Syllabus subtopic: Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein.

Prelims focus: about salient features of GST, GST Council: structure and mandate

Mains focus: concerns of the states regarding delays in compensation payments and the challenges faced by the govt. in GST collections

News: The Centre released Rs. 35,298 crore to the States in Goods and Services Tax (GST) compensation on Monday, just two days before a crucial meeting of the GST Council.

Background

The decision comes at a time when several States had urged the Centre to transfer the compensation payments, which have been pending for several months, with the Punjab government warning that it was prepared to take the issue to the Supreme Court.

Why was there a delay in transfer?

The delay was because GST collections had been lower than expected.

While the government had budgeted for Rs. 6,63,343 crore in GST collections for the current fiscal, 2019-­20, it had garnered only about 50% of its budget estimate in the first eight months.

Concerns raised by the states

States have expressed apprehensions about not getting their compensation on time or at all, with some alleging that they had to incur debts to meet the expenses predicated on GST compensation monies.

While the Congress government in Punjab had threatened to take the Centre to court, Chhattisgarh Chief Minister Bhupesh Baghel had asked the Centre to consider extending the cut­off date for compensation, according to sources.

About GST Council:

The GST Council is set to hold its next meeting on December 18.

1. It is a constitutional body for making recommendations to the Union and State Government on issues related to Goods and Service Tax.
2. It is chaired by the Union Finance Minister and other members are the Union State Minister of Revenue or Finance and Ministers in-charge of Finance or Taxation of all the States.

Composition

As per Article 279A of the amended Constitution, the GST Council which will be a joint forum of the Centre and the States, shall consist of the following members: -

1. Union Finance Minister - Chairperson;
2. Union Minister of State in charge of Revenue or Finance - Member;
3. Minister in charge of Finance or Taxation or any other
4. Minister nominated by each State Government - Members.

Mandate of GST Council

It shall make recommendations to the Union and the States on:

1. the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax;
2. the goods and services that may be subjected to, or exempted from the goods and services tax;
3. model Goods and Services Tax Laws, principles of levy, apportionment of Goods and Services Tax levied on supplies in the course of inter-State trade or commerce under article 269A and the principles that govern the place of supply;
4. the threshold limit of turnover below which goods and services may be exempted from goods and services tax;
5. the rates including floor rates with bands of goods and services tax;
6. any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster;
7. special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and
8. any other matter relating to the goods and services tax, as the Council may decide.
9. It shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel.
10. While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonized structure of goods and services tax and for the development of a harmonized national market for goods and services.
11. One-half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum at its meetings.
12. The Goods and Services Tax Council shall determine the procedure in the performance of its functions.

How does the council take a decision on any tax issue?

Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles-

1. the vote of the Central Government shall have a weightage of one third of the total votes cast, and
2. the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting.

Will absenteeism of any state or vacancy/ies halt the decision of the council?

No act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of—

1. any vacancy in, or any defect in, the constitution of the Council; or
2. any defect in the appointment of a person as a Member of the Council; or
3. any procedural irregularity of the Council not affecting the merits of the case.

Is there any provision for resolving the issues arising among the different parties of the council?

The Goods and Services Tax Council shall establish a mechanism to adjudicate any dispute —

1. between the Government of India and one or more States; or
2. between the Government of India and any State or States on one side and one or more other States on the other side; or
3. between two or more States, arising out of the recommendations of the Council or implementation thereof.

Qatar hopeful of ending rift with Saudi Arabia

Syllabus subtopic: Effect of policies and politics of developed and developing countries on India's interests, Indian diaspora.

Prelims and Mains focus: on the Qatar diplomatic crisis and the countries involved; related geographical locations; impact on India’s interest

News: Qatar’s Foreign Minister has voiced optimism over ending a bitter rift with Riyadh, saying early talks broke a “stalemate” but stressed Doha’s unwillingness to downgrade ties with Turkey as a pre­condition.

Background

Saudi Arabia along with its allies the UAE, Bahrain and Egypt cut all diplomatic and transport ties with Qatar in June 2017.

Why?

The four nations accused Doha of backing radical Islamists, including the Muslim Brotherhood, and seeking closer ties with Saudi arch rival Tehran — allegations Qatar vehemently denies.

Stipulations made by Saudi Arabia

The Saudi­led bloc made 13 key demands, including shutting down broadcaster Al Jazeera, downgrading ties with Iran and closing a Turkish military base on its territory, to resolve the dispute. But the UAE has sought to downplay the reconciliation effort.

How does the Qatar crisis impact India?

