Daily News Simplified - DNS

23 11 19
Notes
SL. THE HINDU
TOPICS
NO. PAGE NO.
1 GDP Slump will hit $5 Trillion Target, Warns NITI Aayog 01

2 GST Council, finance panel should work in tandem 15

3 Hungry Tides in the Sundarbans 11

4 RCEP still on Japan’s Agenda 13

5 The Opacity around the electoral bonds 10

6 No light at the end of the Brexit Deadlock 10

Dated: 22. Nov. 2019 DNS Notes - Revision

Title 1. GDP Slump will hit $5 Trillion Target, Warns NITI Aayog (The Hindu Page No. 01)
Syllabus Mains: GS Paper III – Economic Development
Theme Economic Growth and Development
Highlights Context:

The Government of India has recently come up with a grand vision of realizing $ 5 trillion
economy by the end of 2024. In this regard, this article discusses various concerns and
challenges with India's growth model and accordingly provides set of recommendations to
promote inclusive and sustainable growth in India. Recently, Niti Aayog has also warned that
target of $5 trillion is difficult to achieve.

Concerns and Challenges with India's Growth Model

Lack of Inclusive Growth: The rapid growth of the Indian Economy in the last 2 decades has
not translated into greater benefits to the people in the lower rungs of the Indian Society.

As per Credit Suisse, 1% of the wealthiest in India have increased their share in wealth from
40% in 201o to 60% in the last five years. The richest 10% in India own more than 4 times the
wealth than the remaining 90%. Going forward, richest 10% in India would take away the
majority share of $ 5 trillion economy.

Poor Human Capital Formation: India needs to optimally utilize its demographic dividend to
sustain higher GDP growth rates. However, the human capital formation continues to remain
poor. The Literacy rate of 71% (2015) in India is much lower as compared to other countries
such as Rwanda, Morocco, Congo etc. According to Annual Status of Education Report, the
learning outcomes in India have continued to remain poor. Further, India's poor health and
nutrition status is evident in number of reports such as Global Hunger Index (GHI), Human
Development Index (HDI), National Family Health Survey (NFHS) etc.

Jobless Growth: The rapid growth of the Indian Economy has not translated into creation of
employment opportunities in India. According to the recent Periodic Labour Force Survey
(PLFS) estimates, the unemployment in India has increased to 45 year high of 6.1%.

Environmental Destruction: The economic growth in India has led to severe depletion and
degradation of environmental resources. The recent IPCC report has warned India of the
seriousness of the climate change and its adverse impact on the environment.

Economic Slowdown: The GDP growth rate has declined to 5% accompanied by slowdown in
Investment, Savings and Exports. The Automobile sector has been severely affected due to
decline in the consumption expenditure leading to retrenchment of around 3.5 lakh workers.
Overall, all the major Industries are facing the brunt of the economic slowdown.

The crisis in the manufacturing sector has been further compounded by the agrarian distress.
The Agriculture sector has been affected by rising input costs, low price of agricultural
produce and low public investment leading to decline in the income levels of the farmers. This
has further accentuated the decline in the aggregate demand in the economy.

Suggestions:

Focus on Human Capital Formation: India cannot realise its vision of $ 5 trillion economy
without investing in Human Capital Formation. The Government investment in Education has
to increase to 6% of the GDP from the present 4%. Similarly, the Government investment in
Dated: 22. Nov. 2019 DNS Notes - Revision

health has to increase from 1.5% to 3% of GDP. Such increase in the public Investment would
ensure equitable and inclusive growth.

Focus on Boosting Demand in the Economy: Since the present economic slowdown is on
account of decline in the consumption expenditure, the Government must focus on boosting
the demand in the economy without worrying about the Fiscal Deficit targets. Some of the
measures proposed in the article are as given below:

• Agriculture Sector: The Government must increase the public investment in

Agriculture in terms of Infrastructure, provision of Inputs, facilitating access to
markets so as to ensure fair and remunerative prices to the farmers.

• MGNREGA: The Government must allocate more funds to the MGNREGA programme
to alleviate the agrarian distress and boost demand in the rural areas.

• Creation of Employment Opportunities: The Government must focus on promoting

labour intensive sectors such as textiles, leather, gems and jewellery. The
Government should also raise public employment by filling up all vacant posts in the
central and state governments.

Way forward

The reform measures announced by the Government so far would not be able to address the
present economic slowdown mainly because of mainly 2 reasons. Firstly, these measures
address only the supply side measures and do not boost the consumption expenditure.
Secondly, these measures do not address the needs of the weaker sections which is quite
critical for enhancing consumption expenditure. The Government should look at the weaker
sectors and sections not only to improve their well-being but also to get out of the present
economic slowdown.

Personal
Notes
Dated: 22. Nov. 2019 DNS Notes - Revision

Title 2. GST Council, finance panel should work in tandem (The Hindu Page 15)
Syllabus Mains: GS Paper III – Economic Development
Theme Taxation
Highlights GST COUNCIL

• Composition of GST Council as per the 101st Constitutional Amendment Act.

