Note4Students
From UPSC perspective, the following things are important :
Prelims level: Gross Domestic Expenditure On Research and Development
Mains level: Research and development in India
Central Idea
- India’s research and development (R&D) expenditure-GDP ratio of 0.7% is very low when compared to major economies and is much below the world average of 1.8%. The main reason is the low investment in R&D by the corporate sector.
Get your Rs 10,000 worth of UPSC Strategic Package for FREE | PDFs, Zoom session, Tests, & Mentorship
- While the corporate sector accounts for about two-thirds of gross domestic expenditure on R&D (GERD) in leading economies, its share in India is just 37%. There is evidence, however, suggesting that India’s GERD data are an underestimate.
- A 2022 infobrief of the National Science Foundation (NSF) of the United States on Foreign R&D by U.S.-based multinational corporations (MNCs) shows a spend of $9.5 billion (₹649.7 billion) on R&D in India in 2018, which increased to $9.8 billion (₹690.2 billion) in the following year.
- There are MNCs from other leading countries also spending on R&D in India.
- But the latest Research and Development Statistics, published by the Department of Science and Technology (DST) in 2020, has provided an estimate of ₹60.9 billion R&D spending in 2017-18 by foreign MNCs, which is only about 10% of what U.S. firms have reported to have spent in India on R&D.
What is Gross Domestic Expenditure On R&D (GERD)?
- Gross domestic spending on R&D is defined as the total expenditure (current and capital) on R&D carried out by all resident companies, research institutes, university and government laboratories, etc., in a country.
- It includes R&D funded from abroad, but excludes domestic funds for R&D performed outside the domestic economy.
- This indicator is measured in USD constant prices using 2015 base year and Purchasing Power Parities (PPPs) and as percentage of GDP.
- It is often used as an indicator of a country’s level of innovation and technological progress.
Issues with the current system
- NSTMIS compiles GERD data: The National Science and Technology Management Information System (NSTMIS) of the DST is the agency that compiles GERD statistics in India.
- Challenge is to collect data from private sector: It is easier to gather the information on R&D by the government sector, the higher education sector and public sector enterprises. The challenge lies in collecting data from the private corporate sector.
There are two key factors that make the official R&D estimates grossly inadequate
- The method used for identification of R&D performing firms does not capture all the R&D performing firms.
- NSTIMS uses DSIR and Prowess to identify R&D units: A study found only 11% of 298 firms receiving foreign investment (2004-16) for R&D were registered with DSIR. Prowess covers only 3.5% of currently active registered enterprises in India. Leading enterprises in new technology areas may not be listed in both databases, such as SigTuple Technologies.
- The DSIR list may not have many of the actual R&D performers for two reasons: Firms which consider government incentives as not attractive enough or that are sensitive about sharing critical information with the DSIR may not be inclined to register themselves with the DSIR. 2. It may be difficult for R&D firms in services such as software and R&D services to meet the requirement of having separate infrastructure for R&D to distinguish it from their usual business. In fact, many of the R&D performing enterprises in new technology areas may come under the services category.
- The survey conducted by the NSTMIS is the key source of R&D statistics of India
- Data from Secondary sources works only if firms disclose their R&D spending: If firms don’t respond to the survey, data is collected from secondary sources like annual reports and Prowess. Some firms don’t report R&D spending despite their technology activities, patents and innovators. They may not feel obliged to report accurately to Indian regulatory authorities.
- For instance: A review of the documents submitted to the Ministry of Corporate Affairs (MCA) by some R&D-oriented firms shows that there are firms which do not report any spending on R&D in spite of their declarations that suggest that they are engaged in activities of technology development, adoption and adaptation.
What is to be done?
- Short term measure: the NSTMIS should use the patents granted data, both in India and the U.S., in addition to its current method to identify R&D performing enterprises.
- Mandatory disclosure: Annual R&D estimates can be prepared from mandatory disclosures that the enterprises are required to make to the MCA.
- Technologies can be employed to ensure compliance and proper reporting: In order to ensure compliance and proper reporting, technologies can be used like in the case of revamped income-tax return forms where various sections are interlinked.
- Spending data should be made an essential component of ESG: Additionally, proper disclosure of information to regulatory agencies, including R&D spending data, should be made an essential component of the environmental, social and governance (ESG) ranking of enterprises.
