UPSC 2017: Comprehensive News Analysis - July 22

Context:

• Unfortunately, items of luxury, whose deprivation causes no challenges to human existence is being prioritised and charged less compared to aids and appliances that are essential items for persons with disabilities.

Current tax bracket:

• The GST on aids and appliances for persons with disabilities uses such as Crutches, callipers, hearing aids, walking frames, etc. would attract a GST of 5 per cent.
• But the items used to embellish your body, will attract less and in some cases, no GST.
• Kajal, kumkum, bindi, bangles and even human hair are not taxed at all, and gold and diamonds will attract a GST of just 3 per cent.
• Puja samagri like rudraksha, prasadam, panchamrut, cotton wicks etc. are also exempt from GST.
• There is a lower slab of 0.25 per cent for items like unpolished stones.

Rationale: It is to enable the domestic manufacturer to claim input tax credit for raw materials used in the manufacture of these products.

Impact on the disabled and other vulnerable sections:

• Aids and appliances that are essential items for persons with disabilities for their daily routine, access opportunities of education or employment or enjoyment of other rights or the discharge of duties as a responsible citizen.
• The fact that without aids and appliances the disabled are deprived of all these and forced into a dis-empowered state of seclusion

 Earlier tax regime

• Items like Braille printer, refreshable Braille display and Braille note-taker, talking watches and clocks, audio labelling devices, DAISY players are entirely imported items and did not attract any taxes earlier.
• There are no domestic manufacturers of these products.
• Raw materials like aluminium extrusions, square tubes and round tubes of aluminium used in the manufacture of artificial limbs and many rehabilitation aids were exempt from the earlier tax regime.
• It needs to be underlined that input tax credit is, in any case, merely a by-product of the tax channels’ unification, the weeding out of redundancy and the cascading taxes rife in the system that existed earlier.

Possible Solution:

• If the intent of the government is to protect the domestic industry, the government has to take the following concrete steps.
• Help Indian manufacturers build capacity by way of a technology incubator.
• Extend existing indigenous manufacturers’ scattered production centres into a nation-wide network of distribution, customisation and servicing.

Basic Information:

GST Council: The GST Council aims to develop a harmonized national market of goods and services. The composition of the GST Council includes:

• The Union Finance Minister (as Chairman),
• The Union Minister of State in charge of Revenue or Finance, and
• The Minister in charge of Finance or Taxation or any other Minister, nominated by each state government.
• The decisions of the GST Council will be made by three-fourth majority of the votes cast. The centre shall have one-third of the votes cast, and the states together shall have two-third of the votes cast.

The GST Council will make recommendations on:

• Taxes, cesses, and surcharges to be subsumed under the GST;
• Goods and services which may be subject to, or exempt from GST;
• The threshold limit of turnover for application of GST;
• Rates of GST;
• Model GST laws, principles of levy, apportionment of IGST and principles related to place of supply;
• Special provisions with respect to the eight north eastern states, Himachal Pradesh, Jammu and Kashmir, and Uttarakhand; and
• Other related matters.

Context: problems faced by farmers

Importance of Agricultural sector:

• With a large population to feed, imports will not solve our problem if there is a severe drought and food shortage
• Though agriculture now accounts for less than 15% of gross domestic product (GDP), it is still the main source of livelihood for nearly half our population

Reason behind the current Agrarian crisis

(1). Landless Farmers

• Around 83% of rural households are either entirely landless or own less than 1 hectare of land
• Farmers’ tiny plots of land can no longer sustain whole families, especially in rain-fed agriculture, which accounts for two-thirds of India’s total cultivable area

(2). Shortage of money

• Landless or marginal farmers lack the resources to either buy or lease more land or invest in farm infrastructure like irrigation, power, farm machinery, etc.
• About 52% of agricultural households are estimated to be in debt, and the average size of household debt is Rs 47,000

(3). Different kind of Risks

• Weather: The large majority of small farmers are dependent on the rains. A weak monsoon or even a delayed monsoon means a significant loss of output
• Soil: The next risk is weak soil fertility, pests and plant diseases
• Price: The better the crop the lower would be the price
• Net income sometimes collapses if there is a very good crop of perishables 

MSP benefits large traders instead of farmers:

• For foodgrains like rice and wheat, government procurement at the minimum support price is supposed to protect the farmer
• But MSP benefits the large traders who sell grain to the government
• Small farmers typically do not have enough marketable surplus to justify the cost of transporting the crop to government corporations in the towns
• In the case of other crops, Agricultural Produce Market Committees (APMCs) have the opposite effect
• Farmers have to sell their produce through auctions in regulated markets controlled by cartels of licensed traders
• These licences give traders oligopolistic market power

Solution to farmer problems: Cooperative farming systems

• There are several variants of cooperation ranging from collective action in accessing credit, acquiring inputs and marketing to production cooperatives.
• This also includes land pooling; labour pooling; joint investment, joint water management and joint production.

Advantage of Cooperative farming systems

The advantages of aggregating small farms into larger, voluntary, cooperatives include:

1. Greater capacity to undertake lumpy investment in irrigation and farm machinery,
2. More efficient farming practices,
3. Greater bargaining power and better terms in the purchase or leasing of land,
4. Access to credit,
5. Purchase of inputs and the sale of produce

Question 2. The most important source of information about the agrarian conditions during 
Mughals is_______.

See

Question 3. Which among the following is known as the earliest example of Panchayatana 
style of temple?

See

Question 4. With respect to the President of India, which among the following statements 
is / are correct?

See

Question 5. Which among the following in India are known for substantial coral reef 
formations?

See

GS Paper II

Indian Society

1. “While there is no shame in being gay, lesbian, bisexual, transgender or intersex or even straight – there is a most certain shame and dishonour in being a homophobe, a transphobe and a bigot,” Do you agree with this? Comment critically.

GS Paper III

Agriculture

1. “Government procurement at the minimum support price is supposed to protect the farmer. But it mainly benefits the large traders.” Discuss.

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