Daily News Simplified - DNS

07 08 21
Notes
THE HINDU
SL. NO. TOPICS
PAGE NO.

1 ‘Iran, India can play a useful role’ 09

2 Rewind to fast forward 06

3 South Asia’s emerging digital transformation 06

4 Celebrations begin to mark 150 years of iconic artist Abanindranath Tagore 10

Date: 07-Aug-2021 DNS Notes - Revision

1. UPSC Current Affairs: ‘Iran, India can play a useful role’| Page – 09
UPSC Syllabus: Mains – GS Paper II – International Relation
Sub Theme: India-Iran relation | India’s role in Afghanistan | UPSC

Context: In the backdrop of US withdrawal from Afghanistan and the fears of Taliban takeover, India and Iran
have converging interest and outlook on the issue.

This was highlighted at the recent visit of India's external affairs minister at the swearing in ceremony of
President of Iran - Mr. Ebrahim Raisi.

Iranian president - Iran and India can play a constructive and useful role in ensuring security in the region,
especially Afghanistan, and Tehran welcomes New Delhi’s role in establishment of security in Afghanistan.

Issues in the backdrop -

Deteriorating relations of Iran with the West -

• The new elected president has been put on sanctions list by the US treasury department - for
alleged human rights violations, sentencing of underage prisoners to death in his role as prosecutor
general and then head of Iran’s Judiciary.
• India is balancing ties between Iran and US which are adversaries. JCPOA is already derailed.
• US, UK and Israel have accused Iran of attacks on the Israeli vessel near the (Masirah) Oman coast.

India and Iran's common concerns on the Afghan Issue -

• India and Iran have faced attacks from the Taliban and Al Qaeda in the past.
• Both share the common concern about the support Taliban gets from Pakistan and its long term
impact on the regional security.
• Troika - Russia, US, China have advocated power sharing arrangements involving the Taliban.
• India and Iran support the elected government led by Ghani.
Date: 07-Aug-2021 DNS Notes - Revision

• India and Iran have been left out of the US Russia China- Troika and Troika plus talks with Pakistan,
thus far, despite being regional powers.
• Iran and India have cooperated on connectivity projects for Afghanistan and Central Asia, including
at Chabahar and the INSTC that goes through Bandar Abbas.

India - Iran relations after the sanctions

• US withdrewl from the deal pursuant to “Maximum pressure” policy. Iran has passed nuclear law
to enrich at Natanz and Fordow facilities.

• Impact on Economic interests -

• In 2017-18 Iran was the third-largest supplier of oil to India after Iraq and Saudi Arabia and met
about 10% of total needs.

• India was second-biggest buyer of Iranian oil after China before sanctions halted supplies in May
2019.

• Iranian crude brought a number of benefits, including a longer credit cycle and shorter voyage
savings on freight costs

• Saved Forex for India.

Impact on Strategic and security interests –

• Derailment of progress on trade & connectivity through Chabahar port into landlocked Afghanistan
and Central Asia.
• Adverse impact on ambitious connectivity projects – INSTC, TAPI
• Created space for Chinese strategic intrusion in IRAN – China Iran 25-year cooperation program.
• Escalation of conflict in strategic choke point of Strait of Hormuz could affect India’s Crude oil
imports
• Two-thirds of the oil and half the liquefied natural gas India imports comes through the strait of
Hormuz.
• It is becoming a bottleneck in India-US relations, since both seek cooperation at Global stage to
handle various geo-political issues.
• It adds to Global uncertainty which impacts India’s geopolitical, economic and strategic options.

Need for a restart in India - Iran relations

• Oil import has dropped to Zero level since 2019.

• Trade between the two that topped $17 billion in 2018 has dwindled.
• the sanctions have severely curtailed India’s ability to develop the Chabahar project
• As a traditional partner, Iran has rarely spoken about India’s internal affairs like - Abrogation of Article
370 etc.
• To check the increasing closeness between Iran and China.

