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Economic Survey 2023 highlights: Industrial Sector

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Why in News?

  • The Union Finance Minister, Nirmala Sitharaman, tabled the Economic Survey for the Financial Year 2022-23, after the President’s address, on the first day of the Union Budget Session 2023-24.

What’s in today’s article?

  • Key Highlights from Economic Survey 2023

Key Highlights from Economic Survey 2023:

  • GDP Growth –
    • India has already become the world’s 5th largest economy in the 75th year of Independence.
    • The Economic Survey estimates that India’s nominal Gross Domestic Product (GDP) will reach $3.5 Trillion by the end of March, 2023.
    • In real terms, the economy is expected to grow at 7% for the year ending March 2023. This follows an 8.7% growth in the previous financial year.
    • It further said the fundamentals of the Indian economy are sound as it enters its “Amrit Kaal” – the 25-year journey towards its centenary as a modern, independent nation.
  • Impact of Goods and Services Tax –
    • Goods and Services Tax collection is showing a higher buoyancy than the pre-GST system.
    • Giving a 5-year analysis of tax collection pre- and post-GST, the survey said the taxes which were subsumed in the Goods and Services Tax had a buoyancy of one.
      • However, the buoyancy improved to 1.1 after the GST implementation on July 1, 2017.
    • Tax buoyancy highlights the relationship between the change in the government’s tax revenue growth and the changes in GDP. When a tax is buoyant, it shows an increase in its revenue rate without increasing the tax rate.
  • Startups in India –
    • DPIIT-recognized startups created 2.69 lakh jobs in 2022, compared to 1.98 lakh in 2021.
    • About 48% of the startups are from Tier-II & III cities.
  • Credit flow to MSMEs –
    • Credit flow to Micro, Small and Medium-scale Enterprises (MSMEs) has seen a significant increase, assisted in part by the introduction of the Emergency Credit Linked Guarantee Scheme (ECLGS).
    • As of November 2022, 1.2 crore MSME units availed the ECLGS scheme and raised collateral-free resources for Rs 3.6 lakh crore.
  • Skill Upgradation –
    • The Survey noted that formal vocational/technical training for the age group 15-29 years rose from 2.8% in 2018-19 to 4.1% in 2020-21.
    • Under the Pradhan Mantri Kaushal Vikas Yojana 2.0, between 2017 and 2023, about 1.1. crore persons have been trained.
  • Information Technology Industry –
    • The Information Technology-Business Process Management (IT-BPM) industry showed resilience during the Covid-19 pandemic.
    • It registered 5% growth during the financial year 2021-22.
  • Growth of FinTech & E-Commerce Sector –
    • The e-commerce sector “witnessed a renewed push and a sharp increase in penetration in the aftermath of the pandemic,” the Economic Survey 2022-23 said.
    • The growth was also fueled by –
      • Growing internet penetration,
      • Rise in smartphone adoption,
      • Innovation in mobile technologies, and
      • Increased adoption of digital payments.
    • The sector is projected to grow at 18% annually.
  • Significance of Green Hydrogen –
    • Green hydrogen is hydrogen produced by splitting water by electrolysis. This produces only hydrogen and oxygen.
    • According to the Economic Survey 2022-23, green hydrogen will be crucial for:
      • India’s economic development,
      • energy security and
      • achieving decarbonization of harder to abate sectors such as fertilizers, refining, methanol, maritime shipping, iron & steel, etc.
  • Shipbuilding Industry –
    • The Survey identifies the shipbuilding industry as a strategically important industry due to its role in energy security, national defence, and the development of the heavy engineering industry.
    • The Survey noted that it has the potential to increase the contribution of the industry and the services sector to the national GDP.
    • The industry has the potential to strengthen the mission of an ‘Aatmanirbhar Bharat’, the survey said.


Economic Survey 2022-23: Agriculture sector needs ‘re-orientation’

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Why in news?

  • The Economic Survey 2022-23 said that the agriculture sector needs re-orientation given challenges like adverse impacts of climate change, fragmented landholdings and rising input costs.

What’s in today’s article?

