The Hindu Daily Editorial Discussion 25/3/19 By - Ashish Singh
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Page 8 Page 9 . Another look at fiscal transfers Disinformation is everywhere in India it, but also news media and some politicians Accountable to the public unverified information is crowding social media The simple home truth is that love and work are The time has come to amend the Constitution toIt is not only social media that is responsible for fix the proportion of shareable taxes for the States .Parallel tracks on trade ties Economic diplomacy can still prevent the removal of the U.S.'s trade benefits to Indian exports Twelve years later There is a lot of pressure on legacy media now as .Deconstructing addiction The Madras High Court has prevented a miscarriage of justice in the 'Dinakaran' case A different league In its 12th iteration, the IPL fields concerns about its place in the cricket calendar all we need for a better life
Another look at fiscal transfers GS PAPER 2 .issues and challenges pertaining to the federal structure
Federalism is an old concept. Its origin is mainly political. It is well known that the efficiency of a government depends on, among other factors, its structure. In large countries, it has been felt that only a federal structure can efficiently meet the requirements of people from different regions. Underlying this proposition is the premise that preferences vary across regions. Honi
In our country during the independence struggle, provincial autonomy was regarded as an integral part of the freedom movement. . However, after Independence, several compulsions, which included defence and internal security, led to a scheme of federalism in which the Centre assumed greater importance. . Also in the immediate period following Independence, when the Centre and all States were ruled by the same party and when many of the powerful provincial leaders migrated to the Centre, the process of centralisation gathered further momentum Economic planning at a nation-wide level helped this centralising rocess.
These talks have also broken the most important redline, that of being led by, or at least held with the full backing and knowledge of, the democratically-led government in Kabul. This became evident a few days ago. During a visit to Washington on March 14, Afghan National Security Adviser Hamdullah Mohib lashed out at Mr. Khalilzad for "delegitimising" the Ashraf Ghani government by carrying out talks in the dark,
Fiscal federalismm Fiscal federalism is the economic counterpart to political federalism . Fiscal federalism is concerned with the assignment on the one hand of functions to different levels of government, and with appropriate fiscal instruments for carrying out these functions on the other. It is generally believed that the Central government must provide national public goods that render services to the entire population. A typical example cited is defence. Sub-national governments are expected to provide goods and services whose consumption is limited to their own jurisdictions.
. An equally important question in fiscal federalism is the determination of the specific fiscal instruments that would enable the different levels of government to carry out their functions. .This is the 'tax-assignment problem' which is much discussed in the literature on the subject. In determining the taxes that are best suited for use at different levels of government, one basic consideration is in relation to the mobility of economic agents, goods and resources. It is generally argued that the de-centralised levels of government should avoid non-benefit taxes and taxes on mobile units.
This implies that the Central government should have the responsibility to levy non-benefit taxes and taxes on mobile units or resources. Building these principles into an actual scheme of assignment of taxes to different levels of government in a Constitution is indeed very difficult. Different Constitutions interpret differently what is mobile and what is purely a benefit tax. . For example, in the United States and Canada, both Federal and State On the contrary, in India, income tax is levied only by the Central government . Recognising the possibility of imbalance between resources and governments have concurrent powers to levy income tax. though shared with the States. responsibilities, many countries have a system of inter-governmental transfers.
The Indian Constitution lays down the functions as well as taxing powers of the Centre and States. It is against this background that the issues relating to the correction of vertical and horizontal imbalances have been addressed by every Finance Commission, taking into account the prevailing set of circumstances However, Central transfers to States are not confined to the recommendations of the Finance Commissions. There are other channels such as those through the Planning Commission until recently as well the discretionary grants of the Central government.
New developments The Fourteenth Finance Commission has broken new ground in terms of allocation of resources. One of its major recommendations has been to increase the share of tax devolution to 42% of the divisible pool. This is a substantial increase by almost 10 percentage points. The commission has argued that this does not necessarily affect the overall transfers but only enhances the share of unconditional transfers. It is true that Centrally sponsored schemes, which have ballooned in recent years, may have 'encroached' on the territory of States
On the allocation of unconditional transfers, two questions arise. The first is to determine the total transfers that need to be made, while the second is whether all transfers must be done by the Finance Commission alone. Finance Commissions prior to the Fourteenth recognised that some transfers were being made by the Planning Commission; this was kept in mind while deciding on tax devolution. By the time the Fourteenth Finance Commission was required to submit its report, a fundamental change in the institutional framework had occurred.
The Planning Commission was replaced by the NITI Aayog, which was simply a think-tank with no powers of resource allocation In this context perhaps what the Fourteenth Finance Commission did was justifiable. Of course, the Fourteenth Finance Commission did what it did because the terms of reference had not made any distinction between Plan and non-Plan revenue expenditures. The moot question is about what happens if any future government revives the Planning Commission with financial powers. This will put the Central government in a fix
Also once this power is given to the States, the transfers from the Centre need adjustment. study. between the Centre and the States - As far as India is concerned, this is an area which needs a fuller Adoption of any one of these alternatives will avoid friction Perhaps the first alternative of constitutionally fixing the ratio is the easiest,
There are issues relating to horizontal distribution. Equity considerations have dominated the allocations. This is as it should be. However, the ability of bringing about equalisation across States in India has limitations. Even the relatively richer States have their own problems and they feel 'cheated' because of the overuse of the equity criterion An appropriate balancing of criteria is needed particularly in the context of the rise in unconditional transfers. Of course, appropriate balancing is what all Finance Commissions are concerned about.
