Context

The first India-Central Asia Summit hosted by Prime Minister Narendra Modi with the Presidents of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, officials said on Thursday.

• As the joint statement at the end of the India-Central Asia virtual summit noted, ties between India and the region have been historically close, with “civilisational, cultural, trade and people-to-people linkages”, but the lack of access to land routes, and the situation in Afghanistan are among the biggest challenges.
• It was a first dialogue held with the Presidents of the 5 CARs(Central Asian Republics), building on years of dialogue.
• The summit also came after the meeting of NSAs in Delhi, where they built on several common themes of concern and priority.

Late last year, the Union government authorised the SBI to issue and encash a new tranche of electoral bonds, the 19th such parcel since the scheme’s notification in 2018.

• The timing of the announcement was predictable, with elections slated to be held to five different State Assemblies beginning next month.
• Now, as a result, voters in those States will go to the ballot box with no knowledge about the donors backing the various contestants.

Electoral bond Scheme:

• It is designed to allow an individual, or any “artificial juridical person”, including body corporates, to purchase bonds issued by the State Bank of India during notified periods of time.
• These instruments are issued in the form of promissory notes, and in denominations ranging from ₹1,000 to ₹1 crore.
• Once purchased, the buyer can donate the bond to any political party of their choice and the party can then encash it on demand.
• The purchasers are not obliged to disclose to whom they presented the bond, and a political party encashing a bond is compelled to keep the donor’s identity secret.

Since 2016, the Government has made several efforts to formalise the economy. Currency demonetisation, introduction of the Goods and Services Tax (GST), digitalisation of financial transactions and enrolment of informal sector workers on numerous government Internet portals are all meant to encourage the formalisation of the economy.

Benefits of a formal economy:

• The formal sector is more productivethan the informal sector, and
• Formal workers haveaccess to social security benefits.

Reasons for informalization:

• International Financial institutions like IMF that informal sector exists due to excessive state regulation of enterprises and labourwhich drives genuine economic activity outside the regulatory ambit. Arguably, excessive regulation and taxation ensure the endurance of informal activities.
• It underplays informality as an outcome of structural and historical factors of economic backwardness.
• Hence
• simplifying registration processes,
• easing rules for business conduct, and
• lowering the standards of protection of formal sector workers

will bring informal enterprises and their workers into the fold of formality.

Syllabus: General Studies Paper 3

Context

With the economy still hurting from the pandemic, the Budget on February 1 is likely to address concerns around growth, inflation and spending. The Budget, which will be tabled in Parliament by Finance Minister Nirmala Sitharaman, is the Government’s blueprint on expenditure, taxes it plans to levy, and other transactions which affect the economy and the lives of citizens.

Major Components of the Budget:

• There are three major components— expenditure, receipts and deficit indicators. Depending on the manner in which they are defined, there can be many classifications and indicators of expenditure, receipts and deficits.

The Expenditure :

• Based on their impact on assets and liabilities,total expenditure can be divided into capital and revenue expenditure.
  • Capital expenditureis incurred with the purpose of increasing assets of a durable nature or of reducing recurring liabilities. For example,  expenditure incurred for constructing new schools or new hospitals, which is a creation of assets.
  • Revenue expenditureinvolves any expenditure that does not add to assets or reduce liabilities. Expenditure on the payment of wages and salaries, subsidies or interest payments would be typically classified as revenue expenditure.
• Depending on the manner in which it affects different sectors,expenditure is also classified into:
  • General services
  • Economic services:It includes expenditure on transport, communication, rural development, agricultural and allied sectors.
  • Social services:It includes education or health is categorised as social services.
  • Grants-in-aid and contribution.
  • The sum of expenditure on economic and social services together form the development expenditure.

• • • Again, depending on its effect on asset creation or liability reduction, development expenditure can be further classified as revenue and capital expenditure.

Context

One of the largest producers of fruits and vegetables in the world to boost processed food in large quantities, India has formulated a unique Production-Linked Incentive Scheme (PLIS) which aims to incentivize incremental sales.

• However, the challenge to feed the 10 billion population by mid-century is therefore being deliberated on several fronts. It demands efficient ways of production that are both economically viable and ecologically sustainable.
• Fortunately, technologies are emerging that revamp the traditional approach of farm to fork and with a lower environmental footprint.

Progress so far in the food processing industry:

• Production-Linked Incentive Scheme (PLIS): A sum of ₹10,900 crore has been earmarked for the scheme and to date, 60 applicants have already been selected under Category 1 which incentivizes firms for incremental sales and branding/marketing initiatives taken abroad.
• Beneficiaries have been obliged to commit a minimum investment while applying for the scheme.
• Assuming the committed investment as a fixed ratio of their sales and undertaking execution of at least 75% of the projects, the sector islikely to witness at least ₹6,500 crores worth of investment over the next two years.

Context

The British firm Cairn Energy has said it has concluded all steps prescribed by the Indian government in order to be eligible for the refund of a contentious retroactive tax levy.

