SYNOPSIS: Insights Secure Q&A May 14, 2016
This is a new feature. As feedback from our side on your answers is missing, we thought of providing detailed synopsis of important Secure questions on daily basis so that you could revise our synopsis and compare it with your answers. We intend to post synopsis of Secure questions every next day of posting questions on website.
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General Studies – 1;
Topic: Political philosophies like communism, capitalism, socialism etc.- their forms and effect on the society
1) “The 20th century brand of socialism, following the Bolshevik victory as the prototype of socialisms, has nothing to do with socialism as envisaged by Karl Marx and Friedrich Engels.” Discuss how different is prevailing socialism from that of Marx’s socialism. (200 Words)
Differences between 20th century Bolshevik socialism and Marxian socialism:
- The Marxian socialism is based on the “associated mode of production.” The 20th century socialism is quite aptly recognised as a system of party-state
- the socialism that emerges from the works of these avowed “Marxists” turns out to be the exact opposite of the socialism which one finds in Marx’s extant texts.
- the Bolshevised socialism is a state under the absolute rule of the communist party, passing for a proletarian state, owning the means of production under the appellation of “public ownership” and employing wage labour whose products take the commodity form.
- Needless to stress, this statist socialism based on wage slavery is the exact antipode of Marx’s immensely emancipatory socialism conceived as a “union of free individuals” without private ownership of either variety – individual or collective – without state, without commodity production and without wage labour
- the idea that ownership relations determine production relations and that the juridical abolition of a specific form of capitalist ownership, that is, private individual ownership of the means of production signifies the abolition of capitalism itself
- Communism was originally envisioned by Marx and Engels as the last stages of their socialist revolution. “The meaning of the word communism shifted after 1917, when Bolshevik Party seized power in Russia. The Bolsheviks changed their name to the Communist Party and installed a single-party regime devoted to the implementation of socialist policies
- Whereas Marx saw industrialized workers rising up to take over control of their means of production, the exact opposite happened. Most countries that have gone Communist have been agrarian underdeveloped nations. The prime example is the Soviet Union. The best thing to be said about the October Revolution in 1917 is that the new government was better than the Tsars.
- Marxism became Marxist-Leninism which became Stalinism. Instead of bourgeoise who owned the means of production now it is a bureaucratized degenerated workers state that is, a state in which exploitation is controlled by a ruling caste which, while it did not own the means of production and was not a social class in its own right, accrued benefits and privileges at the expense of the working class.”
- Marxism focussed on overthrowing of capitalism but Bolsheviks concentrated on overthrowing of Tsars.
Prevailing socialism vs Marxism:
- The fundamental characteristic which separates socialism envisaged by Marx from the prevailing socialism is that Marx’s socialism, conceived as an association of free individuals, is a completely de-alienated society with no commodity, no money, no waged/salaried labour, no state, all of which are considered as instruments of exploitation and repression of a class society used to put down the immense majority of the humans.
- Modern day socialism differs from Marx’s socialism in one key parameter: ownership of resources. A wide majority of leaders and political outfits have acknowledged this as to be a utopian dream. Instead they envisage a socialist state to be a state which fulfills its basic responsibilities towards its citizens on a rights based approach
- Marx wanted stateless and classless society but we see today state is becoming more powerful with the help of caste and class division.
- Coexistence of socialistic and capitalistic societies can been seen together contrary to Marx’s prediction of complete downfall of capitalistic society.
- Identity crisis among the nations whether they are socialist,communist or what their actual ideology is .
General Studies – 2
Topic: India and its neighborhood- relations.
What should Srilanka do to prevent resurgence of political violence?
- Core grievances need to be identified and solutions to them need to be proposed via independent commissions of inquiry that included persons who were able to empathise with the concerns of insurgents, without justifying their actions.
- addressing the root causes of the ethnic conflict via meetings some of the aggrieved population’s concerns helps in ensuring security and stability.
- Understand the causes for the rise of Tamil militancy in the first place .
- institutional, administrative and legislative measures need to be taken in order to prevent any reoccurrence of such concerns in the future
- systematic attempt to address Tamil grievances
- efforts similar to The United Front’s attempt to win over the hearts and minds of Tamil youth led by Jaffna Mayor Alfred Durriapah using state patronage for job creation and economic advancement need to be done.
- Giving autonomy and providing devolution of powers to the tamil dominant region by implementation of the 13th Amendment in letter and spirit
- bring about social harmony between Sinhalese, Tamils and other religious minorities to ensure that protests motivated by religion do not hurt the nation.