Parallel tracks on trade ties GS PAPER 2 .Indian Economy; Effect of policies and politics of developed and developing countries on
The calculations behind the S500 billion retail giant's investment in India have gone awry after the change in the FDI rules. The Walmart family are close friends of Mr. Trump. On February 20, Walmart CEO Doug McMillon said the company was .ali disappointed that New Delhi had changed the FDI rules without consultation and hoped for a more collaborative process going forward. Days later, on March 4, Mr. Trump notified Congress of his intention to slap punitive action on India by ending preferential treatment for the country's exports.
Walmart has a reputation for killing small retail businesses with ultra-low prices, a concern that influenced New Delhi's decision to tighten the FDI rules. While the FDI policy might be irreversible, economic diplomacy can still defuse the situation and prevent the removal of the GSP benefits that will not take effect for until a leat 60 days after the notifications to Congress and the Indian government.
The simmering tensions go back to April 2018 when the United States Trade Representative (USTR) launched a review of New Delhi's eligibility for the GSP programme. Tensions escalated in June, as New Delhi, in response to Washington's 25% tariff hikes on steel and 10% levies on aluminum immediately accused it of unfair trade practices, and, seeking to signal a muscular approach, threatened retaliatory tariffs on $235 million of U.S. imports. Bilateral talks since then have failed to ease tensions and India now stares at losing the GSP benefits. Foreign Secretary V.K. Gokhale returned empty-handed from Washington recently.
U.S. manufacturers complain that in doing so, New Delhi has meted out differential treatment to them vis- -vis domestic players. For domestic companies, the price to distributors is considered while in the case of global manufacturers the base proposed is the landed costs of imports. The U.S. medical device industry wants price controls on cardiac stents and knee implants withdrawn and would like products to be treated on parity with domestic medical devices through a trade margin rationalisation regime.
New Delhi has preferred to act against unreasonable price mark-ups through price controls when exactly the same outcomes can be achieved through other types of policy alternatives. 331 .The USTR is right in pointing out that price capping counts as a trade barrier. New Delhi can easily address the concerns by replacing price controls with trade margin rationalisation measures, applying them equally to domestic and foreign manufacturers.
India is the largest beneficiary of the GSP, the largest and oldest U.S trade preference programme. The GSP is aimed at promoting economic development by allowing duty-free entry of products from designated beneficiary countries. Nearly 4,800 different goods from 129 designated countries enjoy duty-free access under the programme The immediate loss for India is preferential access at zero or minimal tariffs to the U.S. in case of about 1,900 products, or about half of all Indian products. .New Delhi has downplayed the impact of the proposed withdrawal of benefits, saying exports worth $190 million only are likely to be affected and that the tariff advantage was 4% or more on only 2,165 of a total of 18,770 tariff lines.
Estimating losses . This is an underestimation. The loss to the economy would be much larger than what the Department of Commerce is projecting. . While it is true that the actual tariff advantage from the programme works out to a meagre $190 million, which is just 0.4% of the total Indian exports to the U.S., the actual loss will not be limited to the immediate tariff advantage. Indian exporters are competing for market share in the U.S. with other low-income countries in industries where margins are wafer thin.
With the Lok Sabha elections coming up, it is critically important that Indians have access to credible and trustworthy information before the vio that many do not fee they dotia The problem is that many do not feel they do. . In a brand new survey of English-language Internet users in India conducted by the University of Oxford, we have found that a majority of the respondents are concerned with whether the news they come across online is real or fake.
.Who can blame them? After the Pulwama attack, social media and messaging apps were flooded with false and misleading content as people tried to make sense of the horrible violence. As Trushar Barot, a former BBC journalist who leads Facebook's integrity initiatives in India, tweeted, "'ve never seen anything like this before- the scale of fake content circulating on one story."
At the heart of disinformation problems are stories that are completely made up for political or commercial reasons, to try to discredit rivals or make money from clickbait. . of our respondents, 51% say they are concerned about this problem. But strikingly, a similar number say they are concerned about what they consider to be poor journalism (stories that respondents consider marred by factual mistakes, inaccuracies, etc.). -And 50% say they are concerned by hyperpartisan political content, where facts are spun or twisted to push a particular agenda, whether from politicians, pundits or publishers.
So, when many Indians in the run-up to the elections say they are concerned about what is real and what is fake on the Internet, this is clearly in part about social media and digital platforms. But unfortunately, it is also about some news media and some politicians who people see as part of the disinformation problems that India faces It is only a few years ago that the Press Council of India said that "the phenomenon of 'paid news' has acquired serious dimensions", "goes beyond the corruption of individual journalists and media companies and has become pervasive, structured and highly organised." The Press Council concluded: "It is undermining democracy in India."
Low trust in institutions .Beyond the rise of digital media, the backdrop of disinformation problems in India is thus low trust in established institutions. . Though there are some admirable exceptions, established institutions often seem to fail the people who rely on them. Other studies have found low trust in politicians and political parties. . our own survey shows that just 36% of respondents feel they can trust most news most of the time, statistically indistinguishable from the 34% who say they trust news found via social media.
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