ContextIn a bid to curb the persistently high inflation in edible oils, the government has decided to exempt crude palm, soya-bean and sunflower seed oils from customs duty, and slash the Agriculture Infrastructure and Development Cess (AIDC) levied on their imports from October 14 till March 31, 2022.
Key takeaways
Imports of crude palm, soya-bean and sunflower seed oils attract a basic customs duty of 2.5% and an AIDC of 20%.
The customs duty has been dropped to zero, while the cess has been reduced to 5% for crude soya-bean and sunflower seed oil. In the case of crude palm oil, the AIDC cess has been reduced to 7.5% instead of the original 20%.
Benefits: The decision would help in reducing price burden on ultimate consumers amid the surging edible oil prices.
What is Agriculture Infrastructure and Development Cess (AIDC)?
Agriculture Infrastructure and Development Cess (AIDC) was proposed in the Budget 2021-22.
Purpose: To raise funds to finance spending on developing agriculture infrastructure aimed at not only boosting production but also in helping conserve and process farm output efficiently.
The new cess will be levied on 29 products, prominent among which are gold, silver, imported apple, imported alcohol (excluding beer), imported pulses, imported palm oil, imported urea, and petrol/diesel including branded ones.
It will only offset the reduction in customs or excise duty and thus will not raise the tax incidence for consumers.
Do you know?
Drawing power from Articles 270 and 271 of the Constitution, the Centre collects cess and deposits it in the Consolidated Fund of India.
However, the money is then supposed to be transferred to a segregated fund to be used for specific purposes.
Part of: Prelims and GS II – International relations
Context Indian and Iranian officials held a virtual meeting following the largest seizure of heroin at the Mundra port in Gujarat managed by the Adani Ports recently.
Key takeaways
The operation led to the largest drug haul in the history of the Directorate of Revenue Intelligence (DRI).
Initial reports had indicated that the containers carrying the substance originated from the Iranian port of Bandar Abbas.
The drug haul also impacted Iran’s trade as the Adani Group declared that containers from Iran, Pakistan and Afghanistan will not be handled at the port from November 15.
Both The countries discussed and examined ways and means of mutual cooperation in fighting drug trafficking which accordingly resulted in some positive outcomes.
It is for many decades that narcotic drugs production and organised drug trafficking from Afghanistan has posed a major threat to the world.
Part of: Prelims and GS II – International Relations
Context The International Energy Agency (IEA) has invited India, the world’s third-largest energy consumer, to become its full-time member.
The proposal if accepted will require New Delhi to raise strategic oil reserves to 90 days requirement. India’s current strategic oil reserves equal 9.5 days of its requirement.
In March 2017, India became an associate member of IEA.
About IEA
It was established in the framework of the Organisation for Economic Co-operation and Development (OECD) in 1974 in the wake of the 1973 oil crisis.
IEA is an autonomous intergovernmental organisation.
Its mission is guided by four main areas of focus: energy security, economic development, environmental awareness and engagement worldwide.
Headquarters: Paris, France.
Roles and functions:
to help its members respond to major oil supply disruptions, a role it continues to fulfil today.
tracking and analyzing global key energy trends,
promoting sound energy policy,
fostering multinational energy technology cooperation.
Composition: It has 30 members at present. IEA family also includes eight association countries. A candidate country must be a member country of the OECD. But all OECD members are not IEA members.
Three countries are seeking accession to full membership: Chile, Israel, and Lithuania.
ITC is a mechanism to avoid cascading of taxes. Cascading of taxes, in simple language, is ‘tax on tax’.
Input Tax Credit refers to the tax already paid by a person at time of purchase of goods or services and which is available as deduction from tax payable .
In simple terms, input credit means at the time of paying tax on output, you can reduce the tax you have already paid on inputs and pay the balance amount.
Exceptions: A business under composition scheme cannot avail of input tax credit. ITC cannot be claimed for personal use or for goods that are exempt.
Concerns over its misuse
Currently there is a time gap between ITC claim and matching them with the taxes paid by suppliers. There could be a possibility of misuse of the provision by businesses by generating fake invoices just to claim tax credit.
As much as 80% of the total GST liability is being settled by ITC and only 20% is deposited as cash.
Under the present dispensation, there is no provision for real time matching of ITC claims with the taxes already paid by suppliers of inputs.
Part of: Mains GS-II: Effect of policies and politics of developed and developing countries on India’s interests
In News: India participated in the Ministerial session of the Green Grids Initiative-One Sun One World One Grid (GGI-OSOWOG) Northwest Europe Cooperative Event, which saw a multi-layered dialogue for developing cross-border trading of renewable electricity.
