• Discussion on econmic , ethical and Legal dimensions of corruption

    11/30/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

     Economic:
    Corruption leads to tax evasion and avoidance which dislodge fiscal deficit from its targets. This hurts the welfare centric approach of government. Corruption also affects GDP growth, employment opportunities and foreign investments.
    Ethical:
    With materialistic values as topmost priority, moral and ethical values at the lowest span of ladder, every fibre of society indulged in-self aggrandizement, where not only credibility of politicians and bureaucrats but also of the judiciary is at stake, it is ridiculous to dream of a corruption-free society.
    Corruption is regarded as a low risk and highly profitable way of making a quick buck and whoever is caught, often knows how to go scot-free. The country which is known for moral and ethical values, where truism is adored, fair means were advocated to achieve anything, has now accounted among the most thirty nations of the world.
    A peculiar face of corruption on our Country is that it goes upstream not downstream. So most of the fundamental policies and decisions about big purchases, contracts, projects, etc are distorted at the top level. The delay in disposing of the cases of corruption is one of the most important causes of flourishing of corruption. Corrupt officials even if caught can manage to go scot-free in due course of time by manipulations or otherwise.
    The youth of the society has a very important role in fighting the gigantic wild animal of corruption. General awakening can make the politicians and bureaucrats use their discretion carefully. The common men must cast their vote on the basis of values and character of the candidates. To eradicate corruption from the society, all have to fight it. It is the most powerful and the most dangerous monstrous evil, which rises to manifold itself stronger with the passage of time
    Political:
    Nature of politics is mainly responsible force for the corruption. Political corruption is the abuse of public power, office, or resources by elected government officials for personal gain, by extortion, soliciting or offering bribes.
    There is a need to reform current anti-corruption laws along with strengthening ethical standards and focussing on economic growth of the country.

  • Discuss euthanasia and its ethical dimensions.

    11/26/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

    Euthanasia is the termination of a very sick person's life in order to relieve them of their suffering. A person who undergoes euthanasia usually has an incurable condition

    At the global scenario , less than a dozen countries in the world currently have legal provisions for euthanasia.
    India is one of them via the Supreme Court’s 2011 verdict in the Aruna Shanbaug case. There, it rejected the euthanasia petition filed by journalist Pinki Virani but established the legal framework for allowing passive euthanasia (as opposed to active euthanasia, which would entail the doctor administering drugs to end the patient’s life).

    Government has proposed Medical Treatment of Terminally-Ill Patients (Protection of Patients and Medical Practitioners) Bill which seeks to codify and regulate this framework.

    There are two perspectives on the issue. The first is the legal. The state has an understandable interest in maintaining its monopoly on the right to—in crude terms—end a citizen’s life. This is foundational to its legitimacy and authority. There are other practical concerns as well. Euthanasia is difficult to regulate and laws allowing it can be vulnerable to malicious intent. At the very least, moral pressure could be exerted on the terminally ill to choose this option.
    Yet, these concerns do not outweigh the individual’s inalienable right to choose how to conduct their private life when that conduct does not cause harm to other individuals or the state. This is particularly so when a patient has no hope of recovery and is suffering greatly, or is in a vegetative state and kept alive by medical apparatus. For the state to insist for its own benefit that the patient continue to spend financial and physical resources in order to continue suffering is perverse.

    There is also a broader ethical and theological perspective. India’s Constitution draws upon Western liberal ideals and the constitutions wherein they are enshrined.
    A direct line can be drawn back from those ideals to the philosophy of Enlightenment thinkers such as Immanuel Kant, whose formulations of universally applicable laws and humanity as an end in itself would argue against euthanasia.
    The line goes further back to Thomas Aquinas, priest, philosopher, theologian and one of the founding figures of modern jurisprudence with his formulation of natural law. The sanctity of life inherent in his philosophy would argue against euthanasia as well.

    In relation to the case Nikhil Soni vs Union of India in 2015, Indian philosophical and theological traditions across various strands of thought—from Jainism to Buddhism and Hinduism—have a more nuanced understanding of an individual’s right to decide on their life and the ethical considerations therein. That understanding dovetails here with the evolution of democratic thought and the limits of state power.

  • What are the security problems of India with special reference to Jammu and Kashmir?

    11/26/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

    After the death of Burhan Wani there is a series of violent protests in the Kashmir Valley. This led to the direct Indo-Pakistan confrontation both on domestic and international front.

    Pakistan is a pseudo democracy with multiple power centres. India has done its best to resolve its differences with Pakistan. Till now India has followed a policy of strategic restraint, but after regime change in India in 2014, there is clear shift from defensive to offensive defence in Indian Policy.

    There is possibilty of invisble hand which is/are infleuncing Pakistani policy and exists both internally and externally.

    After so many years ,India has not been able to win over the trust of Jammu and kashmir people. There is need to change Indian government stance towards kashmiri people.