- Rehabilitation and livelihood for war displaced people
- Infrastructure development in these regions.
- No coercion-the heavy handedness of the government drove many Tamil youth into the hands of the terrorist groups. This resulted in the drying up of support for the security forces
- Srilankan government needs to modify and expand its current education system use of language which was the boundary between Sinhalese and Tamils as a uniting factor for the Srilankan people.
- Promoting textile industry as textile is the largest export of the country will create employment .
What can be India’s role?
- India ‘s role can be predominantly in the development projects.
- The Indian Housing Project is a housing reconstruction project funded by the Government of India and implemented through a Memorandum of Understanding (MoU) with the Government of Sri Lanka (GOSL).
- The specific action of this project will lead to direct housing provision through the reconstruction and repair of 43,000 houses.
- UN-Habitat is responsible for supporting the reconstruction or repair of 16,800 houses in the districts of Jaffna, Killinochchi and Mullaitivu
- Lines of credit:
- In the recent past three lines of credit were extended to Sri Lanka: US$ 100 million for capital goods, consumer durables, consultancy services and food items, US$ 31 million for supply of 300,000 MT of wheat and US$ 150 million for purchase of petroleum products.
- All of these lines of credit have been fully utilized. Another line of credit of US$ 100 million is now being made available for rehabilitation of the Colombo-Matara railway.
- The projects under consideration are: Construction of a 150-bed hospital at Dickoya, upgradation of the hospital at Trincomalee and a US$ 7.5 million grant for setting up a Cancer Hospital in Colombo.
- Education Projects:
- Upgradation of the educational infrastructure of the schools in the Central province including teachers’ training, setting up of 10 computer labs, setting up of 20 e-libraries (Nenasalas), Mahatma Gandhi scholarship scheme for +2 students and setting up of a vocational training centre in Puttalam.
- India also contributes to the Ceylon Workers Education Trust that gives scholarships to the children of estate workers.
- India is also engaged in the reconstruction of the Northern Railway Line in the country’s war-ravaged north.
India in March 2016 signed an agreement with Sri Lanka to provide over USD 400 million to finance three water supply projects in the country that would benefit at least one million consumers.
Topic: Issues relating to development and management of Social Sector/Services relating to Health
Key features of draft National Health Policy 2015:-
- The policy is a first step in achieving universal health coverage by advocatinghealth as a fundamental right, whose “denial will be justiciable”.
(i) That 2.5% of the gross domestic product (GDP) as public health spending should be reached by 2020, of which 70% should be on primary healthcare.
(ii) That the per capita public spending on healthcare should be ₹3,800 at 2015 prices.
(iii) The centre would contribute 40% of the resources instead of its present 20% share and for this would raise resources through health cess and cess on health degrading goods like tobacco, alcohol, etc.
(iv) That the states would have to commit 8% of their total budget for health.
(v) That free drugs and diagnostics in all public health facilities would be available.
(vi) That all district hospitals would be converted into medical colleges.
(vii) That all healthcare facilities—infrastructure and human resources—would be as per the Indian Public Health Standards (IPHS) norms.
(viii) That financing all the above would be largely through a tax-based mechanism.
As per the draft document, government plans to rely mostly on general taxation for financing health care expenditure.With the projection of a promising economic growth, the fiscal capacity to provide this level of financing should become available.
The government is also keen to explore the creation of a health cess on the lines of education cess for raising money needed to fund the expenditure it would entail. Other than general taxation, this cess could mobilize contributions from specific commodity taxes such as the taxes on tobacco, and alcohol, from specific industries and innovative forms of resource mobilization.
While there is an intent to increase spend on health care, the draft policy also stresses on the role of private sector. While the public sector is to focus on preventive and secondary care services, the document recommends contracting out services like ambulatory care, imaging and diagnostics, tertiary care down to non-medical services such as catering and laundry to the private sector.
- even this increase in allocation falls short of the requirement to set right the dysfunctional health-care services in the country. Citing the health-care system’s low absorption capacity and inefficient utilisation of funding as an alibi for not raising the spending to 3 per cent of GDP is nothing but a specious argument. Insufficient funding over the years combined with other faulty practices have led to a dysfunctional health-care system in the country.
- The national programmes provide universal coverage only with respect to certain interventions such as maternal ailments, that account forless than 10 per cent of all mortalities.
- Over 75 per cent of the communicable diseases are outside their purview and only a limited number of non-communicable diseases are covered.
