tax was, however, revived in a different form later.
• In his Budget speech in July 2004, then Finance Minister P Chidambaram said there was a need to plug a loophole to prevent money laundering. Thus, purported gifts from unrelated persons above the threshold of Rs 25,000 (later raised to Rs 50,000), were decided to be taxed as income. Gifts from blood relations, lineal ascendants and descendants, and gifts on occasions like marriage continued to be exempt.

Source: Indian Express

Syllabus

• Prelims & Mains – Rights

Context: Participation of women in the workforce is a constitutional entitlement and denying mothers child care leave violates this, the Supreme Court said Monday.

Background:

• A bench of Chief Justice of India D Y Chandrachud and J B Pardiwala was hearing a plea by an assistant professor in the Government College, Nalagarh, who was denied childcare leave (CCL) to attend to her child suffering from a genetic condition.

Key Takeaways:

• Women government employees are eligible for two years of childcare leave (CCL) for two children till they reach the age of 18 years.
• The judgment highlighted that Article 15 of the Constitution not only restricts discrimination based on gender but also enables the states to make special provisions for women.
• In a country where care is perceived as the responsibility of women, the verdict makes it clear that the state and the employer have responsibilities to enable women to join and retain their employment.
• In India, women have little choice but to single-handedly manage the triple burden of housework, care work and paid work.
• Working women often face “marriage penalties” and “motherhood penalties” as they are often temporarily forced to withdraw from the workforce due to marriage and pregnancy. It is no surprise that the female workforce participation in India is barely 37 per cent.
• The Constitution enables the state to make special provisions for women and children.
• The sectoral labour laws that were repealed recently after the introduction of four Labour Codes mandated childcare services on worksites and paid maternity leaves for a section of workers at construction sites, beedi, cigar and other factories, plantations and migrants. These laws mandated crèches on worksites that had a stipulated number of women on the work site.
• The provision went through a transformation under the Labour Code on Social Protection, 2020, where crèches were made a gender-neutral entitlement. It is a significant step in the right direction. The gender-neutral provision underlined care as a “parental” responsibility.
• Care needs to be seen as a collective responsibility of the state, employers, and communities.
• Labour markets need to consider women as primary earners and enable them to take up full employment. There is evidence of high female labour force participation in countries where unpaid care work responsibilities are equally shared.

Additional information

• As per PLFS 2022, 60 per cent women are self-employed and 53 per cent of the self-employed women work as unpaid family helpers. These are intertwined outcomes of lack of opportunities in the labour market and opting for flexible employment near or at home to balance both.
• A decrease in women’s unpaid care work is related to a 10-percentage point increase in women’s labour force participation rate. The IMF has predicted a possible alleviation of 27 per cent in India’s GDP through an equal participation of women in the labour force participation.

Source: Indian Express

Syllabus

• Prelims – Environment

Context: South African delegation recently visited the Gandhi Sagar Wildlife Sanctuary in Madhya Pradesh to assess its readiness for the release of five to eight cheetahs later this year.

Background:

• This visit is part of the planning for Project Cheetah, which aims to reintroduce cheetahs into the sanctuary. The focus is on breeding and favourable weather conditions.

About Gandhi Sagar Wildlife Sanctuary

• The Gandhi Sagar Wildlife Sanctuary is situated on the northern boundary of Mandsaur and Nimach districts in Madhya Pradesh.
• It shares its border with the state of Rajasthan.
• Much of the sanctuary consists of vast open landscapes with sparse vegetation and rocky terrain, interspersed with small patches of dense forests.
• The Chambal River flows through the sanctuary, dividing it into two parts.
• The forest of this sanctuary is part of Khathiar-Gir dry deciduous forest thus here we will find trees like Salai, Kardhai, Dhawda, Tendu, Palash etc.
• The sanctuary is home to various wildlife species.Some of the easily sighted animals include chinkara (Indian gazelle), Nilgai, and sambar.
• Additionally, the Indian leopard, langur, Indian wild dog, peacock, otter, and Mugger crocodile inhabit the region.
• World famous Chaturbhuj Nala rock shelters are also part of the same Gandhi Sagar wildlife sanctuary.
• Gandhi Sagar Wildlife Sanctuary in Madhya Pradesh, India, is being prepared as a second home for cheetahs as part of the Cheetah Reintroduction Project.
• The Kuno National Park in Madhya Pradesh has been chosen as the first home for the reintroduction of cheetahs.

