Borrow from RBI to bridge GST gap, Centre tells States
Paper:
Mains: General Studies- II: Governance, Constitution, Polity, Social Justice and International relations.
Why in news?
The Centre acknowledged that states are likely to face a GST revenue gap of ₹3 lakh crore this year, as the economy may contract due to COVID-19.
Key Details:
- The economic slowdown has pushed both GST and cess collections down over the last year (2019-20), resulting in a 40% gap last year between the compensation paid and cess collected.
- Compensation cess collections are only expected to bridge 22% of this gap.
- Of the remaining ₹2.35 lakh crore, the Centre said only ₹97,000 crore was due to GST implementation itself, rather than caused by the impact of COVID-19.
- The Centre claimed that ₹97,000 crore is the portion hardwired into the compensation law.
What is Compensation Cess
- The cess will compensate the states for any revenue loss on account of implementation of GST.
- This cess will not be payable by exporters and those persons who have opted for compensation.
- The input tax credit of this cess can be only used to pay compensation cess and not the other taxes like CGST, SGCT or IGST.
Steps taken by GOI:
The Centre has offered states two options for borrowing to meet the shortfall.
- A special window would be provided, in consultation with the RBI, so that the states can get ₹97,000 crore at a reasonable rate of interest, and this amount can be repaid after five years through the collection of cess.
Another option is that this entire gap of ₹2.35 lakh crore can be met by the borrowing by the states
States can have sub-groups among SC/STs, says court
Paper:
Mains: General Studies- II: Governance, Constitution, Polity, Social Justice and International relations.
Why in news:
A five-judge Bench of the Supreme Court held that States can sub-classify Scheduled Castes and Scheduled Tribes in the Central List to provide preferential treatment to the “weakest out of the weak”.
The Constitution Bench led by Justice Arun Mishra said reservation has created inequalities within the reserved castes itself.
Judgement:
- A five-judge Bench of the Supreme Court has held that States can sub-classify Scheduled Castes and Scheduled Tribes in the Central List to provide preferential treatment to the “weakest of the weak”.
- “Citizens cannot be treated to be socially and educationally backward till perpetuity; those who have come up must be excluded like the creamy layer,” the judgment said.
- With this, the Bench took a contrary view to a 2004 judgment delivered by another Coordinate Bench of five judges in the V. Chinnaiah case.
- The Chinnaiah judgment had held that allowing the States to unilaterally make a class within a class of members of the Scheduled Castes would amount to tinkering with the Presidential list.
- Justice Mishra disagreed with this and reasoned that sub-classifications within the Presidential/Central List does not amount to tinkering with it as no caste is excluded from the list.
Constitutional Provisions:
- The Central List of Scheduled Castes and Tribes is notified by the President under Articles 341 and 342 of the Constitution.
- The consent of the Parliament is required to exclude or include castes in the List.
- In short, States cannot unilaterally add or pull out castes from the List.
Key Details:
- The Constitution Bench, led by Justice Arun Mishra, said reservation has created inequalities within the reserved castes itself.
- The court pointed out that there is a caste struggle within the reserved class as the benefits of reservation are being usurped by a few.
- The judgment is significant as it fully endorses the push to extend the creamy layer concept to the Scheduled Castes and Scheduled Tribes.
- With two numerically equal Benches of judges holding contrary viewpoints, the issue has been referred to a seven-judge Bench of the court.
India can be weapons supplier: PM
Paper:
Mains: General Studies-III: Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management
Why in News:
- The Prime Minister has said that India has the capability to become a reliable weapons supplier to friendly nations.
- The PM said that India will consolidate its position as the net security provider in the Indian Ocean region, highlighting self-reliance in defence manufacturing.
Key Details:
- A series of measures were recently announced to boost domestic defence manufacturing.
- Corporatisation of the Ordnance Factory Board (OFB) is under progress.
