SMART LEADERS IAS

TEST-7 EXPLANATION
GENERAL STUDIES MAINS
1. There are growing incidences of lone wolf attacks across the world. Do you perceive such a
threat of lone wolf attacks in India and if so, elaborate on your opinion?
 Lone wolf attack: undertaken by a small group or individual in support of a larger cause,
without the support or overall supervision of a terrorist organization.
 Eg: 2014 Sydney hostage crisis and Boston marathon bombing
 Groups or individuals with access to explosives, light weapons and ammunitions-Strike a
place associated with their personal frustration
 The threat is growing due to influences from Al Qaeda and ISIS – India was largely free of
this development.
 Recently, Al Qaeda urged religious minorities to mount a lone wolf attack [ by Al Qaeda in
Indian subcontinent, AQIS]
 Emerging due to modern means for propaganda like Social media, YouTube, Skypeelectronic outreach
 In India- these organizations arm to exploit the chasms in society as a result of religious
persecution
 While lone wolf attack was reported, there were growing inclinations of individuals towards
these organizations.
o Mehdi Masroor Biswas – a techie from Bangalore, suspected to have managed the
twitter handle of ISIS.
o Arrest of Salman Mohiuddin from Hyderabad when he attempted to flee country to
join ISIS.
Challenges
 Gaining access to weapons in India is not easy compared to other countries. Only countrymade weapons available which are not suited for lone wolf attacks.
 Indians don’t have psychological willingness to take high risk attacks – usually suicidal.
 The possibility exists from the Indian Mujahideen(IM) group. Recently, certain factions of IM
joined ISIS.
 A sense of alert in sensitive locations would demotivate such attacks.
 States that witnessed communal riots and tensions – are vulnerable, such as UP, MP,
Maharashtra, Gujarat and Karnataka.
Vulnerabilities
 Response and preparedness of local police is inadequate
 Heavy concentration of people in some areas – vulnerable targets
 Growing population with access to technologies can provide the opportunities to anti-social
elements.
India may not be as vulnerable as other countries. Still, there is a need to be pro-active and undertake
deradicalisation to prevent any eventualities from happening.
2. With the ambition of putting an end to the populism that had come to be associated with it in
the last few decades, the Union Cabinet has decided to bring the curtains down on the 92year-old tradition of presenting a separate Rail Budget. Discuss the pros and cons of the
recent government’s decision on merging budgets.
Why we don’t need a railway budget:
 Integration of the general and railway budgets will enable formulation of a seamless national
transportation policy.
 The move follows a suggestion to the effect by NitiAayog member BibekDebroy in his report on
restructuring the public transport behemoth.
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A committee headed by Debroy last year had recommended that the railway budget should be
phased out progressively and merged with the general budget.
 The proposal comes at a time when the railway ministry is concerned that the implementation of
the 7th Pay Commission award, which has recommended a 23.6% hike in salary of Central
government employees and pensioners, will increase its wage bill by almost half, from Rs.53,000
crore to Rs.77,325 crore, in 2016-17, putting significant stress on its already weak
finances.Merging the railway budget and Union budget would mean the Indian Railways will not
have to separately bear the burden.
 Now, the railway budget size is quite small at Rs.1.21 trillion compared to India’s overall budget
of Rs.19.8 trillion.
 Debroy argued that there is no constitutional or legal requirement for a separate railway budget.
While the Union budget is a Constitutional requirement and is presented under Article 112 of
the Indian Constitution, which mandates an annual financial statement, the Constitution does
not talk about the railway budget in particular.
 Debroy held that a lot of resources are wasted in the process of preparing the railway budget,
resulting in a very complicated relationship between the finance ministry and the Indian
Railways, and that needs to be simplified.
 The railway budget has also become an avenue for populism with members of Parliament
demanding new trains and stops. However, Union Railway Minister Prabhu has shunned
pandering to this populism and focused on building the already announced railway lines.
 India has 66,000 km of railway lines, of which only 17,000 km have been added since
Independence.
 Debroy argued that decisions on the expansion of the railway network and introduction of new
trains should be taken by the railway board on a commercial basis and should not be left to
Parliament.
 Cash-strapped Railways will save about Rs. 10,000 crore (Rs. 100 billion) annually as it will no
longer have to pay dividend if the separate Rail Budget is scrapped, which is likely to happen
from next fiscal.
 Railways pays about Rs 10,000 crore as dividend a year after getting about Rs 40,000 crore (Rs
400 billion).
 At present, the railways has to bear an additional burden of about Rs 40,000 crore on account of
implementation of the 7th Pay Commission awards, besides an annual outgo of Rs 33,000 crore
(Rs 330 billion) on subsidies for passenger service.
 The delay in completion of projects resulted in cost overruns of Rs 1.07 lakh crore and huge
throw-forward of Rs 1.86 lakh crore in respect of 442 on going rail projects.
 The report is also understood to have addressed the contentious issue of annual dividend
payment by the railways on account of receiving gross budgetary support (GBS).
 However, the merger will have political implications as almost every railway minister,
particularly in coalition governments, has addressed his or her constituency by way of
announcing new trains and projects.
Why it should not be merged?
“Doing so will reduce the Railways to just another government department, whereas it needs to be
run along commercial lines”
 It may be relevant to recall the factors that led to the separation in 1925.
 The Railways were in bad shape at the turn of the last century. The 36,735-mile route was
pulling in different directions.
 There were state lines worked by the state, state lines worked by guaranteed or independent
companies, company lines worked by companies, and lines belonging to the princely states.
 The Railways failed to meet the demand from passengers as well as trade.
 The facilities were utterly inadequate.
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Goods rotted on the platforms as there were no wagons or locomotives to move them.
Overcrowding and waiting for days at stations was quite common. The main reason for such a
state of affairs was the non-availability of funds for expansion, development, and repairs and
maintenance.
A question of funds
 Even though the railway revenue formed a major portion of the government revenue, the
Railways were starved of adequate funds. In times of bad harvest and trade, when the revenue
fell, the budget allotment to the Railways was the first casualty.
 The cut in expenditure was exercised even during the middle of the year resulting in suspension
of works in progress and disbanding of staff.
 Late in the year if the financial situation improved, the finance member with equal suddenness
encouraged the Railways to spend more, leaving them little time in which to do so.
 The system was further battered by World War 1, leading to a clamour from the public — as
represented in the Imperial Legislative Council urged through repeated resolutions moved in
1914, 1915, 1917, and 1918 — for the appointment of a committee to enquire into the
desirability of adopting direct state management of the Railways and emancipating the utility
from the finance department of the government.
 In November 1920, a ten-member (three Indians) committee was appointed with Sir William
Acworth as chairman to “go into the whole question of railway policy, financial and
administration”.
 The committee collected evidence and came to the conclusion that Indian Railways “cannot be
modernised, improved and enlarged so as to give to India the service of which it is in crying need
at the moment until the financial methods are radically reformed” and the essence of that reform
according to the committee was complete separation of the Railway Budget from the General
Budget.
 This, then, was the beginning of the separation. Speaking in the Assembly while presenting the
Budget for 1924-25, the finance member of the council reminded members that “I know of no
reform which offers greater benefits to our finances and Railways alike than a definite
separation”.
 This would enable the Railways to spend money according to the real needs of the system
unimpeded by the vagaries of the Budget figures and the requirements of the Budget accounting.
 The separation started with the Budget of 1925-26.
Populist exercise
 The practice of paying dividend to the general revenues on the capital invested from there
continues but the Railways since then have been responsible for earning and spending their own
money. Of course they do have to look for budgetary support from the general exchequer as the
money earned has never been enough to meet their needs. One reason for this has been their
inability to raise fares and freight commensurate with the rising cost of transport.
 This politicisation of the Railways came along with Independence and India embracing
parliamentary democracy.
 As a result, the Railway Budget over the years has become more a populist than a commercial
exercise.
 The autonomy envisaged was fettered by not raising passenger fares in line with rising costs.
Indeed, passengers are being subsidised by goods traffic.
 The Budget has also become an instrument in the hands of several railway ministers to build
their vote-bank. All this affected the finances, so that today, the Railways do not have adequate
funds for expansion, development or replacement of worn-out tracks or rolling stock. Besides,
there was the impact of Partition and World War 2.
 During all these years of independence, though major landmarks were achieved, Indian Railways
still lagged behind in expanding and modernising its network for want of adequate funds.
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The sacrificial lamb could again be the modernisation and expansion. So the emancipation envisaged in the separation of railway finances from general finances was. Parallel problems  The railway revenue will become part of the general revenue but so will the expenditure.ATUL KULKARNI IPS (286/500) 2013 – Mr.2163. On the one hand. R.000 km in all these years. It has always been the constraint of funds.V. stores and equipment that cannot be guillotined.  External borrowings through the Indian Railway Finance Corporation are also restricted. To this we could add hardly 11.SIVARAJAVEL 2015 – – Page 4 of 30 Ms.161 km in 1950. they suggest merging the entity fully into the system. subverting its commercial nature which requires separate treatment of its finances. Chennai – 40. RAMKUMAR IFS (198/300) #9.VAITHINATHAN IAS (262/500) AIR-37 2014 – Mr. diluted by inherent flaws in our political system.  The constraint in raising passenger fares would be the same with the finance minister presenting the General Budget as with the railway minister presenting the Railway Budget. 12th Main Road. fuel. Our Shatabadis and Rajdhanis and even the latest Gatiman Express run at a maximum speed of 160 kmph.SELVANAGARATHINAM IPS (240/500) 2012 – Mr.SMART LEADERS IAS    In 1950.smartleadersias. GS-Prelims & Mains Online Test Available Visit :www. SHARANYA ARI IAS (256/500) AIR-7 Dr. 7200010122. Internal resources were never enough.Ph: 044-43525468.  The budgetary support from the general revenues was always limited.600 km of track. to a great extent. China had just 22.  There are some regular costs such as staff salaries.BASKARAN IPS (197/300) 2011 – Mr. Plot No.  The merger will only make the Railways become one more government department. Today it has over 1 lakh km. we had 54. In the event of shortfall in revenue or gross receipts in the general budget.com .  It is not that our engineers are not capable of reaching those targets. 9176 787980. It would be better to leave the current nature and character alone and concentrate on strengthening. Anna Nagar West. China has already achieved a speed of 300 kmph with the Beijing-Guangzhou bullet train service. it will lose its commercial character. modernising and expanding the Railways so that it can meet the demands and challenges of transporting mind-boggling numbers of people and goods across the length and breadth of this country ALL INDIA SOCIOLOGY TOPPERS MENTORED BY S. they talk of privatisation of the Railways and on the other.  There is also a contradiction in the approach of intellectuals who were engaged in studying the organisation. will the finance ministry carry out the cuts in Railway expenditure? Certainly not.