    There is also a need to further strenghten our cyber security, border management, inclusive development in insurgency hit areas.  

  • BIMSTEC can be a better alternative of the south Asian economy than SAARC. Critically examine.

    11/25/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

    For too long, India had conflated its regionalism with SAARC that was established three decades ago at the initiative of Bangladesh. While Delhi and Islamabad were both wary of the move in the mid-1980s, it was the inward economic orientation of the Subcontinent that limited possibilities for regional cooperation. As the Subcontinent launched economic reforms in the 1990s, regional integration appeared a natural consequence waiting to happen. As the South Asian states opened up to the world, it seemed sensible to connect with each other. But that was not how it turned out.
    India, on its part, inched towards accepting regionalism as an economic and political necessity. The SAARC, in turn, began to emphasise trade liberalisation, regional connectivity and trans-border economic projects. South Asia sought to evolve, much in the manner that the Association of South East Asian Nations had stitched itself together two decades earlier.
    As SAARC developed new proposals and agreements in favour of preferential trade, free trade, road and rail connectivity and cross-border energy projects, it became clear that Pakistan was the camel that slowed down the pace of the South Asian caravan. More accurately, it was the Pakistan Army headquartered in Rawalpindi that exercised the veto..
    Indian government is now eager to re-energise the BIMSTEC forum. As part of that commitment, it had invited the BIMSTEC leaders to join the BRICS leaders at the Goa summit .
    The turn to the east, however, does not resolve India’s Pakistan problem in promoting economic cooperation with Afghanistan. Rawalpindi is dead set against letting Indian goods move overland to Afghanistan, despite fervent appeals from Kabul and an occasional entreaty from Washington. With no physical access to Afghanistan, Delhi needs to find creative ways to deepen bilateral economic engagement with Kabul bilaterally and through trilateral cooperation with other partners like Tehran.
    Pakistan is free to choose its partners. It has consciously embraced China as the strategic economic partner; Rawalpindi believes that restoring historic economic connectivity with India is a threat to Pakistan. India can’t compel Pakistan to join the project of South Asian integration. Instead of bemoaning that fact, Delhi must devote itself to bilateral, sub-regional and trans-regional cooperation with our neighbours, all of whom except Pakistan want India to do more.
     

  • International communities have failed Syrian people. Critically examine

    11/25/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

    For the past five years, the world has watched in horror as humanitarian and human rights law have been broken again and again in Syria. Chemical weapons, indiscriminate bombing against civilians, the targeting of civilian infrastructures - such as hospitals and schools - the detention, torture and forced disappearance of thousands of political dissenters, the sexual trafficking of young women, and illegal sieges that cut civilians off from basic necessities such as food, water and electricity.
    In these five years, more than 200,000 people have been killed, an overwhelming majority of whom were killed by Syrian government forces loyal to Bashar al-Assad. And this figure is a conservative estimate because the UN stopped counting the death toll in early 2014.
    Why it is happening
    In short, it's been allowed to happen because the World Order, as organised under the UN system, is not primarily concerned with people. It is a global system organised on the principle that the interests of states, not people, are paramount.
    This is not to say that there aren't a lot of good people working to push human rights and humanitarian interests forward on the international level. It just means that these few good men and women are significantly disadvantaged in how they are able to conduct their work.
    The UN Office of the High Commissioner for Human Rights cannot hold any state accountable for even the most egregious human rights violations. It can only comment on them.
    Security Council, which has only 15 members, five of which are permanent and hold a veto, wields an inordinately disproportionate amount of power. This includes the power to authorise the use of force, refer prosecutions to the International Criminal Court, impose sanctions, and create binding resolutions to which all member states must adhere.
    This has had dire consequences for adherence to human rights and humanitarian law in conflict zones, particularly where a conflict zone is of interest to a Security Council Member. In the context of Syria, Russian interests have resulted in block after block of any action that seeks to hold the Assad regime accountable, or to establish effective protection and accountability mechanisms - such as a no-fly zone or referrals to the International Criminal Court - or to ensure peace talks that start with a level playing field for the opposition.
    India and Syria:
    There is a historical relationship between India and Syria since their independence. India and Syria enjoy friendly political relations based on historic and civilizational ties, experience of imperialism and of being colonized, a secular, nationalist and developmental orientation and similar perceptions on many international and regional issues and membership of NAM.
     

  • What do you understand by RuPay and discuss its potential benefits to India? Explain how it can help India to emerge as a Regional Financial Centre and Global Financial Service Provider?

    11/25/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

    What is Rupay:

    • RuPay is a combination of two words – Rupee and Payment. RuPay Card is an Indian version of credit/debit card. It is very similar to international cards such as Visa/Mastercard.

