14th May Current Affairs

Contents

1. Major stimulus package for MSMEs, TDS and TCS Reduced
2. New MSME definition without amending laws
3. Study explores drivers of death terms
4. Low-cost ‘Feluda’ test
5. Nepal can let India use link road

MAJOR STIMULUS PACKAGE FOR MSMES, TDS AND TCS REDUCED

Focus: GS-III Indian economy, Disaster Management

Why in news?

• The Union Finance Minister on 13^th May 2020, announced a Rs. 3 lakh crore collateral free loan scheme for businesses, especially micro, small and medium enterprises (MSMEs), as part of a Rs. 20-lakh-crore economic stimulus package to deal with the COVID-19 pandemic.
• The rates of tax deduction at source (TDS) and tax collection at source (TCS) have been cut by 25% for the next year.
• This is the first tranche of the Atmanirbhar Bharat Abhiyan announced by Prime Minister Narendra Modi on 12^th May 2020 as a ₹20 lakh crore economic package.

Click Here to read about the “Aatmanirbhar Bharat” Announcement by the PM

Other Changes Announced:

Deadline for the Income tax returns for financial year 2019-20 was pushed to November 30, 2020.

Statutory provident fund (PF) payments have been reduced from 12% to 10% for both employers and employees from June – August.

What gets how much attention?

MSMEs

• MSMEs will get the bulk of the funding, with Rs. 3 lakh crores out of the announced Rs. 20 Lakh Crores, given as emergency credit line to ensure that 45 lakh MSME units will have access to working capital for resuming business activities and safeguarding jobs.
• (The definition of an MSME is being expanded to allow for higher investment limits and the introduction of turnover-based criteria.)
• MSMEs usually have little collateral to offer for getting bank credit.
• For non-defaulting small businesses with outstanding debt of as much as ₹25 crore and sales of up to ₹100 crore, Indian Government has offered extra working capital finance of 20%.
• The MSME units will not have to provide any guarantee or collateral of their own.

NBFCs

• NBFCs, housing finance companies and microfinance institutions will get a Rs. 30,000 crore investment scheme, and an expanded partial credit guarantee scheme worth ₹45,000 crore, of which the first 20% of losses will be borne by the Centre.
• Under the scheme, banks will be allowed to invest, through primary or secondary market transactions, in investment-grade debt papers issued by NBFCs, HFCs and MFIs.

Power Distribution Companies, Real estate Projects

• Power distribution companies will receive a Rs. 90,000 crore liquidity injection, to help them cope up with the unprecedented cash flow crisis.
• Contractors will get a six-month extension from all Central agencies, and also get partial bank guarantees to ease their cash flows.
• Registered real estate projects will get a six-month extension.

Low-Income Organised Workers

• Employee Provident Fund (EPF) support, provided to low-income organised workers in small units under the PMGKY is being extended for another three months and is expected to provide liquidity relief of ₹2,500 crore.
• Mandatory EPF contributions are also being reduced from 12% to 10% for both employees and employers in all other establishments.

Why is important concentrate on MSMEs?

• India’s 63 million MSMEs accounted for 29% of the country’s gross domestic output in FY17, according to official data.
• They account for about 45% of manufacturing output; more than 40% of exports and employ about 111 million people.
• Helping them restart is key to addressing the pain of job losses across the country and to restore demand for goods and services amid fears of a contraction in the economy.

Full guarantee may push banks to lend

• Banks being reluctant to lend is evident from over Rs. 8 lakh crores being parked by these lenders with the RBI’s reverse repo window.
• Risk-averse banks may now have the appetite to resume lending perations, with the government deciding to provide full guarantee for the loans extended by them to borrowers to kick start the economy.
• This 100% credit guarantee will mean that banks do not have to make any provision for the loans, that is, they do not have to set aside capital in case the account turns non-performing.

Landslide changes in MSME sector expected

• MSMEs, including stressed ones, are being given financial support both in terms of loans and equity support for revival after the recent setbacks and activity paralysis suffered due to a series of lockdowns.
• MSMEs will now be able to grow without fear of disqualification due to exceeding either volume of investment or turnover.
• This would definitely motivate MSMEs to grow without the need for creating more entities or such adjustments.
• The government has taken a very pragmatic step by formally recognising the period of lockdown as ‘Force Majeure’ and thus avoid any possibility of conflict relating to contract completion dates and consequent delay in related claims.
• The definition change to MSMEs will have an important effect on both supply chain partners as well as distribution partners.

