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DAILY NEWS ANALYSIS

Monthly DNA

19 Dec, 2019

0 Min Read

Goa relieved after MoEF’s decision on Mahadayi project

GS-II :

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 and Mains focus: about the Mahadayi Project and its significance, concerns of the states associated

News: In a reprieve to Goa, the Ministry of Environment, Forest and Climate Change (MoEF) on Wednesday kept in abeyance its letter earlier written to Karnataka stating that its proposed Kalasa Banduri project on Mahadayi river does not need an environment clearance (EC).

Context

The MoEF’s move comes after Goa Chief Minister Pramod Sawant, who is in New Delhi to attend the GST Council meeting, met Environment Minister Prakash Javadekar on Wednesday, seeking withdrawal of the letter.

Kalasa Banduri Project

  • The Kalasa Banduri project is aimed at providing drinking water to three important districts of north KarnatakaBelagavi, Gadag and Dharwad — which go parched in summer due to acute water scarcity.

  • The project involves diverting water from Mahadayi river, the lifeline of Goa, into the Malaprabha river.

Mahadayi River Dispute

  • There have been ongoing protests in Karnataka on the issue of sharing of Mahadayi river waters.

  • Mahadayi river originates in Karnataka before flowing into Goa where it is called Mandovi.

  • Karnataka is seeking release of 7.56 tmcft water by Goa from the river for the Kalasa-Banduri Nala project, which is being opposed by Goa.

  • The project involves building barrages across Kalasa and Banduri, tributaries of Mahadayi river, to divert water to the Malaprabha which meets drinking water needs of the north Karnataka districts of Dharwad, Belagavi, Bagalkot and Gadag.

  • Goa is of the view that it has no problem in providing "reasonable and justified" amount of 0.1 TMC of water to Karnataka for its drinking needs.

  • The matter is pending before the Mahadayi Water Disputes Tribunal.

Source: The Hindu

Pre-budget meet: Hike in states’ fiscal deficit limit, IGST dues among chief demands

GS-II :

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 and Mains focus: about the key issues raised by the states in the meeting, Ayushmaan Bharat

News: In a pre-Budget consultation held with the Centre on Wednesday, state finance ministers pitched for more funds, relaxation in fiscal deficit target and settlement of pending Integrated Goods and Services Tax (IGST) payments.

Who attented the meeting?

The meeting was attended by Chief Ministers of Goa, Haryana and Puducherry, Deputy Chief Ministers of Arunachal Pradesh, Bihar, Delhi, Tamil Nadu and Tripura as well as 17 Finance Ministers/Ministers representing their states. Union Minister of State for Finance & Corporate Affairs Anurag Singh Thakur also attended the meeting.

Issues raised by various States

  • Both Bihar and Kerala had suggested raising the fiscal deficit limit for states to 4 per cent, while Delhi raised the issue of stagnation of share in central taxes for union territories with legislature since 2001-02, and West Bengal flagged the issue of budgetary resources amounting to Rs 7,300 crore for cyclone relief not having reached the state.

  • Delhi has also asked for augmentation of financial assistance to tackle the issue of stubble burning in Punjab, Haryana, Uttar Pradesh and Delhi, which has an impact on air pollution in the region.

Key takeaways from the meeting

  • The biggest take home from pre-Budget discussion of FMs is suggestion by Bihar and Kerala to raise the fiscal deficit limit to 4 per cent. It was agreed to large number of states. In current year real expenditure of states will decline — a crazy macro outcome in time of recession.

  • Cutting across political divide State FMs demanded raising fiscal deficit, larger central allocation for programs Ayushman Bharat, social pensions and MGNREGS, support to farmers, interest subvention to SHGs and streamlining of central devolution to avoid ways and means crisis.

Ayushmaan Bharat

Source: Indian Express

India-Bangladesh technical talks on sharing of river water cancelled

GS-II : International Relations Bangladesh

India-Bangladesh technical talks on sharing of river water cancelled

Syllabus subtopic: India and its neighbourhood - relations.

Prelims and Mains focus: about Indo-Bangladesh Joint River Commission and its significance; rivers shared by India and Bangladesh

News: The India-Bangladesh Joint Rivers Commission’s technical-level talks that were scheduled to begin on Thursday were cancelled at the last minute, an official of the Ministry of Jal Shakti said on Wednesday.

What was the reason?

  • Though the official didn’t mention any specific reason for cancellation of the talks, he said, “It was a request from the Bangladesh side.”

  • However, sources said the meeting was postponed due to the delay in the exchange of data on six common rivers which was updated several years ago.

  • Noting that the meeting was scheduled to be held on December 19-20, the official said the new date of the meeting has not been finalised yet.

  • The cancellation of the meeting comes at a time when the country is witnessing protests against the Citizenship (Amendment) Act passed by Parliament earlier this month. Last week, Bangladesh Foreign Minister A K Abdul Momen and Home Minister Asaduzzaman Khan, too, cancelled their scheduled visits to India.

Rivers shared by India and Bangladesh

  • India and Bangladesh share 54 rivers and a Joint River Commission is functioning since June 1972. Besides this, technical level meetings are held regularly.