Conclusion
- Concrete data on R&D spending is crucial as it helps to identify areas needing investment, promotes economic growth, informs policymaking decisions, tracks progress, and evaluates policy effectiveness in promoting innovation and technological development. Transforming India’s R&D statistics to truly reflect the R&D ecosystem calls for short-term and medium-term measures.
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Inflation
Mains level: The role of MPC, Inflation, repo rate and its impact
Central Idea
- In its last meeting, held just a few days after the Union budget, the monetary policy committee (MPC) of the RBI had voted to raise the benchmark repo rate by 25 basis points. The MPC noted that calibrated action was warranted to break the persistence in core inflation. This surprise uptick in inflation is likely to complicate the policy choices before the MPC members when it meets next in the first week of April.
Get your Rs 10,000 worth of UPSC Strategic Package for FREE | PDFs, Zoom session, Tests, & Mentorship
What is Basis points we often hear about?
- A basis point is a unit of measurement used to express changes in interest rates, bond yields, and other financial indicators.
- One basis point is equal to one-hundredth of a percentage point, or 0.01%.
- For example, If the Reserve Bank of India (RBI) raises the repo rate by 25 basis points, it means that the interest rate has increased by 0.25%.
What it indicates?
- If the Reserve Bank of India (RBI) keeps raising the repo rate by basis points, it is an indication that the central bank is tightening its monetary policy stance to manage inflationary pressures in the economy.
Back to basics: Monetary Policy Committee (MPC)
- Committee of RBI to fix the benchmark policy: The Monetary Policy Committee (MPC) is a committee of the RBI, which is entrusted with the task of fixing the benchmark policy interest rate (repo rate) to contain inflation within the specified target level.
- To bring transparency and accountability: The RBI Act, 1934 was amended by Finance Act (India), 2016 to constitute MPC to bring more transparency and accountability in fixing India’s Monetary Policy.
- Policy is published after discussion: The policy is published after every meeting with each member explaining his opinions.
- Answerable to GOI: The committee is answerable to the Government of India if the inflation exceeds the range prescribed for three consecutive months.
What is Inflation?
- Inflation is an increase in the level of prices of the goods and services that households buy. It is measured as the rate of change of those prices.
- Typically, prices rise over time, but prices can also fall (a situation called deflation).
- Rise in retail inflation: Retail inflation, as measured by the consumer price index, rose to 6.52 per cent in January, up from 5.72 per cent in December, reversing the declining trend seen in the preceding months.
- Much of the surge was driven by food inflation: The consumer food price index rose to 5.94 per cent, up from 4.19 the month before, driven largely by cereals.
- Price pressure remain across the economy: Inflation remained elevated in clothing and footwear, household goods and services, personal care effects and education, signalling that price pressures remain fairly broad-based across the economy.
RBI’s Upper tolerance limit for inflation
- Highest level of inflation that can be tolerated: The upper tolerance limit for inflation set by the Reserve Bank of India (RBI) is the highest level of inflation that the RBI will tolerate before taking action to bring inflation back within its target range.
- RBI’s limit: The target range is defined in terms of the Consumer Price Index (CPI) inflation and the RBI has set an upper tolerance limit of 6% and a lower tolerance limit of 2% with a central target of 4%. This means that the RBI aims to keep CPI inflation within the range of 2-6%, with a target of 4%.
- Tools to contain inflation: If inflation exceeds the upper tolerance limit of 6%, the RBI is required to take steps to bring inflation back within the target range. The RBI uses a variety of monetary policy tools to control inflation, including adjusting the policy interest rate, changing reserve requirements for banks, and using open market operations to manage liquidity in the financial system.
Conclusion
- Monetary policy experts Varma and Goyal suggest pausing to observe the impact of previous tightening before taking further action. Despite a cumulative 250 basis point increase, inflation is still expected to remain above the 6% target. The full impact of previous tightening should be considered before making any decisions.
Mains Question
Q. What is upper threshold of the RBI’s inflation targeting framework? Discuss the impact of policy interest rate hikes on the economy.
Attempt UPSC 2024 Smash Scholarship Test | FLAT* 100% OFF on UPSC Foundation & Mentorship programs
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Tenth Schedule of the Constitution
Mains level: Anti-defection law and the challenges
Central Idea
- On February 17, the Election Commission of India (ECI) allotted the name ‘Shiv Sena’ and the party’s Bow and Arrow symbol to Maharashtra Chief Minister Eknath Shinde’s faction, in effect recognizing it as the original party founded by Babasaheb Thackeray. Strengthening Anti-defection law becomes relevant again.
