PERIYAR IAS CURRENT AFFAIRS 10-OCTOBER-2017
Topic: Government policies and interventions for development in various
sectors and issues arising out of their design and implementation.
Group of Ministers set up to make GST composition scheme more
attractive
The GST Council, chaired by finance minister Arun Jaitley and
consisting of his state counterparts, has constituted a group of ministers or
GoM under Assam finance minister Himanta Biswa Sarma to make the composition scheme more attractive and to revisit the goods
and services tax rates on restaurants.
Background:
Businesses with turnover of up
to Rs 1 crore can opt for the composition scheme and they can pay taxes in the
range of 1-5% and file returns quarterly. However, only 15.5 lakh of the total
98 lakh businesses have registered under the GST regime opting for the
composition scheme.
Terms of reference:
§ The GoM has been tasked with
revisiting tax structure of different categories of restaurants with a view to
rationalising or reducing the rates. Currently, GST is levied at 12% on non-AC
restaurants while it is 18% in case of airconditioned ones.
§ The GoM will examine whether
the AC restaurants pass on the benefit of cost reduction under GST to consumers
and if they don’t, whether they should be disallowed input tax credit claims.
§ To make the composition scheme
more attractive, the GoM will look into whether turnover of exempted goods can
be excluded from the total turnover threshold for levying tax under the
composition scheme.
§ It will also examine whether
the scheme can be extended to taxpayers dealing in inter-state supplies of
goods and whether the manufacturers opting for it can be given the benefit of
input tax credit.
What you need to know about the
Composition scheme?
The composition scheme is an alternative method of levy of tax designed for small taxpayers
whose turnover is up to Rs 75 lakh — Rs 50 lakh in the case of eight
north-eastern states and the hilly state of Himachal Pradesh. The objective behind it is to
bring simplicity and reduce the compliance cost for small taxpayers.
§ The scheme is optional under which manufacturers
other than those of ice cream, pan masala and tobacco products have to pay a 2%
tax on their annual turnover. The tax rate is 5% for restaurant services and 1%
for traders.
§ As per the Central GST Act,
businesses are eligible to opt for the composition scheme if a person is not
engaged in any inter-state outward supplies of goods and not into making any
supply of goods through an electronic commerce operator who is required to
collect tax at source.
§ While a regular taxpayer has to
pay taxes on a monthly basis, a composition supplier is required to file only
one return and pay taxes on a quarterly basis. Also, a composition taxpayer is
not required to keep detailed records that a normal taxpayer is supposed to
maintain.
Sources: pib.
Topic: Government policies and
interventions for development in various sectors and issues arising out of
their design and implementation.
Sovereign Gold Bond Scheme–Series-III
The government has
launched the Sovereign Gold Bond Scheme 2017-18
– Series-III, which will be issued by the Reserve Bank India on behalf of the
Government of India.
About the Sovereign Gold Bond
Scheme:
The sovereign gold bond was
introduced by the Government in 2015. While the Government introduced these
bonds to help reduce India’s over dependence on gold imports, the move was also
aimed at changing the habits of Indians from saving in physical form of gold to
a paper form with Sovereign backing.
Key facts:
Eligibility: The bonds will be restricted for sale to resident Indian
entities, including individuals, HUFs, trusts, universities and charitable
institutions.
Denomination and tenor: The bonds will be
denominated in multiples of gram(s) of gold with a basic unit of 1 gram. The
tenor will be for a period of 8 years with exit option from the 5th year to be
exercised on the interest payment dates.
Minimum and Maximum limit: The minimum permissible
investment limit will be 1 gram of gold, while the maximum limit will be 4 kg
for individual, 4 kg for HUF and 20 kg for trusts and similar entities per
fiscal (April-March) notified by the government from time to time.
Joint Holder: In case of joint holding, the investment limit of 4 kg will
be applied to the first applicant only.
Collateral: Bonds can be used as collateral for loans. The loan-to-value
(LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve
Bank from time to time.