• Energy crisis: Half of India’s energy import needs from the Persian Gulf and Qatar, small in size, are the world’s top seller of liquefied natural gas (LNG). Qatar’s dispute with Arab states will most likely put LNG market on the burner.
• Lobby for sides: Given the risky and volatile conditions of the region, India may be drawn into this ideological war which may disturb the balanced relationship and take part in the “Shia-Sunni”, “Arab-Persian” or “Wahabi-Salafi” divide.
• Livelihood crisis: With Qatar hosting 2022 FIFA World Cup and many Indian workers are working there in terms of the project related to the World Cup, it threatens the livelihood of around 60000 Indians working there. Indian company L&T have won contracts to construct stadium there.
• Safety and Security concerns: Apart from that around six million Indians live and work in West Asia and in Qatar in particular, there are 6,00,000 Indian workers. Remittances of this large expatriate community are most likely to be affected too.
• Rise in air fares: Flying restrictions in Qatar will lead to a sharp rise in airfares from Doha to India as more Indians are expected to return back home.
• Tensions may reach the backyard: Since the Maldives is involved, there might not be an immediate effect, but if the rift continues and intensifies, there may be negative repercussions for India where the Qatar crisis or rather Gulf crisis may reach our backyard.
• Regional Instability: Energy imports might not get affected until Gulf countries follow through with sanctions but in the case of countries like Yemen and Libya, any tensions in these regions will have a consequential impact on thousands of Indian workers.

Syllabus subtopic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Prelims and Mains focus: about salient provisions of CAA and the controversy around it; Citizenship related provisions in the constitution

News: The Union Home Ministry on Monday said no migrant from the six non­Muslim communities from Afghanistan, Pakistan and Bangladesh “will become an Indian citizen automatically”.

What is the procedure then?

A migrant should apply online and the competent authority would see whether he or she fulfilled all the qualifications for registration or naturalisation as an Indian citizen.

Background

The Citizenship Amendment Act, passed by Parliament last week, proposes to grant citizenship to “persecuted” minorities from any of the three countries who entered India on or before December 31, 2014. The Centre will soon frame rules to operationalise the provisions of the Act.

Advisory issued to States by the Centre

• The Ministry on Monday issued an advisory to the States and Union Territories asking them to take all possible steps to check violence and ensure the safety of life and property.
• It requested them to take action against circulation of fake news and rumours on social media having the potential to incite violence.

Why?

There are apprehensions that the Act, followed by a country­wide National Register of Citizens, will benefit non­Muslims, while excluded Muslims will have to prove their citizenship.

Assurances given by the govt.

• The CAA does not target any religious community from abroad. It only provides a mechanism for some migrants who may otherwise have been called ‘illegal’ depriving them of opportunity to apply for Indian citizenship provided they meet certain conditions.

• The Citizenship Act, 1955, which was amended last week, provides that Indian citizenship could be acquired by birth, descent, registration, naturalisation or by incorporation of territory.

• Any foreigner on becoming eligible can acquire citizenship by registration or by naturalisation irrespective of his country or his community. The CAA enables migrants/foreigners of six minority communities from three specified countries who have come to India because of persecution on grounds of their religion to apply for Indian citizenship.

• It does not amend any existing legal provision which enables any foreigner of any class, creed, religion, category etc to apply for Indian citizenship through registration or naturalisation modes.

• Such a foreigner has to become eligible to apply for citizenship after fulfilling the minimum legal requirements.

• The CAA does not apply to Indian citizens and they are completely unaffected by it. In the past six years, 2,830 Pakistani citizens, 912 Afghan citizens and 172 Bangladeshi citizens were given Indian citizenship and “hundreds of them are from the majority community of these three countries”.

• Such migrants continue to get Indian citizenship and shall also continue to get it if they fulfil the eligibility conditions already provided in the law for registration or naturalisation.

Citizenship to Tamils

• 4.61 lakh Tamils of Indian origin were given Indian citizenship from 1964 to 2008 after the signing of bilateral agreements in 1964 and 1974.
• Nearly 95,000 Sri Lankan refugees are living in Tamil Nadu.

Syllabus subtopic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Prelims and Mains focus: about the RTI Act, 2005 and issues related to its abuse; office of Information Comissioners and the controversy around their appointment.

News: Flagging “fears” over the “abuse” of the Right to Information (RTI) Act, the Supreme Court Monday observed “there have been innumerable cases of blackmail, extortion in its working” which it wanted to address.

The remarks were made by a bench of Chief Justice of India S A Bobde and Justices B R Gavai and Surya Kant. The bench was hearing a plea by RTI activist Anjali Bharadwaj seeking direction to the Centre and states to implement the court’s direction earlier this year to appoint information commissioners (ICs) without further delay.

Background

• In the past, SC has warned against a situation where 75% of the staff of public authorities spends 75% of the time answering RTI queries.

• At other times, it has also acknowledged information officers have evaded answers to queries. What SC says will invariably influence how public information officers respond to RTIs.

Court’s directive to the Centre

• The bench asked the Centre and states to fill the vacancies within three months.
• It also asked the Centre to upload on the official website names of members of the Search Committee for selection of ICs of the Central Information Commission within two weeks.