    Benefits:

    • Lower transaction cost
    • Sms alerts.
    • Reduced processing fees
    • It is imperative for India to create a low-cost electronic payment system if the ongoing endeavour to overhaul the existing system of welfare payments and subsidies is to succeed. The unique identity project will deliver a unique numerical tag for every Indian resident, which can then be used to create unique electronic bank accounts.
    • Transferring welfare and other payments from government treasuries directly to beneficiary accounts would be possible. Thereafter, if the beneficiary can use electronic cards to spend the money in his account, it would remove one more layer of administrative mediation with its potential for corruption and leakage.

    Global scale:

    To offer a complete bouquet of card payment services at par with leading International Card Schemes, in March’12, NPCI had formed global alliance with Discover Financial Services (DFS), USAwhich has a strong global network. NPCI is further strengthening their network capabilities by creating global network alliances with key players like Japan’s JCB International & China’s UnionPay International over FY2016-17
     

  • What does the term BEPS recently in news signify? How has it affected the current fiscal policy of the government?

    11/24/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

     Base Erosion and Profit Shifting (BEPS) refers to those instances where gaps between different tax rules leads to tax avoidance causing harm to the government. It refers to all those artificial arrangements where:

    • Due to gaps in application of the bilateral tax treaties, cross border activities may go untaxed in any of the two countries.
    • No or low tax is paid by shifting profits to low tax jurisdictions and shifting losses and high expenditures to high tax jurisdictions.

    Further, the spread of the digital economy has also posed challenges for international taxation.
    Over the years, the MNCs have artificially reduced their corporate tax outgo by shifting to lower tax jurisdictions. As per OECD estimates, the base erosion and profit shifting has resulted in a loss of $100-240 billion every year to countries which is around 4-10% of global corporate income tax revenue.
    OECD Action Plan on BEPS
    Originally, OECD had started the BEPS project in response to the 2008 financial crisis in order to create sustainable economic growth. It was formally launched in 2012 by the G-20 Finance Ministers who in turn called on OECD to develop an action plan to address BEPS issues in a co-ordinated and comprehensive manner and develop an action plan with inter alia, following points:

    • There is a need to effectively prevent the double non-taxation and low taxation by checking the artificial arrangements to reduce tax liability.
    • Countries should adopt new consensus-based anti-abuse provisions and new international standards to ensure the coherence of corporate income taxation at international level to complement the existing standards.
    • Rise of digital economy has furthered the problem.

    In 2013, the OECD came up with an action plan to address the Base Erosion and Profit Shifting menace. This action plan has 15 actions points. In summary, the 15 OECD action points seek to develop a more coherent international system to address the problems of digital economy taxation, treaty abuse, transfer pricing, aggressive tax planning and disputes related to such problems. The document says that countries should build consensus on how to effectively address the tax compliance of digital products and services and effective collection of VAT/GST with respect to cross border supply of digital products and services. It talks about neutralising the effects of hybrid mismatch arrangements and strengthening the CFC (controlled foreign company) rules. It aims to improve transparency both for business and governments by introducing commonly agreed minimum standards for tax administration across countries.
    Hybrid mismatch arrangements
    Hybrid entity refers to the companies which might be treated differently in two tax jurisdictions. A hybrid instrument is one which is treated differently in two tax jurisdiction i.e. debt in one and equity in other. The tax planners exploit the asymmetries between different tax jurisdictions through the use of a hybrid entity or a hybrid instrument. The OECD action plan calls for developing model treaty provisions regarding domestic rule to neutralize the effect of hybrid mismatch arrangements.

    Current Status
    The G20-OECD led project on base erosion and profit sharing (BEPS) is currently taking a firm shape. It aims to fulfil the 15 points of the G20-OECD on the multifarious aspects of international tax policy by December 2015. On October 5, 2015, OECD has released a Base Erosion and Profit Shifting (BEPS) package containing final reports on 15 identified focus areas. This report includes recommendations for significant changes in the key elements of international tax architecture. In 2016, OECD is expected to come out with a multilateral convention to prevent the treaty abuses.

    India’s Stance on multilateral / Bilateral Tax Regime
    India has also responded positively to the G20-OECD led BEPS project. For a developing country like India, any such regime which effectively addresses the treaty shopping would result in more tax revenues. Further, India is also in the process of making tax treaties sustainable with its bilateral partners such as Mauritius. India also has become a signatory of the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information on 3rd June, 2015. These new global standards on automatic exchange of information, known as Common Reporting Standards (CRS), once implemented, will facilitate automatic exchange of taxpayers’ information between treaty partner countries for speedy dispute resolution and reducing instance of base erosion through use of dubious structures/financing instruments in cross-border transactions.
    Further, India has also signed the Inter-Government Agreement (IGA) on Foreign Account Tax Compliance Act (FATCA) with United States.