India
Affirmed its commitment to the environment and the cause of clean energy and energy transition
Highlighted India’s target of achieving 450 GW of installed renewable energy capacity by 2030
Underlined that India is well on its way to achieving its Nationally Determined Contributions (NDCs) relating clean energy and emission reduction well ahead of the target date.
Presented the GGI-OSOWOG initiative as a possible solution for driving down the need for storage and in effect reduce the costs of the energy transition.
Sustainable development and climate change mitigation are at the heart of the GGI-OSOWOG initiative, and that the scale of the project could very well make it the next biggest modern engineering marvel.
Background
The idea for the One Sun One World One Grid (OSOWOG) initiative was put forth by the Prime Minister of India Shri Narendra Modi, at the First Assembly of the International Solar Alliance (ISA) in October 2018. He had called for connecting solar energy supply across borders.
In May 2021, the United Kingdom and India agreed to combine forces of the Green Grids Initiative and the One Sun One World One Grid initiative and jointly launch GGI-OSOWOG at the COP26 summit being hosted by the UK at Glasgow in November 2021.
In News: Govt. of India launched Climate Resilience Information System and Planning (CRISP-M) tool under Mahatma Gandhi NREGA.
For integration of climate information in Geographic Information System (GIS) based watershed planning
Open up new possibilities for our rural communities to deal with the issues of climate change – to cope with climate change and protecting them from weather-related disasters.
Part of: Prelims and GS-II – Policies and Interventions
In News: In addition to marketing 56 GI products, TRIFED is working to get GI tag for the 177 potential products that have been identified from the states under operational areas across the country.
TRIFED’s GI intervention and setting up of Atmanirbhar corner in Indian Missions abroad aims at:
To safeguard the interests of the original producers as well as that of the product and ensure that the producer avails optimum cost for their premium goods even in the highly competitive market scenario.
To ensure recognition of indigenous products both in India and global market.
To revive diminishing art and craft from a Tribal specific geographical location.
Tribal Cooperative Marketing Development Federation of India (TRIFED)
A national-level apex organization, came into existence in 1987
Objective: To provide good price of the ‘Minor Forest Produce (MFP) collected by the tribes of the country.
It functions under Ministry of Tribal Affairs, Govt. of India.
TRIFED has its Head Office at New Delhi and has a network of 13 Regional Offices located at various places in the country.
Philately is considered the king of hobbies as the collectors through various philatelic items develop a better appreciation of the history, culture, personalities and of their societies. Philately documents the authentic history.
Mass Emission Standards for E12 AND E15 fuels
Part of: Prelims
In News: Ministry of Road Transport and Highways notified mass emission standards for
E 12 (12% Ethanol with Gasoline)
E15 (15% Ethanol 12 with gasoline) fuels
This will enable the Automotive Industry to manufacture E 12 and E 15 compliant motor vehicles.
100 new Sainik Schools to be set up
Part of: Prelims and GS-II – Education
Context The 100 new Sainik Schools to be set up under public-private partnership was recently approved by the Union cabinet.
Government also envisages to provide an annual fee support of 50% subject to an upper limit of Rs. 40,000 per annum, for 50% of the class strength, subject to an upper limit of 50 students per year from Class 6 to Class 12, on a merit-cum-means basis.
About Sainik schools
The Sainik Schools are a system of schools in India established and managed by the Sainik Schools Society under the Ministry of Defence (MoD).
They were conceived in 1961 by V. K. Krishna Menon, the then Defence Minister of India, to rectify the regional and class imbalance amongst the Officer cadre of the Indian Military, and to prepare students mentally and physically for entry into the National Defence Academy (NDA) and Indian Naval Academy.
(Mains Focus)
ECONOMY/ GOVERNANCE
GS-2: Infrastructure & Economy
GS-2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Context: In his Independence-day speech, the PM has announced a ₹100 lakh crore “Gati Shakti” infrastructure plan.
What is Gati Shakti Master Plan?
It is a Rs. 100 lakh-crore project for developing ‘holistic infrastructure’.
The plan is aimed at easier interconnectivity between road, rail, air and waterways to reduce travel time, improve industrial productivity and developing synergies towards building a more harmonised infrastructure.
The push for infrastructure is in line with the government’s efforts to step up capital expenditure in infrastructure to promote economic growth.
Significance
Logistics Grid: With Gati Shakti, India will be able to build an integrated, harmonised transportation and logistics grid. Such a grid will help bring down logistics & supply cost of India.