  • News Summary

News Summary: Key highlights of the Survey with respect to Agriculture Sector

  • Agriculture sector is growing at a robust annual growth rate
    • The Survey noted that the Indian agriculture sector has been growing at an average annual growth rate of 4.6 per cent during the last six years.
      • It grew by 3.0 per cent in 2021-22 compared to 3.3 per cent in 2020-21.
  • India emerged as the net exporter of agricultural products
    • In recent years, India has rapidly emerged as the net exporter of agricultural products.
    • In 2020-21, exports of agriculture and allied products from India grew by 18 per cent over the previous year.
    • During 2021-22, agricultural exports reached an all-time high of $50.2 billion.
  • Strong agri growth led to a YoY dip in monthly demand for MGNREGS
    • There has been an Year-on-Year (YoY) decline in monthly demand for Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) work.
      • The number of persons demanding work under MGNREGS was seen to be trending around pre-pandemic levels from July to November 2022.
      • In FY23, as on 24 January 2023, 6.49 crore households demanded employment under MGNREGS, and 6.48 crore households were offered employment out of which 7 crore availed employment.
    • This is resulting from normalisation of the rural economy due to strong agricultural growth and a swift bounce-back from Covid-19.
    • The significant growth in rural India, led by agriculture sector, was the major shock absorber during the COVID-19 pandemic.
      • When majority of the workforce reverse-migrated to rural areas, agriculture as well as MGNREGA supported the domestic economy.
    • The survey also credited the MGNREGS with having a positive impact on income per household, agricultural productivity, and production-related expenditure.
      • It added that this helped with income diversification and infusing resilience into rural livelihoods.
  • Indian agriculture needs re-orientation
    • The Survey highlighted that Indian agriculture needs re-orientation in the backdrop of certain challenges like adverse impacts of climate change, fragmented landholdings, sub-optimal farm mechanisation, low productivity, disguised unemployment, rising input costs, etc.
    • The performance of the agriculture sector remains critical to growth and employment in the country.

Other highlights of Economic Survey 2023

  • India’s green goals- ambitious and needs money
    • The Economic Survey emphasised India’s commitments for climate actions.
    • However, it noted that availability of adequate and affordable finance remains a constraint for the country.
      • India’s current priority is to grow economically and integrate development goals with climate action targets.
    • India has so far largely met its requirements from domestic sources only.
    • The survey said the country ranks third globally (after China and Australia) with respect to the net gain in average annual forest area between 2010 and 2020.
    • It mentioned that the likely installed capacity by end of 2029-30 is expected to be more than 800GW.
      • Of this, non-fossil fuel would contribute more than 500GW, resulting in the decline of average emission rate of around 29% by 2029-30, compared to 2014-15.
    • The survey highlighted that India is progressively becoming a favoured destination for investment in renewables.
      • During the period 2014-2021, total investment in renewables stood at $78. 1 billion in India.

  • Digital infrastructure can add 60-100 bps to GDP growth
    • India’s digital public infrastructure (DPI) can add around 60-100 basis points (bps) to the country’s potential GDP growth rate.
      • DPI includes platforms like Aadhaar, the Unified Payments Interface (UPI), and the account aggregator network.
    • According to the Survey, payments made through UPI accounted for over half of all digital transactions in India in FY22 (2021-22).
      • In FY22, UPI accounted for 52 per cent of the total 8,840 crore financial digital transactions with a total value of Rs 126 lakh crore.
    • The Survey said that the country had a fintech adoption rate of 87 per cent among the public, compared to the global average of 64 per cent, making India the third biggest market for such transactions after the US and China.


Tax buoyancy and Tax Elasticity

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The Economic Survey 2022-23 submitted recently in Parliament said that Goods and Services Tax (GST) collection is showing a higher buoyancy than the pre-GST system.

What is Tax buoyancy?

  • Tax buoyancy explains the relationship between the changes in government’s tax revenue growth and the changes in GDP.
  • It refers to the responsiveness of tax revenue growth to changes in GDP.
  • When a tax is buoyant, its revenue increases without increasing the tax rate.

It depends upon:

  • the size of the tax base;
  • the friendliness of the tax administration;
  • the rationality and simplicity of tax rates;

What is Tax Elasticity?

  • It refers to changes in tax revenue in response to changes in tax rate.
  • For example, how tax revenue changes if the government reduces corporate income tax from 30 per cent to 25 per cent indicate tax elasticity.