-Source: The Hindu, ET, ToI, Livemint

NEW MSME DEFINITION WITHOUT AMENDING LAWS

Focus: GS-III Indian Economy, Prelims

Why in news?

The definition of Micro, Small and Medium Enterprises (MSMEs) was redefined on the basis of investment limit and turnover size.

What has changed in the Definition of MSMEs?

• Earlier, the MSMEs were defined on the basis of investments put in, now the revised definitions will also include turnover of the company.
• There will be no more distinction between Manufacturing and Service MSMEs.

Details

Micro Units

• MSMEs will now be called Micro units if they have investments upto Rs 1 crore and turnover of less than Rs 5 crore.
• The definition earlier was on investment criteria of up to Rs 10 lakh for Service MSMEs earlier and Rs 25 lakh or manufacturing.

Small Units

• For an MSME to be defined as a Small unit, its investment limit has been raised from Rs 5 crore to Rs 10 crore with a turnover of less than 50 crore.
• This applies to all MSMEs including the Service enterprises which earlier came under investment of up to Rs 2 crore.

Medium Units

• Enterprises with investments up to Rs 20 crore with a turnover of less than Rs 100 crore will now be called Medium units.
• Earlier, the investment limit for Medium units was up to Rs 10 crore and Service enterprises up to Rs 5 crore.

Why was such a change needed?

• The definition being changed is done in the favour of MSMEs.
• There are around 6.3 crore MSME units in the country, with over 99% categorised as small units.
• There has always been this fear, among successful MSMEs also, that if they outgrow the size of what has been defined as an MSME, they will lose their entitled benefits.
• This is why MSMEs like to remain within the definition rather than grow.
• With the revised definitions of MSMEs, they will not have to worry about growing their size and can still avail benefits.
• The criticisms against the move to define MSMEs based on Turnover is that, it will not be in the interest of manufacturers but instead it will benefit assemblers.

-Source: Times of India

STUDY EXPLORES DRIVERS OF DEATH TERMS

Focus: GS-II Social Justice, GS-IV Ethics

Findings of the Research on Death Sentences:

• The shock and impact of a crime on the collective conscience of society was a major reason cited by trial courts in Delhi while imposing death sentence on convicts.
• Out of the 43 cases in Delhi in which death sentence was handed down between 2000 and 2015, trial courts invoked the impact of the crime on society’s collective conscience in 31 cases – 72% as grounds to send convicts to death row.

Supreme Court: Bachan Singh vs. State of Punjab (1980)

• The Supreme Court in its 1980 judgment in Bachan Singh v. State of Punjab, where a Constitution bench of the Supreme Court was called upon to decide the constitutional validity of the capital punishment, had laid down the framework for sentencing to death.
• The Supreme court had made it very clear that Capital punishment in India can be given only in rarest of rare cases.
• It required the weighing of aggravating and mitigating circumstances relating to both the circumstances of the offence and the offender, to decide whether a person should be sentenced to death or given life imprisonment.
• According to the Bachan Singh judgment, for a case to be eligible for the death sentence, the aggravating circumstances must outweigh the mitigating circumstances.
• If the alternative punishment of life imprisonment can be “unquestionably foreclosed”, Only then can death penalty be imposed.
• The Bachan Singh judgement recognized the age of the accused as a relevant mitigating circumstance.
• While stating that honour killings fall within the “rarest of the rare” category, Court has recommended the death penalty be extended to those found guilty of committing “honour killings”, which deserve to be a capital crime.
• The Supreme Court also recommended death sentences to be imposed on police officials who commit police brutality in the form of encounter killings.

Bringing up Collective conscience of society

• ‘Collective conscience of society’ as a ground to justify death penalty was first used by the Supreme Court in the 1983 judgment of Machhi Singh v. State of Punjab.
• In that case, the court held that when “collective conscience of society is shocked, it will expect the holders of the judicial power centre to inflict death penalty”.
• ‘Collective Conscience of Society’ was also used in 2005 judgment in the Parliament attack case in which it awarded capital punishment to convict, Afzal Guru and 2017 judgment of the Supreme Court in the December 2012 Delhi gang rape case of Mukesh v. State of NCT of Delhi.