    India and BEPS
    India has been actively participating in the G20 Base Erosion and Profit Shifting ('BEPS') project and as expected the Country-by-Country reporting requirements have already been announced in Budget 2016. However what came as a big surprise was the proposal to introduce a tax on digital economy transactions as was discussed in the BEPS Action Plan 1. India is probably the first country to introduce such a tax more so in such a novel way because the equalization levy is neither an income tax nor a VAT.
    Finance Bill 2016 has introduced Chapter VIII in the Finance Bill, 2016 for charging an "equalization levy" of 6% on certain specified services. Specified services have been defined to mean online advertisement, any provision for digital advertising space or any other facility or service for the purpose of online advertisement and includes any other service as may be notified by the Central Government in this behalf. This levy is required to be collected by the following persons while making a payment to non-resident:
    1. Person resident in India and carrying on business or profession
    2. Non-resident having a permanent establishment in India

  • Taxation is not just about financing expenditure; it is economic glue that binds citizens to the state in a two-way accountability relationship. Analyze in the context of India's Fiscal Responsibility and Budget Management?

    11/23/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

    •  Democracy is a contract between the state and its citizens. This contract has a vital economic dimension: the state's role is to create the conditions for prosperity for all by providing essential services and protecting the less well-off via redistribution.
    • The citizen's part of the contract is to hold the state accountable when it fails to honor the contract, but a citizen's stake in exercising accountability diminishes, if he does not pay in a visible and direct way for the services the state commits to providing.
    • Both government & people are accountable to run the show. This both end accountability ensures that the public money is utilized efficiently & enough resources are mobilized to pace the development ahead. Government need to adhere to fiscal discipline & have constant monitoring & transparency in spending.
    • While analyzing it from prism of Fiscal capacity i.e. spending and especially taxation is key to long run economic development. Simple tax-GDP (16.6%) and spending-GDP(26.6%) ratios suggest that India is under-taxed and it under-spends w.r.t comparable countries. • India does tax and spend less than other politically developed nations, but given that most other democracies took time to strengthen tax capacity, perhaps India is not an outlier on this dimension, either.
    • India does stand out in the number of individual income taxpayers, currently about 4 percent, far from our desirable estimate of about 23 percent (i.e., size of middle class), i.e., we are utilizing much less than our fiscal capacity.
    • Building long-run fiscal capacity is vital. One low hanging fruit would be to refrain from raising exemption thresholds for the personal income tax, allowing natural growth in income to increase the number of taxpayers.
    • Beyond that, building fiscal capacity is also about creating legitimacy in the state. This can be acquired by prioritizing improved delivery of essential services that all citizens consume: public infrastructure, law and order, less pollution and congestion, etc. reducing corruption, fiendishly difficult as it is, must be a high priority not just, because of its economic costs, but also because it undermines legitimacy.
    • The more citizens believe that public resources are not wasted, the greater their willingness to pay taxes.
    • Similarly fiscal discipline is essential and subsidies to the well-off(amounting to about R1 lakh crore) need to be scaled back. The utilization of fiscal capacity in itself would also bring about much of fiscal discipline.
  • What is Unified Payments Interface (UPI) system? How is it different from the prevailing funds transfer systems? Discuss its potential to change the payments landscape in India, with special reference to financial inclusion.

    11/23/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

    UPI is a payment system that allows money transfer between any two bank accounts by using a smart phone.
    UPI allows a customer to pay directly from a bank account to different merchants, both online and offline, without the hassle of typing credit card details, IFSC code, or net banking/wallet passwords.
    How safe is UPI?
    It is safe as the customers only share a virtual address and provide no other sensitive information.
    What kind transactions can be performed via UPI?
    Merchant payments, remittances, bill payments among others.
    Is there a per transaction limit?
    The per transaction limit is Rs.1 lakh.
    How exactly does one make a payment transaction?
    A user can make an in-app payment for goods or services purchased online.
    For instance a site allows purchase of a movie-on-demand.

  • India is not yet ready for full capital account convertibility. Discuss the reasons and the recent trends in this regard.

    11/23/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

    The term Capital Account Convertibility was coined by RBI and this term is almost synonymous with the RBI committee headed by SS Tarapore.
    Capital account convertibility (CAC) means the freedom to convert local financial assets into foreign financial assets and vice versa at market determined rates of exchange. This implies that Capital Account Convertibility allows anyone to freely move from local currency into foreign currency and back.
    Capital controls are used by the state to protect the economy from potential shocks caused by unpredictable capital flows. Capital account convertibility means the freedom to convert a currency for capital transactions and the rupee is not fully convertible on that front yet, though capital flows have been liberalised in recent years.

    G Padmanabhan, Executive Director of the Reserve Bank of India (RBI), has suggested that India should move towards making the rupee more convertible for capital transactions by foreign investors.