Indo-Bangladesh Joint River Commission

  • An Indo-Bangladesh Joint Rivers Commission (JRC) is functioning since 1972. It was established with a view to maintaining liaison in order to ensure the most effective joint effort in maximizing the benefits of common river systems. The JRC is headed by Water Resources Ministers of both countries. 37th meeting of the JRC was held in New Delhi from 17th – 20th March 2010, wherein various matters pertaining to cooperation in the Water Resources sector with Bangladesh were discussed.

  • A new chapter in Indo-Bangladesh relations opened up with the signing of a Treaty by the Prime Ministers of India and Bangladesh on 12th December 1996 on the sharing of Ganga/Ganges waters. The Treaty shall remain in force for a period of thirty years to be renewable by mutual consent. For monitoring the implementation of the Treaty, a Joint Committee has been set up.

  • Discussions have been continuing with Bangladesh for sharing of waters of the Teesta & Feni rivers besides other six common rivers namely; Manu, Muhri, Khowai, Gumti, Jaldhaka and Torsa. Govt. of India is in its endeavour to conclude the agreement of the sharing of waters of the Teesta and Feni rivers with Bangladesh, which is acceptable to all parties concerned and which protects the interests of all stakeholders.

  • There exists a system of Transmission of flood forecasting data on major rivers like Ganga, Teesta, Brahmputra and Barak during the monsoon season from India to Bangladesh. The transmission of flood forecasting information during the monsoon has enabled the civil and military authorities in Bangladesh to shift the population affected by floods to safer places.

The Teesta River dispute

Source: Indian Express

Government defends citizenship Act in Geneva

GS-II :

Syllabus subtopic: Important International institutions, agencies and fora, their structure, mandate.

Prelims and Mains focus: about the first global refugee forum and its significance; the refugee crisis around the world and its consequences, about UNHCR

News: Stressing that India has welcomed refugees from all over the world, the government on Wednesday defended the Citizenship (Amendment) Act in Geneva and said it is dealing with the problem through ``democracy and due proces``.

Remarks made by the Permanent Representative of India to UN

  • In a statement at the First Global Refugee Forum by Permanent Representative of India to the UN, Geneva, Rajiv K Chander said Pakistan is a self-proclaimed champion of human rights that has shrunk the size of its own minority community from 23 per cent in 1947 to 3 per cent by subjecting them to draconian blasphemy laws, systemic persecution, blatant abuse and forced conversions.

  • Throughout history, India has welcomed refugees from all over the world. The Zoroastrians who had sought refuge in India from 7th century onwards, now known as the Parsis, are a vibrant and important community in our democratic polity. The Jews who were persecuted in the 16th century had sought refuge in Cochin in South India where the synagogue they built exists to date.

  • Closer to our times, thousands and thousands have sought refuge in India from some of our neighbouring countries, including more than 10 million in 1971 from erstwhile East Pakistan, after which Bangladesh was born.

About the First Global Refugee Forum

  • The forum is organized by the United Nations Refugee Agency (UNHCR) and the Govt. of Switzerland in Geneva with the aim of generating new approaches and commitments from a variety of actors to assist and respond to refugee needs more effectively.

  • Being conducted for the first time with the participation of representatives from the states, U.N. Agencies, nongovernmental organizations and many other international actors, the forum, in its words, "comes at the end of a tumultuous decade," which has been marked by various refugee crises.

  • While host countries such as Turkey, Jordan and Lebanon contributed large amounts of their resources for the refugee communities, the West had a disappointing record of refusing to tackle the problem. Still, the Global Refugee Forum kicked off with the hope of coming up with substantial, concrete solutions to the issue.

United Nations High Commissioner for Refugees

  • It is a UN Refugee Agency and a global organization dedicated to saving lives, protecting the rights and building a better future for refugees, forcibly displaced communities and stateless people.

  • It was created in 1950 to help millions of Europeans who had fled or lost their homes.

  • It is headquartered at Geneva, Switzerland.

Source: Indian Express

Disinflation may be a concern for India in new year

GS-III : Economic Issues Terminology

Disinflation may be a concern for India in the new year

Syllabus subtopic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Prelims and Mains focus: on CPI and WPI, disinflation, stagflation and their role in determining economic performance

News: Consumer Price Index (CPI) inflation for November was at 5.5%, while core CPI was at 3.26%. The CPI print, along with the low growth rate, suggests the possibility of sustained high inflation next year.

What is disinflation and why is it bad?

A general reduction in inflation is often termed disinflation. Central banks do want prices to moderate and a temporary reduction in inflation is desired as it can imply a productivity increase. Prolonged periods of disinflation result in a revision of inflation expectations by households and firms, which expect prices to drop further. This results in deferment of spending and investment decisions, which would result in contraction of demand leading to deflationary pressures. Persistent disinflation may result in deflationary cycles, which could cause an increase in leverage for firms, dampening economic activity and job creation.

Is India experiencing a disinflationary phase?

