Insights Daily Current Events, 22 January 2016
Paper 1 Topic: poverty and developmental issues.
Rich must open their wallets more to remove inequalities: Piketty
Thomas Piketty, author of the best-selling book ‘Capital in the Twenty-First Century,’ that transformed the understanding of the history of wealth and its distribution, recently visited India.
- He was in Delhi to deliver a lecture on Inequality and Capitalism.
He made the following suggestions to reduce inequalities in India:
- For India to meet its huge challenges of inequalities, the elite in the country would have to start paying more taxes.
- The current tax-to-GDP ratio in India is in between 10% and 11%. This is insufficient for meeting India’s huge challenges of inequalities. The aim should be to evolve the ratio toward the 30% to 50% levels now seen in the U.S. and some of the West European countries. For this to happen, the Indian elite will have to behave more responsibly than the western elite did in the 20th
Compared with China:
Mr. Thomas observed that Communist China has fared better than India at collecting taxes from the elite. This is evident from the stark difference in the public spending between the two countries. The public health system in India has a budget of less than 1% of GDP as compared with almost 3% in China. The Chinese Communist Party has been much more successful than the democratic and parliamentary Indian elites in mobilising resources to finance social investment and public services.
His findings:
Mr. Piketty’s documentation of the evolution of income and wealth over the past 300 years in the rich countries shows that from about 1914 to the 1970s there was an historical outlier in which both income inequality and the stock of wealth (relative to GDP) fell dramatically.
- This was on account of the political shocks and because of an increase in tax rates in the rich countries in response to the world wars.
- But, after 1970s both wealth and income gaps started rising toward their pre-20th-century norms. Between 1980 and 2007, 70% of the addition to gross domestic product, especially in the rich countries, went to the top 10% of the “elite” population. In contrast, the per capita incomes rose just about 1.5% a year.
Indian scenario:
Income and wealth concentration in India today is probably very high by international and historical standards. It is probably close to Brazil and South Africa (top 10% income share = 50-60% of total income) than to U.S. (top income share = 45-50% of total income) or Europe (top 10% income share = 30-35 %).
Why so?
One of the factors that explain this concentration of wealth is that inherited wealth and invested capital — in the stock market, in real estate — will grow faster than income.
Way ahead:
Inequality needs not just economic but also social and political strategies. In India, the preferential admission policies of caste-based quota and reservation systems in education in the long-run should be gradually transformed into rules founded on universal social criteria such as parental income or place of residence.
He also cites the absence of data. Since there is no sufficient data, it is not possible to show the evolution of wealth in India. The data is needed to limit the concentration of wealth, fight corruption and assess the efficacy of India’s tax policy choices.
sources: the hindu.
Paper 3 Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Ninety seven per cent of retail transactions still cash-based, says USAID report
As per a new report by the United States Agency for International Development, an overwhelming 97% of retail transactions in India are still cash-based and only 29% of bank accounts have been used in the last three months.
Significance of these findings:
The report’s findings assume significance in the backdrop of the government’s stated commitment to promote a cashless economy and switch all government transactions to electronic payments by the end of 2016.
What else the report says?
- Only 29% of bank accounts in India have been used in the last three months. The use of electronic payment methods, such as debit cards and mobile wallets, is even lower.
- The government has proposed several incentives for electronic payments such as tax-breaks for the payee and the payer, but hasn’t moved ahead with implementing them so far.
- The report recommends several steps the government can take to incentivise electronic payments both on the consumer side as well as from the merchant’s point of view.
- The report notes that, currently, the greatest barrier to a digital economy is the everyday behaviour of consumers and merchants. They are very much used to a cash-based economy.
- Another recommendation involves the government implementing digital payments for mass transport, in much the same way as private taxi services like Ola and Uber accept payments from digital wallets.
- The report also recommends that the government implement tax incentives for consumers who transact electronically and also for banks to develop flexible and convenient micro-savings products for low-income consumers, since it found that those who save digitally are more likely to spend digitally.
- On the up-front cost issue, the report encourages banks and payment players to consider removing upfront fees and device installation charges and move towards pay-per-use models.
The report notes that the cashless economy would also curb the flow of black money in the country.
sources: the hindu.
Paper 3 Topic: infrastructure- railways.
400 railway stations to get airport-like facilities
The Ministry of Railways is planning to provide airport-like facilities such as separate entry and exit points, connectivity with local transportation, pick up or drop off points and access to Internet at 400 stations across the country.