Elasticity vs buoyancy:

  • Tax elasticity considers the automatic response of revenues to the change in income given that tax structure is unchanged.
  • On the other hand, tax buoyancy reflects both the impacts of income and discretionary changes on revenue earnings.

 What is Laffer Curve?

  • It is an economic theory pioneered by economist Arthur Laffer suggesting that tax rates above a certain threshold reduce tax revenue since they incentivize people not to work. As such, it suggests that lowering tax rates motivates people to earn more money, resulting in greater tax revenue.


Yaya Tso Lake

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Recently, Yaya Tso Lake was declared Ladakh’s first biodiversity heritage site under the Biological Diversity Act.

Why in news?

  • The Biodiversity Management Committee, the panchayat of Chumathang village, along with the SECURE Himalaya Project recently resolved the issue and declared Yaya Tso Lake a biodiversity heritage site.

Key facts about the Yaya Tso Lake

  • Lake Yaya Tso is known as a bird’s paradise for its beautiful lake located at an altitude of 4,820 metres in Ladakh.
  • It is a nesting habitat for a large number of birds and animals, such as the bar-headed goose, black-necked crane and brahminy duck
  • It is also one of the highest breeding sites of the black-necked crane in India.

What is the Secure Himalaya project?

  • It is funded by the Global Environment Facility.
  • It supports the government’s efforts for the conservation of snow leopard and its habitat by developing and implementing a landscape-based approach for Himalayan ecosystems, and addresses key issues of habitat degradation, threatened livelihoods and illegal trade in wildlife.
  • It was launched in 2017.

Project Landscapes:

  • Changthang, Ladakh Landscape, Jammu & Kashmir
  • Lahaul-Pangi and Kinnaur Landscapes,
  • Gangotri-Govind and Darma-Byans Landscapes,
  • Khangchendzonga-upper Teesta Valley.


Red-headed vulture

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Recently, The Red-headed vulture was spotted in the Asola Bhatti Wildlife Sanctuary.

About Red-headed vulture

  • This is one of the 9 species of Vulture which are found in India
  • It is also called the Asian King vulture or Pondicherry Vulture was extensively found in India but its numbers drastically reduced after diclofenac poisoning.
  • Conservation status
    • IUCN Red List: Critically Endangered
    • Wildlife Protection Act, 1972: Schedule 1

Key facts about the Asola Bhatti Wildlife Sanctuary

  • It is located on the Southern Delhi Ridge of the Aravalli hill range on the Delhi-Haryana border and in Southern Delhi as well as northern parts of the Faridabad and Gurugram districts of Haryana.
  • It is at the end of an important wildlife corridor that starts from Sariska National Park in Alwar, Rajasthan.
  • Flora:  Wide variety of trees, shrubs, herbs and grasses.
  • Fauna: A large number of mammals, reptiles, amphibians, butterflies and dragonflies


Economic Survey 2022 – 2023

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Finance Minister recently tabled the Economic Survey for 2022-23 in the Lok Sabha.

Key facts about Economic Survey:

  • It is the flagship annual document of the finance ministry that contains a detailed analysis of the economic development of the country.
  • It reviews the economic development in India over the past financial year by giving detailed statistical data of all the sectors-industrial, agricultural, manufacturing among others.
  • It analyses the whole macroeconomics of the country in the past year and provides an outline for the next financial year.
  • The Survey has two parts–one, one consists of the economic challenges that the country is facing and the second is the review of the year gone by.

When was the first Economic Survey of India presented?

    • The first Economic Survey in India was presented in the year 1950-51.
    • Up to 1964, it was presented along with the Union Budget. From 1964 onwards, it has been delinked from the Budget.

When and who present it? 

  • It is presented normally a day before the presentation of the Union Budget in the Parliament by the Finance Minister.

Who prepares it? 

  • It is prepared by the Economics Division of the Department of Economic Affairs in the Finance Ministry under the overall guidance of the Chief Economic Adviser and is released after it is approved by the finance minister.


NASA’s Perseverance Rover

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NASA’s Perseverance rover recently completed the first “sample depot on another world” by dropping the tenth and final sample tube.

Why in News:

  • The tube will be part of a depot that will be considered for the return to Earth as part of the Mars Sample Return Campaign.