Way forward
Date: 07-Aug-2021 DNS Notes - Revision

Iran is India’s traditional, historical and cultural partner. It is of immense importance to India as it provides an
alternate route of connectivity to Afghanistan, Central Asia and Europe. if India is able to negotiate a way
around US sanctions, Iran could once again be a vital source of energy for India at a time when oil prices in
India have skyrocketed.

2. UPSC Current Affairs: Rewind to fast forward | Page – 06

UPSC Syllabus: Mains – GS Paper III – Indian Economy
Sub Theme: Retrospective amendment to the tax laws | UPSC

The finance minister has recently introduced the Taxation laws (Amendment) Bill 2021. The Bill seeks to do
away with the retrospective amendment to the tax laws introduced in 2012.

The 2012 Finance Act had amended the IT Act to impose tax on the foreign companies on a retrospective
basis. Under the act, if a company is registered outside India, its shares will be deemed to be situated in India
if they derive their value substantially from the assets located in India. As a result, the persons who sold such
shares of foreign companies before the enactment of the Act (i.e., May 28, 2012) also became liable to pay tax
on the income earned from such sale.

For example, let's say there is a foreign company "X" which is registered in Cayman Islands (Tax haven). Such a
foreign company may be operating in India by setting up its base. This company majorly earns its revenue
from its operations based in India. Hence, as per the 2012 amendment, the shares of such a company would
be considered to be based in India. Further, the profits earned on sale of such shares would be taxed in India
in the form of capital gains tax.

Based upon this amendment, the IT department had slapped notices on number of foreign companies such as
Vodafone, Cairn Energy etc. The details of these aspects have been already covered in DNS dated Mar 4, 2021.
1. Concept of Base Erosion and Profit Shifting (BEPS)
3. Double Taxation Avoidance Agreement (DTAA)- Concept and Rationale
4. Misuse of DTAA- Treaty Shopping and Round Tripping

Now, the Government has decided to do away with the retrospective amendment. Salient features:
• Demand for the payment of the taxes on the transactions which were done before May 28, 2012,
would be withdrawn. Tax collected on a retrospective basis would be refunded back to the companies.
• No further demand for taxes on the transactions which were done before May 28, 2012.
• Above provisions would be applicable if the company withdraws the case against the Government.
Date: 07-Aug-2021 DNS Notes - Revision

3. UPSC Current Affairs: South Asia’s emerging digital transformation | Page 06

UPSC Syllabus: Mains – Economy
Sub Theme: Digital transformation | Digital economy | Digital governance | UPSC

Acceleration of digital transformation during the pandemic

1. Shift to work from home and remote working.

2. Digital education has become mainstream with physical classes not functioning at both schools and
university level.
3. Digital healthcare:
a. National Digital Health Mission aims at enhancing the accessibility and efficiency of health-
care services by creating a unique health-ID for every citizen.
b. Liberalisation of Telemedicine enables citizens to access healthcare services despite
lockdown.
4. Digital economy:
a. E-commerce sites enabled households to purchase items they want when physical brick and
mortar stores were closed.
b. Share of digital payments increased manifold.
5. Digital governance:
a. More and more governance is shifting to digital channels. Welfare and health assistance is
being increasingly being provided by digital channels.
b. Digital governance increases transparency, reduces corruption, simplifies procedures and
increases participation of citizens.

Challenges:

1. Digital Divide:
Close to 50% of India's population do not have access to internet. Access to digital infrastructure
demands having access to broadband and devices which is often unaffordable for the poor people.
a. Inadequate Digital Literacy: Digital literacy is essential for individuals to understand and use digital
technologies for meaningful actions. Digital literacy
b. Regional & Rural urban digital divide:
i. There are a regional disparities in access to digital
ii. As many as 75% of rural households do not access to computers and are unlikely to have
digitally literate persons.
c. Social dimension of digital divide with women, children, SC & ST and minority communities
particularly behind in both access to digital devices and services.
d. Linguistic digital divide: Most of the content available on the internet is in Hindi. This excludes
people who do not know the English language from participating and gaining.
2. Impact of eigital exclusion:
Social Impact: Lack of access to internet denies citizens to access their rightful claims.
i. Lack of access to internet denies children to continue their education in the era of digital education.
ii. Lack of access to internet excludes needy women, poor and marginal communities to access their
social protection measures.
This can put children out of school, place girls at risk of early marriage and push poor children into
child labour costing economies billions.