- In this regard, the Ministry has identified 15 key parameters on which the 400 railway stations will be redeveloped with world-class facilities. For this purpose, the government has planned to invite bids from private developers by March-end.
How different these stations will be?
- The stations will have separate arrival and departure terminals, easy connectivity with local transportation such as bus or metro and will be accessible from both sides of the city.
- Parcel movement across the platforms will be restricted and facilities such as food courts, retail outlets and medical facilities will be provided at the railway stations.
- Helipads near railway stations may also be built.
- Traffic circulation around these stations will also be taken care of.
Swiss model:
The government plans to adopt the ‘Swiss Challenge’ mode to invite bids for redeveloping the stations.
How Swiss model operates?
- First, the government will invite developers to submit their master plans.
- After evaluating the proposals, the selected design will be uploaded over the Ministry of Railways website.
- Financial bids will be invited and the developer quoting the highest upfront premium to be paid to the government will win the bid.
- However, the project developer, who had originally submitted the plan, will be given an opportunity to match the bid amount.
The government will also ensure that the developer has prior experience in the field of passenger transportation such as railway stations, airports or ports or construction experience in the core sector.
Who is responsible for the redevelopment of these stations?
The railway stations will be built on ‘design, build, finance, operate and transfer’ model and the developer will meet the entire cost of redevelopment by commercial development of land and air space in and around station which will be leased for a period of 45 years. Also, the onus of securing approvals such as environment clearance, heritage clearance, archaeological clearance and others will be on the developers.
Way ahead:
- It will take around six-eight months to complete the entire bidding process. The proposals will first be examined by standing committees formed by the Ministry of Railways followed by a committee of experts.
- Many big private developers such as the GMR Group, Tata Realty, Larsen & Tourbo and realty developers body Confederation of Real Estate Developers’ Association of India (CREDAI) have shown interest in developing the railway stations.
sources: the hindu.
Paper 2 Topic: statutory bodies.
New CBDT chairman
Senior Indian Revenue Service official Atulesh Jindal has been appointed the Chairman of the Central Board of Direct Taxes (CBDT), India’s apex tax body.
- The appointment was cleared by the Appointments Committee of the Cabinet (ACC).
About CBDT:
The Central Board of Direct Taxes is a statutory authority functioning under the Central Board of Revenue Act, 1963. The officials of the Board in their ex-officio capacity also function as a Division of the Ministry of Finance dealing with matters relating to levy and collection of direct taxes.
What it does?
- It provides essential inputs for policy and planning of direct taxes in India and is also responsible for administration of the direct tax laws through Income Tax Department.
- It is India’s official Financial Action Task Force unit.
Composition:
The CBDT Chairman and Members of CBDT are selected from Indian Revenue Service (IRS), a premier civil service of India, whose members constitute the top management of Income Tax Department.
Background:
- The Central Board of Revenue as the Department apex body charged with the administration of taxes came into existence as a result of the Central Board of Revenue Act, 1924.
- Initially the Board was in charge of both direct and indirect taxes. However, when the administration of taxes became too unwieldy for one Board to handle, the Board was split up into two, namely the Central Board of Direct Taxes and Central Board of Excise and Customs in 1964.
sources: the hindu.
Paper 3 Topic: Infrastructure-energy.
International Solar Alliance set to be operational in 6 months
The centre has clarified that the International Solar Alliance (ISA) will be operational by the middle of 2016.
- Modi and French President François Hollande would lay the foundation stone of the alliance at the National Institute of Solar Energy in Gurgaon, Haryana on January 25.
About ISA:
The initiative was announced by Prime Minister, Narendra Modi, at the Conference of Parties in (COP 21) in Paris last November. The headquarters of this alliance will be located in India.
- This will be the first time that India will have the headquarters of an international agency.
- The government of India will host the ISA’s Secretariat for five years, following which it is expected to generate its own resources and become truly independent.
Main objectives:
- One of the objectives of the alliance is to get $1 trillion investments in the solar sector worldwide by 2030.
- Another objective is to get solar sector-specific human resources development in all member countries and ensure that any research and development in a country becomes available to all.
Members:
It comprises of countries with land between the Tropic of Capricorn and the Tropic of Cancer which typically have 300 or more days of sunshine a year. It is expected to have 121 members.
What about other countries?
Countries, other than tropic countries, can join as partners.
Finance:
India has already offered Rs. 100 crore for an ISA corpus, which is expected to grow to $1 billion when all the member countries contribute.