- It is, therefore, crucial for the Union government to undertake proactive measures to upgrade the health-care services of poorly performing States such as Bihar and Uttar Pradesh.
- As it stands, health will be recognised as a fundamental right through a National Health Rights Act only when three or more States “request” it. Since health is a State subject, adoption by the respective States will be voluntary.
- Though a different approach has been taken to improve adoption and implementation by States, the very objective of universal health coverage that hinges on portability will be defeated in the absence of uniform adoption across India.
- To meet the expenses, the policy draft wants to introduce a complex system that relies largely on tax collectionbut also proposes tapping the services of not-for-profit ventures and trusts.
- An assortment of secondary and tertiary services are proposed to be bought by the government from public and private healthcare facilities — though it is unclear how this differs from the present system of ’empanelled’ private hospitals.
- This system has not proved very effective for various reasons, including delayed and inadequate reimbursement of the costs.Indeed private provision and public financing is everywhere a recipe for disaster, and will serve no interests but that of private healthcare providers.
- The new policy acknowledges that the present concept of primary healthcare covers hardly 20 per cent of the health needs and that heavy out-of-pocket health expenditure is pushing nearly 63 million people into poverty every year.
- It has, consequently, done well to broaden the definition of primary healthcare to include more services related to reproductive and child health as well as several infectious and non-communicable diseases.
- But although bringing down medical expenses has been listed among the major objectives of the new policy, it has no ideas on how to do it.
- It is silent, for example, on regulating the private healthcare sector.
- Though healthcare is a state subject, most states starve it of resources.
General Studies – 3
Topic: Disaster management; Infrastructure
4) “The recent disasters such as collapse of flyover in Kolkata, Chennai floods and many such incidents indicate the steady and continuing decline of the civil engineering profession in India, and this decline has its roots in policies mandated by the Comptroller and Auditor General in regard to the procurement of consultancy services.” Examine. (200 Words)
- Instances which prove the point:
- The flyover under construction in Kolkata was presumably allowed under a design and build contract. There was no independent designer answerable to the owner, to verify the construction, and whose reputation hung on a trouble-free and successful outcome .
- The flooding that happened in Chennai might be attributed to heavy rain and the sudden opening of a dam’s floodgates. But what is inexplicable is the time it took for the water to recede. This can only be because the city’s drainage systems have been compromised, and that can only happen if those in charge of systems do not have the ordinary competence that good civil engineering demands.
- All one can blame is the decline of the profession, the ultimate root cause of which is the framework for procurement as determined, above all, by government’s audit arms .
- Ideally, given the experience their design and supervision staff had, BPT would have been ideal if the design and supervision staff had been hived off into an independently-managed consultancy firm.
- Similar is the case with the Brihan Mumbai Municipal Corporation. Even though the quality was good it could not serve a wider clientele as the area of jurisdiction was confined to the employer.
- Mixing financial bids with evaluation of merit is a sure way of ensuring that the best consultant will not be selected. In India the lowest bidder almost gets the project .
- In any case, savings in consultancy fees are often trivial in the context of the total project. Projects are awarded considering this as the prime point. Savings resulting from more efficient design, particularly at the conceptual stage, can far outweigh the total consultancy fee.
- One personal experience of a project in Bengaluru was the addition of a latecomer to the shortlist, on instructions from Delhi. This latecomer quoted a fee 1% below that of the best consultant.
- officers knew that by awarding work to the lowest the project cost would go up by 25%, but their hands were tied by audit, they had no option but to award the work to the lowest bidder.
- So the Comptroller and Auditor General (CAG)’s procedures complicated the process. It only achieved to contribute a poorer quality project at significantly higher total cost and all in the name of minimising corruption.
- The long-term consequence of this consultant selection process has been that fees have steadily drifted downwards. Consultants focus is no longer on keeping up with the latest developments, or on improving the quality of their work. The focus is on cutting costs.
- CAG – The very procedures are ignoring quality and even overall project costs, by insisting that each element be awarded to the lowest bidder, are hurting the country’s infrastructure in ways these audit officers are incapable of comprehending
- Equally culpable perhaps are the government officers who award work. They have a poor understanding of civil engineering matters because the education system in that branch has declined in step with the profession.
- Nor have they had the advantage, in their subsequent careers, of learning from high quality professionals, because the system of procurement has ensured they learn only from the poorest ones.