    Mr. Padmanabhan said. "Increasing openness to international trade may create opportunities for circumvention of capital account restrictions through under- and over-invoicing of trade transactions, and the increasing sophistication of investors and global financial markets makes it much easier to do so,’’ he conceded. Corporates could use transfer pricing to get around capital account restrictions, he said. However, keeping any restriction for too long could prove self-defeating as people ended up finding new methods of bypassing that restriction, he added. Ipso facto, he felt, India should move towards full capital account convertibility. "There is simply no escape from it,’’ Mr. Padmanabhan asserted.
    How fast that movement should be would, however, depend on how fast the country could meet the pre-conditions such as

    •  fiscal consolidation,
    •  inflation control,
    • low level of NPAs (non-performing assets),
    • low and sustainable current account deficit,
    • strengthening of financial markets,
    • prudential supervision of financial institutions etc.

    `India has already made visible progress on these fronts. There are, of course, risks, but we need to accept these risks and move forward boldly while controlling the risks as far as practicable.
    Sound policies, robust regulatory framework promoting a strong and efficient financial sector, and effective systems and procedures for controlling capital flows greatly enhanced the chances of ensuring that such flows fostered sustainable growth and did not lead to disruption and crisis.India has all these in place, and we need to keep on strengthening them.
    What can it do?
    It can lead to free exchange of currency at lower rates. Also, it can result in unrestricted mobility of capital.
    How does it benefit a nation?
    It can trigger stepped up inflow of foreign investment. Transactions also can become much easier, and occur at a faster pace.
    What are the negatives?
    It could destabilise an economy especially if there is massive capital flows in and out of the country. Currency appreciation/depreciation could affect the balance of trade.
    Where does India stand now?
    India currently has full convertibility of the rupee in current accounts such as for exports and imports. However, India’s capital account convertibility is not full. There are ceilings on government and corporate debt, external commercial borrowings and equity.

  • “India is today more liberalised with respect to entry than even some developed countries. However, less progress has been made in relation to exit.”Elaborate.

    11/23/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

    •  Government has taken various initiatives & policy measures like from LPG reforms in 1991 to recent flagship programme of "Make in India", Start Up India, Mudra Bank, etc to facilitate the entry of new firms, new ideas, new technologies & new entrepreneurs, however, least has been done to make the exit easy.
    • Impeded exit has substantial fiscal, economic, and political costs. The barrier to exit is not only exists in public sector and manufacturing, but the private sector and agriculture also.
    • Various permission & approval from regulatory bodies are required for closing a firm. There is no comprehensive bankruptcy law in existence, multiple laws governs the process. This cause huge delay in final closing of unviable business. Impact is deterioration of assets, loss of market opportunity, locking of capital & loss of investors' confidence.
    • If the locked capital in loss making units could be released easily, it could go to profit making ventures, for example, a VCD making firm which was profitable and promising 10 years has no future, due to arrival of alternate media in form of pen-drives. If we would not allow the firm involved in CD production to close the unit, how would he be able to invest in a profitable venture of today, say pen-drive.
    • But it is not allowed in most cases, because of archaic labor laws, which require golden handshakes and golden parachutes. Similarly, the entrepreneurial talent is lost in red-tape meanwhile. Apart from these issues, sometimes closing down a unit is not possible, because it provide a service which large number of people use, for example; a) If problem is analyzed with respect to Public sector, fertilizer manufacturing firms are most affected by it. Subsidy to farmers which predominantly benefits large farmers-cannot be reduced/ eliminated, because of exit problem, as it would contain political costs. ; b) Many central organizations like BSNL, Air India were running in heavy losses for quite a long time & government is paying hefty amount of public money to keep these running. Due to political & policy reasons, government is not able to close them down. Most important of them is employees' concern and protest.
    • However, a number of solutions to facilitate exit are possible. The government's initiatives including the new bankruptcy law, rehabilitation of stalled projects, proposed changes to the Prevention of Corruption Act as well as the broader JAM agenda hold the promise of facilitating exit, and could provide a significant boost to long-run efficiency and growth.
    • As per TK vishwanathan committee, the easy exit option will give the entrepreneurs a viable choice to start. However the investment climate would also get a boost and would further strengthen the stability of the economy.
  • What are urban cooperative banks? Discuss their significance and the challenges faced by them in India

    11/20/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

     About Urban Cooperative societies:
    Urban co-operative banks are confined to the municipal area of a town. They are of types: (i) unit banking type, and (ii) branch banking type.
    Urban co-operative banks usually meet the needs of specific types or groups of members pertaining to a certain trade, profession, community or even locality.
    Urban Co-operative Banks are also called Primary Co-operative Banks (PCBs) by the Reserve Bank. The Reserve Bank of India defines PCBs as ‘small-sized co-operatively organised banking units which operate in metropolitan, urban and semi-urban centres to cater mainly to the needs of small borrowers, viz., owners of small scale industrial units, retail traders, professionals and salaried classes’.
    Challenges

    • Lack of corporate governance.
    • Dual control.
    • Political interference.
    • Lack of professionalism.
    • Incidence of financial weakness.