• Union finance minister is the chairman of GST council. Other members include
Union Minister of State in charge of Revenue or Finance, Minister in charge of
Finance or Taxation of State as members
• The members of the GST Council choose one amongst themselves to be the Vice-
chairman of the council for such period as they decide.
• One half of the total number of members of GST council shall constitute the
quorum at its meetings.

DECISION MAKING
• Every decision of the GST Council shall be taken at a meeting, by a majority of not
less than three-fourth of the weighted votes of the members present and voting
o Central Government has a weightage of one-third of the total votes
o Votes of State Governments taken together have a weightage of two-thirds of the
total votes.
• Thus, Central Government has an effective veto on all decisions of the GST
Council.
• However, so far all decisions in the GST council have been taken by consensus.

FUNCTIONS OF GST COUNCIL, IS TO RECOMMEND TO THE UNION AND TO STATES

ON:
• Taxes, cess and surcharges levied by the Union, States and the local bodies which
may be subsumed in GST.
• Goods and services that may be subjected to or exempted from GST
• Model GST laws, principles of levy, apportionment of GST levied on the course of
inter-State trade or commerce under article 269A
• Threshold limit turnover below which GST will not be applicable.
• Rates including floor rates with bands of GST
• Any special rate or rates for a specified period, to raise additional resources
during any disaster
• Special provision with respect to the States of Arunachal Pradesh, Assam, J&K,
Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and
Uttarakhand.
• GST council shall recommend the date on which GST will be levied on Petroleum
crude, High speed diesel,

Personal
Notes
Dated: 22. Nov. 2019 DNS Notes - Revision

Title 3. Hungry Tides in the Sundarbans (The Hindu Page No. 11)
Syllabus Mains: GS Paper III – Environment and Ecology

Theme Sundarbans
Highlights
Dated: 22. Nov. 2019 DNS Notes - Revision

Personal Notes
Dated: 22. Nov. 2019 DNS Notes - Revision

Title 4. RCEP still on Japan’s Agenda (The Hindu Page 13)

Syllabus Mains: GS Paper III – Economy
Theme Trade groups

Highlights Context

Prime Minister of Japan will be visiting India next month. In this context Japanese
officials have said that they will try to convince India to join the RCEP. Also the
former PM of Australia has said that India’s reluctance to join RCEP is justified since
it is just an economic arm of BRI of China.
Dated: 22. Nov. 2019 DNS Notes - Revision
Dated: 22. Nov. 2019 DNS Notes - Revision

Personal
Notes
Dated: 22. Nov. 2019 DNS Notes - Revision

Title 5. The Opacity around the electoral bonds (The Hindu Page 10)
Syllabus Mains: GS Paper II – Polity and Governance
Theme Electoral Bonds
Highlights Context:
The Political Funding of Elections has emerged as a biggest threat to Indian democracy.
According to the Association of Democratic Reforms (ADR), 70% of the funding of the
political parties comes from unknown sources which increase the risk of big corporates
and super-rich individuals influencing the decisions of the Government. Hence, In order
to improve the transparency in the funding of Elections, the Government had
introduced Electoral Bonds in 2018. However, a number of concerns have been raised
with respect to Electoral Bonds.

What are Electoral Bonds?

• Electoral Bonds are bearer instrument in the nature of a Promissory Note and
are an interest free banking instrument. Electoral Bond shall be issued for any
value, in multiples of Rs 1000, Rs 10,000, Rs 1 lakh, Rs 10 lakh and Rs 1 crore
from the Specified Branches of the State Bank of India (SBI)
• The purchaser would be allowed to buy Electoral Bonds only on due fulfillment
of all the extant KYC norms and by making payment from a bank account. It will
not carry the name of payee.
• The Electoral Bonds would have a life of only 15 days during which it can be used
for making donation only to political parties which has secured not less than one
per cent of the votes polled in the last general election to the House of the
People or to Legislative Assembly.
• Every political party in its returns will have to disclose the amount of donations it
has received through electoral bonds to the Election Commission.

Electoral Bonds- Concerns and Challenges

• Corporate Funding of Elections: Earlier, the companies were prohibited from
donating more than 7.5% of their average net profit over the previous 3 years to
the Political parties. However, this restriction has now been removed. Going
forward, even the loss-making companies could also make contributions through
the Electoral Bonds. Similarly, earlier only those companies which were in
existence for at least 3 years were allowed to make contributions. Such a
restriction was basically laid down in order to prevent the shell companies from
influencing the political parties. Even this restriction has now been removed and
hence concerns have been raised that the shell companies would end up
influencing the policies of the Government.
• Lack of Transparency: In a democratic country, voters need to be aware of how
the political parties are funded in order to ensure greater transparency in the
elections. However, by keeping the political donations anonymous, the electoral
bonds violate the right of the citizens to know the information related to political
funding.