- For the first time, 74% Foreign Direct Investment (FDI) in defence is allowed through the automatic route.
- Also, the government recently issued a draft Defence Production and Export Promotion Policy (DPEPP) 2020 for public feedback with the aim to achieve a manufacturing turnover of $25 bn or ₹1,75,000 crore, including exports of $5 bn in aerospace and defence goods and services by 2025.
- Work is in progress in the two defence industrial corridors in Uttar Pradesh and Tamil Nadu and a target of ₹20,000 crore investments had been set for the next five years.
- Recently, 101 items’ negative import list was announced and these items have been reserved for the domestic industry.
Russia hopeful of concluding fighter, copter deals by year-end
Paper:
Mains: General Studies-III: Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management
Why in News:
Russia is hopeful of concluding contracts for MiG-29 and SU-30MKI fighters’ jets and six Ka-31 helicopters by year-end, a representative of the Federal Service for Military-Technical Cooperation (FSMTC) said at the ongoing Army 2020 expo in Russia.
Key Details:
- The Indian government has allocated additional funds for procurement of additional batches of Russian MiG-29, SU-30 MKI jets and six Ka-31 choppers.
- The Defence Acquisition Council (DAC) approved the procurement of 21 MiG-29s for the Indian Air Force (IAF) along with the upgrade of 59 MiG-29s estimated to cost ₹7,418 crore and 12 SU-30 MKI aircraft at an estimated ₹10,730 crore.
- On the S-400 deal, acceleration of the delivery of the first batch of S-400s was technically impossible, as there was objective, technology-related stages of production, acceptance and transfer of equipment.
Significance:
The deals could see some progress during the visit of Russian President Vladimir Putin to India later this year for the annual bilateral summit, which also coincides with the 20th year of India-Russia strategic partnership.
Why is the S-400 deal important?
- The agreement to purchase the Triumf missile system boosted India-Russia defence ties at a point of inflection.
- Russia has traditionally been India’s biggest defence supplier, but was surpassed by the U.S. in the last few years, a fact that had added to a perceptible drift in bilateral ties.
- Putin and Mr. Modi addressed this drift with a special “reset” summit in Sochi, which was followed by Mr. Putin’s visit to Delhi on October 5, 2018, when the deal was announced.
- The Indian Air Force has also backed the superior air defence system in that it will fill the gap in India’s particular needs: countering its main adversaries and neighbours, China and Pakistan’s growing air power, while dealing with a depleting stock of fighter aircraft.
Solar tariff in India unlikely to beat Gulf rates
Paper:
Mains: General Studies-III: Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management
Why in news:
- The per unit cost of solar power in India, considered among the cheapest in the world, is unlikely to cost less than what it is in Gulf countries, according to an analysis by an energy think tank.
- This is primarily due to the lower cost of finance in the countries in the region along with factors such as cheaper land prices.
Key Details:
- Recent record-low tariffs in Abu Dhabi, Dubai, Saudi Arabia and Qatar are the result of
- the lower cost of U.S. dollar-denominated,
- long-dated financing, with major tax concessions
- other factors driving prices down in the region,
- The Gulf region has achieved tariffs in the range of U.S. cent 1.35-1.80/kWh, and (outside the Gulf region) Portugal was able to offer a record-low tariff discovery cost of U.S. cent 1.32/kWh at a recent bid at a 700MW solar energy auction on August 24, 2020. (1 cent = ₹0.7 approx.) but India’s tariffs, some of the lowest in the world, are about twice that in the Gulf region or around U.S. cent 3.14-3.25/kWh.
Favourable destination
- India has for years being considered a favourable destination for solar projects and nearly 20 gigawatts of solar capacity is under installation currently.
- According to the latest estimates, India has deployed about 87,000 MW of renewable energy capacity as of 2019, and has committed to achieving 450 GW of renewable energy capacity, a significant fraction of which is by solar, by 2030, according to a report by the Centre for Science and Environment.