•  This should be the last act of a long and winding tax dispute drama.
• It should be the last act of a long and winding tax dispute drama.
• The firm, now rechristened as Capricorn Energy, expects to get back ₹7,900 crore.

The Dispute

• Cairn Energy was the second major firm pursued by the I-T Department for taxes it believed had accrued in the past, using retro-active legislative changes introduced in the 2012 Budgetby then Finance Minister Pranab Mukherjee.
• The original target for this move, that has sharply dented India’s credibility, was Vodafone, which had secured a Supreme Court verdict against the tax department’s demands for past transactions.
• Empowered to dig up similar transactions, involving the indirect transfer of assets situated in India, the I-T Department had, since 2014, pursued Cairn over a group restructuring undertaken in 2006, culminating in a tax demand of as much as ₹24,500 crore.
• Cairn and Vodafone had initiated arbitration proceedings against the Indian tax authorities’ actions, and won in late 2020.
• But in Cairn’s case, the taxman had recovered part of its ‘dues’by forcibly selling its shares even as arbitration proceedings were pending — an action that led to The Hague awarding it penal damages of $1.2 billion.

Context

• The military takeover in Myanmar last February, just days before the newly elected democratic government was to be sworn in, stymied the country’s tenuous transition to democracy, for which a beginning had been made in 2015.
• The purported reason for the coup d’état was that the elections were rigged, in which the National League for Democracy, under the stewardship of Aung San Suu Kyi had secured a majority for another term.

India’s policy

Notwithstanding the unfortunate developments since the military took over, India should implement an unbiased and proactive “Neighbourhood First” strategy that facilitates the Act East policy crucial for India’s long-term security and economic interests.

• A recalibration exercise for developing a robust relationship with Naypyidaw is the need of the hour.
• India, in all its wisdom, should find ways to support Naypyidaw for its critical requirements of systems and platforms like UAVs, surveillance systems and communication equipment.
• In addition, there is a need for dynamic economic engagement with Myanmar, to expedite the completion of the earlier agreement on the operationalisation of the Sittwe port, the establishment of an oil refinery and joint vaccine production facilities at a cost of $6 billion.
• Myanmar — regardless of who governs its polity — is a decisive lynchpin for India’s Act East policy and critical for the economic development and security of India’s Northeast. The latter aspect has become even more imperative as earlier operations that were conducted against Indian insurgent groups (IIGs) have experienced a reversal, with many valley-based insurgent groups of Manipur forging an agreement with the Myanmar army.

As a major boost to Centre and State collaboration in promoting products under the One District One Product (ODOP) Initiative – a State Conference was held recently by the Department for Promotion of Industry and Internal Trade, Ministry of Commerce & Industry.

About the scheme

• One District One Product One District One Product (ODOP) scheme was launched by the Ministry of Commerce and Industry.
• The objective is to convert each District of the country into an Export Hub by
  • Identifying products with export potential in the District,
  • Addressing bottlenecks for exporting these products,
  • Supporting local exporters/manufacturers to scale up manufacturing, and
  • Find potential buyers outside India with the aim of promoting exports,
  • Promoting the manufacturing & services industry in the District and generating employment in the District.

Context

The Joint Committee of Parliament has recently presented its recommendations on the Personal Data Protection Bill, 2019. The Bill principally seeks to regulate the use of our data and to foster a privacy protection framework in the country.

Background

• The prime minister has recently said that “innovation, aspiration and application of technology” will fuel the country to become a $5-trillion economy.
• The government’s stated goal is to grow the technology and electronics manufacturing sector to $300 billion by 2025.

Concerns

There are several areas of concern-

• First, the framework under the Bill is premised on a centralised Data Protection Authority with a wide discretionary remit to formulate regulation.
• Second, the Bill has broad-based restrictions on the transfer of data overseas that are likely to splinter our market from the global digital economy.
• Third, it seeks to impose onerous compliance obligations that have little to do with data protection.
• Fourth, it sets forth an inflexible framework that is bereft of any formal consultative rule-making process.
• Lastly, substantial portions of the Bill are out of sync with international data protection practices, which could blunt India’s competitive advantage as a digital market. These aspects of the Bill require substantial changes for it to not only achieve its objective of privacy protection, but to also avoid stunting the growth of our digital economy.

Context

As India draws closer to being a $5 trillion economy, the government’s strategic initiatives to encourage the infrastructure sector is providing a boost to collective growth of the Indian economy.

Developing infrastructure

• The upgradation of real estate and infrastructure development to assist the allied industries is necessary to achieve the required momentum of economic growth in these difficult times.
• These industries play a significant role in enhancing the employment generation along with upliftment of the small and medium businesses.
• However, delays in large-scale infrastructure projects due to multiple waves of COVID-19, coupled with a nationwide lockdown, have hindered the infrastructure projects
• The vulnerability of infrastructure projects to market volatility arises from the industry’s normal protracted gestation period.
• Governments are today partnering with private players to ensure a robust approach and seamless execution of some of the marquee infrastructure projects across the country.