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18th September 2017 Part-2:Daily News Analysis
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Gold imports and FTA with South Korea

Jatin Verma is teaching live on Unacademy Plus

Jatin Verma
Have appeared in UPSC CSE thrice. Have been taking Unacademy Plus courses Academics- Polity, Economics & Current Affairs.

Unacademy user
Advantages of cash system over PDS a) Cash transfers in form of PDS would involve the transfer of money directly into bank accounts of identified card holders. b) Instead of going to their local ration shops to take subsidized grains, recipients would withdraw this money to buy the food of their choice from the market. c) to enormous leakages into the black market, and high waste in costs of transferring subsidies in the form of food transfers. d) replacing food with direct cash transfers would greatly reduce corruption and leakages. It would enable the poor to access goods currently denied them by a PDS beset by corruption. Further, it would enable people to buy better quality food of their choice from the open market e) not be restricted to items sold in the PDS, which are often inferior in quality and limited in range. f) it would both bypass brokers as well as reduce the waste and holding costs of storing grains in government silos. The amount of grain actually required for India’s buffer stock needs could be held in better-quality warehouses, eliminating waste and rotting. g) Cash transfers would help reduce fiscal deficit (currently we are facing with it) by curbing expenditures earmarked for the PDS that are siphoned off through corruption, as well as avoiding substantially higher costs of transferring food rather than cash. Disadvantages- a) Irregularities are empirically found to be high in existing cash transfer programmes. the difference between the corruption or probity of delivery of welfare programmes is not dependent on whether cash or food is delivered, but on political and administrative will and capacities, and public vigilance and organization. b) It is also possible for people to spend cash transfers not on more nutritious food,but instead on non-food items, which would decrease the amount of household money left for buying food. c) There are significant gendered differences of choice here. culturally decisions relating to cash in households tend to be made by men, who may or may not spend the money on food. Decisions relating to food are made by women in almost all cultures, and therefore food rather than cash in a household is more likely to end up as food in a child’s stomach. d) There are also worries about how genuinely inclusive of people in remote rural regions is India’s banking system. e) Fair price shops exist in three of every four villages, and are therefore generally accessible. f) average distance to the nearest bank branch is between 6.5km to 10km. Distances would be much longer in remote regions, entailing high additional costs of transport and time. g) Another advantage of PDS over cash transfers from the perspective of the poor is that PDS supplies rations at a constant price, irrespective of the fluctuations in market prices. cash transfers cannot match. h) PDS requires the government to procure food from farmers. The government builds up stocks of grains which are also useful for price stabilization. Indeed, the guarantee of minimum support price purchase by the government for wheat and rice is the most important instrument for the protection of farmers’ income in India, and this would become unfeasible if the government could not offload a lot of this grain back through the PDS and it will affect farmers.
Shashank jain
2 years ago
sir please review it please sir and sir actually i used to make my notes on notepad. it became easy for me to answer here so you can review my answer please sir review it
People are getting benefits while importing from South Korea, in layman's language it's smuggling.
hey guys... i am sharing my notes from the last year editorial on PDS system in Jharkhand. I hope you will get it easily as these are in point format only... Case study in Jharkhand Success of PDS system due to -Broad coverage -Clear entitlement - De-privatization of PDS shops - Separation of distribution agencies and transport agencies -Computerization, Fixed distribution, tight monitoring, fast redressal of grievance. NEW system will be Aashar based biometric authentication in the PDS. This involves setting of PoS machines which involve fingerprints. Issues with it - Network failure - The poor connectivity - Pos machine sometime can be returned due to technical problem SC: allowed aadhar in PDS but not compulsory
Cash nahi dena chahiye food grains hi dene chahiye with some extra attention that last man in the row could get the benefit because as normal example agar hum ek beggar ko paise dete hain to koi surity nahi hai ke woh khane ke liye hi us money ko use krega he can buy alcohol or tobacco too with that cash instead of buying food so with better system of PDS we should distrubte the food from my point of view :)
Shilpa Verma
2 years ago
by food grain also they can buy alcohol n tabacoo... by selling that food grain instead of eating it.. how can one insure that they are using it just for eating
Daman Singh
2 years ago
Exactly as what i said earlier Shilpa there should be an adequate procedure to track that food grains that the person whose getting the benefit is actually consuming it in a right way otherwise it will be like an ineffective welfare of that poor society.
agar anaj ke badle subsidy me logo Ko paisa Diya jayega to iske do impact ho sakte hai pehla ye ke poor people Ko paisa to anaj ke Kam rate pe milega jisse ki poor people us paise ka Kam anaj hi khareed sakange kyuke market me anaj ki kimat jyada hodi hai rashan Wale dookan se isparkar poor pe iska negative impact parega Lekin iska positive impact bhi ho Sakta hai ki poor people Jo ki Kishan hai aur Apne livelihood ke liye anaj ka rise kar lete hai to wo in paiso ka use Apne other kamo me kar sakte hai jisse ki unka vikash ho Sakta hai aur wo Apne livelihood Ko uper badha sakte hai kyuke hamare Desh me jyada poor Kishan hi hote hai so, is nishkarsh pe hum pahuchhte hai ke isse dono impact ho Sakta hai but,isse wo ghotala wala Kam jaroor Karan hoga Jo ki ek sahi Disha hai aur jab tak corruption nahi Karan hoga poor people aage nahi aa sakange atah,govt Ko ye Kam karna chahiye jisse ki corruption Karan ho
  1. DAILY NEWS ANALYSIS from THE HINDU 18th September 2017 By Jatin Verma Educator Unacademy