Enhances Supply Chain Efficiency: It helps build new supply-side capacities &enhances supply chain efficiencythat can set the wheels of growth in motion and move towards the ambitious mission of a $5-trillion economy
Coordinated Governance: To have all utility and infrastructure planning under an umbrella framework will ensures coordinated planning, cut down ministerial delays, and leads to faster decision making.
Attracts FDI: Having an umbrella framework under Gati Shakti provides clarity & stability to investors thereby attracting Foreign Direct investment into infrastructure sector.
Scope for New Economic Corridors: Increased investment by domestic & foreign investors for new infrastructure creations open the doors for new future economic zones
Improves Connectivity: It will ensure last-mile connectivity to economic zones in a definite timeframe.
Increased Competitiveness of exports: Supply chain inefficiencies add to product costs, and thus, run the risk of making our exports uncompetitive vis-à-vis other international export players. Dedicated infrastructure development under Gati Shakti, therefore, improves India’s infrastructure capacity and global export competitivenesswith regard to manufacturing in India.
Datafor Policy Making: The geographic information system (GIS)-enabled digital platform under Gati Shakti will provide useful data — including a region’s topography, satellite images, physical features, maps of existing facilities and so on — for ministries, thus, helping them save on funds and time for approvals.
Enhances India’s share in cargo business: India’s share in the international cargo business was worth ₹1,686 crore in 2019-20, which rose to ₹2,644 crore in 2020-21 (a 57% increase). Having a harmonised & integrated logistics hub will help increase this share.
Conclusion
Thus, Gati Shakti could pave the way for a culture of multimodality, where sea, road, rail and air transport modes do not compete with each other, but rather, complement each other.
Connecting the dots:
PM Gram Sadak Yojana
Railway Freight Corridors
Industrial Corridors
INTERNATIONAL/ ECONOMY
GS-2: Effect of policies and politics of developed and developing countries on India’s interests
Context: The is supposed to be an off season. Winter is yet to set in. But natural gas prices soared over the past few months, especially in Europe. The price of natural gas in Europe is now six times higher than what it was last year. Across the continent, natural gas inventories are falling.
What’s driving up the prices?
Supply Constraints
Global energy demand fell in 2020 when economies slipped into COVID-induced lockdowns.
When growth returned this year, especially to Asian economies, demand shot up and energy producers struggled to meet the growing demand, pushing up prices.
Even in the U.S., the world’s largest natural gas producer, prices rose from $1.7 per million British thermal units on March 31 to $6.3 per mBtu on October 5.
Europe, which is heavily dependent on imports to meet its energy demand, was particularly hit hard.
As part of Europe’s shift towards cleaner energy, many countries had moved away from coal to gas to produce electricity. This increased Europe’s reliance on gas.
On the other side, the Europe’s natural gas production has shrunk over the years, as many countries shut down production fields over environmental concerns.
If Europe’s natural gas production (excluding Russia) was about 300 billion cubic metres in 2005, it fell to less than 200 bcm in 2021. Europe’s main producer of natural gas, has seen its production shrink from 117.6 bcm in 2015 to 105.3 bcm in 2021. This has left Europe largely dependent on Russia.
Energy Geopolitics
As prices shot up amid growing worldwide demand and falling production in Europe, supplies from Russia via a pipeline that passes through Ukraine and Poland also reduced, which made the situation worse.
Russia has built another gas pipeline, Nord Stream 2, which will take Russian gas directly to Germany bypassing Ukraine and Poland (who are critical of Putin). But supplies to Europe through Nord Stream 2 are yet to start as the pipeline is awaiting approval from European authorities.
US & several countries in Europe remain critical of Nord Stream-2 pipeline, because they believe that the pipeline will enhance Russia’s leverage over Europe and would also allow Russia to economically punish Ukraine and Poland.
In the past when Europe’s energy demand shot up, Russia had stepped up supplies. However, Russian exports to Europe this year were lower than they were in 2019.
This has fuelled speculation that Mr. Putin is using the energy crunch in Europe to get approval from the EU for the Nord Stream 2 pipeline. Russia has dismissed such criticism, saying Russia has no role in the energy crunch.
What lies ahead?
The situation has calmed after Russian President Vladimir Putin assured Europe of increasing the supplies.
But Mr. Putin didn’t say how Russia was going to increase it supplies — through the existing pipeline or Nord Stream 2?
It is to be seen if additional supplies would be tied to a quick approval for the Nord Stream- 2 pipeline.
Furthermore, the Russian domestic gas market also remains tight. Inventories are running low, and winter is coming, which would shoot up demand constraining Russia’s export capacity.