About Perseverance rover:

  • It is robotic explorer to land on Mars as part of NASA’s ongoing Mars 2020 Mission.
  • Main Job:Seek signs of ancient life and collect samples of rock and regolith (broken rock and soil) for possible return to Earth.
  • The rover will collect samples of rock and soil, encase them in tubes, and leave them on the planet’s surface to be returned to Earth at a future date.
  • Launch: It was launched on July 30, 2020 from Cape Canaveral, Florida.
  • Landing: Successfully landed on the surface of Mar’s Jezero Crater on Feb. 18, 2021.

Features:

  • It is about 3 metres long, 2.7 metres wide, and 2.2 metres tall.
  • It is about the size of a car, but weighs only about 1,025 kilograms with all instruments on board.
  • Power source:Multi-Mission Radioisotope Thermoelectric Generator (MMRTG). Converts heat from the radioactive decay of plutonium into electricity.

Ingenuity  Helicopter:

  • It is a small, autonomous aircraft.
  • Main Job: Technology demonstration to test the first powered flight on Mars.
  • The helicopter rode to Mars attached to the belly of the Perseverance rover.
  • It became the first aircraft in history to make a powered, controlled flight on another planet.


Turnersuchus hingleyae

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Palaeontologists have recently discovered fossils of the ancient ‘marine crocodile Turnersuchus hingleyae.

About Turnersuchus hingleyae

  • The fossils uncovered on the Jurassic Coast in the United Kingdom include part of the head, backbone, and limbs of Turnersuchus hingleyae.
  • Its age dates back to the early Jurassic, Pliensbachian period, which was about 185 million years ago.
  • Due to their relatively long, slender snouts, they would likely have looked similar to the currently living Gharial crocodiles.

Pliensbachian period

  • It occurred between 190.8 million and 182.7 million years ago during the Early Jurassic Period.
  • The stage’s name is derived from the village of Pliensbach, Germany.


Heimang

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Despite recent studies highlighting the Heimang’s remarkable adaptability, it hasn’t yet been used much in commerce.

Key facts about Heimang

  • The Heimang tree grows widely in Manipur and other north-eastern regions
  • Its fruit have a citrus-like tartness and, it is packed with nutrients such as polyphenols, flavonoids, and antioxidants.
  • Traditional healers of Manipur called Maibas or maibis, prescribe heimang for common gastrointestinal problems like diarrhoea and dysentery.
  • It is also recommended to eat water-soaked fruit for indigestion and stomach ulcer.
  • The research found that compounds isolated from the stem of the heimang tree can significantly suppress HIV-1 activity in vitro. 
  • Local communities in the state also use heimang leaves to prepare a herbal shampoo called chinghi by boiling them with rice water.


Port of Haifa

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The Adani Group recently acquired the strategic Israeli port of Haifa for USD 1.2 billion.

About Haifa Port:

  • Location: It is located in northern Israel, adjacent to the city of Haifa along the Mediterranean sea.
  • It is also located on the busy Suez Canal shipping route.
  • The Haifa port is one of the two biggest commercial ports in Israel.
  • It handles nearly half of the country’s container cargo and is also the nation’s principal port for passenger traffic and cruise ships.
  • It has a natural deep-water harbor, which operates all year long.
  • The facility features two container terminals and two multi-cargo terminals. 
  • The Port of Haifa was constructed in 1933 by the British. Since 1948, it has been rebuilt and developed by the Israeli government.


PM CARES Fund

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The Central Government has recently informed the Delhi High Court that PM CARES Fund is set up as a public charitable trust and is not a public authority under RTI.

About PM CARES Fund:

  • The Prime Ministers Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund) was created on 28 March 2020, following the COVID-19 pandemic in India. 
  • It was created for combating, and containment and relief efforts against the coronavirus outbreak and similar pandemic like situations in the future.
  • It has been registered as a Public Charitable Trust.

Objectives:

  • To provide assistance and relief to all the affected persons in the event of any calamity, disaster, public health emergency or any other emergency of any kind that may be either natural or man-made.
  • Creation as well as upgradation of any pharmaceutical facilities, funding a research, creation or upgradation of any necessary infrastructure, healthcare support or any other kind of support.