Foreign Influence: The Election Commission cannot monitor the funding through
Electoral Bonds as there is secrecy of donor, therefore it becomes difficult to know what
Dated: 22. Nov. 2019 DNS Notes - Revision

is coming in is black money or not. Electoral Bonds can be misused for routing foreign
money and thereby increase ability of other countries to influence Indian elections.
Further, the amended Foreign Contribution Regulation (FCRA) rules enable the political
parties to accept donations from foreign companies. This leaves a scope for the foreign
companies in influencing Indian Politics.
Personal
Notes
Dated: 22. Nov. 2019 DNS Notes - Revision

Title 6. No light at the end of the Brexit Deadlock (The Hindu Page 10)
Syllabus Mains: GS Paper III – International Relations
Theme International Organization
Highlights British Prime Minister Boris Johnson has urged MPs “to come together” and support his
“excellent” Brexit deal without any more delay.
But he is facing a desperate scramble for votes to pass the deal in Parliament, as his
Conservative government is well short of a majority.
MPs will debate his new agreement at a rare weekend sitting of Parliament — only the
fifth time since 1939 there has been a Saturday session in Parliament. In this
background lets us understand various aspects of the Brexit issue.

• What is Brexit?
• Why is the UK leaving?
• Why hasn't Brexit happened yet?
• Why did Parliament reject Theresa May's Brexit deal?
• What is the new Brexit deal?
• Will the DUP accept the new deal?
• What happens next with Brexit?

What is Brexit?

Brexit - British exit - refers to the UK leaving the EU.

What is the European Union?

• The EU is an economic and political union involving 28 European countries. It
allows free trade and free movement of people to live and work in whichever
country they choose.
• The UK joined in 1973 (when it was known as the European Economic
Community). If the UK leaves, it would be the first member state to withdraw
from the EU.

Why is the UK leaving?

• A public vote - or referendum - was held on Thursday 23 June 2016, to decide
whether the UK should leave or remain.
• Leave won by 52% to 48%. The referendum turnout was very high at 72%, with
more than 30 million people voting - 17.4 million people opting for Brexit.

Why hasn't Brexit happened yet?

• Brexit was originally due to happen on 29 March 2019. That was two years after
then Prime Minister Theresa May triggered Article 50 - the formal process to
leave - and kicked off negotiations. But the Brexit date has been delayed twice.
• A deal was agreed in November 2018, but MPs rejected it three times.

Why did Parliament reject Theresa May's Brexit deal?

Dated: 22. Nov. 2019 DNS Notes - Revision

• The main sticking point for many Conservative MPs and the DUP (the
government's ally in Parliament) was the backstop.

• This was designed to ensure there would be no border posts or barriers between
Northern Ireland and the Republic of Ireland after Brexit.

• If it was needed, the backstop would keep the UK in a close trading relationship
with the EU and avoid checks altogether.

• But many MPs were critical. They said if the backstop was used, the UK could be
trapped in it for years. This would leave the UK stuck in the EU's customs union,
preventing the country from striking trade deals with other countries.

• Their opposition eventually led to Theresa May's resignation. Boris Johnson took
over as PM in July 2019.

• On 17 October, Mr Johnson announced that a revised deal had been agreed

between the UK and EU negotiating teams.

What is the new Brexit deal?

• The new deal replaces the backstop with new customs arrangements.
• Under the plan, the whole of the UK will leave the customs union. But Northern
Ireland will also remain an entry point into the EU's customs zone.
• The UK will not apply tariffs to products entering Northern Ireland, as long as
they are not destined to be sent across the border
• Some checks will also have to be introduced on goods travelling between Great
Britain and Northern Ireland.
• After four years, the Northern Ireland Assembly will have the opportunity to
vote on whether Northern Ireland should continue the arrangement.
The rest of the Brexit deal remains largely unchanged from the one negotiated by
Theresa May. Known as the withdrawal agreement, it includes:
▪ The rights of EU citizens in the UK and British citizens in the EU
▪ how much money the UK was to pay the EU (widely thought to be £39bn)

The withdrawal agreement sets out terms for the "divorce" process. There is also a
political declaration - which outlines the future relationship between the UK and EU on
areas like trade and security.

Will the DUP accept the new deal?

• The DUP has been in an agreement with the Conservative Party since the 2017
election. In the past, this gave the government a working majority.
• However, the DUP says it won't back the new deal because it does not get a
veto. It's worried that if Northern Ireland sticks to some EU rules, the union
between Northern Ireland and Great Britain will be undermined.
• Without the DUP's support, it could be very hard for the government to get
enough MPs to get the new deal through Parliament.
Dated: 22. Nov. 2019 DNS Notes - Revision

• As part of no-deal plans, a section of the M20 would be reserved for lorries in
the event of long delays
What happens next with Brexit?
▪ The deal needs to be approved by European leaders in Brussels.
▪ If it clears that hurdle, Mr Johnson intends to bring the deal to a vote in the
Commons, at a special Saturday sitting on 19 October.
▪ If MPs fail to approve the deal, Mr Johnson could be forced to seek a third Brexit
extension.
▪ That's because MPs have passed a law - known as the Benn Act - that requires
Mr Johnson to ask for a Brexit delay. This will push the deadline back from 31
October, to 31 January 2020.
▪ MPs say the law is necessary in order to prevent a no-deal Brexit.
▪ Mr Johnson still insists the UK will leave at the end of October. It is unclear how
this will happen if the law does require him to ask for an extension.

Personal
Notes