What is Collective Conscience of Society?

• Collective consciousness (sometimes collective conscience or conscious) is a fundamental sociological concept that refers to the set of shared beliefs, ideas, attitudes, and knowledge that are common to a social group or society.
• The collective consciousness informs our sense of belonging and identity, and our behavior.
• In general, it does not refer to the specifically moral conscience, but to a shared understanding of social norms.
• However, some experts say “Collective Conscience of Society”’ is an amorphous term, and is not possible to judicially determine what it means.

Issues with Death Sentencing in Maharashtra, Madhya Pradesh and Delhi

• As per the report, no mitigating circumstances were mentioned in more 40% of death penalty cases in the three states.
• 37% of the prisoners sentenced to death in the three states were between 18-25 years of age.
• Trial courts in the three states discussed life imprisonment as an alternative only in 26.6% cases before imposing death penalty. In all cases where it was discussed as an alternative, it was dismissed on the ground of brutality of the crime.
• More than 40% cases saw sentencing within 24 hours of the conviction.

J.S. Verma Committee

J.S. Verma Committee said that capital punishment is a regressive step and may not provide deterrence. The committee recommended the life sentence for the most grievous of crimes.

-Source: Hindustan Times

LOW-COST ‘FELUDA’ TEST

Focus: GS-III Science and Technology, Prelims

Why in news?

• An accurate and low-cost strip test called “Feluda” that can detect the coronavirus disease within one hour is expected to be available for the first phase of testing by July 2020.
• Called Feluda, the test is named after a fictional detective created by the late Satyajit Ray – and it is also an acronym for FNCAS9 Editor-Linked Uniform Detection Assay.

How does Feluda Work?

• The test uses CRISPR gene-editing technology to identify and target the genetic material of Sars-CoV2, the virus that causes Covid-19.
• The CRISPR-based Feluda testing works by combining CRISPR biology and paper strip chemistry. Briefly, Cas9 protein, a component of the CRISPR system, is barcoded to interact specifically with the Sars-CoV2 sequence in the patient’s genetic material.
• The complex of Cas9 with Sars-CoV2 is then applied to a paper strip, where using two lines (one control, one test) make it possible to determine if the test sample was infected with Covid-19.
• The entire diagnostic process takes about one hour, starting from RNA to giving a visual readout on the strip.
• Unlike other CRISPR tests that use CAS12 and CAS13 proteins to detect Sars-CoV2, the CSIR-IGIB kit technology uses CAS9 protein (CRISPR-associated protein 9) to identify and bind to the target sequence.

Significance of Feluda

• Most labs are working with PCR (polymerase chain reaction)-based technology, which is costly and needs a lab set-up.
• Feluda paper strip does not require (biosafety) Level-2 or Level-3 lab for testing and can be done in any path lab.
• Feluda is not limited to Covid-19.
• Each Feluda test costs Rs 500 in the lab, bringing down the current cost of Rs. 4,500 for RT-PCR.

What is CRISPR?

CRISPR, which is short for Clustered Regularly Interspaced Short Palindromic Repeats, is a gene-editing technology that can be used to detect a specific snippet of DNA from a sequence. It can also be used turn genes on or off without altering their sequence.

-Source: Hindustan Times

NEPAL CAN LET INDIA USE LINK ROAD

Focus: GS-II International Relations

Why in news?

Nepal’s Prime Minister, on 13^th May 2020, proposed a solution to the ongoing border tension saying that Nepal can allow India to use the link road to the Lipulekh Pass as part of an agreement, but will not surrender the Kalapani territory on which India has been carrying out construction.

Background

• Nepal expressed regret after India inaugurated the link road that will cut travelling time to the Tibetan plateau and the Kailash Mansarovar.
• Kathmandu maintains that the territories to the east of Mahakali river are a part of its domain, as agreed in the Treaty of Sugauli of 1816 between the East India Company and the King of Nepal.

Click Here to Read More about the Kalapani Row (4^th Article)

Click Here to Read More about the New Kailash-Mansarovar Route (1^st Article)

-Source: The Hindu