Composition of the Trust:

  • Prime Minister is the ex-officio Chairman of the PM CARES Fund.
  • Minister of Defence, Minister of Home Affairs and Minister of Finance, Government of India are ex-officio Trustees of the Fund.
  • The Trust Deed of the Fund gives the Chairman of the Board of Trustees, i.e. the Prime Minister, the power to nominate three Trustees to the Board of Trustees.
  • Contributions:
    • The fund consists entirely of voluntary contributions from individuals/organizations and does not get any budgetary support. 
    • The contributions to the Fund can be from any individuals or any organizations including companies, other charitable institutions, associations, etc.
  • Donations to PM CARES Fund would qualify for 80G benefits for 100% exemption under the Income Tax Act,
  • Donations to PM CARES Fund will also qualify to be counted as Corporate Social Responsibility (CSR) expenditure under the Companies Act, 2013.
  • It has also got exemption under the FCRA. This enables PM CARES Fund to accept donations and contributions from individuals and organizations based in foreign countries.


Amrita Sher-Gil

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Recently, The National Gallery of Modern art in association with Liszt Institute, Hungarian Cultural Centre, New Delhi celebrated the 110th birth anniversary of Amrita Sher-Gil.

About Amrita Sher-Gil:

  • Amrita was an Indian-Hungarian painter and one of the avant-garde women artists.
  • Though her art education was from Paris, she has discovered the artistic traditions of India.
  • She travelled widely in India during 1939 which brought a robust impact on the style of expression, figuration and composition in her artwork.

Her famous works are

    • A group of three girls.
    • Brahmacharis, Bride’s toilet.
    • Lady Daljit Singh of Kapurthala, Musicians, women on Charpoy, Camels and Village girls


Air Marshal A.P. Singh to be new Vice Chief of IAF

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Air Marshal A P Singh has been appointed as the new Vice Chief of the Indian Air Force, officials said on January 30, 2023.

  • He will succeed Air Marshal Sandeep Singh, who will retire from service on January 31, 2023.
  • Air Marshal A P Singh is currently serving as the Air Officer Commanding-in-Chief of the Central Air Command. He will take charge as the Vice Chief on Wednesday, the officials said.
  • He was commissioned into the fighter stream of the IAF on December 21, 1984.
  • Air Marshal A P Singh is an alumnus of National Defence Academy, Defence Services Staff College and National Defence College


Munroe Thuruthu: The sinking island of Kerala

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A recent study revealed anthropogenic interventions as the main reason for the plight of Munroe Thuruthuresidents, Kerala’s first set of climate refugees.

  • Munroe Thuruthu  is slowly going under water
  • Munroe Island is located 27 km away from the heart of Kollam. 
  • It is a string of eight islets at the confluence of the Ashtamudi Lake and the Kallada river. 
  • The island’s decline began with the construction of the Thenmala dam. 
  • Located 70 km away and constructed in the 1960s under the Kallada Irrigation Project, the dam blocked the flow of fresh water as a result of sediments from the Kallada river — the main determinant of the land’s fertility. 
  • Today the whole area has turned saline


Forest Cover in India

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Context

India is lagging behind in the targets to increase the number and quality of tree- and forest-cover plantations set in the Green India Mission, according to data accessed via the Right To Information Act.

The numbers

  • From 2015-16 to 2021-22, the Centre – based on submissions from 17 States – had approved a target of increasing tree/forest cover by 53,377 hectares and improving the quality of degraded forest by 1,66,656 ha. 
  • As per the Environment Ministry tree/forest cover had increased by 26,287 hectares and forest quality improved in only 1,02,096 hectares as of December 31, 2022.
  • For executing these projects, the Centre had allocated ?681 crore but only ?525 crore had been utilised.
  • States with significant shortfall in tree cover include 
    • Andhra Pradesh, with a target of 186 ha but having only achieved 75 ha
    • Uttarakhand with a target of 6,446 ha but only 1,505 ha achieved
    • Madhya Pradesh targeting 5,858 ha but delivering 1,882 ha
    • Kerala committing 1,686 ha but furnishing 616 ha
    • Punjab, unusually committed to 629 ha but having delivered 1,082 ha
 India State of Forest Report-2021