 This undermines the fairness and integrity of tax systems. Chennai – 40.is launched from western neighbours. 7200010122. reinforcing substance requirements in tax rules globally.by introducing commonly agreed minimum standards for tax administration across countries. 2016 operation by elite commandos of 21 Para Special Forces in Myanmar’s Sagaing division across Manipur and Nagaland borders. Comment with relevant examples. leaving gaps and mismatches that can be exploited to generate double non-taxation.2163. 12th Main Road.  BEPS is a global problem which requires global solutions. Plot No. but in no way provoking Pakistan to make a nuclear attack.Ph: 044-43525468. Recently surgical strike by Indian army inside LOC is also an example of this strategy. particularly from multinational enterprises (MNEs).  Base Erosion and Profit Shifting (BEPS) refers to tax planning strategies that exploit these gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity.  The BEPS project was initiated by OECD as a response to the 2008 economic crisis to create sustainable economic growth.com . But Indian Security forces can act only within the Indian Territory.  OECD estimates that tax avoidance through base erosion and profit shifting has resulted in loss of tax revenue to the tune of $100-240 billion every year . fueling insurgency and terrorism. GS-Prelims & Mains Online Test Available Visit :www. The ‘hot pursuit strategy’ of Indian security forces is an extension of ‘cold start doctrine’.smartleadersias. resulting in little or no overall corporate tax being paid.for business and governments . fluid movement of capital.  Border infiltration. OECD and G20 countries worked together on an equal footing.  BEPS is of major significance for developing countries due to their heavy reliance on corporate income tax. and step up the momentum of global recovery.  More than a dozen developing countries have participated directly in the work and more than 80 non-OECD. non-G20 jurisdictions have provided input.  For the first time ever in tax matters. The idea is to strengthen "the foundations for long-term growth" and avoid policies that "promote growth at other countries' expense"  Multinational businesses have over the years through a complex structuring process artificially reduced their corporate tax outgo by shifting to lower tax jurisdictions. targeting NSCN-K and ULFA elements.  To act against terrorist safe havens across the border without an element of war – is the hot pursuit strategy termed as ‘offensive-defensive’ strategy.that is around 4-10% of global corporate income tax revenue. Anna Nagar West.SMART LEADERS IAS 3. OP Vijayee Bhava (2001) – is the trail run of cold start doctrine. while the insurgents attack and retreat across the border to their safe haven. Comment  In an increasingly interconnected world. These insurgents used hit and run strategy and were a constant irritant for the internal security management. national tax laws have not always kept pace with global corporations. and the rise of the digital economy.  Hot pursuit strategy: A new counter – insurgency strategy involving crossing the international or demarcated border to strike at anti-India insurgents.  Cold start doctrine:A military doctrine developed by Indian Armed Forces to put to use in case of a war with Pakistan. Page 5 of 30 #9. *Main objective: To launch retaliatory convention strike against Pakistan inflicting significant harm on the Pakistan Army before any international community can intercede.  used by other countries also such as Israel 4.  The BEPS plan aims to improve transparency . The OECD’s BEPS (Base Erosion and Profit Shifting) action plan will make it easy for the taxman to bring evaders into the net. Eg: June 9. 9176 787980.  This includes alignment of taxation with the location of economic activity and value creation.

Anna Nagar West. taking into account transparency and substance  Action 6 – Prevent treaty abuse  Action 7 – Prevent the artificial avoidance of permanent establishment status  Actions 8-10 – Assure that transfer pricing outcomes related to intangibles are in line with value creation  Action 11 – Establish methodologies to collect and analyse data on BEPS and the actions to address it  Action 12 – Require taxpayers to disclose their aggressive tax planning arrangements  Action 13 – Re-examine transfer pricing documentation  Action 14 – Make dispute resolution mechanisms more effective  Action 15 – Develop a multilateral instrument Transfer Pricing and BEPS  OECD agree that it’s vital that all countries can effectively and efficiently administer the transfer pricing rules. and standardising compliance requirements.smartleadersias. which would be available to help tax administrations better focus their limited resources on higher risk.  The OECD/G20 BEPS Project has delivered 15 Actions to tackle tax avoidance.e.Ph: 044-43525468. GS-Prelims & Mains Online Test Available Visit :www. 9176 787980. higher value.  OECD has also developed a simplified approach for low value-adding services.  Action 1 -Addressing the tax challenges of the digital economy  Action 2 – Neutralise the effects of hybrid mismatch arrangements  Action 3 – Strengthen controlled foreign companies rules  Action 4 – Limit base erosion via interest deductions and other financial payments  Action 5 – Counter harmful tax practices more effectively. A hybrid instrument is one which is treated differently in two tax jurisdiction i.  For instance.2163. more complex transactions.com . 12th Main Road. The final BEPS package gives countries the tools they need to ensure that profits are taxed where economic activities generating the profits are performed and where value is created. The OECD action plan calls for developing model treaty provisions regarding domestic rule to neutralize the effect of hybrid mismatch arrangements. to improve the coherence of international tax rules and to ensure a more transparent tax environment.SMART LEADERS IAS   Fifteen actions equip governments with the domestic and international instruments needed to tackle BEPS. it is recognised that the risk of profit shifting is high in relation to transactions involving intangibles. Page 6 of 30 #9.  That’s one of the reasons why OECD was mandated to work on developing a practical toolkit to help developing countries make the best use of available data as well as providing potential options for dealing with situations where there are no comparables available. while balancing that with greater transparency to help ensure the approach doesn’t create base-eroding opportunities. Hybrid entity refers to the companies which might be treated differently in two tax jurisdictions. The tax planners exploit the asymmetries between different tax jurisdictions through the use of a hybrid entity or a hybrid instrument. Chennai – 40. 7200010122. and recognise that sometimes that can be challenging.  These were also key considerations when drafting the outcomes of the BEPS Action Plan.  These solutions illustrate that it is possible to develop approaches that are less reliant on comparables within the boundaries of the arm’s length principle. Plot No. debt in one and equity in other.  It is also recognised that comparables for such transactions may not be available. in the Report on Actions 8-10 of the BEPS Action Plan. while at the same time give business greater certainty by reducing disputes over the application of international tax rules.

Tunisia.  All the above will be part of the work on the tools on lack of comparables for developing countries. Country-by-country reporting The BEPS Connect:  Action 13 of the BEPS report recommends detailed documentation by multinationals that gives tax authorities in every jurisdiction an overview of the operation of the entire group. it is important to highlight the increases in revenue collected from transfer pricing audits.2163. shall submit a country-by-country (CbC) report containing aggregate information on revenue. details of capital and reserves. Programmes in Nigeria and Senegal in partnership with the European Commission and World Bank Group are about to start. belonging to international groups. a country-by-country report containing certain information relating to the global allocation of the MNE’s income and taxes paid together with certain indicators of the location of economic activity within the MNE group. Plot No. Malawi.SMART LEADERS IAS  Other simplified approaches or safe harbours will also be developed for other kinds of transactions in the future. Kenya. Chennai – 40.com . Morocco. GS-Prelims & Mains Online Test Available Visit :www.smartleadersias.  In terms of actual evidences. Zambia and Zimbabwe. new improved transfer pricing legislation has been introduced in Ghana and Ethiopia and is expected to be introduced in the near future in Botswana.  Foreign companies in India.22m in 2012 to USD7. tangible assets in each country or territory. especially in terms of revenue figures. a master file containing standardised information relevant for all group members of a MultiNational Entity (MNE) b. the Finance Minister has said that from April 1. The new legislation in all of the countries is aligned with international standards and will assist countries to effectively address transfer pricing risk to their tax base. For example in Kenya revenue collected from transfer pricing audits has doubled from USD52m in 2012 to USD107m in 2014. 12th Main Road.  All these programmes have already had an impact. 7200010122. amount of income-tax paid and accrued. Zambia and Zimbabwe.  The OECD has in force programmes with the following countries aimed at building effective solutions to address transfer pricing and other BEPS risks: Botswana. Page 7 of 30 #9.91m in 2013. We are expecting important outcomes also from the Tax Inspectors without Borders initiative. resident in India and having a consolidated group revenue of over €750 million or Rs. 9176 787980.395 crore. Ghana. profit and loss before tax.Ph: 044-43525468. Ghanaian and Netherlands officials are working on transfer pricing audits as are Rwandan and UK officials. 2017. nature and detail of main business activity. 5. Ethiopia. multinational companies.  Indian MNCs are also required to submit information for a master file as required by OECD BEPS Action 13 report. shall provide details of the country of residence of the parent. Kenya. a local file referring specifically to material transactions of the local taxpayer and c. The Budget proposal:  In line with the OECD’s suggestion. Benefits for Developing Countries  If we consider the example of OECD’s work in Africa it is interesting to see the actual impact of capacity building initiatives. along with details of each constituent’s residential status. In Zambia revenue from audits has increased from USD3. For example. Anna Nagar West. number of employees.  A three-tiered structure was suggested by the OECD for reporting: a. thus helping to evaluate transfer pricing deals and identify possible evasions. Assisting countries in developing capacity is therefore an important pillar to ensure domestic resource mobilisation and to create a more sustainable and equitable environment.