  2. Page-11: PDS digitisation moving at snail's pace. . The Govt's claim to ensure end-to-end digitisation of the Public Distribution System (PDS) is coming to naught even after three years of being in mission mode The project was launched in 201 2 at a cost of 84 crore to ensure that at every step from field to fork, the government would be able to track the movement of foodgrains so that they reached the right beneficiaries . Components of Digitisation project [i] Automation of the supply chainonline monitoring of stock positions in godowns, [i] Digitisation of food procurement system (FPS) data, Tiij Tracking the movement of the food grains from the godowns to the fair price shops, [iv] open transparency portals [v] SMS alerts to beneficiaries. [v] Digitisation of Ration cards and [vii]seed Aadhaar card data. Progress so far: [i] Out of 5.26 lakh ration shops, only 51% have been digitised in three years. Thirteen States are yet to take the first step in this direction [i] At least II States have not taken the elementary step of digitising fair price shops and nine other States, including Uttar Pradesh, have hardly made any progress. In Bihar, less than 1% of ration shops are digitised;

  3. The Centre was successful in digitisation of 23.11 crore ration cards as a great success, uncovering 2.48 crore bogus cards, which have been deleted to save the nation a subsidy of 5,000 crore per annum. Reasons behind the delay: Connectivity issues: Many states have cited connectivity issues for their inability to commence the process of digitisation The numbers are most stark in the northeastern states: Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram and Nagaland. UPSC Mains GS-3 [2015] Q. In what way could replacement of price subsidy with Direct Benefit Transfer (DBT) change the scenario of subsidies in India? Discuss.

  4. Page-12: Russia denies bombing U.S.- backed forces Maono 4 SYRIAN ARAB REPUBLIC al Bid TURKEY kbc . U.S.-backed militias in Syria came under attack on Saturday from Russian jets and Syrian government forces in Deir al-Zor province, a flashpoint in an increasingly complex battlefield. RIS AR RAQQAH Ac Raman . Russia's Defence Ministry rejected allegations it k to n DAYRAZZA Dayr az Zam had bombed U.S.-backed militias in Syria, saying its planes only targeted Islamic State militants and that it had warned the United States well in advance of its operational plans. The Syrian Democratic Forces (SDF), an alliance of Kurdish and Arab militias fighting with the U.S.-led coalition, said six of its fighters Sm had been wounded in the strike MEDITERRANEAN TARTUSY Ash IRAQ Tmam), Jubay National cal Provincial cap LEBANON Arpon aDIMAS Expresay Main road Secondary road AS SUWAYDA JORDAN ISRAEL

  5. Page- 13 International:US could stay in parisaces Tn leate change,Secretary f Sate Rex After a succession of mixed messages on the US stance on climate change, Secretary of State Rex Tillerson said that the Trump administration was seeking ways in which we can work with partners in the Paris climate accord. . Tillerson did appear to signal a softening from Trump's earlier characterisation of the deal as a "draconian" pact that impinged on American sovereignty and unfairly favoured countries like China and India over the US