Sources: the hindu.
Paper 3:
Topic: Indian Economy and issues
relating to planning, mobilization of resources, growth, development and
employment.
Nobel Economics Prize
US economist Richard Thaler
won the 2017 Nobel Economics Prize for his contributions in the field of behavioural economics.
The economics prize, officially
called the Sveriges Riksbank Prize in Economic Sciences in
Memory of Alfred Nobel, was established in 1968. It was not part of the
original group of awards set out in dynamite tycoon Nobel’s 1895 will.
Contributions of Richard
Thaler:
His empirical findings and
theoretical insights have been instrumental in creating the new and rapidly
expanding field of behavioural economics, which has had a profound impact on
many areas of economic research and policy.
§ By exploring the consequences
of limited rationality, social preferences, and lack of self-control, he has
shown how these human traits systematically affect individual decisions as well
as market outcomes.
§ In total, Richard Thaler’s
contributions have built a bridge between the economic and psychological
analyses of individual decision-making.
So, what is behavioural
economics?
The field of behavioral
economics blends insights of psychology and economics, and provides some
valuable insights that individuals are not behaving in their own best
interests. Behavioral economics provides a framework to understand when and how
people make errors. Systematic errors or biases recur predictably in particular
circumstances. Lessons from behavioral economics can be used to create
environments that nudge people toward wiser decisions and healthier lives.
§ This branch looks at the
impacts of social, psychological and emotional factors in making decisions
about money that aren’t in a person’s best interest. It’s kind of the opposite
to the rational decision makers that are usually described in economic theory.
§ Thaler’s research has expanded
economic analysis by considering three psychological traits: limited
rationality, perceptions about fairness and lack of self-control.
Sources: the hindu.
Topic: Effects of liberalization on
the economy, changes in industrial policy and their effects on industrial
growth.
Uday Kotak Committee suggests changes in corporate governance rules
A corporate governance comittee
was formed by the Sebi in June 2017, under the chairmanship of Uday Kotak, MD,
Kotak Mahindra Bank, with a view to enhance the standards of this regime of
listed entities in India. The committee recently submitted its report.
§ In an attempt to support and
enable sustainable growth of enterprise, while safeguarding interests of
various stakeholders, the committee has come out with various recommendations.
Important recommendations made
by the committee:
Minimum number of board of directors: The Committee has
proposed that now board of directors shall comprise not less than six
directors. Also board of directors shall have an optimum combination of
executive and non-executive directors with at least one woman as an independent
director and not less than 50% of the board of directors shall comprise of
non-executive directors.
Minimum number of board meetings: These board shall meet at
least 4-5 times a year, with a maximum time gap of one hundred and twenty days
between any two meetings and at least once a year. Under this meeting, the
board shall specifically discuss strategy, budgets, board evaluation, risk
management, ESG (environment, sustainability and governance) and succession
planning. Listed entity shall, at least once every year, undertake a formal
interaction between the non-executive directors and the senior management.
Minimum compensation and remuneration: Top 500 listed entities
by market capitalisation shall pay compensation to each independent director as
Rs 5 lakh per annum, whether through sitting fees or profit linked commissions.
Provided that, this provision will not apply in case of inadequacy of profits
in accordance with Section 197 of Companies Act, 2013 – minimum sitting fees
for every board meeting of Rs 50,000 for top 100 entities by market
capitalisation and Rs 25,000 for next 400 entities.
Way ahead:
If these proposals are
implemented, at least 256 companies on NSE will need to increase their board
size and 637 will have to appoint a woman director. Also, the ministry of
corporate affairs (MCA) has opposed 12 out of the 24 key proposals and said the
changes are not feasible and in many instances will cause a regulatory overlap
and unnecessarily make the functioning of boards tougher.
Sources: the hindu.
Topic: Conservation, environmental
pollution and degradation, environmental impact assessment.
