GDP to contract 7.7% in current fiscal, advance estimates show
Mains: G.S. III Indian Economy
Why in news?
The first advance estimated of GDP, obtained by extrapolation of seven months data released by the National Statistics Office showed that India’s GDP will contract 7.7% in the current financial year.
- The Indian economy is poised for its biggest-ever contraction since 1952.
- According to analysts, the NSO’s advanced estimates are reasonably accurate as they have been correct about the real GDP growth rate in three of the past 12 years.
- The estimated fall is steeper than a 7.5% drop predicted by the RBI and other rating agencies. However, the World Bank has forecast shrinkage of 9.6% this year.
- The numbers are driven by negative growth in seven of the eight core sectors for which data is reported.
- Agriculture will be the sole bright spot and is projected to grow at 3.4% but manufacturing will contract 9.4%.
- The worst hit will be trade, hotel, and transport in the services sector which are projected to contract by 21.4%.
- Manufacturing has continued with its pre-Covid poor performance when it registered a growth of just 0.03% last year.
- Fiscal deficit for year ending in March is likely to be over 7% of GDP, as revenue collection suffered from a lockdown and restrictions to rein in the spread of Covid.
Centre merges J&K cadre officers with AGMUT
Mains: G.S. II Polity and Governance
Why in news?
Centre merged Jammu and Kashmir cadre IAS, IPS and IFS officers with that of Arunachal Pradesh, Goa, Mizoram and Union Territory (AGMUT), also called the Union Territory cadre, through an ordinance.
- The Arunachal Pradesh, Goa, Mizoram, and Union territories cadre (AGMUT) was expanded on 07/01/2021, through a Presidential order, to include All India Service Officers of IAS, IPS, and IFoS, belonging to the erstwhile J&K cadre.
- The expanded cadre officials could now be posted to the Union Territories of J&K as well as Ladakh.
- This also implies that henceforth, a larger number of fresh AIS officers would be assigned to the AGMUT cadre to enhance its personnel strength.
- Since Parliament isn’t in session at the moment, the presidential order, in the form of an Ordinance, was issued.
- The merger of the existing J&K cadre of IAS, IPS and IFS officers is both a political and administrative move. It sends the message of total integration of J&K with the Centre while putting a question mark on the time it may take to return the region’s statehood.
- The move is also seen to have been necessitated by the reluctance of J&K cadre officers to serve in Ladakh. It gives government a larger talent pool for the UTs.
- The All India Services comprises the three prestigious civil services of India and they are the Indian Administrative Service (IAS); Indian Police Service (IPS); and Indian Forest Service (IFS).
- The common exceptional feature of the All India Services is that the candidates selected for these civil services are recruited by the Centre (Union Government in federal polity), however, their services are allotted under various State Cadres and they have the accountability to serve both under the State and the Centre.
Dedicated Freight Corridor seen as game changer: PM
Mains: G.S. II & III Polity and Governance, Infrastructure
Why in news?
PM Narendra Modi dedicated the 306 km Rewari-Madar section of Western DFC to the nation and flagging off the double stack long haul container train in this route.
- PM said, the Dedicated Freight Corridor (DFC) is seen as a game changer in the 21st
- The DFC is not only the route for modern freight trains but also a corridor for rapid development of the country.
- These corridors will form the basis of development of new growth centres in different cities of the country.
- DFC is a high speed and high capacity railway corridor that is exclusively meant for the transportation of freight, or in other words, goods and commodities.
- DFC involves the seamless integration of better infrastructure and state of the art technology.
- DFC has two arms : Eastern DFC & Western DFC.
- Dedicated Freight Corridor Corporation of India Ltd. – DFCCIL under the Ministry of Railways is a special purpose vehicle tasked with planning and completion of 3,306 kms of DFCs.
- It is headquartered in New Delhi and is a Public Sector Undertaking (PSU).
- It engages in the planning and development, deployment of monetary resources, building, upkeep, and the operation of the DFCs.
USTR targets India, Italy, Turkey over digital taxes
Mains: G.S. II & III International Relations and Issues related to economy
Why in news?
The US Trade Representative’s office said that digital services tax adopted by India, Italy and Turkey discriminate against US companies and are inconsistent with international tax principles, paving the way for potential retaliatory tariffs.
- The office of the U.S. Trade Representative said in a statement, while it won’t retaliate now, the USTR will “continue to evaluate all available options,” it said.
- The USTR started investigations into the moves of at least 10 countries, citing Section 301 of the U.S. Trade Act of 1974, which allows it to retaliate for trade practices it deems unfair. It’s the same tool used to justify U.S. tariffs on Chinese goods for alleged theft of intellectual property.
- In its detailed reports, which the office has made public, USTR studied how these digital taxes affected companies, including Amazon, Google, Facebook, Airbnb and Twitter.
- India, which has become the largest market for Silicon Valley giantsGoogle and Facebook by users, introduced digital taxes in 2016 to target foreign firms.
- Digital tax is a tax that is levied on digital business activities.
- In India, the Equalisation Levy was introduced for the first time in 2016 as 6 per cent tax on revenues earned by non-residents from online advertising and related services.
- The burden of this tax eventually fell on local firms advertising on these platforms.
- In March, the government expanded the scope of this levy to include the sale of goods and services in the country by overseas e-commerce operators.
- The transactions will be taxed at 2 per cent if businesses earned more than Rs 2 crore.
- Globally, the rate of digital tax varies from 1.5 per cent (in Poland and Kenya) to 15 percent (Paraguay). In Europe, the tax rate varies from 3 percent (France, UK, Spain) to 7.5 percent (Hungary).
- Examples of Digital Tax are GAFA Tax in Europe, Equalisation Levy in India.