- But even if they know something is inadvisable, they prefer the route that will invite no audit objections. What does threaten to hurt them though is the consequence of not following stipulated procedure, for which they will almost certainly be hauled up by audit. So their focus has to be on procedure, not outcome.
What can be done?
- Learning the process from organisations like the World Bank can help as it had an excellent system of consultant selection.
- All those invited to bid were asked to submit their technical proposal and their financial bid in separate sealed envelopes.
- First, only all the technical proposals were opened.
- Selection was on merit alone, all aspects considered, usually by a committee.
- Then the financial bid of only the selected best consultant was opened.
- It was a simple way of ensuring that work was awarded to the best, or close to best consultant, evaluated on purely technical grounds, undiluted by monetary savings.
- Another simple way of selecting the best consultant would be for the client to fix the fee he wants to pay
Topic: Prevention of money laundering
In an increasingly interconnected world, national tax laws have not always kept pace with global corporations, fluid movement of capital, and the rise of the digital economy, leaving gaps and mismatches that can be exploited to generate double non-taxation. This undermines the fairness and integrity of tax systems.
Base erosion and profit sharing initiative:
- Base Erosion and Profit Shifting (BEPS) refers to tax planning strategies that exploit the above gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity, resulting in little or no overall corporate tax being paid.
- BEPS is of major significance for developing countries due to their heavy reliance on corporate income tax, particularly from multinational enterprises (MNEs).
- The BEPS project was initiated by OECD as a response to the 2008 economic crisis to create sustainable economic growth, and step up the momentum of global recovery. The idea is to strengthen “the foundations for long-term growth” and avoid policies that “promote growth at other countries’ expense”
- The BEPS plan aims to improve transparency – for business and governments – by introducing commonly agreed minimum standards for tax administration across countries. This includes alignment of taxation with the location of economic activity and value creation, reinforcing substance requirements in tax rules globally
- It has been urging governments across the globe to curb the misuse of tax havens for tax evasion and tax avoidance
Importance of BEPS for India:
- As part of G20, India has been very active in the Base Erosion and Profit Shifting (BEPS) project, working closely with the Organization for Economic Cooperation and Development (OECD)
- According to OECD estimates, BEPS measures will affect around 9,000 companies globally. In India only the very large ones will be affected by these measures.
- As BEPS recommendations come into force, tax experts say companies are going to see greater need for sharing information, leading to increased transparency in their business operations globally. Companies will have to think of what resources they need to meet country-by-country reporting requirements, and comply with enhanced transfer price rules.
- Adoption of the BEPS framework means multinationals will have to disclose their profits, number of employees and taxes paid in each country.
- Start-ups would have to think about taxation from day one. They can optimise their opportunities if they think about how they want to be structured from the very beginning
- This will give tax authorities a clear picture of the activities of an MNC in each country of operation. It will prevent these companies from shifting profits to shell companies in tax havens and boost governments’ revenues. The compliance burden of MNCs will rise.
- BEPS has perhaps inspired the government to introduce a 6% tax on ad revenues of MNCs being paid from India.
- The OECD and G20 countries including India have committed to address treaty shopping by agreeing to a minimum standard to provide a minimum level of protection against treaty shopping.
- With the signature of India Mauritius treaty the OECD BEPS initiative only gained strength.
- Disclosures and information sharing:
- The emphasis on transparency and exchange of information under the BEPS Action Plan will continue to add force to measures that are already being taken by India towards this end.
- Indian residents are required to disclose all assets and bank accounts located outside India and the recently enacted black money law prescribes stringent penalties and prosecution in relation to undisclosed foreign income and assets.
- Impact on e-commerce and outsourcing:
- the BEPS Action Plan suggests that the preparatory/auxiliary activity exemption may not apply if the foreign enterprise running the web platform has a warehouse in India and proximity to customers is integral to the business model.
- A number of measures introduced by India in the last few years have been aimed at countering BEPS. These include broad general anti-avoidance rules (“GAAR”), increased focus on economic substance, taxation of overseas transactions with underlying Indian interests, stringent disclosure norms, enhanced profit attribution to permanent establishments or via transfer pricing and other measures.
- Changes in the transfer pricing guidelines may impact outsourcing arrangements and there may be increased pressure on captive BPO and KPO entities to justify their profit margins in line with activities performed and the overall value generated.
- In light of the GAAR rules it is also important to demonstrate substance and commercial justification of any overseas holding and investment structures.
- The biggest issue with the BEPS initiative is the lack of international consensus on the limits of a country’s legitimate tax base. For instance, some of India’s views regarding taxing e-commerce transactions, services, overseas share transfers, and permanent establishments are inconsistent with global approaches and create a risk of double taxation.
