Insights Static Quiz -80, 2018
Polity and Rights issues
INSIGHTS IAS QUIZ ON STATIC SYLLABUS - 2018
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Question 1 of 5
1. Question
Which of the following can be taxed by Central government
- A State Public Sector Enterprise
- Land of a municipal body
- Land of Gram Panchayat
Select the right code
Correct
Answer – d
- The property and income of a state is exempted from Central taxation. Such income may be derived from sovereign functions or commercial functions.
- But the Centre can tax the commercial operations of a state if Parliament so provides. However, the Parliament can declare any particular trade or business as incidental to the ordinary functions of the government and it would then not be taxable.
- Notably, the property and income of local authorities situated within a state are not exempted from the Central taxation.
- Similarly, the property or income of corporations and companies owned by a state can be taxed by the Centre.
Source – Chapter 14, Laxmikanth
GS 2 – Functions and responsibilities of centre and states
Incorrect
Answer – d
- The property and income of a state is exempted from Central taxation. Such income may be derived from sovereign functions or commercial functions.
- But the Centre can tax the commercial operations of a state if Parliament so provides. However, the Parliament can declare any particular trade or business as incidental to the ordinary functions of the government and it would then not be taxable.
- Notably, the property and income of local authorities situated within a state are not exempted from the Central taxation.
- Similarly, the property or income of corporations and companies owned by a state can be taxed by the Centre.
Source – Chapter 14, Laxmikanth
GS 2 – Functions and responsibilities of centre and states
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Question 2 of 5
2. Question
At the state level
- Share of direct tax is more than indirect tax
- Land tax is collected, while building tax is devolved to local levels
Which of the above is/are correct
Correct
Answer – b
- At the second tier, all countries are broadly comparable in their reliance on devolved resources, but India stands out as a country where the second tier (states) generate a very low share of its revenue from direct taxes: about 6 percent in India compared to 19 percent in Brazil in 2016 and a hefty 44 percent in Germany
- The property taxes collected at the second and third tiers of government are (a) land tax
assessed and collected at the state level; and (b) building tax, including property/house tax, collected at the municipality (ULG) and grama panchayat (RLG) levels
Source – Chapter 4, Economic Survey 1
GS 2 – Functions and responsibilities of the States
- How states failed in expanding their direct tax base – suggests low level of industrial development ( as direct tax from agriculture is not taken)
- Implications for inclusive growth as well due to reliance on indirect taxes – dominant groups remain dominant therefore – anti-thetical to social democracy
Incorrect
Answer – b
- At the second tier, all countries are broadly comparable in their reliance on devolved resources, but India stands out as a country where the second tier (states) generate a very low share of its revenue from direct taxes: about 6 percent in India compared to 19 percent in Brazil in 2016 and a hefty 44 percent in Germany
- The property taxes collected at the second and third tiers of government are (a) land tax
assessed and collected at the state level; and (b) building tax, including property/house tax, collected at the municipality (ULG) and grama panchayat (RLG) levels
Source – Chapter 4, Economic Survey 1
GS 2 – Functions and responsibilities of the States
- How states failed in expanding their direct tax base – suggests low level of industrial development ( as direct tax from agriculture is not taken)
- Implications for inclusive growth as well due to reliance on indirect taxes – dominant groups remain dominant therefore – anti-thetical to social democracy
-
Question 3 of 5
3. Question
With respect to regulation of charity organisations, consider the following
- It falls under the domain of state governments
- There exists a three member Charity Commission to look after such issues
Which of the above is/are correct
Correct
Answer – a
- 2nd ARC recommended that the union government should draft a comprehensive model legislation covering both Trusts and Societies in lieu of the existing laws on Societies, Trusts, Endowments and Charitable Institutions for the states which regulates charity
- 2nd ARC has also recommended that In place of the present charity administration consisting of a Charity Commissioner / Inspector General of
Registrations as existing in the States, the proposed law should provide for a new governance structure in the form of a three member Charities Commission in each State with necessary support staff for incorporation, regulation and development of Charitable Organisations.
Source – Government report on 2ND ARC Social Capital – A Shared Destiny available on DIRP website
GS 2 – Development processes and the development industry the role of NGOs, SHGs, various groups and associations, donors, charities, institutional and other stakeholders
- Administration of charities, their role and issues
Notes
- We do not recommend that one should necessarily read 2nd ARC from the above source, rather the intention is to integrate your prelims preparation with mains. The above source will however help you know the response from the government and the reasoning behind its rejection of certain recommendations. It is also crisp and is good one if you are lethargic to read 2nd ARC reports.
- Having said this, also appreciate that there is no definite break between current and static portions, and therefore UPSC can ask questions in different forms. Take for example the question on National Food Security Act in prelims this year. It was not majorly in news last year and UPSC still went ahead and delved into its details. The point is that some report of the government including 2nd ARC covers such provisions and their administration in details.
Incorrect
Answer – a
- 2nd ARC recommended that the union government should draft a comprehensive model legislation covering both Trusts and Societies in lieu of the existing laws on Societies, Trusts, Endowments and Charitable Institutions for the states which regulates charity
- 2nd ARC has also recommended that In place of the present charity administration consisting of a Charity Commissioner / Inspector General of
Registrations as existing in the States, the proposed law should provide for a new governance structure in the form of a three member Charities Commission in each State with necessary support staff for incorporation, regulation and development of Charitable Organisations.
Source – Government report on 2ND ARC Social Capital – A Shared Destiny available on DIRP website
GS 2 – Development processes and the development industry the role of NGOs, SHGs, various groups and associations, donors, charities, institutional and other stakeholders
- Administration of charities, their role and issues
Notes
- We do not recommend that one should necessarily read 2nd ARC from the above source, rather the intention is to integrate your prelims preparation with mains. The above source will however help you know the response from the government and the reasoning behind its rejection of certain recommendations. It is also crisp and is good one if you are lethargic to read 2nd ARC reports.