Way ahead:
Following the signing of the statute, each member country will have to send the document to their Cabinets or Parliaments for ratification within three months. The International Solar Alliance will become a legal entity after a minimum of 25 countries ratify it.
sources: the hindu.
Paper 2 Topic: Welfare schemes for vulnerable sections of the population by the Centre and States.
‘Giriputrika Kalyana Pathakam’ launched
At a time when infant mortality and child marriages are rampant among tribal people, the Andhra Pradesh State government has come out with a novel scheme to support the tribal women in their quest for livelihood. The scheme is named- Giriputrika Kalyana Pathakam.
About the scheme:
‘Giriputrika Kalyana Pathakam’ is a scheme designed to provide a onetime financial assistance of Rs.50,000 to each tribal woman who gets married.
- The amount would be disbursed through District Tribal Welfare Office directly to the bank accounts of the beneficiary.
- Each beneficiary would have to fulfil some mandatory conditions like submission of marriage certificate, income certificate etc to avail benefits of the scheme.
- The scheme is envisaged to provide nutritional food to infants till the age of seven years.
sources: the hindu.
Paper 2 Topic: neighbourhood relations.
Pakistan’s nuke warheads aimed at deterring India: U.S. report
A latest US Congressional (CSR) report has warned that Pakistan’s nuclear warheads which are estimated to be between 110-130 are aimed at deterring India from taking military action against it.
- CRS is the independent research wing of the U.S. Congress, which prepares periodic reports by eminent experts on a wide range of issues so as to help lawmakers take informed decisions. Reports of CRS are not considered as an official view of the U.S. Congress.
Highlights of the report:
- The report also expressed concern that Islamabad’s “full spectrum deterrence” doctrine has increased risk of nuclear conflict between India and Pak- the two South Asian neighbours.
- The report notes that Pakistan’s nuclear arsenal probably consists of approximately 110-130 nuclear warheads, although it could have more. Pak is also producing fissile material, adding to related production facilities, deploying additional nuclear weapons, and new types of delivery vehicles.
- According to the report, Pakistan’s nuclear arsenal is widely regarded as designed to dissuade India from taking military action against it, but the expansion of its nuclear arsenal, development of new types of nuclear weapons and adoption of a doctrine called “full spectrum deterrence” have led some observers to express concern about an increased risk of nuclear conflict between Pakistan and India, which also continues to expand its nuclear arsenal.
However, Pakistani officials argue that since the 2004 revelations about a procurement network run by former Pakistani nuclear official A.Q. Khan Islamabad has taken a number of steps to improve its nuclear security and to prevent further proliferation of nuclear-related technologies and materials.
What is Full Spectrum Deterrence?
Pakistan’s Full Spectrum Deterrence gives it a flexibility to deal with conventional threats through tactical nuclear weapons like Nasr. It is a ‘qualitative’ response to new war fighting concepts of ‘Cold Start’ and Pro Active Operations (PAO). Full spectrum offers a range of options to the decision-makers.
What this policy does?
Full Spectrum Doctrine effectively changes Pakistan’s Nuclear Policy; it no longer waits for nuclear attack to counter with nuclear weapons; it will deter conventional force by employing nuclear deterrence. The greater the conventional threat, lower would be the threshold to employ nuclear deterrence.
sources: the hindu.
Paper 3 Topic: biodiversity.
New thrush species found in eastern Himalayas
An International team of scientists have found a new species of the thrush in northeastern India and adjacent parts of China. The bird is named Himalayan Forest Thrush.
About the species:
The bird’s scientific name will be Zoothera salimalii. The bird has been named after Dr. Salim Ali in recognition of his huge contribution to the development of modern Indian ornithology and wildlife conservation. This is the first Indian bird to be named after late Dr. Salim Ali.
- This bird species is common in the eastern Himalaya range but was overlooked till now because of its similarity in appearance to the plain-backed thrush, now renamed as Alpine thrush.
- The Himalayan Forest Thrush is only the fourth new bird species described from India by modern ornithologists since Independence.
- It has short wings and legs, but longer bills. The species is distinguished by its musical song.
sources: the hindu.
Paper 2 Topic: appointment to constitutional posts.
Collegium moves to fill vacancies in High Courts
The Supreme Court Collegium has made the first move to fill vacancies in various High Courts across the country by recommending transfer and elevation of judges.
Significance of this move:
- After enactment of the National Judicial Appointments Commission law in early 2015, filling of the vacancies was stalled. There are over 400 vacancies in various high courts across the country.