in substance made. Chennai – 40. the bane of Indian revenue will be dealt with.000 and track record of two years can avail the treaty benefits. if its POEM in that year is in India. been deferred by one year in the Budget citing difficulties experienced by the stakeholders in changing to the new system. which has been haunting Indian Tax Authorities for some time now.  Growing intolerance of India towards these practices means that these investors will now have to get ready to pay additional tax. Double tax treaties  Misuse of double tax avoidance agreements signed bilaterally between countries is one of the common ways in which tax evasion takes place.  As per the amendment brought in by Finance Act. 12th Main Road. Once that is done. 2015.”  Determination of control will be based on place where meetings of Board of Directors are held.  POEM has been defined to mean “a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are. Place of effective Management (POEM) The BEPS connect:  Action 7 dealing with ‘Preventing artificial avoidance of permanent establishment status’ deals with this issue.smartleadersias. and its global allocation of income and economic activity in order to assist the taxmen in evaluating the transfer pricing risk in the group.  The GAAR state that the tax authorities will have the right to scrutinise tax arrangements whose sole purpose is to save on tax. if during the year. control and management of the affairs of that company was wholly situated in India. Proposal in the Budget:  It is not surprising that the Finance Minister has not dealt with BEPS Action plan 6 in the Budget since the General Anti Avoidance Rules that are to come into effect from April 1. Anna Nagar West. Plot No. a foreign company will be regarded as a tax resident of India. place from where the chief executive officer and other senior management carry on their activity and so on.com . Impact:  These rules affect the foreign portfolio investors investing in Indian equity and other instruments.  Investors investing through such brass-plate companies will now come under the taxman’s lens. however.2163.SMART LEADERS IAS  This file will provide an overview of the group’s business.  Another reason why the Centre has not implemented Action 6 is because the threat of GAAR is already resulting in incremental foreign portfolio and foreign direct investment flows coming in from jurisdictions with whom the Indian government has signed more fool-proof DTAA such as Singapore and the US.  The implementation of the POEM rules has. 2017. already deal with these issues.  The Indian government has also been aware of the pitfalls in double tax treaties and the DTAA with Singapore has a LoB clause that specifies only companies with minimum annual expenditure of Singapore dollar 200. a foreign company was treated as resident of India. GS-Prelims & Mains Online Test Available Visit :www.  There are reports that similar clauses are also being included in the DTAA with Mauritius.  It is no secret that many FPIs and FDIs have routed their investments through Mauritius in the past to make the most of the DTAA between India and Mauritius and get away without paying any capital gains tax on profits. 7200010122.Ph: 044-43525468. 9176 787980. Page 8 of 30 #9. The Budget proposal:  Upto financial year 2014-15. its overall transfer pricing policies.  The BEPS Action 6 on ‘Preventing the granting of treaty benefits in inappropriate circumstances’ deals with such double tax agreements and the way to tackle their misuse.

Page 9 of 30 #9. 9176 787980.SMART LEADERS IAS Impact: These rules will impact Indian companies that have formed overseas subsidiaries to which a bulk of profits have been shifted using the ‘Permanent Establishment’ rules.  These reporting requirements are likely to affect Indian companies which have subsidiaries across the world and have group turnover exceeding Rs 5. This will hit you as an investor. sniffing at every deal. The IT department is thus taking a softer route towards ending these tax-planning methods. which have been aggressively buying overseas companies. Hindalco. This is expected to give an additional incentive for companies to retain and commercialise existing patents and to develop new innovative patented products. are transferred to companies in low-tax jurisdictions to avoid paying tax at a higher rate in India.395 crore. 7200010122. within the country.2163. therefore. Some alternate investment funds could also be impacted by these changes. Anna Nagar West. resulting in increase in tax incidence. Many Indian MNCs will find the cost of complying with these requirements a drag. The proposal in the Budget:  The Budget has recognised the need to retain the patents developed through research and development activity in India. Plot No.  The royalty income received for a patent developed and registered in India shall be taxable at the rate of 10 per cent (plus applicable surcharge and cess) on the gross amount of royalty. Taxation of income from patents The BEPS connect:  India has become a large R&D hub.com .  Due to the higher rate of corporate tax in India.smartleadersias. electronics and some chemical companies. the ownership of patents created is shifted to subsidiaries in low-tax regimes so that profit by way of royalty is shifted to these jurisdictions. there can be higher transparency in corporate accounts.  But the patents. automotive. as far as ownership of intangible assets goes. will now have to make higher disclosures and will also have the taxman on their heels.  Some companies that have been playing the tax arbitrage game will now have to re-think these arrangements.  The Action Plan 5 of the BEPS project recommends the nexus approach which prescribes that income arising from exploitation of intellectual property should be attributed and taxed in the jurisdiction where substantial research and development activities are undertaken. once developed.  Lower tax on royalty income can now result in companies re-thinking these tax-planning strategies. GS-Prelims & Mains Online Test Available Visit :www. Major companies that figure in this list include Tata Steel. such as pharma. If companies take up this offer. over 30 per cent. Tata Motors.  The profitability of some Indian multinationals can be hit by larger tax incidence. Impact:  These reporting requirements can have widespread ramifications for both companies as well as investors.  The Centre. etc. Impact:  This will impact companies that have large research and development spends. proposes to tax income from patents at a concessional rate.  Many pharma companies such as Sun Pharma and Dr Reddy’s. rather than the jurisdiction of legal ownership only.Ph: 044-43525468. TCS and BhartiAirtel. 12th Main Road. Chennai – 40. especially in pharmaceutical research.

 MOHA: NGOs are getting over Rs 11.U. finance terror or even to carry out religious conversions which are illegal in India. o NGOs registered under FRCA did not submit statutory annual returns as mandated by law. Anna Nagar West. but in reality are fronts to fund terror and launder money. The flow of foreign funds to NGOs and charity organizations operating in India is a growing concern for the security management of the country. these NGOs show that they are working for a cause.  There is a concern because of: o unknown or undisclosed source of income. Why NGOs came under the scanner of security agencies and what are the security concerns that emerges from the flow of foreign funds to India through these NGOs?  The column marked ‘miscellaneous’ in statement of accounts of NGOs who receive foreign funds is turning out to be a headache for authorities.com .Sagayam IAS Page 10 of 30 #9. The unregistered NGOs are the cause of concern. o active involvement in certain anti-development social movements. Sharanya Ari (AIR-7. 9176 787980. Our Student.  Nearly 85.000 NGOs are in the country out of which 68. GS-Prelims & Mains Online Test Available Visit :www.  According to IB.500 crore annually from foreign funds alone. 12th Main Road.smartleadersias. Tamil Nadu Rank-1) Felicitated by Mr. Chennai – 40.SMART LEADERS IAS 5. Ms. o poor accounting methods.  This money could be either used to launder money.Ph: 044-43525468. Plot No. 7200010122.  MOHA report: NGOs are vulnerable to terror funds and money laundering.000 are registered to collect funds. poor records on expenditure.2163.