  6. . Page-13 Business:Gold imports increase threefold to $15 billion. The country's gold imports recorded a three-fold jump to $15.24 billion during the April-August period of the current fiscal. . Gold imports, which has a bearing on the country's current account deficit (CAD), stood at Rs. 5.08 billion in April-August 2016-17 Increase in gold imports last month contributed to the widening of trade deficit to $11.64 billion as against $7.7 billion in August 2016. . The imports are expected to increase on account of the forthcoming festival season, which will start from the end of this month. . Increase in inbound shipments of gold is also one of the reasons for higher CAD. CAD rose sharply to $14.3 billion-or 2.4% of GDP-at the end of first quarter of 2017-18. In general terms, CAD refers to the difference between inflow and outflow of foreign exchange that has an impact on exchange rate. Worried over surge in gold imports from South Korea, with which India has a free trade agreement, the government has restricted inbound shipments of the precious metal.

  7. Business: Tweaks to pact with S. Korea mooted. India-South Korea FTA that allows duty-free import of the precious metal and its articles. India is looking to plug loopholes in its Free Trade Agreement (FTA) with South Korea following concerns over a recent sudden surge in imports of gold and related articles from that country. GST, the cause The Problem in Figures: Gold imports from South Korea had shot up to about $340 million in the period July I-August 3, 2017, compared with about $71 million for all of FYI7 The implementation of the Good and Services Tax (GST) from July I led to the import surge. Pre-GST, gold imports through the non-FTA channel attracted a 10% basic customs duty (BCD) and an additional 12.5% countervailing duty (CVD), while those from the FTA route were levied a 12.5% CVD (as the FTA eliminated the customs duty on gold imports)-which discouraged such gold imports. Under the new tax regime, a 3% GST replaced the CVD. This meant gold imports from the non-FTA route attracted 10% BCD and 3% GST while those from the (S. Korea) FTA channel paid only 3% GST, which could be later claimed as input tax credit.What has raised eyebrows is that South Korea is not among the world's leading producers or exporters of gold and related items.

  8. . The authorities are examining a possible criminal angle in such transactions as those entities were allegedly sending gold medallion directly from Dubai to South Korea and then exporting to India, violating FTA norms. Under the FTA, duty-free import of gold medallion into India is currently allowed only if it has met the norm of 'Change in Tariff Heading' under the Harmonised System Code. This means one could send gold bars and rods from a third country to South Korea, convert them into medallion there, export to India and avail the zero-duty benefit. Though the Centre had last month 'restricted' imports of jewellery,precious metal and related items from South Korea, but it was only a temporary measure. What is the Solution: 3 options India will push for inclusion of tighter norms in the FTA on imports of gold and its items to prevent misuse. [i]India could insist on a clause in the FTA specifying the criteria of at least 35%"value addition, as well as "Change in Tariff Sub-Heading' to ensure that the item has undergone substantial transformation in South Korea, and not been just routed through that country to take advantage of duty-free norms.

  9. [ii]Only those furnishing the required certificate, stating the criteria have been met, will be allowed FTA benefits. [iii]Else, such imports from South Korea will attract 10% duty. Since gold is a sensitive item for India, the other plan is to shift gold and articles to the negative list in the FTA Work is also on to impose safeguard duty (12.5%) on gold imports from South Korea. Dubai. South Korea[FTA] Pendant

  10. Business: GST Composition Scheme registration open till Sept. 30 The Goods and Services Tax Network announced the opening of the registration window for the Composition Scheme again till September 30. . Under the Scheme, small taxpayers with a turnover of 75 lakh can file quarterly returns instead of the normal monthly returns Many taxpayers who migrated after August 16 could not avail this facility as it was open till August 16, 2017 only. To make this facility available to all those who could not opt for Composition, the facility has been opened again by the GST Council.This is also open to those who registered afresh under GST but did not avail the facility at the time of registration. Advantages: i] For Business: Businesses opting for the composition scheme will see a lesser compliance burden as they will have to file returns only once in a quarter. [ii] For Govt: Govt, in anyway, effectively gets 2-3% tax revenue from these small traders.