Get your Rs 10,000 worth of UPSC Strategic Package for FREE | PDFs, Zoom session, Tests, & Mentorship
- Division in the party: The political crisis in Maharashtra began last year after a group of 40 of the 55 Sena MLAs walked out of the Maha Vikas Aghadi (MVA) alliance under the leadership of Mr. Shinde, which caused a division in the party.
- Fight of Name and Symbol: Both the Uddhav Thackeray and Shinde sides staked claim to the party name and symbol, each claiming to represent the real Shiv Sena.
- The ECI said that it had based its decision on a test of majority: It said the group of MLAs supporting the Shinde faction got nearly 76% of the votes polled for the 55 winning Shiv Sena candidates in the 2019 Maharashtra Assembly elections, while the Uddhav Thackeray faction got 23.5% of votes.
Exam Spotlight
- The crisis has thrown the spotlight once again on the anti-defection law, whose purpose is to prevent political defections.
What is Anti-defection Law?
- Tenth Schedule: The Anti-Defection Law under the Tenth Schedule of the Constitution punishes MPs/ MLAs for defecting from their party by taking away their membership of the legislature.
- Power to the speaker: It gives the Speaker of the legislature the power to decide the outcome of defection proceedings.
- 52nd Amendment Act, 1985: It was added to the Constitution through the Fifty-Second (Amendment) Act, 1985 when Rajiv Gandhi was PM. The law applies to both Parliament and state assemblies.
What was the need to have this law then?
- Vies in favour
- Defection was recognized as an evil that needed to be curbed: Defections cause destabilization and lead to governments falling, which can have negative impacts on the country’s political and economic stability.
- Law helps to stabilise party system: The law helps to stabilize party systems by consolidating control of the party leadership instead of relying on ideological cohesion or ownership by constituent legislators.
- Views against it
- Law would curb freedom of opinion of the representatives: Some people thought that the law would curb freedom of speech and affect the free exercise of opinion by the members of the legislature who are elected by the people.
- Undermines the representative system of democracy: The law effectively does away with the representative system of democracy in India by framing democracy as a contest between factions rather than a system of representation and accountability.
- Limiting the ability of legislators: The law consolidates power in the hands of the party leadership, potentially limiting the ability of individual legislators to represent their constituents’ interests.
How the law is faring today?
- Recent events shows that the law needs to be tightened: The kinds of defections which used to take place before the passing of this law are not taking place now. But recent events show that this law needs to be tightened.
- Third paragraph of tenth schedule was deleted: A little tightening was done earlier by doing away with a split, that is, paragraph three of the Tenth Schedule of the Constitution. It had said, if there is a split in a particular party, and one-third of the legislators move along with the breakaway group, they will not be disqualified. So, split was a defence against disqualification.
- No authoritative interpretation of the law: there is a very disturbing trend, which is to interpret paragraph four (decision on questions as to disqualification on ground of defection) in a particular way, because there is no authoritative declaration of law from the Supreme Court on the exact application of it.
- No timeline fixed for the Speaker: In the 10th Schedule currently, there is no timeline fixed for the Speaker to determine the issue and the purpose of this anti-defection law is defeated.
Conclusion
- People are principal stakeholders in a democracy; parties are merely the institutional intermediaries. Democracy needs stable parties, but controlling legislators removes their representative role. Need of the hour is to fix the loopholes in the system because the continuous cycle of instability adversely affects the people, who are the primary stakeholders in a democracy and suffer the most.
Mains Question
Q. The events of spilt within the political are rising posing a challenge to the Anti defection law In this backdrop discuss the need of Anti defection law?
Attempt UPSC 2024 Smash Scholarship Test | FLAT* 100% OFF on UPSC Foundation & Mentorship programs
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: Aadhaar- Voter ID Linkage
Central idea: An RTI query has revealed that around 60% of Indian voters have linked their Aadhaar cards with their voter ID cards.
Benefits of Aadhaar linking
- Voter uniqueness: The move to link Aadhaar and voter ID cards was introduced to prevent electoral fraud and ensure unique identity of each voter.
- Curb bogus votes: It is expected to help prevent multiple voting, impersonation, and bogus voting, which have been a concern in the past.
- Facilitate migrant voting: There have been migrant workers who may have been registered more than once on the electoral rolls in different constituencies or for persons registered multiple times within the same constituency.