    Eg- Ten years after the Permanent Account Number (PAN) was made mandatory for banking transactions above Rs. 50,000, a Mangaluru-based urban cooperative bank was found to have allowed 3,500 transactions without PAN, involving a whopping Rs. 4,400 crore. This bank either did not ask for PAN for these transactions or underreported them, just to prevent information flow to the Income Tax Department.These cooperative banks, in the last decade, have emerged to facilitate money laundering and as a means to escape the tax net since other banks insist on PAN. To make matters worse, such banks are based on caste, community or religious lines, and some are managed by politicians.
    Significance

    • Local knowledge.
    • Undeniable edge in the area of relationship banking.
    • Local flavour

    In the wake of demonetization of higher currencies by the govt majority of Urban Cooperative Banks and almost all the credit co-operatives in the country have simply ceased to exist as far as servicing their members is concerned.
    These co-op organizations mostly keep their deposits with commercial banks which treat each credit co-op as an individual which can withdraw Rs 10,000 per day and Rs 20,000 per week following the RBI guidelines. Some of the credit co-ops especially the multi state credit co-op societies among them have become huge entities servicing sometimes a twenty thousand strong clientele.

  • Contemporary International relation issues 2016 overview

    11/20/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

    Contemporary issues 2016

    • Bilateral- India and USA, Russia, china, Pakistan, Myanmar, n. korea
    • Multilateral – crimean crisis and pseudo cold war, RESTRUCTURING of unsc, entry into NSG/ MTCR and other sensitive export control regimes.
    • Regional associations/diplomacy- SAARC, BIMSTEC, IOR-ARC, ASEAN, MEKONG GANGA CORPN, KUNMING INTITIATIVE, TRANS-ASIAN HIGHWAY.
    • Geopolitics – in trade, military, energy and infrastructure
    • India’s foreign policy- determinants and recent trends- FROM IDEALISM TO PRAGMATISM
    • Security – internal and external dimensions
    • New international economic order- NDB, AIIB, BRICS, IBSA, SCO, etc.

     

  • Contemporary economic issues 2016 overview

    11/20/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

    Contemporary issues 2016 

    • Financial sector- Demonetisation and Black Money, parallel economy basel 3 norms
    • Banking sector- Indradhanush reforms and liquidity insertion, NPAs in PSBs
    • Fiscal sector – new approaches, FRBM, GST +taxation reforms
    • Monetary policy- MPC and inflation targeting
    • External sector – trade treaties and India- tpp
    • Inflation – cpi combined
    • National income – gross value added vs GDP
    • Twin deficits and NPAs
    • Agriculture- farmer suicide vs HYV seed monopoly, MONSANTO MAHYCO case
    • Industry – skill India, Make in India and start-ups ( AIC Mantra)
    • Services- why a biased structure of economy?
  • What are non performing assets(NPAs)? Discuss the recent steps undertaken by the RBI to improve the fiscal prudence of public sector banks due to rising NPAs.

    11/20/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

     What are NPAs:
    According to RBI, terms loans on which interest or instalment of principal remain overdue for a period of more than 90 days from the end of a particular quarter is called a Non-performing Asset.
    Steps taken by RBI:

    1. Indradhanush
    2. Strategic Debt Restructuring (SDR)
    3. SARFAESAI Act : It will be amended to enable sponsors of Asset Reconstruction Companies (ARCs) to hold up 100% stake in PSBs
    4. Bank Board Bureau (BBB)
    5. RBI’s 3R framework for revitalising distressed assets:
    • RECTIFICATION*- no change in tenure or interest rates
    • RESTRUCTURING- eased tenure/interest rate
    • RECOVERY- SARFESI act
  • What is sovereign debt? Discuss the various ways in which government can generate it and what principles should guide this process?

    11/20/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

     Sovereign debt - also referred to as government debt, public debt, and national debt - is a central government's debt. Sovereign debt is issued by the national government in a foreign currency in order to finance the issuing country's growth and development. The stability of the issuing government can be provided by the country's sovereign credit ratings which help investors weigh risks when assessing sovereign debt investments.

  • What is the monetary policy committee? How does this structural innovation convert in terms of functional aspects of monetary policy in India?

    11/18/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

    Context:

    • In order to reduce the burden on RBI governor, Parliament has amended RBI Act, 1934 to set up monetary policy committee (MPC) .

    About MPC

    • The monetary policy committee framework will replace the current system where the RBI governor and his internal team have complete control over monetary policy decisions. While a technical advisory committee advises the RBI on monetary policy decisions, the central bank is under no obligation to accept its recommendations.
    • The committee will have six members. Of the six members, the government will nominate three. The RBI Governor will chair the committee. The governor, however, will not enjoy a veto power to overrule the other panel members, but will have a casting vote in case of a tie. No government official will be nominated to the MPC.
    • The other three members would be from the RBI with the governor being the ex-officio chairperson.
    • The MPC will set interest rates to keep retail inflation within targets. Inflation targets will be set once every five years.