  • As per the Report, forest and tree cover in the country increased by 2,261 square kilometre since the last assessment in 2019. 
  • India’s total forest and tree cover was 80.9 million hectares, which accounted for 24.62% of the geographical area of the country. 
  • 17 States and Union Territories had more than 33% of their area under forest cover. 
    • Madhya Pradesh had the largest forest cover, followed by Arunachal Pradesh, Chhattisgarh, Odisha and Maharashtra. 
  • The top five States in terms of forest cover as a percentage of their total geographical area were 
    • Mizoram (84.53%)
    • Arunachal Pradesh (79.33%)
    • Meghalaya (76%)
    • Manipur (74.34%)
    • Nagaland (73.90%)

India’s Target to increase forest cover

  • National Mission for a Green India (GIM) is one of the eight Missions under the National Action Plan on Climate Change. 
  • It aims at protecting, restoring and enhancing India’s forest cover and responding to climate change. 
  • The target under the Mission is 10 million hectares (Mha) on forest and non-forest lands for increasing the forest/tree cover and to improve the quality of existing forest.

Need to improve tree cover

  • Improving tree cover is critical to sequester carbon and bolster India’s carbon stocks as part of its international commitments to mitigate greenhouse gas emissions.



Marriage laws in India

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The Supreme Court announced that it would examine whether minor girls, as young as 15 years, can marry on the basis of custom or personal law.

  • Legal age for marriage in India – 18 years for women and 21 years for men.Marriage below this age is considered to be child marriage, and hence an offence.
  • Offence – In 2017, the Supreme Court ruled that sexual intercourse by a man with his wife, who is below 18 years, is rape, reading down Section 375 (rape) of the Indian Penal Code.
  • Increasing legal age to 21 – The Prohibition of Child Marriage (Amendment) Bill, 2021 has sought to amend the Prohibition of Child Marriage Act (PCMA), 2006, to increase the minimum age of marriage for women from 18 to 21 years.
  • In December 2021, it was referred to a parliamentary standing committee for further deliberations, and it has already got three extensions to submit its report, the last being in October 2022.
  • Legal age in different faiths – The minimum age of marriage for a man is 21 years and for a woman is 18 years in the following acts of different faiths,
    1. The Indian Christian Marriage Act, 1872
    2. Parsi Marriage and Divorce Act, 1936
    3. Special Marriage Act, 1954
    4. Hindu Marriage Act, 1955
  • Under the Muslim personal law in India, persons who have attained puberty are eligible to get married i.e. on attaining the age of 15 years, while they are still minor.
  • In December 2022, the National Commission for Women (NCW) filed a petition in the Supreme Court to make the minimum age of marriage for Muslim women on par with persons belonging to other faiths.
  • The NCW had raised the question whether personal law could override statutory provisions of the POCSO Act and other laws.


Need for an Indian Inheritance Tax

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Why in news?

Oxfam report says that 70% of countries don’t have any form of inheritance tax on wealth.

What is the status of inheritance tax in India?

  • Inheritance tax – Inheritance tax was a tax that was levied against a particular asset during the time of its inheritance.
  • A person can receive inheritance either under a Will or under the personal law of the deceased.
  • It comes under direct tax.
  • Status of inheritance tax in India – In India, the concept of levying tax on inheritance does not exist now.
  • The Inheritance or Estate Tax was abolished with effect from 1985.
  • In the event of death of an individual, properties belonging to the deceased would pass on to his legal heirs, a transfer without any consideration in return.
  • Hence, it could qualify as a gift for the purpose of income tax.
  • The Income Tax Act, 1961, specifically excludes the transfer of assets under will or inheritance from the purview of gift tax.

When should the person receiving the inheritance pay tax?

  • On the income earned from the inherited property – The person receiving the inheritance has to pay tax on the income earned (rent, interest etc.) in respect of the assets inherited by him once he becomes owner of the same.
  • On selling the inherited asset – The person has to pay capital gains tax when he sells the inherited asset.
  • The holding period (period for which the property was held by the heir and the deceased) will determine if capital gains will come under long-term capital gains tax or short-term capital gains tax.
  • The judicial pronouncements have held that since the cost to the previous paid for owner is to be substituted, indexation should be allowed.
  • The indexed capital gains are taxed at flat rate of 20%.