Is the linking of Aadhaar with one’s Voter ID mandatory?
- In December 2021, Parliament passed the Election Laws (Amendment) Act, 2021 .
- It states that the electoral registration officer may require voters to furnish their Aadhaar numbers to verify Authencity of voters list.
- This was to amend the Representation of the People Act, 1950 and Section 23(4) was inserted in the RP Act.
Why was such linking proposed?
The preference to use Aadhaar for verification and authentication, both by the state and private sector, stems from few reasons:
- Increase in UID-holders: First, at the end of 2021, 99.7% of the adult Indian population had an Aadhaar card.
- Most versatile document: This coverage exceeds that of any other officially valid document such as driver’s licence, ration cards, PAN cards etc. that are mostly applied for specific purposes.
- Reliable source of authentication: Since Aadhaar allows for biometric authentication, Aadhaar based authentication and verification is considered more reliable, quicker and cost efficient when compared to other IDs.
Issues with mandatory linking: Puttaswamy judgment highlights
- Puttaswamy judgment: The above reasons do not suffice the mandating of Aadhaar except in limited circumstances as per the Puttaswamy judgment.
- The indispensability of the purpose: It needs to be considered whether such mandatory linkage of Aadhaar with Voter ID would pass the test of being “necessary and proportionate” to the purpose of de-duplication which is sought to be achieved.
- Constitutional ambiguity: In Puttaswamy, one of the questions that the Supreme Court explored was whether the mandatory linking of Aadhaar with bank accounts was constitutional or not.
- Against informational autonomy: It is the right to privacy which would allow a person to decide which official document they want to use for verification and authentication.
Other judicial observations: Lal Babu Hussein (1995) Case
- The Supreme Court had held that the Right to vote cannot be disallowed by insisting only on four proofs of identity.
- The voters are entitled to rely on any other proof of identity and obtain the right to vote.
What are the operational difficulties?
- Aadhaar is not a citizenship proof: The preference to Aadhaar for the purposes of determining voters is puzzling as Aadhaar is only a proof of residence and not a proof of citizenship.
- Excluding non-citizens is not easy: Verifying voter identity against this will only help in tackling duplication but will not remove voters who are not citizens of India from the electoral rolls.
- Estimate of error rates in biometric based authentication: This certainly differs. As per the UIDAI in 2018, Aadhaar based biometric authentication had a 12% error rate.
- Disenfranchisement of existing voters: Errors have led to the disenfranchisement of around 30 lakh voters in AP and Telangana before the Supreme Court stalled the process of linkage.
Key concern: Right to Privacy
- Some civil societies has highlighted that linking of the two databases of electoral rolls and Aadhaar could lead to the linkage of Aadhaar’s “demographic” information with voter ID information.
- This could lead to violation of the right to privacy and surveillance measures by the state.
- This would leave the EC with the option of verifying its information only through door-to-door checks.
- There is a lack of enforceable data protection principles that regulate how authentication data will be used.
Way Forward
- Address privacy and security concerns: There should be strict measures in place to ensure the safety of personal information and prevent data breaches.
- Provide alternative authentication: The government should provide alternative methods of identity verification. This will help ensure that no citizen is disenfranchised due to the lack of an Aadhaar card.
- Regular monitoring and evaluation: The government should regularly monitor and evaluate the effectiveness of the linking of Aadhaar and voter ID cards in preventing electoral fraud.
Attempt UPSC 2024 Smash Scholarship Test | FLAT* 100% OFF on UPSC Foundation & Mentorship programs
Get your Rs 10,000 worth of UPSC Strategic Package for FREE | PDFs, Zoom session, Tests, & Mentorship
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: GST share in Revenue
Mains level: GST
India’s Goods and Services Tax (GST) revenues grew 12.7% in January to hit almost ₹1.59 lakh crore ($17.9 billion), the second-highest monthly collections on record, as per revised figures from the Finance Ministry.
What led to hike in GST revenue collection?
- Economic recovery: Discusses how the steady economic recovery in India has led to higher consumption and spending, resulting in increased GST collections
- Crackdown on Tax evasion: Several measures were taken by the government to streamline the GST system and reduce tax evasion, including the implementation of e-invoicing and the use of technology to track compliance.
- Crackdown on fraudulent claims: The government’s efforts to crack down on fraudulent input tax credit claims, have also contributed to the increase in GST collections
- Increase in imports: The higher value of imported goods due to rising commodity prices is another reason behind the increase in GST collections from imports.