    Importance:

    • Diversity of views, specialised experience and independence of opinion.
    • Footprint of global most global central banks.
    • Heightened public interest and scrutiny of MP decisions and outcomes has propelled a worldwide movement towards a committee based approach to decision making with a view to bringing in greater transparency and accountability in India.
  • The recent amendments to the India-Mauritius DTAA set an important benchmark in tax treaties. Discuss its significance and outline the ripple effects that it may create for other such agreements.

    11/18/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

    Context

    • Mauritius is the second largest FDI contributor to India. This is due to the tax avoidance treaty between both countries. But this often leads to tax evasion, round-tripping of funds and treaty abuse.

    Core:
    Highlights of pact

    • Tax on capital gains between April 1, 2017 and April 1, 2019 at 50% of domestic rates in India.
    • Also, the benefit of 50% reduction in tax rate during the transition period from 2017 to 2019 shall be subject to Limitation of Benefits. This means a resident of Mauritius will have to pay the full rate if it fails the main purpose test and bonafide business test. A resident is deemed to be a shell or conduit company, if its total expenditure on operations in Mauritius is less than Rs 27 lakh in the immediately preceding 12 months.
    • According to the amended double taxation avoidance convention (DTAC), interest arising in India to Mauritian resident banks will also be subject to withholding tax in India at the rate of 7.5 per cent in respect of listed securities and 20% in case of unlisted securities bought after March 31, 2017 but sold before 1st April 2019. In case they are sold after 1st April 2019, then they would be subjected to 15% and 40% tax respectively.
    • The interest income of Mauritian resident banks in respect of debt-claims existing on or before March 31, 2017 will,be exempted from tax in India.
    • The amendment to the India Mauritius tax treaty also automatically applies to the India-Singapore tax agreement.
    • Treaty shopping from Mauritius and India has been losing revenue.

    Recent Development:

    • GAAR which provides domestic override, so there is a need to change treaty.
    • BEPS : tax treaty should not promote double non taxation

    Significance:

    • This move could affect foreign investments. Currently, Mauritius and Singapore together contribute 50% of the total FDI inflows into India.
    • Litigation on account of availability of the Mauritian Tax Treaty will reduce significantly. These amendments will bring clarity and certainty to investment decisions.
    • The move is expected to prevent misuse of the three-decade-old pact from paying taxes, curb round tripping of funds, prevent double non-taxation, streamline investments and lift tax uncertainty.
    • With these amendments, Mauritius may cease to be the preferred routing destination for some inbound and outbound MNCs and India can hope to achieve its fair share of revenues/taxes at last.
    • It will improve transparency in tax matters and will help curb tax evasion and tax avoidance.

    Impact on other agreements:

    • Impact on the India-Singapore DTAA: Article 6 of the protocol to the India-Singapore DTAA states that the benefits in respect of capital gains arising to Singapore residents from sale of shares of an Indian Company shall only remain in force so long as the analogous provisions under the India-Mauritius DTAA continue to provide the benefit.
    • Most Favoured Nation (MFN) Clause: The lowering of withholding tax (WHT) on interest to 7.5% under the new protocol has provided succour in favour of debt securities like CCDs. While the WHT of 7.5% is lower than the one provided in other DTAAs like Netherlands (10%), Singapore (15%), UAE (12.5%), etc., most DTAAs entered into by India contain MFN clauses, pursuant to which if India enters into a Convention, Agreement or Protocol with another country which reduces the tax rate of items of income like interest income, then such reduced tax rate shall apply in case of their DTAA as well. It remains to be seen whether the rate of WHT under other DTAAs will automatically reduce as a consequence of the protocol.
  • India has signed more than 40 free trade agreements (FTA) till date. What is politico-economic significance of these agreements? Critically analyse with reference to recent trends in FTAs.

    11/18/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

    Context:
    A free trade agreement is a preferential arrangement in which members reduce tariffs on trade among themselves, while maintaining their own tariff rates for trade with non-members.Preferential Trade Agreements (PTAs) have been proliferating, especially since the establishment of the World Trade Organization (WTO) in 1994. India has made use of FTAs as a key component of its trade and foreign policy, especially from 2003-04 onwards.

    Core:

    Political framework:

    • Previously most of the trade agreements focused on geographical proximity so india focused on Asia region as seen in India-ASEAN,SAFTA, Indo –japan , korea agreements.
    • Secondly NAM , cold war, developed-developing divide, colonial experience created an inertia with respect to FTAs between developing and developed world.
    • This is presently changing with coming up of mega regional world where politicalproximities matter more than geographical proximities as seen in indo- us agreement, NGG clearance, dilution of NAM, post-cold war multipolar world.
    • Internationalization of yuan.