Source: Times of India

Syllabus

• Prelims – Geography & Environment

Context: The drying of the wetlands in Assam’s Majuli island is having a profound impact on both the local ecology and the livelihoods of its residents.

Background:

• Wetlands play a crucial role in maintaining ecological balance, supporting biodiversity, and preserving the livelihoods of local communities.

About Majuli Island:

• Majuli is a river island located on the Brahmaputra River in Assam, India.
• It is recognized as the world’s largest river island by the Guinness World Records, covering an area of 352 sq km.
• The island was formed due to frequent earthquakes and a catastrophic flood in 1750.
• Majuli is home to various tribal groups including Mising, Deoris, Ahoms, and Sonowal Kacharis.
• The island is known for the Ali Aye Ligang festival celebrated by the Mishing tribe and is an ancient site of Assamese neo-Vaishnavite monasteries, with around 22 Satras.
• Majuli faces serious ecological threats due to soil erosion and changing climatic conditions, which affect agriculture and livelihoods.
• Majuli has been nominated for the World Heritage Site status and is included in the tentative list by UNESCO.
• In 2016, Majuli became the first island to be made a district in India.

Factors Contributing to the Drying Up of Majuli Island

• Embankments: The construction of embankments along the Brahmaputra River has disrupted the natural flow of water. These embankments prevent floodwaters from reaching the wetlands, leading to reduced water levels and drying up of the island’s beels (wetlands).
• Lack of Natural Floodwater Circulation: The embankments have also hindered the natural circulation of floodwaters within Majuli. As a result, stagnant water accumulates in the wetlands, affecting their health and vitality.
• Expansion of Agriculture and Infrastructure: Agricultural expansion and infrastructure development have encroached upon wetland areas. Land reclamation for agriculture and construction reduces the available space for wetlands, impacting their size and functionality.
• Erosion: Majuli faces severe erosion due to the Brahmaputra’s powerful currents. The erosion displaces soil and silt, which then choke the water bodies, further contributing to their drying up.
• Climate Change: The changing climate in the region exacerbates the situation. Unpredictable rainfall patterns and increased summer temperatures affect water availability, impacting the wetlands.

Source: Scroll

Syllabus

• Prelims – Science

Context: Researchers from Kerala have reported a series of cases where the regular use of fairness creams has been linked to nephrotic syndrome.

Background:

• These creams, often marketed for skin lightening or brightening, may contain harmful ingredients, including high levels of mercury.

About NEPHROTIC SYNDROME :

• Nephrotic syndrome is a kidney disorder characterized by excessive protein excretion in the urine.
• Recently, a link has been found between fairness creams and kidney problems, specifically membranous nephropathy (MN), which damages kidney filters and causes protein leakage.

Fairness Creams and Mercury:

• Some fairness creams contain high levels of mercury, which can be detrimental to the kidneys.
• Mercury is absorbed through the skin, leading to damage in kidney filters.
• The presence of mercury in these creams has been associated with the development of membranous nephropathy.

Symptoms of Nephrotic Syndrome:

• Severe Swelling (Edema) especially around the eyes, ankles, and feet.
• Foamy urine due to excess protein.
• Weight gain caused by fluid retention.
• Fatigue and loss of appetite.

Underlying Cause:

• Nephrotic syndrome usually occurs due to damage to the tiny blood vessels (glomeruli) in the kidneys.
• These glomeruli filter blood, separating essential substances from waste.
• Damage to glomeruli allows too much blood protein (mainly albumin) to seep into the urine, leading to nephrotic syndrome.

Source: Hindu

Syllabus

• Prelims & Mains – Economy

Context: The Reserve Bank of India (RBI) has permitted the lending and borrowing of G-Securities (G-Secs) by issuing directions called RBI (Government Securities Lending) Directions, 2023.

Background:

• This move comes even as India is set to be included in the globally tracked JP Morgan’s Government Bond Index-Emerging Markets (GBI-EM) index, starting June 28, 2024.