 The policy recommends increasing the scope of the present 'Scheme on Enhancement of Competitiveness of Capital Goods' by adding a set of components including technology. Capital Goods Policy  This is first ever policy for Capital Goods sector with a clear objective of increasing production of capital goods from Rs.50. Common Engineering Facility Centres. Plot No. The gap to stated aspiration is large. advanced manufacturing and cluster development. Page 11 of 30 #9. 12th Main Road. Anna Nagar West.  The policy proposes a comprehensive policy agenda to achieve these goals. Discuss about the road map for the capital goods sector in India and its recognition as strategic sector. skills & capacity building.  It will increase the share of domestic production in India’s demand from 60 per cent to 80 per cent thus making India a net exporter of capital goods. GS-Prelims & Mains Online Test Available Visit :www.  To create an enabling scheme as a pilot for 'Heavy Industry Export & Market Development Assistance Scheme (HIEMDA)' with a view to enhance the export of Indian made capital goods. increase skill availability. dies.  The National Manufacturing Policy of 2011 envisaged manufacturing to contribute 25% to GDP and create 100 million jobs.  In contrast. 6.  Strengthen existing capital goods scheme: The policy recommends increasing the budgetary allocation & scope of the present 'Scheme on Enhancement of Competitiveness of Capital Goods' which include setting up of Centres of Excellence. textile machinery. ensure mandatory standards and promote growth and capacity building of MSMEs.  NGOs have complex financial operations with multiple donors and informal money transfers.Ph: 044-43525468. printing and packaging machinery and food processing machinery as priority sectors to be envisaged under 'Make in India' initiative. manufacturing activity contributes to 17% of India's GDP and only 4 million jobs are estimated to have been created in the sector since 2010.  The policy envisages increasing exports from the current 27 per cent to 40 per cent of production. Integrated Industrial Infrastructure Park and Technology Acquisition Fund Programme. plastic machinery.  Manufacturing is a key contributor to the economic development of any nation. earthmoving and mining machinery.com .000 crore in 2025 and raising direct and indirect employment from the current 8.4 million to 30 million.2163. heavy electrical equipment. adding jobs as well as increasing self-reliance.  The policy also aims to facilitate improvement in technology depth across sub-sectors.smartleadersias. process plant equipment. green engineering and energy. so suspicious transactions may be harder to identify. moulds and press tools. as summarized below:  Make in India initiative: To integrate major capital goods sub-sectors like machine tools.  NGOs have unpredictable and unusual income and expenditure streams.SMART LEADERS IAS Threats  can become an unconventional source of funds for terrorism  money laundering  may cause social arrests and like in religious reconversions  can thwart bilateral relations with other countries – a proxy to influence national policies to favor or malign relations with other countries  NGOs are targets for money laundering because of availability of tax benefits to NGOs doing charitable activities. user promotional activities.2. till date. Chennai – 40.7. This will also require developing a comprehensive branding plan for the CG sector with the support of India Brand Equity Foundation (IBEF). 9176 787980.000 crore in 2014-15 to Rs.30. 7200010122.

 A monitoring and evaluation mechanism for governing and ensuring implementation of policy recommendations is also proposed. and set up 10 more CMTI like institutes to meet the requirements of all sub-sectors of capital goods. Chennai – 40. purchase of IPRs.smartleadersias. there is need to create a scheme based on capital subsidy to promote the manufacturing of quality products.SMART LEADERS IAS  To launch a Technology Development Fund under PPP model to fund technology acquisition. international standard bodies.  Support services: A robust mechanism for reporting data of production. 12th Main Road.  The National Capital Goods Policy 2016 will be reviewed every five years and revised appropriately to take account of progress in implementation and emerging trends in the national and international environment. culminating in realizing the true manufacturing potential of India and achieving the stated goals of 'Make in India'. The mechanism will be in the form of inter-ministerial and inter-departmental committees at the highest level to ensure due consideration of the interests of all stakeholders. Cost management. export and import for all capital goods sub-sectors with minimal time lag to facilitate continuous monitoring of policy effectiveness and timely actions is proposed. These actions in tandem are expected to unlock the potential of the Capital Goods sector.  Cluster approach:-To provide schemes for enhancing competitiveness through a cluster approach. computer controlled and energy efficient machineries across capital goods sub-sectors. Governance Mechanism:  The policy proposes a governance mechanism for smooth implementation and effectiveness of the policy. 9176 787980. to institute formal development program for promoting and framing Standards with Standards Developing Organizations (SDOs) including Bureau of Indian Standards (BIS). testing and certification infrastructure such as Central Power Research Institute (CPRI). especially for CG manufacturing SMEs. Anna Nagar West. Thrust to be on critical components of competitiveness such as Quality management. Plant maintenance management. designs & drawings as well as for commercialization of such technologies of capital goods.  Skill development: To develop a comprehensive skill development plan/scheme with Capital Goods Skill Council and to upgrade existing training centres and set up 5 regional State-of-theArt Greenfield Centres of Excellence for skill development of CG sector.com . Incubation and Post-Incubation phases of a start-up's growth to ensure that a robust foundation is established. Page 12 of 30 #9. test / research institutions and concerned industry/ industry associations  To upgrade development. Human Resource management and prevention of corrosion with the Government support to the extent of 80% of the cost. transfer of technology.  To create a 'Start-up Centrefor Capital Goods Sector' shared by DHI and CG industry/industry association in 80:20 ratio to provide an array of technical.  To modernize the existing CG manufacturing units. Energy management. Periodic Review of Policy:  The capital goods sector operates in a dynamic local and global environment and it is imperative for the policy to undergo a periodic review and revision to maintain its relevance.  Mandatory Standardization which includes. inter alia.Ph: 044-43525468. especially SMEs by replacing the modern. 7200010122. This includes an inter-ministerial committee coordinated by Ministry of Heavy Industries & Public Enterprises with Secretariat participation to annually review the progress on policy objectives and driving coordinated action and a joint implementation mechanism with State governments. These services should focus on Pre-incubation.2163. GS-Prelims & Mains Online Test Available Visit :www. business and financial support resources and services to promising start-ups in both the manufacturing and services space. defining minimum acceptable standards for the industry and adoption of International Organization for Standardization (ISO) standards in the absence of other standards. Plot No.

2 are killed and 7 are in custody.Rise of splinter groups in Jharkhand like Tritiya Prastuti committee 4. Nine-point action plan: The policy has proposed a comprehensive set of policy actions which would enable the achievement of the objectives for the sector and had recommended a set of nine new initiatives and policy actions and they are: Devising a long term. 6. Also true for central committee members.the strategy of“clear. CPI(M) started making connections to Maoist groups in Philippines. Inter-organizational and intra-organizational conflict . Turkey. and financial and political muscle. 7200010122. Crisis of leadership . Developing manufacturing clusters with shared facilities especially for SMEs 7.Maoists have significant loss of cadre and leadership. 2. There is an increasing surrender also witnessed. Plot No. hold and develop” must be strengthened Page 13 of 30 #9. period after that shows a declining trend. Anna Nagar West. Links with Islamist terrorism . 8. 5. Briefly trace the contemporary developments on the issue of Maoist insurgency? Do these developments alarm the preparedness of government in dealing with the issue or is it welcoming?  Continuity and discontinuity have remained as important characteristics of Maoist conflict in India. Chennai – 40.Ph: 044-43525468. 3. there is downward movement. 9. Holland and Italy. Created a parallel economy and justice system and involved in illegal mining. CCOMPOSA (2001) meetings attended by CPI(M)  It’s a welcoming trend. From 2003-2010. stable and rationalized tax and duty structure to ensure cost competitiveness of the sector Drafting a comprehensive public procurement policy with amended qualifying criteria and introducing special provisions in contracts for domestic value addition Promoting development of new technology through indigenous sources Providing Technology Upgrade Fund Support across all capital goods sub-sectors Creating a level playing field vis-à-vis imports by restricting imports of second hand machinery and mitigating duty disadvantages Supporting availability of short and long term of financing at competitive rates to capital goods manufacturers Enabling skill development by setting up sub-sector specific Skill Councils. International connections . 12th Main Road. 2.2163.smartleadersias.Report that LeT and CPI(M) (Communist Party of India (Maoist)) has established a relationship. The corporate –maoist nexus that target infrastructure .SMART LEADERS IAS 1. 5. The arms and ammunitions recovered after 2013 January ambush attack bore Pakistani markings.  Security with development. an upward trend in violence but after 2010. 6. 4.Violence – basic in Charu Mazumdar’s annihilation doctrine. 3. Low incidences of violence and growing presence of security forces presents a sense of law and order is a lawless zone.created an extortion industry. Enabling higher participation of India in standard creation and developing support system to improve compliance.Since 1995.  While 2010 was the bloodiest year of Maoist insurgency. Out of 16 polit bureau members. 9176 787980. Contemporary developments 1.com .  This reversal may be due to sustained anti-maoist operations or a strategic move by maoists for recruitment and making alliances. GS-Prelims & Mains Online Test Available Visit :www. Escalation and de-escalation of maoist violence: . 7.

smartleadersias.commerce rules?  It’s not just offline retailers who will benefit from the new restrictions imposed on e-commerce players. hence. for example. So who gains from new e.  In such a scenario. Snapdeal or Amazon.  With over 150. Meanwhile.  Even new start-ups that do not have foreign investments will not come under the ambit of the new norms. when it comes to discounting. “Such an ownership over the inventory will render the business into inventory-based model. 12th Main Road.000 sellers and Snapdeal has around 200. Anna Nagar West. whose profitability was being hurt because of aggressive discounting by online players. which plans to enter the e-commerce segment through a marketplace model. Tata Group has also announced its entry into the e-commerce segment. would have the upper hand over Flipkart. This also means they can influence pricing directly and indirectly. have to immediately comply with the priceinfluencing norms. Tatas.Ph: 044-43525468.  Companies such as Flipkart and Snapdeal have already received FDI through foreign private equity and venture capitalist investors and.SMART LEADERS IAS 8. the cash-rich Reliance will compete with Flipkart. any warrantee/ guarantee of goods and services sold will be responsibility of the seller.  However.  The Centre had announced that 100 per cent FDI will be allowed in online marketplaces.  Amazon India has more than 50. Page 14 of 30 #9. the biggest categories for online players. 9176 787980. which has been in the business for over eight years and has about 40. Reliance Retail.000 vendors. The cap of 25% on sales by a vendor on marketplace will ensure a broad basing of vendors for a true marketplace  E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field  E-commerce marketplace may provide support services to sellers in warehousing and logistics.  So. gaining an edge over the competition in a market that is largely driven by discounts and cash backs. these marketplaces cannot influence pricing of products directly and indirectly.  Reliance Retail declined to make any comments for this story. did the government come out with these regulations to promote the entrepreneurship ecosystem?  Indian consumer is already addicted to online retailers and it will be interesting to see if these customers buy on Reliance or Tata’s platforms only for the discounts. but also wholly-owned Indian online retailers. Chennai – 40.000 vendors.  Reliance Group.000 sellers on its platform.  In marketplace model.2163.However. and cannot get more than 25 per cent of sales from one single vendor. 7200010122.  New norms would also benefit brick and mortar retailers (like Future Group).com . GS-Prelims & Mains Online Test Available Visit :www. Reliance plans to enter the market with electronics. Some Important Guidelines:  E-commerce firm will not be permitted to sell more than 25 per cent of total sales from one vendor or its group companies. Plot No. Discuss the FDI in e-commerce policy and how it would benefit or harm the consumers as well as businesses.  That’s because the restrictions on sourcing products and pricing do not apply to companies that have not received foreign investment. Aditya Birla Group and Mahindra & Mahindra are planning to enter the ecommerce segment and could have the edge as they can continue with the discounting model.  These riders are not applicable to online marketplaces completely-owned by Indian companies. appliances and apparel. such entities will not exercise ownership over the inventory.