Indexation is a systematic process that enables individuals to protect their earnings against tax erosion. It allows individuals to adjust the cost of investment for inflation with the help of a price index.

What is the need for an inheritance tax in India?

  • Reduces inequality – It aids in reducing the inequality.
  • Dispersion of wealth – It will allow for a more efficient dispersion of wealth.
  • Creation of meritocratic society – It will create a meritocratic society by chipping away the advantages the children of the wealthiest families enjoy by an accident of birth.
  • Utilitarian economics – It rests on the principle of utilitarian economics which believes that an optimal social state can be achieved through redistribution of initial endowments.
  • Need for more direct taxes – Most of India’s tax revenues accrue from indirect taxes, intensifying the economically weaker sections.
  • Revenue to fund public welfare – Inheritance tax can raise a significant quantum of revenue for the exchequer which could be used to finance public welfare.
  • International practices – Countries such as England, France, Germany, the USA, and Greece have been taxing inherited wealth at as high as 40%.


Let Diplomacy flow: On the Indus Water Treaty

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Context:

  • While Islamabad expressed the desire for a diplomatic handshake from across the border two weeks ago, it recently restated its request for third-party mediation in the Indus Water Treaty (IWT).
  • This shows that the climate is not at all appropriate for the thawing of relations between the two nations, and it is still difficult to bridge the gap between words and deeds.

What is the Indus Water Treaty (IWT)?

  • It is a water-distribution agreement between India and Pakistan that was mediated by the World Bank (WB) and signed in Karachi in 1960 by Jawaharlal Nehru, then the Indian PM, and Ayub Khan, then the president of Pakistan.
  • The Treaty gives control over the waters of the three eastern rivers – the Beas, Ravi and Sutlej – to India (about 20% of the total water), while control over the waters of the three western rivers – the Indus, Chenab and Jhelum – to Pakistan (80%).
  • India is granted unlimited non-consumptive usage of the western river waters for purposes like power generation and limited irrigation use.
  • The dispute redressal mechanism provided under the IWT is a graded 3-level mechanism:
    • Indus Commissioners
    • Neutral Expert
    • Court of Arbitration

 

 Background in which Talks of Modifying IWT Started:

  • In order to change the more than 60-year-old IWT that controls how the two nations share the waters of six rivers in the Indus system, India has sent Pakistan a notice via the Indus Commissioners.
    • Article XII (3) of the IWT states that it may occasionally be altered by a treaty that has been properly approved.
  • The notice comes as a result of Pakistan’s continuous inaction in enforcing the IWT by repeatedly objecting to the development of hydroelectric projects on the Indian side.
  • Two hydroelectric power projects, one on the Kishanganga river (a tributary of the Jhelum), and the other on the Chenab (Ratle), have been the subject of a prolonged controversy.
  • In 2013, the Court of Arbitration gave a partial award on the Kishanganga Hydel Power Project (KHEP), upholding India’s right to divert water for the project.
    • The Court refused to set a bar on the release of water, as demanded by Pakistan.
    • However, it also restrained from making KHEP immune to environmental considerations.
    • After the completion of the project, Pakistan objected to it again in 2014.
  • Pakistan has also contested the Ratle project on grounds of design and violations of the IWT. The project was delayed but work resumed in 2019.
    • Meanwhile, Pakistan asked the WB to establish a Court of Arbitration to look into the project.
  • The WB in 2022 started a parallel process of simultaneously appointing a Neutral Expert and a Chair of the Court of Arbitration to resolve the dispute, which India claims presents both logistical and legal difficulties.
    • India wanted a Neutral Expert to settle the conflict, whereas Pakistan wanted a Court of Arbitration.

 Why Does India Want to Modify the IWT?

  • Under Article 60 of the Vienna Convention on the Laws of the Treaties, a party can criticise an agreement and give notice of its intention to terminate it if the other party violates its fundamental provisions.
  • India has adopted the moderate approach of not terminating but modifying the IWT.
  • New Delhi claims that Islamabad has violated the dispute settlement mechanisms, as mandated by Articles 8 and 9 of the Treaty.
    • Article 8 specifies the roles and responsibilities of the Permanent Indus Commission – a regular channel of communication for matters relating to the implementation of the Treaty.
    • Article 9 offers a graded pathway (Neutral Expert, Court of Arbitration) to address any issue related to the implementation or interpretation of the IWT.
  • As per India, Pakistan’s unilateral decision to approach the Permanent Court of Arbitration, bypassed the graded pathway.