The increased divergence between the Wholesale Price Index (WPI) and CPI should be a cause of concern. But WPI figures suggest the existence of a disinflationary phase as WPI inflation was 5.68% in June 2018 and 0.16% in October 2019. This shows a consistent drop in WPI over 15 months despite some periods of temporary increase. We witnessed a similar increase for November as WPI was 0.58%. But since January, WPI has consistently been below 4%. If WPI figures continue to be below 2% in the first half of 2020, it would demonstrate the extent of weakness in demand that followed the crisis at non-banks.

Why are many people calling it stagflation?

The increase in CPI figures when the economic growth rate slowed to 4.5% in the September quarter has led many people to term it stagflation. Stagflation is a simultaneous increase in inflation and unemployment. However, this increase is because of seasonal factors and inflation is likely to be moderate for a few months.

Onion prices are high, how is inflation ‘low’?

Indeed, onion prices have risen and consumer food price inflation was 10.01%, while CPI was 5.5% for November. Delayed arrival of the new crop and damage to the harvested crop in Maharashtra, Karnataka and Madhya Pradesh have pushed up onion prices. Over the next few months, food price inflation may moderate and, thus, CPI could be back under 4%. Core CPI is at 3.26%, while WPI has been under 3% since May and under 2% since July. This suggests the bogey of disinflation is real, despite a temporary surge in CPI.

When will CPI inflation start moderating?

Many believe inflation will moderate from March, while others say the ghost of inflation is back. But persistently low WPI and core CPI figures suggest inflation would be back to the 3% level by March. Low commodity prices combined with excess capacity will ensure the bogey of inflation is unlikely to cause concern for a major part of FY21. This open the possibility of more interest rate cuts to revive growth and generate an inflationary impulse.

The differences Between WPI and CPI hat is the C

Bases of Comparison – WPI vs CPI

WPI

CPI

Full Form

Wholesale Price Index

Consumer Price Index

Meaning

It is used to measure the average change in price in the sale of goods in bulk quantity by the whole seller.

CPI is a consumer prices index which measures the change in the price in the sale of goods or services in retail or directly to the consumer.

Published By

WPI is published by the office of economic advisor that Ministry of Commerce and Industry.

CPI is published by Central Statistic Office that Ministry of Statistic and Programme Implementation.

Measured Price By

It is restricted to goods only.

It is both for goods and services.

Measurement of Inflation

WPI measure inflation in the first stage.

CPI measures inflation in the final stage.

Prices Bear By

Prices bear by the manufacturer and the whole seller.

Prices bear by the consumer.

Number of items covered

697

448 for rural and 460 for urban.

Goods and Services Covered

Fuel, power and manufacturing products.

CPI covers education, food, transport, communication, recreation, apparel, housing and medical care.

Base/ Reference Year

The Financial Year

The Calendar Year

Used by

Used by a few countries.

Used by 157 countries.

Date of Release

It releases on weekly basis for primary articles, fuel and power for the rest items in publishing monthly.

It releases on monthly basis.

Source: mint

In a first, GST Council votes on tax proposal

GS-III : Economic Issues welfare

In a first, GST Council votes on tax proposal as consensus collapses

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.
  • Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Prelims and Mains focus: on the key decisions taken in the GST Council meeting and their significance; GST Council and its structure

News: Goods and Services Tax (GST) Council, the federal indirect tax body, broke from its tradition of consensus-based decision-making to vote on a proposal for imposing a uniform tax rate on lotteries.

Why this change happen?

The decision to go for voting was taken after efforts by Union finance minister Nirmala Sitharaman to build consensus on the proposal failed as states were divided on the issue and one Kerala insisted on voting.

What did the Council decide?

  • The Council decided to set the GST rate on all lotteries at 28%. At present, lotteries run by state governments are taxed at 12%, while those authorized by states and operated by private players as well as interstate suppliers of lotteries are taxed at 28%. The decision was favoured by 21 states and opposed by seven, while three abstained. The change is effective from 1 March.

  • The Council also took a few steps to curb tax evasion but did not take up any proposal for GST rate increase. The decision to abstain from raising GST rates comes after official data issued last week showed consumer goods output had shrunk 18% in October, its fifth straight month of contraction. Several state ministers also said the time was not right for raising GST rates.

  • The anti-evasion measures included limiting input tax credit in cases where invoices or debit notes are not properly reflected in records, blocking fraudulently availed tax credits and invalidating e-way bills generated by taxpayers who have not filed their tax return forms for two tax periods.

  • The Council also decided to exempt entities in which either the central or state government owns 20% or more from paying an upfront amount for long-term lease of industrial or financial infrastructure plots. Currently, this relief is available to entities with at least 50% state ownership. Also, businesses will get an extra month for filing annual returns and tax audit reports for the first year of GST, 2017-18. The new due date is 31 January.

GST Council

The Goods and Services Tax (GST) is governed by the GST Council. Article 279 (1) of the amended Indian Constitution states that the GST Council has to be constituted by the President within 60 days of the commencement of Article 279A.

According to the article, GST Council will be a joint forum for the Centre and the States. It consists of the following members:

  1. The Union Finance Minister will be the Chairperson
  2. As a member, the Union Minister of State will be in charge of Revenue of Finance
  3. The Minister in charge of finance or taxation or any other Minister nominated by each State government, as member.

Source: mint

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