Commerce is even more dangerous. 12th Main Road. in seeking to institute a uniform rate on all forms of consumption. 9176 787980. Anna Nagar West. during clearing. Plot No.  The GST. 2. unlike. Guidelines for Inventory Based Model are required on the similar lines with the Marketplace Based model.  CRPF – Central Reserve Police Force: largest central armed police force in India.  Using CRPF for other functions such as during elections.smartleadersias. while the GST. like all indirect taxes. In the model of mega retail – profit is actually appropriated in terms of the market share. Can the concept of social equity be given up just for the sake of increase in GDP or Common Market? Comment. E. it tightens the tax net — currently riddled with numerous holes in the form of multiple rates and exemptions and classifications — in addition to widening it. even in the diluted version proposed in the GST Bill. as in most operations they have to coordinate with the local police force. Under the control of Home affairs. thereby improving overall operating efficiency Some Suggestions: 1. Criticism  Incoherence in following SOP. Page 15 of 30 #9.  The main function is to assist state police agencies to maintain law and order and counter insurgency operations. Amazon in 2015 faced 6000 crores loss by offering discounts under the name of marketing promotion. Competition commission of India should be given more teeth to regulate this sector.  Security force with highest casualty and also a prime target from maoist and terrorist organizations.  Role of command officers in operations not well-defined. would still accomplish one thing: widen the tax base and make it identical for both the Centre and the States. paralleling the rise to global dominance of neoliberal economic thought. these retailers had gamely fought back by reorienting store profiles. The social dimension  The answer to this question leads us to the other aspect of the GST. to do with why it started to get widely adopted (as VAT) from the 1970s. E-Commerce might lead to unemployment of small retailers.  The fractured leadership between state police forces and CRPF.  The seller of the good or service remits this GST to the State after deducting the taxes already paid by him earlier in the supply chain. 3. GS-Prelims & Mains Online Test Available Visit :www. say. Chennai – 40. Governmentt should have separate agency to monitor such markets. sweeping or counter-insurgency operations. an excise duty (whose base consists of manufacturers) the GST is paid only by the final consumer. 7200010122.  Training sessions should include awareness on human rights too.SMART LEADERS IAS  “Facing what seemed like an existential crisis over the past couple of years. Which security organization in India is termed as ‘primary counter-insurgency’ force? Critically analyse the organization of its performance and provide any recommendations to improve its efficiency. Note: a study reveals that for every wall mart store – 3000 jobs are being killed in the small retailers. Once you capture the market – you can monopolise the market.  That is because. increasing private labels and sharpening focus on tier II and III cities. For instance.2163.Ph: 044-43525468. 9. 4. 10.com . Such Marketing promotions which results in predatory dumping should be curbed.  In other words. is a tax on consumption.  Poor living conditions during operations that psychologically harms the CRPF jawans.

Both these rates might be unrealistic.77 per cent and 13.Karthikeyan G Ms. a panel of State government representatives mooted a revenue-neutral rate or RNR (rate at which tax revenues for states and the Centre will remain the same as before GST) of 27 per cent (12.Ram Krishnan R Mr.2163. Plot No. Chennai – 40. In the countries where the GST rate was reduced over time. as the general VAT rate for many states hovers around the 13-14 per cent mark. But the very logic of GST is such that it works best when the exemptions are zero or minimal.Sruti Vijayakumar Mr.Prakash B ALL INDIA RANK 7 37 268 301 381 420 655 701 906 OPTIONAL Sociology Sociology Sociology Sociology Sociology Sociology Sociology Sociology Sociology ALL THE ABOVE SUCCESSFUL CANDIDATES WERE MENTORED BY MR.SIVARAJAVEL     New Zealand introduced GST at 10 per cent. 7200010122. higher rates.Ph: 044-43525468. 9176 787980.Pavankumar G Giriyappanavar Mr. Once implemented — in however compromised a form — this is the direction GST regimes gravitate toward: fewer exemptions. Anna Nagar West.Sarveshwaran Mr.Vaithinathan R Mr.Balachandar D Mr. or kept lower rates for select goods. New Zealand comes closest to the GST purist’s dream — with very few exemptions. GS-Prelims & Mains Online Test Available Visit :www.S. it was made possible by a broadening of the base by minimising exemptions.Saranya ARI Dr. Page 16 of 30 #9.com . A 12 per cent GST will most definitely mean substantial revenue losses for states. That was in 2010. In 2014. This brings us finally to the question that has monopolised the GST debate of late: what should be the taxation rate? The report of the 13th Finance Commission’s Task Force on GST recommended 12 per cent (7 per cent for SGST and 5 per cent for CGST). today it is 15 per cent. SOCIOLOGY OPTIONAL OVERWHELMS IN IAS 2015 – 16 FINAL RESULT NAME Ms.91 per cent for CGST and SGST respectively.SMART LEADERS IAS    Many countries that have embraced the GST have also exempted essential commodities from it.smartleadersias. 12th Main Road.

Jaitley has been quick to clarify that the GST rate would be much lower than 27 per cent. by fragmenting Indian markets along State lines. the GST can only be implemented. and not income-dependant beyond a point. Benefits of GST:  GST will increase the resources available for poverty alleviation and development. governments. and Madhya Pradesh — who happen to be large consumers will increase substantially.  This might explain why in some developed countries. GS-Prelims & Mains Online Test Available Visit :www. are more difficult to evade.  A GST rate of 27 per cent.  Understandably.  This will happen indirectly as the tax base becomes more buoyant and as the overall resources of the Central and State governments increase.  Second.7 per cent of total tax revenue.  These distortions are caused by three features of the current system: the Central Sales Tax (CST) on inter-State sales of goods. Chennai – 40.com .5 per cent from direct taxes) or Indonesia (55. that indirect taxes are considered regressive compared to direct taxes.  But this could mean that some essential goods currently taxed at a lower rate could end up being taxed at a higher rate under a GST. which fixed a roll-out date for GST (April 1. the GST would rectify all these distortions: the CST would be eliminated.  The resistance to it was so strong in Canada that the then Prime Minister Brian Mulroney had to invoke an obsolete. ironically enough. a move. and announced a lowering of corporate tax rate from 30 per cent to 25 per cent over a four-year period. and too fearful that higher corporate taxes will lead to capital flight (or capital slumber). believes Ms.” The shift towards indirect taxation:  Around the world.SMART LEADERS IAS  And from this week. most of the other taxes would be subsumed into the GST. by “a leap of faith”. which are typically proportional to the abilityto-pay. on the other hand. 9176 787980. especially the trade unions. faced with declining tax revenues.  It has to be acceptable to the masses. numerous intra-State taxes. Uttar Pradesh.Ph: 044-43525468.85 per cent). intended to smoothen the transition to a GST regime.36 per cent to 14 per cent. accompanied by lower taxes on capital and reduced social spending.  At any rate (pun unintended). colonial era provision of the Constitution — drawing on special powers of the Queen — to get the law passed in the Senate. the introduction of the GST was opposed fiercely by the local working classes.  In fact.  In one fell swoop. would impose an enormous tax burden on the wage-earning classes. India isn’t immune to this global shift in favour of indirect taxation. and could prove fatal for any elected government.  It’s because the poor and the working classes spend a greater proportion of their income on essential consumption compared to the classes that are better off. and the extensive nature of countervailing duty exemptions that favours imports over domestic production. have been turning their attention to indirect taxes. Anna Nagar West. and because the GST would be applied on Page 17 of 30 #9.smartleadersias. but it would hit the lower income groups harder. the GST will facilitate ‘Make in India’ by making one India. the service tax (levied by the Centre) has gone up from 12. Mr.  This is despite that fact that India’s direct taxes contribute only 37. also abolished the wealth tax. the ideal way to bring down the GST rate without incurring revenue losses is to widen the base by including as many goods and services under its purview as possible. which have a wider base than direct taxes. “You can’t do a calculation to the last penny and say only at this revenueneutral rate will I implement GST.  The current tax structure unmakes India. according to a 2013 study by the Centre for Budget and Governance Accountability — which makes India’s taxation regime already more regressive than that of other emerging markets such as South Africa (57. She elaborates. Plot No. 12th Main Road. easier to administer.2163. because at the end of the day. Bihar. it is the average citizen who has to cough up the money. 2016).  The 2015-16 budget.  But it will also happen directly because the resources of the poorest States — for example. including Canada and Australia. 7200010122.  The National Democratic Alliance government has already ticked two of those boxes. Rao.