- A related issue is the sheer uncertainty that is inherent in anti-avoidance rules and, at times, it is difficult to differentiate between what is permissible and what is not. The resulting litigation risks and compliance costs will have a big impact on MNC strategy and may further distort investment flows.
- The BEPS Action Plan should not be implemented in a manner that increases the risk of double taxation. India should also avoid unilateral measures that override tax treaties.
- India should also embrace international arbitration of tax disputes which several developed countries have endorsed as a best practice. It is also time for India to introduce a formal charter of taxpayer rights to provide further reassurance to investors.
Topic: Issues related to IPR
6) Recently, the union Cabinet approved the National Intellectual Property Rights (IPR) policy to foster and channelise creativity and innovation in the country. Discuss its salient features and significance. (200 Words)
- The cabinet approved the National Intellectual Property Rights (IPR) policy to foster and channelise creativity and innovation in the country.
- The IPR policy comes in the backdrop of the US Trade Representative (USTR), in its annual (2016 edition) Special 301 Report (on the global state of IPR protection and enforcement) retaining India on the ‘Priority Watch List’ for “lack of sufficient measurable improvements to its IPR framework.”
- the IPR Policy will ensure that no changes are made in the Section (which prevents ever-greening of drug patents) as well as the patent-disabling Compulsory Licensing (CL).
National Intellectual Property Rights (IPR) policy:
- It will provide the future roadmap for intellectual property in India.
- The Policy recognises the abundance of creative and innovative energies that flow in India, and the need to tap into and channelise these energies towards a better and brighter future for all.
- The National IPR Policy is a vision document that aims to create and exploit synergies between all forms of intellectual property (IP), concerned statutes and agencies.
- It sets in place an institutional mechanism for implementation, monitoring and review.
- It aims to incorporate and adapt global best practices to the Indian scenario.
- This policy shall weave in the strengths of the Government, research and development organizations, educational institutions, corporate entities including MSMEs, start-ups and other stakeholders in the creation of an innovation-conducive environment, which stimulates creativity and innovation across sectors, as also facilitates a stable, transparent and service-oriented IPR administration in the country.
The Policy lays down the following seven objectives:
- IPR Awareness: Outreach and Promotion – To create public awareness about the economic, social and cultural benefits of IPRs among all sections of society.
- Generation of IPRs – To stimulate the generation of IPRs.
- Legal and Legislative Framework – To have strong and effective IPR laws, which balance the interests of rights owners with larger public interest.
- Administration and Management – To modernize and strengthen service-oriented IPR administration.
- Commercialization of IPRs – Get value for IPRs through commercialization.
- Enforcement and Adjudication – To strengthen the enforcement and adjudicatory mechanisms for combating IPR infringements
- Human Capital Development – To strengthen and expand human resources, institutions and capacities for teaching, training, research and skill building in IPRs.
- The aim was to create awareness about the economic, social and cultural benefits of IPRs among all sections of society.
- The policy has been designed to lay stress on the need to facilitate entrepreneurship and enhance socio-economic and cultural development while also prioritising the need for better access to healthcare, food security and environmental protection.
- The Policy recognizes that India has a well-established TRIPS-compliant legislative, administrative and judicial framework to safeguard IPRs, which meets its international obligations while utilizing the flexibilities provided in the international regime to address its developmental concerns. It reiterates India’s commitment to the Doha Development Agenda and the TRIPS agreement.
- These flexibilities include the sovereign right of countries to use provisions such as Section 3(d) and CLs for ensuring the availability of essential and life-saving drugs at affordable prices.
- An all-encompassing IP Policy will promote a holistic and conducive ecosystem to catalyse the full potential of intellectual property for India’s economic growth and socio-cultural development .Such a Policy will nurture the IP culture and address all facets of the IP system including legal, administrative and enforcement infrastructure, human resources, institutional support system and international dimensions
- It lends strong words against theft and misappropriation of IP rights.
- It offers an explanation of the decisions by courts and tribunals that might be seen as detrimental to foreign interests.
- The IPR policy is driven by the agenda of IP maximalism, where IP owners’ rights will be maximised at the cost of public interest. This (policy) will influence courts and judges.
With this draft plan, India appears to show that it is evolving on IP, while continuing to present a model to other developing countries of ways to ensure the system is employed in the best interest of the country.
General Studies – 4
Topic: Moral and political attitudes;