Impact on Business:
i. Business which failed to transform their business models digitally paid a heavy price. Embrace of e-
commerce and cloud-based technologies is essential for business continuity. This particularly hit
hard smaller MSME and women led firms.
Date: 07-Aug-2021 DNS Notes - Revision

ii. Digital skills are essential for the workforce to continue to remain productive and find employment.

3. Gaps in infrastructure:
a. A robust digital infrastructure is the backbone for digital transformation. Access to fibre
broadband and devices which allows people to access internet is limited in India.
b. Projects such as Bharat Net which can have transformational impact on rural digital
connectivity have continuously missed timelines.

4. Huge financing requirements: It is estimated that India needs an annual investment of $35 billion
to be in five global digital economies. Mobilising such large amounts can be challenging for India
particularly during an economic slowdown.

5. Regulatory bottlenecks: Despite the growing importance of digital sectors in the economy, India
has not been able to keep its regulatory structures with demands of a digital transformation.
a. India has failed to legislate on issues of Data Security despite B N Srikrishna committee
report.
b. E-commerce regulations with focus on consumer protection, market access and grievance
redressal remain unaddressed.
6. Cyber-security & Cyber-crime:
a. The increase instances of cyber security threats such as ransomware, denial of service
attacks, malware etc. challenge business and individuals in this digital era.

Way forward:

Digital transformation is a global imperative with adoption of advanced technologies such as cloud computing,
Aritificial Intelligence, Internet of things and Big Data etc critical to success to economies and organisations.
To reap the dividends of digital transformation, India needs to address legal, regulatory and policy gaps as well
as boost digital skill sets.

1. Digital Literacy:
a. There is a need for universalisation of digital literacy.
b. Governments and businesses need to revamp the education system from school to
universities to meet the demand for digital skills and online platforms.
c. Focussed intervention for digital literacy such as PMGDISHA scheme for digital education in
rural areas needs to be intensified.
d. A digital enabled workforce is essential for people for find employment.

2. Digital infrastructure development:

a. Projects such as Bharat Net need to be accelerated.
b. Entry level devices need to be made more accessible by subsidies and promoting make in
India.
c. The proposals in the National Digital Communication Policy needs to be accomplished in a
time bound manner.

3. Financing for digital infrastructure:

a. There is a need for harnessing public-private partnership for digital infrastructure financing
in India.

4. Sort regulatory gaps:

a. India needs to quickly enact the comprehensive data security law on the lines of
recommendations of B. N. Srikrishna committee.
Date: 07-Aug-2021 DNS Notes - Revision

b. Guidelines for e-commerce ensuring customer protection and market access needs to be
notified.

5. Issues of cyber-security:
a. Cyber-security should be a focused by developing capabilities of institutions such as CERT-
In.
b. Amendments in Information Technology Act are needed to make it more relevant for
contemporary cyber-security needs.
c. International collaboration to address cyber-security.
d. Capability development, R&D and manpower development for cyber security capacities.

4. UPSC Current Affairs: Celebrations begin to mark 150 years of iconic artist Abanindranath Tagore | Page 10
UPSC Syllabus: Mains – GS Paper I – Art & culture
Sub Theme: Abanindranath Tagore | UPSC

Abanindranath Tagore
• He was the principal artist and creator of the "Indian Society of Oriental Art".
• He was also the first major exponent of Swadeshi values in Indian art, thereby finding the
influential Bengal school of art, which led to the development of modern Indian painting.
• He was also a noted writer, particularly for children.
• Popularly known as 'Aban Thakur', his books Rajkahini, Buro Angla, Nalak, and Khirer Putul were
landmarks in Bengali language children's literature and art.
• Tagore sought to modernise Mughal and Rajput styles to counter the influence of Western models of
art, as taught in art schools under the British Raj. Along with other artists from the Bengal school of
art, Tagore advocated in favour of a nationalistic Indian art derived from Indian art history, drawing
inspiration from the Ajanta Caves.