- Having said this, also appreciate that there is no definite break between current and static portions, and therefore UPSC can ask questions in different forms. Take for example the question on National Food Security Act in prelims this year. It was not majorly in news last year and UPSC still went ahead and delved into its details. The point is that some report of the government including 2nd ARC covers such provisions and their administration in details.
-
Question 4 of 5
4. Question
Consider the following statements about micro-credit financing
- Projects by SHGs in urban areas are also refinanced by NABARD, besides those in rural ones
- SHG movement is weak in North Eastern states of the country
Which of the above is/are correct
Correct
Answer – b
- SHG movement needs to be extended to urban and semi-urban areas. State Governments, NABARD and commercial Banks should join together to prepare a directory of activities and financial products relevant to such areas. Currently, the commercial Banks, on the basis of a project‟s financial viability can disburse microcredit in urban and semi urban areas on their own but such micro credit disbursements are not entitled to refinance from NABARD. 2nd ARC recommends that if necessary, the NABARD Act, 1981 may be amended suitably to bring urban / semi-urban areas under its refinance mandate.
- 2nd ARC recommends that since a large number of rural households in the North-Eastern States and Central Eastern parts of the country (Bihar, Jharkhand, Uttar Pradesh, Uttarakhand, Orissa, Madhya Pradesh, Chhattisgarh and Rajasthan) do not have adequate access to formal sources of credit, a major thrust on the expansion of the SHG movement in these areas should be facilitated. The presence of NABARD should be much more pronounced in these places.
Source – Government report on 2ND ARC Social Capital – A Shared Destiny available on DIRP website
GS 2 – Development processes and the development industry the role of NGOs, SHGs, various groups and associations, donors, charities, institutional and other stakeholders
- Why extension of SHG movement in urban areas ( growing urbanisation) and untouched regions of the country is a necessity
- Policy seeks to tap entrepreneurial spirit of the demographic dividend, and SHGs are critical to address the issue of finance constraint for the same, albeit at group level
Incorrect
Answer – b
- SHG movement needs to be extended to urban and semi-urban areas. State Governments, NABARD and commercial Banks should join together to prepare a directory of activities and financial products relevant to such areas. Currently, the commercial Banks, on the basis of a project‟s financial viability can disburse microcredit in urban and semi urban areas on their own but such micro credit disbursements are not entitled to refinance from NABARD. 2nd ARC recommends that if necessary, the NABARD Act, 1981 may be amended suitably to bring urban / semi-urban areas under its refinance mandate.
- 2nd ARC recommends that since a large number of rural households in the North-Eastern States and Central Eastern parts of the country (Bihar, Jharkhand, Uttar Pradesh, Uttarakhand, Orissa, Madhya Pradesh, Chhattisgarh and Rajasthan) do not have adequate access to formal sources of credit, a major thrust on the expansion of the SHG movement in these areas should be facilitated. The presence of NABARD should be much more pronounced in these places.
Source – Government report on 2ND ARC Social Capital – A Shared Destiny available on DIRP website
GS 2 – Development processes and the development industry the role of NGOs, SHGs, various groups and associations, donors, charities, institutional and other stakeholders
- Why extension of SHG movement in urban areas ( growing urbanisation) and untouched regions of the country is a necessity
- Policy seeks to tap entrepreneurial spirit of the demographic dividend, and SHGs are critical to address the issue of finance constraint for the same, albeit at group level
-
Question 5 of 5
5. Question
With respect to financial relations between centre and states, consider the following
- During the period of emergency, Parliament can change the distribution of revenues from the centre to states
- Presider can issue directions to states to observe certain financial proprietary during financial emergency
Which of the above is/are correct
Correct
Answer – d
- While the proclamation of national emergency (under Article 352) is in operation, the president can modify the constitutional distribution of revenues between the Centre and the states. This means that the president can either reduce or cancel the transfer of finances (both tax sharing and grants-in-aid) from the Centre to the states. Such modification continues till the end of the financial year in which the emergency ceases to operate
- While the proclamation of financial emergency (under Article 360) is in operation, the Centre can give directions to the states: (i) to observe the specified canons of financial propriety; (ii) to reduce the salaries and allowances of all class of persons serving in the state (including the high court judges); and (iii) to reserve all money bills and other financial bills for the consideration of the President.
Source – Chapter 14, Laxmikant
GS 2 – Issues and challenges pertaining to federal structure
- The role of Parliament and President in the two types of emergencies describes the nature of these two institutions in the federal structure. Ponder over the question as to why they enjoy different powers in different situations in the context of federalism.
Incorrect
Answer – d
- While the proclamation of national emergency (under Article 352) is in operation, the president can modify the constitutional distribution of revenues between the Centre and the states. This means that the president can either reduce or cancel the transfer of finances (both tax sharing and grants-in-aid) from the Centre to the states. Such modification continues till the end of the financial year in which the emergency ceases to operate
- While the proclamation of financial emergency (under Article 360) is in operation, the Centre can give directions to the states: (i) to observe the specified canons of financial propriety; (ii) to reduce the salaries and allowances of all class of persons serving in the state (including the high court judges); and (iii) to reserve all money bills and other financial bills for the consideration of the President.
Source – Chapter 14, Laxmikant
GS 2 – Issues and challenges pertaining to federal structure
- The role of Parliament and President in the two types of emergencies describes the nature of these two institutions in the federal structure. Ponder over the question as to why they enjoy different powers in different situations in the context of federalism.