What is GST?
- GST is an indirect tax that has replaced many indirect taxes in India such as excise duty, VAT, services tax, etc.
- The Goods and Service Tax Act was passed in Parliament on 29th March 2017 and came into effect on 1st July 2017.
- It is a single domestic indirect tax law for the entire country.
- It is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.
- Under the GST regime, the tax is levied at every point of sale. In the case of intra-state sales, Central GST and State GST are charged. All the inter-state sales are chargeable to the Integrated GST.
Answer this PYQ in the comment box:
Q. All revenues received by the Union. Government by way of taxes and other receipts for the conduct of Government business are credited to the (CSP 2015):
(a) Contingency Fund of India
(b) Public Account
(c) Consolidated Fund of India
(d) Deposits and Advances Fund
Post your answers here
What are the components of GST?
There are three taxes applicable under this system:
- CGST: It is the tax collected by the Central Government on an intra-state sale (e.g., a transaction happening within Maharashtra)
- SGST: It is the tax collected by the state government on an intra-state sale (e.g., a transaction happening within Maharashtra)
- IGST: It is a tax collected by the Central Government for an inter-state sale (e.g., Maharashtra to Tamil Nadu)
Advantages of GST
- GST has mainly removed the cascading effect on the sale of goods and services.
- Removal of the cascading effect has impacted the cost of goods.
- Since the GST regime eliminates the tax on tax, the cost of goods decreases.
- Also, GST is mainly technologically driven.
- All the activities like registration, return filing, application for refund and response to notice needs to be done online on the GST portal, which accelerates the processes.
Issues with GST
- High operational cost
- GST has given rise to complexity for many business owners across the nation.
- GST has received criticism for being called a ‘Disability Tax’ as it now taxes articles such as braille paper, wheelchairs, hearing aid etc.
- Petrol is not under GST, which goes against the ideals of the unification of commodities.
Take a look at the share of GST in government earnings for the previous fiscal:
UPSC can ask about the majority component of the Revenue Receipts of the govt. See how Corporate tax is nearing the GST revenues.
Do you think it will surpass GST revenue when the economy is fully recovered?
Attempt UPSC 2024 Smash Scholarship Test | FLAT* 100% OFF on UPSC Foundation & Mentorship programs
Get your Rs 10,000 worth of UPSC Strategic Package for FREE | PDFs, Zoom session, Tests, & Mentorship
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now
Note4Students
From UPSC perspective, the following things are important :
Prelims level: Neutral Citiation
Mains level: Not Much
The CJI expressed hope that High Courts too would follow neutral citation for their judgments. The Delhi, Kerala, and Madras HCs have already introduced neutral citation.
What is a “Citation”?
- A case citation is essentially an identification tag for a judgment.
- Typically, it would contain a reference number, the year of the judgment, the name of the court that delivered that judgment, and a shorthand for the journal publishing the judgment.
And what is a neutral citation?
- A neutral citation would mean that the court would assign its own citation — distinct from those given by traditional Law Reporters.
- Law Reporters are periodicals or annual digests that publish judgments, often with an editorial note to make it accessible for lawyers to refer to precedents.
- For example, for the landmark Kesavananda Bharati case, the citation in ‘Supreme Court Cases’, a journal published by the Eastern Book Company, is (1973) 4 SCC 225.
- In the All India Reporter (AIR), the citation is AIR 1973 SC 1461.
Why is a neutral system good or necessary?
- Judgments mention citations while referring to precedents and often use citations from different Law Reporters.
- With artificial intelligence (AI) enabled translation of judgments and transcribing of court proceedings, a uniform citation is necessary.
- Several High Courts including Delhi High Court have started a neutral citation format.
- The Delhi HC neutral citation is, for example, in this format: No-YEAR/DHC/XXXXXX
How will the SC implement the neutral citation system?
- Our recent initiative is neutral citations for all judgments of the Supreme Court.
- So all 30,000 judgments are going to have neutral citations.
- First tranche will be till January 1, 2023, then the other tranche will be till judgments from 2014 and then finally we will go back to 1950.
Attempt UPSC 2024 Smash Scholarship Test | FLAT* 100% OFF on UPSC Foundation & Mentorship programs
Get your Rs 10,000 worth of UPSC Strategic Package for FREE | PDFs, Zoom session, Tests, & Mentorship
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
Attend Now