 What are the Concerns?

  • Pakistan has shown a preference for third-party mediation, suggesting that this may be the most effective way to resolve the impasse in the two countries’ relations.
  • In India, Pakistan’s opposition to the hydroelectric projects is viewed as a strategy to postpone them.
  • These stances resemble diplomatic hedging – meaning that by pursuing two diametrically opposed strategies toward another state, balancing (preparing for the worst) and engagement, a state distributes its risk.
  • They serve as a reminder that technically-negotiated agreements are just half of the solution and can cause transboundary rivers and their ecosystems to experience gradual strain over time.

 Way Ahead:

  • The two countries should use bilateral dispute settlement mechanisms to discuss the sustainable uses of water resources.
  • Given the broad contours of the IWT – particularly Article 7 that talks about future cooperation – discussing and broadening transboundary governance issues in holistic terms could be the starting point for any potential diplomatic handshake.

 Conclusion:

  • Any analysis of international diplomacy would be incomplete if it looks only at legal aspects.
  • The practice of diplomacy and the use of law for explaining and justifying government actions are equally important.


Sariska Tiger Reserve (STR)

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After successful reintroduction of tigers at the Sariska Tiger Reserve (STR), the forest department is planning to relocate a pair of sloth bears at the reserve.

About Sariska Tiger Reserve (STR):

  • Location: It is located in the Aravalli hills in the Alwar district of Rajasthan
  • This area was a hunting preserve of the erstwhile Alwar state.
  • It was declared as a wildlife reserve in 1955 and then a Tiger Reserve in 1978 under Project Tiger. 
  • It is the first reserve in the world which successfully relocated tigers.
  • Sariska is also famous for old temples, palaces and lakes such as Pandu Pol, Bhangarh Fort, Ajaibgarh, Pratapgarh, Siliserh Lake and Jai Samand Lake.
  • Topography: Grasslands, dry deciduous forests, cliffs, and rocky landscapes.
  • Flora:  salar, kadaya, dhak, gol, ber , Banyan , gugal , bamboo , kair , adusta etc
  • Fauna: Bengal tigers, leopard, jungle cat, Indian jackal, chital, chinkara, four-horned antelope, Indian peafowl, grey partridge, Indian peafowl, Indian eagle-owl etc.

Sloth Bear:

  • Sloth bears are one of the eight bear species found across the world.
  • Scientific name: Melursus ursinus
  • Distribution: They mainly inhabit the region of India, Nepal, Sri Lanka and Bhutan.
  • Features:
    • They have long, shaggy dark brown or black fur and curved claws, which are the longest out of any of the bear species. 
    • It feeds on fruits, ants and termites. 
  • Conservation Status:
    • IUCN: “Vulnerable”
    • Indian Wildlife Protection Act, 1972: Schedule 1


Justice Rohini Commission

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The Justice G. Rohini-led commission for the sub-categorisation of other backward classes (OBCs) was recently given another extension in its tenure by the President.

About Rohini Commission:

  • The commission was set up by the President under Article 340 of the Indian Constitution on October 2,
    2017. 
  • It is headed by former Delhi High Court judge, Justice G. Rohini (retd).
  • Mandate: To examine the issues related to the sub-categorisation of Other Backward Classes.
  • Terms of References:
    • to examine the extent of inequitable distribution of benefits of reservation among the castes or communities included in the broad category of Other Backward Classes, with reference to such classes included in the Central List;
    • to work out the mechanism, criteria, norms and parameters in a scientific approach for sub-categorisation within such Other Backward Classes;
    • to take up the exercise of identifying the respective castes or communities or sub-castes or synonyms in the Central List of Other Backward Classes and classifying them into their respective sub-categories. 

What does Article 340 says?

  • The Article reads, “The President may, by order, appoint a Commission consisting of such persons as he thinks fit to investigate the conditions of socially and educationally backward classes within the territory of India and the difficulties under which they labour and to make recommendations as to the steps that should be taken by the Union or any State to remove such difficulties and to improve their condition…”