Namami Gange Programme
National Mission for Clean
Ganga has approved eight projects worth Rs. 700 crore, out of which four
pertain to sewage management in Uttar Pradesh, Bihar and West Bengal, three are
related to treatment of drains through bio-remediation and one of
inventorization and surveillance of river Ganga.
About Namami Gange Programme:
Namami Gange programme was
launched as a mission to achieve the target of cleaning
river Ganga in an effective manner with the unceasing involvement of all
stakeholders, especially five major Ganga basin States – Uttarakhand, Uttar
Pradesh, Jharkhand, Bihar and West Bengal.
The programme envisages: River Surface Cleaning,
Sewerage Treatment Infrastructure, River Front Development, Bio-Diversity,
Afforestation and Public Awareness.
Implementation:
The program would be
implemented by the National Mission for Clean Ganga (NMCG), and its state
counterpart organizations i.e., State Program Management Groups (SPMGs).
§ In order to improve
implementation, a three-tier mechanism has been proposed for project monitoring
comprising of a) High level task force chaired by Cabinet Secretary assisted by
NMCG at national level, b) State level committee chaired by Chief Secretary
assisted by SPMG at state level and c) District level committee chaired by the
District Magistrate.
§ The program emphasizes on
improved coordination mechanisms between various Ministries/Agencies of Central
and State governments.
Sources: pib.
Topic: Conservation, environmental
pollution and degradation, environmental impact assessment.
SC bans sale of crackers in Delhi
The Supreme Court has suspended
the sale of firecrackers in Delhi and NCR till November 1, 2017 in a bid to
test whether a Deepavali without firecrackers this year will have a “positive
effect” on the health of citizens and a steadily deteriorating air quality.
Background:
There are evidences of
deterioration of air quality at alarming levels in Delhi. Burning of these
firecrackers during Deepavali in 2016 had shot up pm [particulate matter]
levels by three times, making Delhi the worst city in the world, insofar as air
pollution is concerned. Direct and immediate cause thereof was burning of
crackers during Deepavali.
Opposing view:
Few experts see court’s
decision to re-impose a ban on the sale of firecrackers in Delhi and
surrounding towns till November 1 as extreme, unjustified and, perhaps,
inadequately thought move.
§ To begin with, the ban is on
the sale of firecrackers, not their use. So those who already have
firecrackers, or, presumably, are able to obtain them from outside Delhi would
be free to let them off.
§ Equally importantly, the
Supreme Court decision only applies to Delhi and nearby towns. The rest of
India is exempt. For now Mumbai, Kolkata, Chennai, Bangalore, Hyderabad are not
of equal concern.
§ Also, has the court considered
what this will do to the firecracker industry and, more importantly, to the
livelihood of thousands of shopkeepers and traders, many of whom are small
roadside vendors or corner shops? It could very well bankrupt and impoverish
them.
§ This raises the moral question:
Is the court right to experiment with Diwali? Firecrackers do create an
environmental and health hazard. For those with asthma and other breathing
problems, this can be very serious. Therefore, the case for controlling and
restricting is undeniable. But the Supreme Court has gone further and attempted
a ban.
Why not have a blanket ban on
firecrackers’ sale in Delhi?
However, a total ban on
firecrackers’ sale in Delhi NCR is too “radical a step” and a graded, gradual
approach to a complete ban should be adopted — would be effective from November
1.
What can be done?
The problem of firecrackers in
Delhi has been around for decades. That’s ample time for the Court to have
devised a more thoughtful response than a last minute arbitrary ban. It could
have imposed a stricter timeframe, reducing the 10 pm limit to 9 or even 8 pm.
It could have asked the government to stage firework displays in a handful of
strategic locations, broadcast by TV channels, so people can do without their
own. London does this on New Year’s Eve. Finally, it could have asked the
government to pay for those who suffer from firecracker displays to leave the
city for 48 hours and add the cost as an additional tax on firecrackers.
Sources: the hindu.
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