12. Chennai – 40. Anna Nagar West.  Should encourage inter-faith platforms and community engagement.  This is an Era of growing radicalization and violent extremism. it is necessary to understand and refute the ideology behind it. Provided the chain is not broken through wide-ranging exemptions. Elucidate. there is the possibility that the other overseeing authority may not. 12th Main Road.  Soft approach is one that is designed to win the hearts and minds of radicalized individuals by employing non-coercive methods.  Strong social ethos.com . Gujarat.  A rare occasion of positive reinforcement. this self-policing feature can work very powerfully in the GST. 9176 787980. and keep India in the range of countries with reasonable levels of indirect taxes. But dual monitoring should also be viewed as creating desirable tax competition and cooperation between State and Central authorities. Modi made the candid admission that the “many doubts” he had had about the GST when he was Chief Minister of Gujarat helped him understand the worries of State governments.  This was an obvious reference to the concerns raised by many States such as Tamil Nadu. Page 18 of 30 #9. the GST would improve — even substantially — tax governance in two ways. encourage compliance. simplify administration. Plot No. cultural diversity and supportive religious scholars are the assets towards the new strategy.  India’s vulnerability to extremism necessitates a multi –pronged approach-using both soft and hard tactics.SMART LEADERS IAS            imports. these benefits will only flow through a well-designed GST. GS-Prelims & Mains Online Test Available Visit :www.  Buoyed by the euphoria over the passage of a major hurdle in his reforms push.  Seeks to undo the radicalization process by engineeringthe individual’s return to moderate society by providing a stable support network. Of course. 11.  To eliminate extremism. to handle which conventionadvocates an iron approach. Suitability to Indian Settings:  Force based approach proven to be inadequate in India. Maharashtra and Goa.  The fact that the GST is essentially a tax on consumption implies that the States in which final consumption occurs get the privilege of collecting the tax. ‘War on ideas’ rather than ‘war on terror’  In May 2016. What do you understand by the term ‘soft counter-terrorism’ strategy? Analyse its suitability to Indian settings. probing their original reason for extremist tendencies and divorcing them from extreme beliefs and social contacts. Third. Other benefits such as the boost to investment have been documented in the Report on the Revenue Neutral Rate that was submitted in December last year. To claim input tax credit.2163. The first relates to the self-policing incentive inherent to a valued-added tax. Goods and Services Tax is good for business but snag for federalism. the negative protection favouring imports and disfavouring domestic manufacturing would be eliminated. Critics and taxpayers have viewed the dual structure with some anxiety. fearing two sources of interface with the tax department and hence two potential sources of harassment. The GST should aim at tax rates that protect revenue.smartleadersias. 4 youths indoctrinated to JeM ideology were released by Delhi police after a set of counseling sessions.Ph: 044-43525468. 7200010122. The second relates to the dual monitoring structure of the GST — one by the States and one by the Centre. avoid adding to inflationary pressures. weekly visits to psychologist and Muslim scholar.  Successfully followed in Singapore a bilayered strategy. each dealer has an incentive to request documentation from the dealer behind him in the value-added/tax chain. especially on intermediate goods. Even if one set of tax authorities overlooks and/or fails to detect evasion.

“All goods and services will be divided into certain categories. other inputs and services will take credit for the taxes they have paid. aiming to serve the national market.  An attempt was made to curtail this autonomy with the introduction of VAT. 9176 787980. Note:  When you move to a GST regime in a federal set-up. whose main base in India is near Chennai. the CGST and the SGST. the State would have to refund to the manufacturer on a proportionate basis the portion of the GST revenue paid by the company.  The GST’s design as a destination-based consumption tax has important implications for States that are the home base of these manufacturing companies. some curtailment of the State’s freedom is inevitable. The rates for both. such tax credit would be apportioned to those destinations from the tax revenue gathered in the State where the manufacturing occurred. I cannot shift a commodity from a lower to a higher rate. which mandates a uniform rate. Gujarat. they now stand to lose revenues because of the GST’s design.  Now the providers of these components. 7200010122.  During the manufacturing process the company would have procured goods and services from within the State.  They are worried that after having wooed these companies with fiscal incentives over the years. which.smartleadersias. on average.  But if the final sales are mostly happening in other States. will be fixed by the GST Council.  This development needs to be viewed in the context of steady erosion in the states’ freedom to decide on taxes and tax rates. when a large industrial house establishes a base in a particular State.  So.  In the case of exports. whose members will be State finance/revenue ministers and chairman will be the Union finance minister.  So. Hyundai sells only about 10 per cent of its cars within Tamil Nadu. and if I am a state.”  This is not the only limitation. Maharashtra and Haryana.  It. accounted for 80 per cent of their revenue. 40 per cent of its cars are sold in other parts of India and the rest exported.  This also highlights the fact that the GST could actually be a fiscal disincentive to States aspiring to becoming manufacturing centres by climbing on to Modi’s “Make in India” bandwagon.  The rates will be fixed by category.SMART LEADERS IAS  The serious implication this has for States that have an edge in manufacturing explains the opposition to the GST from States such as Tamil Nadu.  But it did not totally succeed because the VAT still had four different rates that states could play with. even if the production has happened in one State.  Once the rates are set by the GST Council.Ph: 044-43525468. to explain why States that are major sites of manufacturing activity are worried. for which it would have paid a tax component. in the case of a company such as Hyundai. a portion of the GST revenue gathered in the manufacturing base has to be transferred to the State where the final consumption happens. GS-Prelims & Mains Online Test Available Visit :www. “exports” goods and services to not only other States but overseas too and these are the sites of final consumption of its products. Chennai – 40. or put it in the exempt category.  Typically. 12th Main Road. the State may end up losing a significant portion of the overall revenue that it “earns”. it is obvious that only a fraction of its output would be sold within its home base.com .” Page 19 of 30 #9. capital goods. Plot No.2163. the States have complete autonomy over levy of sales taxes. But with the GST. Anna Nagar West.  “According to the Constitution. thus.  Example of the Korean car major Hyundai. individual States will lose their right to tax whichever commodities they want at the rates they want. even this limited autonomy would be gone.

GS-Prelims & Mains Online Test Available Visit :www. Chennai – 40. 9176 787980.2163. 12th Main Road.Ph: 044-43525468. 7200010122. Anna Nagar West. Plot No.smartleadersias.SMART LEADERS IAS Page 20 of 30 #9.com .

 It is also being burdened with the task of determining the nuts and bolts of the GST structure to become operational. at the cost of the neglect of all the canons of taxation.  A genuine pursuit of reforms in order to engender equity and build a fairer direct tax regime would have logically required the enlistment of the States as partners in the levy of such taxes. Anna Nagar West. reflects a mind-set that promotes the sectarian interests of a tiny minority in the name of furthering the public interest. 12th Main Road. most notably sections of large business houses. But any decision by the Council would require a three-fourths majority.  It is indeed laughable that a poor (or a weak or small) State with limited resources at its command would be able to get a favourable verdict in the Council without the blessings of the Centre.  Surely the pursuit of uniformity would be the nemesis of a democratic polity.SMART LEADERS IAS  In other words. and the dual taxes will be administered independently by the States and the Centre.  Besides.  Moreover. even if it has the support of other States. there is the danger that the long history of tax jurisprudence may be jettisoned. if rates will be different. would have an almost automatic impact on tax buoyancy. which is to decide the rates.2163. GS-Prelims & Mains Online Test Available Visit :www. especially the RNR. which.  The fetish of these two elements.  According to the government.  Two characterisations of the GST have been repeatedly made by those championing its cause.  Although all States are to carry a vote in the Council. which. the Centre is to have a one-third share of the votes. why not just streamline the existing tax architecture instead of erecting a new one? GST Council:  The design of the GST Council. how does one make good a State’s loss of the political right to fix its own tax rates?  However. there is no escape from the tax because it is built into the price.Ph: 044-43525468. while the loss in revenue of the States may well be compensated by the Centre (as provided for in the GST Bill). State Finance Commission can resolve this issue. and act as a body to settle disputes between States and the Centre is another issue raised by critics. Chennai – 40. 9176 787980.  The first is its “simple” structure.  If the Council works like a kattapanchayat (or khaps as they are called in the northern badlands) attempting to settle disputes among States and the Centre. raising the possibility of prolonged and messy litigation. it is inconceivable that such States would wish to antagonise the Centre and jeopardise the discretionary transfer of resources to them from the Union government. the taxes will be dual. a GST regime where each State has a different tax rate for different goods and services doesn’t sit well with the industry demand for a single national market with a uniform tax regime. Note: With Respect to Local Bodies  Principle relating to the share of local bodies in revenue buoyancy must be discussed in the GST Council.  First. Plot No.  It is well known that indirect taxes are regressive in nature for two reasons. given the nature of Centre-State financial relations.  But what is the reality with respect to the State Finance Commission? Page 21 of 30 #9. no matter how logical or fair its case may be. the Centre has an effective right to veto any move not to its liking.com . it is claimed. 7200010122.  By virtue of its share of votes in the Council.  Moreover. a consumption tax such as the GST falls equally on everybody irrespective of the disparities in income levels.smartleadersias.  The second is the uniformity in the rate. this is not the case with income tax or other direct taxes because there are ways in which they can be avoided or evaded. would actualise the move towards India emerging as a unified common market. it is claimed.