    Economic aspect:

    • India ASEAN FTA is positive,
    • Indo Korea –Japan has negative impact
    • Impact of FTA on trade balance and welfare is uncertain.
    • Lager impact on metals on importing side and textile on the exporting side
    • Internationalization of currency based on export demand from other countries.
    • Sectorial base with in export regime(industry vs services).
    • Trickle down of welfare benefits to lower sections of society (industry vs service)

    Way ahead:
    Continued utilization of FTA for enhancement of soft power with developed countries and market access with developing countries.

  • What is the TPP agreement? How is it significant for the Indian economy?

    11/18/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

    Context:  Emerging trends and new agreements in global economic partnership. Their main focus is on advocating mutually advantageous and sustainable trade.
    About TPP:

    • Trans Pacific Partnership (TPP)Agreement is a trade agreement among twelve of the Pacific Rim countries (excluding China).
    • The finalized proposal was signed on 4 February 2016 in Auckland, New Zealand, concluding seven years of negotiations.
    • The agreement aim to "promote economic growth; support the creation and retention of jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty in the signatories' countries; and promote transparency, good governance, and enhanced labor and environmental protections."
    • The TPP contains measures to lower both non-tariff and tariff barriers to trade, and establish an investor-state dispute settlement mechanism.
    • As the World Bank noted in a study in January on the macro-economic implications of the TPP, the pact could, by 2030, help boost the overall GDP of member-countries by 1.1 per cent. And given that the grouping includes two of the world’s three largest economies — the U.S. and Japan — and overall accounts for more than one-third of the world’s economic output, the spillover benefits would be significant.

    Significance:

    • For India, the agreement provides an opportunity to reflect on its approach to multilateral trade talks, while underscoring the need to build a strong multi-disciplinary cadre of specialist free-trade analysts and negotiators.
    • Benefits from these agreements will help mitigate some of the export losses that India may face in leather goods, textile, and plastics on account of trade diversion due to TPP. Aiming to diversify export destinations to hitherto untapped markets like Latin America and Africa would also help.

    Conclusion & future aspect-

    • Like China, India must focus on strengthening its own economy than worry about the TPP.
    • From ensuring the creation of a domestic common market through adoption of the long-delayed Goods and Services Tax, to building its own multilateral bloc of emerging and developing economies that can act as a bulwark against TPP-like groupings, India has its task cut out.
    • Internationally, India should conclude, on a priority basis, its ongoing free trade negotiations.
    • On the domestic front, India should accelerate the process of making its products more cost-competitive.
  • Discuss the interplay of multilateral trade regimes and their effect on Indian economy. Is the world today moving towards neo-mercantilism? Highlight the recent trends in this regard.

    11/18/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

    Context: Geo-political economic relationships with special reference to mercantilism

    Core answer:  a continuous flux in economic relationships will always remain the core of world trade. The balance of this will be determined by the power equations which can change based on the following fundamentals;
    equation 1- developed vs developing swots ( international tie ups)
    equation 2- core engines of growth within capitalism oriented ,profit oriented business cycles ( regional tie ups)
    These equations counterbalance each other thus avoiding neo-mercantilism in absolute sense while always opening up new opportunities for exploitation of trade scenario by a capable entrepreneur within the market or the State.
    Recent trends: Since developing nations have stalled negotiations on the Doha Round at WTO, US has established new regional agreements such as TIPP and TPP to exclude the objecting countries such as India etc.

    These new regional trade agreements would result in trade diversion and thus India needs to enhance its engagement with other nations to secure markets for its exports and source raw materials to feed its domestic economy

  • India has a special place in rising Asia in the 21st century.

    11/17/2016 | Writing Structure |Qchat

    Related Current Affairs | Related Blogs

    Context: This year India has become the fastest growing economy in world by surpassing China. But India must overcome many of the economic, social, and political problems before it can be considered a superpower.

    Core answer:

    Local factors

    • Lack of skilled manpower, capital, technology and infrastructure
    • Regional disparity
    • Lack of indigenisation leading to price instability
    • Structural imbalances in the economy
    • Ease of doing business is yet to come
    • Corruption
    • Systemic inefficiencies

    Global factors

    • Border disputes with China and Pakistan leading to diversion of capital towards defence
    • Uncertainty in global demand
    • Poor performance of Regional economic partnerships

    Conclusion
    The challenges inherent to the Indian economy need to be addressed by ushering structural reforms in the economy such as weeding out cost inefficiencies, reforming the taxation system, ensuring price stability and gradually building self reliance in different sectors of the economy. At the global level, India needs to diversify its trade direction away from recession prone developed economies to emerging economies which in turn will give boost to domestic employment, raise per capita GDP.