And demand is rising not only in Europe and the Americas, but also in Asia. Coal shortages in India and China could drive up prices of natural gas further.
Context: Democratically ruled Taiwan has complained of stepped-up military and political pressure from Beijing to force it to accept Chinese rule.
Over the last weekend, Chinese President Xi Jinping reiterated a vow to reunify Taiwan.
This was followed by People’s Liberation Army Daily’s official newspaper in a brief report on its Weibo microblogging account, saying China’s military had carried out beach landing and assault drills in the province directly across the sea from Taiwan, though it did not link these exercises to current tensions with Taipei.
According to reports China’s air force has also carried out a series of aerial intrusions into Taiwan’s Air Defence Identification Zone recently with a record 38 aircraft on October 1, when China marked its National Day, followed by 39 on October 2, 16 on October 3 and 56 on October 4.
While Taiwan’s Defence Minister described the current tensions between the two nations as the worst in 40 years, Taiwanese President has said that her country will not be forced to bow to China.
Also, Taiwan is entirely dependent on the US for its defence against possible Chinese aggression — and that is why every spike in military tensions between China and Taiwan injects more hostility in the already strained relationship between Washington and Beijing.
Taiwan, officially known as the Republic of China (ROC) (earlier known as Formosa), is an island off the southern coast of China that has been governed independently from mainland China since 1949.
The People’s Republic of China (PRC) views the island as a province, while in Taiwan—a territory with its own democratically elected government that is home to twenty-three million people—political leaders have differing views on the island’s status and relations with the mainland.
The PRC asserts that there is only “one China” and that Taiwan is an inalienable part of it. Beijing says Taiwan is bound by an understanding reached in 1992 between representatives of the Chinese Communist Party (CCP) and the Kuomintang (KMT) political party then ruling Taiwan.
Referred to as the 1992 Consensus, it states that there is only “one China” but allows for differing interpretations, by which both Beijing and Taipei agree that Taiwan belongs to China, while the two still disagree on which entity is China’s legitimate governing body.
The tacit agreement underlying the 1992 Consensus is that Taiwan will not seek independence.
In Taiwan, the Chinese government’s objective has long been what it calls “peaceful reunification” — “reunification” even though Taiwan has never been under the jurisdiction or control of the People’s Republic of China or the Chinese Communist Party.
To achieve that goal, Beijing has for years tried to simultaneously coax and coerce Taiwan’s adhesion with both the promise of economic benefits and military threats.
Challenge for the US
President Joe Biden has so far walked a thin line between pledging support for Taiwan, and keeping the lid on tensions with Beijing.
After speaking with Xi earlier this month, he said they had agreed to abide by the “Taiwan Agreement”, under which US support for the “One China Policy” is premised on Beijing not invading Taiwan.
The AUKUS pact among the US, UK, and Australia, under which Australia will be supplied with nuclear submarines, has imparted a new dimension to the security dynamics of the Indo-Pacific. Taiwan has welcomed the pact, while China has denounced it as seriously undermining regional peace.
Implications for India
India should review its One China Policy — it should use the Tibet card, and develop more robust relations with Taiwan to send a message to Beijing.
India and Taiwan currently maintain “trade and cultural exchange” offices in each other’s capitals. In May 2020, the swearing-in of Tsai was attended virtually by BJP MPs Meenakshi Lekhi (now MoS External Affairs) and Rahul Kaswan. In 2016, New Delhi had dropped plans to send two representatives for Tsai’s first inaugural at the last minute.
Talks with Taipei are ongoing to bring a $7.5-billion semiconductor or chip manufacturing plant to India. Chips are used in a range of devices from computers to 5G smartphones, to electric cars and medical equipment (the need to build a “safe supply chain for semiconductors”).
Can you answer the following question?
What is the reason for the long-running tensions between Beijing and Taipei? What implications does it have for the Indo-Pacific region and for India?
(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.
Q.1 Bandar Abbas, recently seen in news, is located inWhich of the following countries?
Afghanistan
Iran
Iraq
Bangladesh
Q.2 consider the following statements regarding International Energy Agency (IEA):
It was established in the framework of the Organisation for Economic Co-operation and Development (OECD) in 1974 in the wake of the 1973 oil crisis.
It works under United Nations Security Council
India is its full-time member
Which of the above is or are correct
1 and 2 only
1 only
2 and 3 only
1, 2 and 3
Q.3 Agriculture Infrastructure and Development Cess (AIDC) is not levied on which of the following?
Imported apple
Imported beer
Imported pulses
Imported palm oil
ANSWERS FOR 13th Oct 2021 TEST YOUR KNOWLEDGE (TYK)