hierarchical organization with purely economic motives and usually causes law and order problems. GS-Prelims & Mains Online Test Available Visit :www.Dawood gang. N. briefly comment on the recent verdict of Supreme Court to set up a new ‘Organized Crime Investigating Agency’ in India.  In Dec 2015.  Crime and terrorism can potentially have a close linkage.100 crore to be given to the agency from Nirbhaya fund in response to aPIL filed by an NGO Prajwala.L.Ph: 044-43525468.smartleadersias.  Organized crime mafia in India –most prevalent in Mumbai.SMART LEADERS IAS   In principle Centre Finance Commission recommendations are accepted by the centre. UP (Babloo gang). Beno Zephine. TN. Our Student.com . extortion is the fundamental basis of funding for all forms of extremism. organ trade. forced marriages . Liquor mafia in Ahmadabad and Bihar. counterfeit currency is the main source of funding for terrorism. Links between OC and terrorism  In NE. 7200010122. But this is not the case with respect to State Finance Commission Recommendation. 12th Main Road.  What was a crime syndicate later turned into a terrorist outfit.2163. Also includes cattle smuggling and small arms.  Also directed to frame a comprehensive anti-trafficking legislation within 6 months and rehabilitation of children caught in trafficking and Rs. Constitutional obligation to protect local bodies with respect to sound finance should be protected. Plot No. for sexwork. Chennai – 40. Rajasthan and Karnataka. 9176 787980. Is there any link between organized crime and terrorism in India? In addition. Anna Nagar West. India's 1st visually challenged IFS Officer Page 22 of 30 #9. SC set a deadline of Dec 1. Most trafficking goes unregistered and no effective legislation to prevent them. and also in Delhi (ransom). 2016 to set up ‘Organized Crime Investigative Agency’ to exclusively probe human trafficking cases.  In Jammu and Kashmir. WB.  About 1100 girls went missing in Gujarat alone. According to UN office on Drug and crime.  Organized Crime (OC) a well-knit.  Largest cases registered in Maharashtra. labor. 13. human trafficking in South Asia is one of the fastest growing transitional organized crime. (UNODC).

inland water. Discuss how Indian ports and coastal regions are set to witness a sea change through Sagarmala Project The Sagarmala is a series of projects to leverage the country’s coastline and inland waterways to drive industrial development.000 Crore and a subscribed share capital of Rs. 1. 90 Crore – Sep. 2016 update. add up to six new ports and enhance capacity. aimed at promoting port-led development in India. efficient and cost-effective transport to and from ports.  It will be headed by shipping minister.  The administrative framework National Sagarmala Apex Committee At apex level. of which 40 lakh will be in the nature of direct employment. State governments would set up State Sagarmala committees. Key Objective:  The key objective of Sagarmala project is to develop port infrastructure in India that results in quick. benefiting industries and export/import trade.SMART LEADERS IAS 14.com . Plot No. Sagarmala. Chennai – 40. could lead to annual logistics cost savings of Rs 35. Improve port connectivity through rail corridors.  It also includes establishment of rail / road linkages with the port terminals. Page 23 of 30 #9. enhanced multi-modal connectivity including rail. 2013.smartleadersias. 12th Main Road. a Sagarmala Development Company (SDC) will be set upto provide equity support to assist various special purpose vehicles (SPVs) set up for various projects. 2. a National Sagarmala Apex Committee (NSAC) will be created to provide overall policy guidance. including modernization and setting up of new ports Efficient Evacuation to and from hinterland. thus providing last mile connectivity to ports. 4.  Union Minister for Shipping. As part of the efforts to promote port-led development in the country.000 crore and boost India’s merchandise exports to $110 billion by 2025. the Sagarmala Development Company (SDC) has been incorporated under the Companies Act. NitinGadkari. Three Pillars of Sagarmala Project: The current version of Sagarmala initiative focuses on three pillars of development as follows:  Supporting and enabling Port-led Development Port Infrastructure Enhancement. spread across four broad areas. To implement this. At the central level. development of linkages with new regions. The company will have an initial Authorized Share Capital of Rs. Create 14 coastal economic zones or CEZs and a Special Economic Zone at Jawaharlal Nehru Port Trust in Mumbai with manufacturing clusters to enable port-led industrialisation. coastal and road services. The project is humongous with 150 initiatives with a total outlay of Rs 4 lakh crore. Promise of any immediate benefits from grand government plans should typically be taken with a load of salt but Sagarmala seems to be cruising already and the project timeline has been reduced from ten to just five years.Ph: 044-43525468. Modernise port infrastructure. integrated with the development of inland waterways.  It said the Sagarmala programme will also create one crore new jobs. Anna Nagar West. Develop skills of fishermen and other coastal and island communities. 1.2163. GS-Prelims & Mains Online Test Available Visit :www.  The Union government’s Sagarmala project. told that the objective of the plan is to substantially reduce export-import and domestic trade costs with minimal investment. 7200010122. is expected to reduce cost and time for transporting goods. 3. freight-friendly expressways and inland waterways. 9176 787980. headed by the chief minister or the minister in charge of ports. the Sagarmala National Perspective Plan report said. It was originally mooted by the Vajpayee government in 2003 as the waterways equivalent of the Golden Quadrilateral.

15. Fencing.          India – a soft target for terrorism and conflicts with neighboring countries manifests as issues in border management. and harness the potential of coastal communities through skill development and increased economic opportunities. The project will try to tap into the potential of port-led industrialisation through coastal special economic zones. Nellie massacre (1983) and most recent Assam riots (2012) are mainly due to illegal immigration.smartleadersias. These include modernisation of existing ports and establishment of five to six new ports to augment capacity. Plot No. 9176 787980. whichhas been a source of concern since Indo-Pak war of 1971 with the Independence for Bangladesh. Korea and China (the Shenzhen Port) have leveraged their coastline and waterways to drive industrial development. drugs and cattle also complicates the issue. Mr Gadkari said the government's plan identifies specific opportunities for transportation of commodities such as thermal coal. foodgrain. The conflict with Pakistan and continuous tension results in disproportionate response of military deployment to strengthen border surveillance and security on the western boundaries.” Countries such as the US. The Sagarmala programme aims to replicate these successes in India.SMART LEADERS IAS       The minister said: “This plan is based on four strategic levers: Optimising multi-modal transport to reduce the cost of domestic cargo. lowering costs for bulk industries by locating them closer to the coast and improving export competitiveness by locating discrete manufacturing clusters near ports. Caused increased flow of illegal immigrants into Assam causing competition for livelihood. Critically comment on the statement. the time frame of the project has been reduced to five years from 10 years. The unevenness of border management on eastern and western frontiers is an important reason for the continuing unrest in North Eastern India. hence it becomes notorious for porosity The smuggling of arms.com . GS-Prelims & Mains Online Test Available Visit :www. He said that on the Prime Minister’s instructions. and development of strategic inland waterways. Border management was largely dictated by the concerns and threats from external sources. But eastern boundaries are porous and possess threat to the regional peace and fuels insurgency. technological solutions. Recently elected government in Assam also took illegal immigration as their important goal. Page 24 of 30 #9. Sagarmala aims to deliver the desired result through over 150 projects and the initiatives spanning four broad areas.Ph: 044-43525468. focus on port connectivity through the heavy-haul rail corridor. Anna Nagar West.land and space. which house a number of industrial clusters. freight-friendly expressways. Chennai – 40. The most affected is Assam. bilateral negotiations onborder management involving local communities on the borders are some of the solutions that can be adopted.2163. improving deployments. Mr Gadkari said the release of the plan is the first step towards a new era of port-led development in India. Much of borders in NE India are riverine or under forest cover. 12th Main Road. Japan. 7200010122. minimising the time and cost of exportimport cargo logistics. fertilizers. cement and steel by coastal shipping and inland waterways.

2015 Compensatory Afforestation Fund  Under public accounts  Money received under permissions  Also establishes a monitoring Group to assist the national authority.Ph: 044-43525468. forest management. Chennai – 40.forest and wildlife related infrastructure. Environment & Forests in this issue.  Since 2009.  CAMPA-established in 2009 in response to SC judgment for monitoring technical assets and evaluation of compensatory afforestation activities at centre and state level.S. Is it justified to use unutilized funds lying under Compensatory Afforestation Fund Management and Planning Authority to realize the objectives of Green India Mission? Substantiate your views in the light of the Parliamentary Standing Committee Report on Science & Technology.  Fund envisaged for compensatory afforestation but the bill envisages enables the fund to be used for general afforestation programmes under Green India mission. wildlife conservation and even relocation of people in the forest areas. The last three purposes are largely unrelated to afforestation and will take away the prime objective of the fund. Former Civil Judge and our Founder-Directors Mr.A. Plot No. Page 25 of 30 #9.  Present scheme of artificial regeneration of forest doesn’t work.000 crore  To utilize the aggregated fund.Sagayam IAS. 9176 787980. Mr. GS-Prelims & Mains Online Test Available Visit :www. 7200010122. 12th Main Road.2163. Issues  Non availability of land for afforestation  Degraded forest cannot be chosen as it requires twice the funding that is needed for afforestation of a bare land.S.smartleadersias.  According to the act.M. Anna Nagar West.com .  Purpose: Forest protection. 16.Sivarajavel & Mr.SMART LEADERS IAS Some of our IAS Toppers with Mr.Sadik. collected nearly 40. a bill was introduced in RS as compensatory afforestation bill.U. NPV (net present value) of the diverted forest is calculated for 50 years and recovered from the user agency that’s diverting.Bharath.  As a way to compensate forest land diverted to non-forest uses.