- The recommendation is the first major step taken by Chief Justice of India T.S. Thakur to fill judicial posts in the High Courts during 2016, a year he said was dedicated to clearing pending cases.
The President is expected to make the appointments in a few days.
Background:
For fresh appointments, a Constitution Bench, led by Justice J.S. Khehar, has asked the Centre to come out with a fresh Memorandum of Procedure in consultation with the CJI. Law Minister Sadananda Gowda has written to the Chief Ministers and the Chief Justices of the High Courts to send suggestions to improve the Collegium system.
Collegium system:
Under the Collegium system, the Chief Justice of India would consult the four senior most judges of the Supreme Court for Supreme Court appointments and two senior-most judges for high court appointments.
sources: the hindu.
Paper1 Topic: Role of women and women’s organization, population and associated issues, poverty and developmental issues, urbanization, their problems and their remedies.
Rural India too battles hypertension
Higher stress levels in rural India and faulty diet in cities have thrown up two most disturbing health concerns in the National Family Health Survey (NFHS), the data for which was released recently.
Highlights:
- According to the data, while obesity levels have shot up in the country since the last NFHS survey in 2005-06, the number of people suffering from hypertension in rural India is, in many cases, higher than in urban parts.
- The data is for 15 States and each State, with the exception of Puducherry, showed a sharp rise in obesity levels among both men and women.
- The data show that among women, obesity levels shot up from 13.92% in 2005-06 to 19.56% in 2015-16. For men, the rise from the last decade has been from 10.35 per cent to 18.04 per cent.
Data on various states:
- In Andhra Pradesh, where over 10,000 households were surveyed, 45.6% of the total women surveyed in urban areas were found to be overweight — the highest in the country. Obesity among rural women in AP was found to be 27.6%, which may not appear alarming, but is still high compared to other rural parts.
- Rural Bihar recorded the fewest number of women suffering from obesity among the 15 States, but more women in rural parts here were found to have hypertension compared to urban parts of Bihar — a trend seen in other parts of the country as well.
- In Andaman and Nicobar, more men and women in rural parts were found to be suffering from hypertension than in urban centres. This trend was found in Meghalaya too.
- As for blood sugar levels, most States have maintained the traditional difference between urban and rural areas, with urban centres recording more cases of high blood sugar. The few exceptions have been recorded in Goa where the number of women in rural areas with high blood sugar was more than in urban Goa. The same trend was mapped in Puducherry.
- In Tripura and also in Haryana, more men in rural areas had high blood sugar than men in urban parts.
What these figures indicate?
Health experts said the overall obesity in urban India and rising hypertension in rural India was indicative of the faulty diet of people and also of the stress levels of women in rural India.
Why high stress level?
High stress levels in rural areas are rooted in income, agriculture and high cost of healthcare.
sources: the hindu.
Paper 2 Topic: Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.
India may cease to be ‘pharmacy of the world’
With patients grappling with increasing drug prices, the government has expressed concern that India will no more be the “pharmacy of the world” if generic companies “gave up” the fight for access to affordable drugs.
What is the main concern now?
The concern now is regarding the Voluntary Licence (VL) agreements signed between 11 Indian generic drug makers and Gilead Science to bring the blockbuster Hepatitis C drug Sovaldi (salt name sofosbuvir ) to Indian markets.
Why this is a cause for concern?
It is because under the VL agreement on Sovaldi, Indian made generic versions of the drug could not be exported to 50 middle-income, high burden countries, or any high income nations including much of Western Europe, and the U.S.
- According to an analysis, over 49 million Hepatitis C patients live in middle income countries excluded under the VL’s anti-diversion programme.
- But it is part of a company’s business strategy, and the government cannot have a policy dictating what a company’s business strategy should be.
- As part of the VL, the Indian companies pay a royalty to the innovator company (Gilead, in this case) and are allowed make copy-cat versions of blockbuster drug.
Way ahead:
India is increasingly now reliant on imported expensive medicines. Today generic manufacturers face major constraints to produce and supply generic versions of new patented medicines and hence it is time for the Indian government to once again step up and respond to the crisis in the industry.
Benefits of voluntary licensing:
Voluntary licensing to a local partner under mutually agreed terms will not only help drug makers expand the market but also avoid compulsory licensing action.
- While government intervention will lead to a drastic reduction in price as it’s typically without the consent of the patent owner, voluntary licensing will still ensure the companies make a profit, albeit at a lower price.
- By granting a voluntary licence to local partners in different markets, the patent owners make sure that the drugs are sold at a price that is at least one-third of the original price.
Sources: The Hindu.