G-Securities (G-Secs):

• It is a tradeable instrument issued by central or state governments. It acknowledges the government’s debt obligation.
• Such securities are short-term terms usually called Treasury bills (T- Bills) with maturities of less than one year (91 days, 182 days, or 364 days) or long-term called Government bonds or dated securities with maturity of one year or more (between 5 years and 40 years).
• In India, central government issues both T bills and bonds or dated securities while State Governments issue only bonds or dated securities, which are called State Development Loans (SDLs).
• G-Secs carry practically no risk of default and, hence, are called risk-free gilt-edged instruments.
• Other G-Sec includes Cash Management Bills (CMBs), introduced in 2010, a new short-term instrument to meet temporary cash flow mismatches of the government. CMBs have the generic character of T-bills but are issued for maturities of less than 91 days.
• G-Secs are issued through auctions conducted by RBI. Auctions are conducted on the electronic platform called the E-Kuber, the Core Banking Solution (CBS) platform of RBI.

Concerns associated with G-Securities (G-Secs):

• A diversified investor base for fixed-income securities is important for ensuring high liquidity and stable demand in the market. However, currently, a large portion of G-Secs are held by captive investors such as banks, and insurance companies.
• RBI’s Negotiated Dealing System Order Matching (NDS-OM) platform was not able to boost retail participation as it resulted in an artificial segmentation of investors in different securities.
• Inflows of foreign funds via government bonds can lead to rupee appreciation.
• The G-sec market lacks liquidity due to the non-availability of buyers for the security in the secondary market. It can lead to distressed sales (selling at a lower price than its holding cost) causing loss to sellers.

Major risks associated with holding G-Secs:

• Market risk arises out of adverse movement of prices of the securities due to changes in interest rates. This could lead to loss if securities are sold at adverse prices.
• Cash flows on a G-Sec include a coupon every half year and repayment of principal at maturity, which needs to be reinvested. However, it poses a risk for investors as they may not be able to reinvest due to a decrease in prevailing interest rates.
• Dated securities have a long-term maturity of 5-40 years, and thus are exposed to interest rate risk, reducing their relevance over longer tenure.

Way Forward:

• Unifying the G-Sec and corporate bond markets would enable the seamless transmission of pricing information from G-Secs to corporate bonds. Having the same regulatory regime for trade, clearance, and settlement of corporate bonds and G-Secs will result in economies of scale and scope, leading to greater competition, efficiency, and liquidity in markets.
• To facilitate greater investor participation and achieve ease of doing business, G-Secs should be issued and traded through the stock exchange mechanism.
• The government should issue G-Secs in demat so that demat holders (currently, more than 120 million and expanding) can easily invest in G-Secs. G-Sec-based exchange-traded funds should also be developed to increase retail participation.
• Fiscal Responsibility and Budget Management (FRBM) legislation should highlight a fiscal path to investors highlighting the steps to reducing government debt in a transparent and accountable manner to boost investors’ confidence.
• Providing tax incentives in the form of no tax to be paid on interest income generated from the G-Sec can boost the demand for the G-sec in the market.

Source: Hindu Businessline

Q1.) With reference to the Nephrotic syndrome, consider the following statements:

1. Nephrotic syndrome is a liver disorder.
2. It is characterized by excessive protein excretion in the urine.
3. Regular use of fairness creams containing high levels of mercury is leading to nephrotic syndrome.

How many of the statements given above are correct?

1. Only one
2. Only two
3. Only three
4. None

Q2.) Consider the following:

1. The construction of embankments along the Brahmaputra River.
2. Lack of natural floodwater circulation.
3. Agricultural expansion and infrastructure development.
4. The changing climate in the region.

How many of the above are the possible reasons for the recent drying of the wetlands in Assam’s Majuli island?

1. Only one
2. Only two
3. Only three
4. All four

Q3.) With reference to the Gandhi Sagar Wildlife Sanctuary, consider the following statements:

1. The Gandhi Sagar Wildlife Sanctuary is situated in Madhya Pradesh.
2. The Chambal River flows through the sanctuary.
3. Gandhi Sagar Wildlife Sanctuary is an ideal location for the reintroduction of cheetahs.

How many of the statements given above are correct?

1. Only one
2. Only two
3. All three
4. None

Comment the answers to the above questions in the comment section below!!

ANSWERS FOR ’  27th April  2024 – Daily Practice MCQs’ will be updated along with tomorrow’s Daily Current Affairs.st

Q.1) – b

Q.2) – b

Q.3) – c