What did the court say regarding the abuse of RTI?

• Guidelines should be laid down to check the locus of the RTI applicant and put a “filter” on the kind of requests made under the 2005 Act.
• There is the serious problem of people filing RTI requests with malafide intentions, people set up by rivals.
• The RTI Act had become a source of criminal intimidation by people with an axe to grind. “Criminal intimidation is a nice word for ‘blackmail.”
• People who call themselves “RTI activists” and were in no way concerned with the issues on which they file RTI requests had impeded government functioning,
• The court is willing to hear arguments on the locus of people who filed RTIs and also about setting up a “filter which can be rightfully employed.”

Right to Information (Amendment) Act, 2019

• Term of Information Commissioners: Under the Act, Chief Information Commissioner (CIC) and Information Commissioners (ICs) are appointed at the national and state level to implement the provisions of the Act. The Act states that the CIC and other ICs (appointed at the central and state level) will hold office for a term of five years. The Bill removes this provision and states that the central government will notify the term of office for the CIC and the ICs.

• Determination of salary: The Act states that the salary of the CIC and ICs (at the central level) will be equivalent to the salary paid to the Chief Election Commissioner and Election Commissioners, respectively. Similarly, the salary of the CIC and ICs (at the state level) will be equivalent to the salary paid to the Election Commissioners and the Chief Secretary to the state government, respectively.

• The Bill seeks to amend these provisions to state that the salaries, allowances, and other terms and conditions of service of the central and state CIC and ICs will be determined by the central government.

• Deductions in salary: The Act states that at the time of the appointment of the CIC and ICs (at the central and state level), if they are receiving pension or any other retirement benefits for previous government service, their salaries will be reduced by an amount equal to the pension.

• Previous government service includes service under: (i) the central government, (ii) state government, (iii) corporation established under a central or state law, and (iv) government company owned or controlled by the central or state government.

• The Bill removes these provisions.

RTI vs Right to Privacy

• Conceptually, RTI and the right to privacy are both complementary as well as in conflict to each other.
• While RTI increases access to information, the right to privacy protects it instead.
• At the same time they both function, as citizen rights safeguarding liberty, against state’s overreach.
• When the question of harmonising the contradicting rights arises, it should:

1. give justice to the larger public interest
2. advance the public morality

RTI vs Official Secrets Act, 1923

• The OSA was enacted in 1923 by the British to keep certain kinds of information confidential, including, but not always limited to, information involving the affairs of state, diplomacy, national security, espionage, and other state secrets.
• Whenever there is a conflict between the two laws, the provisions of the RTI Act override those of the OSA.
• Section 22 of the RTI Act states that its provisions will have effect notwithstanding anything that is inconsistent with them in the OSA.
• Similarly, under Section 8(2) of the RTI Act, a public authority may allow access to information covered under the OSA, “if the public interest in disclosure outweighs the harm to the protected interest”.

Syllabus subtopic:

• Statutory, regulatory and various quasi-judicial bodies.
• Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Prelims and Mains focus: Abour J&K Reorganisation Act and issues related; about FFC and its mandate

News: As part of the devolution formula prescribed by the 15th Finance Commission (FFC), Jammu and Kashmir will be treated as a Union territory (UT), despite the Centre’s assurance that this status is temporary and that statehood will be restored “at an appropriate time”.

Procedure for UTs and State receiving grants?

The commission had sought legal opinion from experts before deciding that the Union Territory of J&K will receive grants from the home ministry from the Centre’s share of funds. States’ share of the money comes directly from the consolidated fund of India.

What J&K Reorganisation Act says about grants?

• The J&K Reorganisation Act passed by Parliament says the President shall make a reference to the FFC to “include Union territory of Jammu and Kashmir in its terms of reference and make award for the successor Union territory of Jammu and Kashmir”.
• The centre’s assurance of restoring J&K’s status as a state had led to the impression that an exception will be made by the FFC for J&K, which would continue to receive its share of taxes like any other state.
• Constitutionally, there will be an infirmity on non-states getting share of net proceeds of taxes which are admissible only to states.

Way ahead

• The formation of J&K and Ladakh as UTs will have significant implications for the vertical and horizontal dimensions of fiscal transfers.
• However, whether the tax devolution to individual states will increase or decline after total number of states decreased from 29 to 28 will depend on the devolution formula adopted by the finance commission.

15^th Finance Commission

• Last month, the Union Cabinet extended the tenure of the finance commission by another year.
• The FFC submitted its first report for 2020-21 to the President earlier this month, and is expected to submit its second and final report for the reward period 2021-22 to 2025-26 by 30 October.
• The government is expected to release the first report of the FFC just before the Budget presentation on 1 February. The extension of the term will enable the commission to examine various comparable estimates for financial projections in view of the reforms and the new realities to finalise its recommendations for 2020-26.