U. 17. ICAO plans for ‘carbon neutral growth’ from 2020. But in UNFCCC negotiations airline sector was left out.  To implement the above. Plot No.  In this context. will increase by 70%.Ph: 044-43525468.R. India’s concern  Slowing down of airline sector  Already running on their margin profit  Can increase fare charges  Scramble the industry to search non-fossil fuels. lighter air craft and bio fuels. 12th Main Road. Chennai – 40.Vaithinathan (AIR-37. Tamil Nadu Rank-2) Felicitated by Mr. By 2020. Our Student.2163.5% per annum (goal already missed) o To stabilize CO2 emissions by 2020 o To halve the CO2 emissions by 2050.  Deal will be voluntary between 2021 and 2026. 9176 787980.Sagayam IAS Page 26 of 30 #9.  Investment constraints in efficient engines. Plans to achieve this through carbon offsets. it proposed for ‘carbon emission tax’  Members have to either limit emissions or buy carbon credits. Therefore.smartleadersias.  Proposed measures o Improve fuel efficiency of fleet by 1.com . diverting CAF to aid GIM will not be judicious use of the fund.  Emissions from airline doubled between 1990 and 2006. GS-Prelims & Mains Online Test Available Visit :www. Anna Nagar West.  Offsetting doesn’t reduce emissions but merely shifts emissions from one to another sector. 7200010122. What is India’s position in this issue and criticism raised on the proposal?  ICAO: UN Specialised agency  Increase in air travelresulted in increase of emissions. Bring out the background data on the proposal of United Nations' International Civil Aviation Organisation to freeze carbon emissions.SMART LEADERS IAS  There is a separate Green India programme that has separate budgetary grants to deal with issues related above. But mandatory from 2027 onwards. Dr.

government departments supervising and auditing and legislative institutions. 12th Main Road. GS-Prelims & Mains Online Test Available Visit :www. Key recommendations of the committee  Significance: Speeding up of the PPP model is urgently required for India to grow rapidly and generate a demographic dividend for itself and also to tap into the large pool of pension and institutional funds from aging populations in the developed countries. Independent regulators should be set up with a unified mandate that encompasses activities in different infrastructure sub sectors to ensure harmonized performance by the regulators. review and roll out activities to build capacity. Plot No. Anna Nagar West. Given the enormity of investment required and the limited availability of public resources for investment in physical infrastructure in India. 9176 787980. The Twelfth Plan projected an investment of Rs. etc.55.Ph: 044-43525468.2163.  The committee advised against adopting PPP structures for very small projects.SMART LEADERS IAS 18.com . managerial efficiency.  India’s success in deploying PPPs as an important instrument for creating infrastructure will depend on a change in attitude of all authorities dealing with PPPs-public agencies.  Experience has also underlined the need to further strengthen the three key pillars of PPP frameworks namely Governance. While augmenting delivery and financing of public projects. transportation and energy. the projected infrastructure requirements have made it imperative for the government to explore avenues for increasing investment in infrastructure through a combination of public investment and the PPP mode of delivery. enable research. The performance in the first two years of the Twelfth Plan suggests that infrastructure investment has slowed and there will be a shortfall of approximately 30%. in addition to functioning as a centre of excellence in PPPs. The use of PPP an as instrument of procurement for creation of infrastructure assets and delivery of public services has been recognized globally.  Model concession agreements to be issued only when 80 per cent of the land for a project has been acquired. Institutions and Capacity.  The Committee strongly endorsed setting up of the “3PI” (dedicated institute for PPPs) which can. the government initiated several policy and enabling measures to support the creation of high-quality infrastructure and efficient delivery of services to its citizens. There is a contractual accountability for the private party to guarantee timely and high-quality infrastructure services to end users. In order to augment economic growth. with the shortfalls in public investment (central and states combined) and private investment at 20% and 43% respectively. PPPs are expected to bring in new and cost-effective technology for creation of infrastructure assets. Chennai – 40. to build on the established foundation for the next wave of implementation. and superior competencies in service standards for the operation and maintenance of public assets. since the benefits of delivering small PPP projects may not be commensurate with the resulting costs and the complexity of managing such partnerships over a long period.75 lakh crores (at current prices) in infrastructure during the Plan period (2012-17). 7200010122.smartleadersias. 1988which does not distinguish between genuine errors in decision-making and pretensions. This is necessary to make punishable only the malafide action of public servants and not errors. What are the main recommendations of Kelkar Committee report on Revamping and Revitalizing Public Private Partnership? Rapid urbanization and industrial growth led to the demand for basic infrastructure such as water supply and sanitation. The Twelfth Five Year Plan (2012-2017) was formulated against the backdrop of a remarkable performance of the infrastructure sector during the Eleventh Plan. Page 27 of 30 #9. which was more than twice that achieved during the Eleventh Plan period.  The Government may take early action to amend the Prevention of Corruption Act.

 DMH-II is herbicide tolerant crop (GLUFOSINATE)  Large scale field trials is of complex issue. market associations.smartleadersias.Ph: 044-43525468. GS-Prelims & Mains Online Test Available Visit :www. Comment  DMH-11.  The GM Mustard is an indigenous crop. But the issue with it was that the GM crop was not indigenous and creates a vicious cycle of dependency on GM crop manufacturers.  Collect back schemes for packaging o Brandowners should collect back non bio-degradable wastes.  Recently notified rules SWM rules 2016. In this context. event organizers are directly responsible for sorting and segregation of waste and mange in partnership with local bodies. Haryana and Rajasthan accountfor 70% of mustard production.  Increase in yields in GM cotton is proven since 2006. the field trials of the GM crop raises crucial questions that need to be answered.  A technical body under MoEF-ruled that GM mustard is safe for human health and environment. The Committee recommended the government to notify comprehensive guidelines on the applicability and scope of access to. 9176 787980.  Collection and disposal of sanitary waste o Manufacturers are responsible for creating awareness and providing proper pouch (cover) for disposal. The issue of solid waste disposal in India is not due to dearth of technology but can be traced to non-segregation of waste at source. which is a good improvement.  User fee for collection o Local bodies authorized o Spot fine for dumping waste o Integration of rag pickers Page 28 of 30 #9. wood) and domestic hazards. While the indigenously engineered GM mustard DMH-11 is a shot to arm in terms of ownership. Anna Nagar West.developed in Delhi University.replaces municipal solid waste (management and handling) rules 2000. 19. Banks and financial institution should be encouraged to issue Deep Discount Bonds or Zero Coupon Bonds (ZCB) to mobilise long term capital at low cost. o Segregation into 3 streams as biodegradable. under RTI and Art 12 of the Constitution. out of 138 GM crop field trials only 39 were properly monitored  The field trials of GM mustard in Punjab and Delhi and its post-harvest monitoring was missing. Will allow local crop developers to easily develop varieties of hybrid mustard.safety  GEAC approved DMH-II 20. 12th Main Road. Plot No.  Segregation at source: o To channelize the waste to wealth by recovery.2163. and auditingof financial related matters in order to avoid any delays in public asset provision. Since state owned entities SoEs/PSUs are essentially Government entities and work within the government framework. 2015 aims to deal with this issue through segregation at source.com . analyse how Municipal Solid Waste (MSW) Rules. Chennai – 40. 7200010122. Makes it better suited for breeding.  As one independent report –from 2008 to 2014. they should not be allowed to bid for PPP projects.  3 states: MP.SMART LEADERS IAS     Unsolicited Proposals (“Swiss Challenge”) may be actively discouraged as they bring information asymmetries into the procurement process and result in lack of transparency and fair and equal treatment of potential bidders in the procurement process. Ministry of Finance may develop and publish a national PPP Policy document and it should be endorsed by the Parliament to impart an authoritative framework to implementing executive agencies as well as to legislative and regulatory agencies charged with oversight responsibilities. o Institutional generators. dry (plastic.

non-biodegradable. 9176 787980. o Landfill tax can be levied to discourage resorting to the method of landfill. Plot No. 12th Main Road.com . o When segregation is contracted to private player enforcement is an issue. Page 29 of 30 #9. 7200010122. the strategy of segregation has failed in almost all of major cities. only non-usable. The feature of ‘spot fine’. o Landfills. ‘responsibility on institutional generators’ – will bring the necessary awareness and obedience. Chennai – 40. are located near cites. as a matter of convenience and feasibility. non-combustible. GS-Prelims & Mains Online Test Available Visit :www. Of the waste that cannotbe disposed otherwise.SMART LEADERS IAS    Waste processing and treatment o Processed treated and disposed through bio-methanation within the premises of the institutions involved as far as possible Segregation at source o Heart of the SWM o So far.2163. if the rules are properly implemented. The concern to this failure is aptly recognized and incorporated in the new rules. should reach landfills. Anna Nagar West.Ph: 044-43525468.smartleadersias. Criticisms o No alternatives are available for managing non-segregated wastes. non-recyclable.

9176 787980. GS-Prelims & Mains Online Test Available Visit :www.SMART LEADERS IAS Page 30 of 30 #9. Chennai – 40.2163. Anna Nagar West. 7200010122. 12th Main Road. Plot No.com .smartleadersias.Ph: 044-43525468.