Current Affairs 07 May 2024

CONTENTS

1. Issues Faced by MSMEs
2. PRS Legislative Research Releases Annual Review of State Laws 2023
3. Tamil Nadu Accuses Kerala of Hindering Mullaperiyar Dam Maintenance
4. Tamil Nadu School Education Department Releases Guidelines to Eliminate Corporal Punishment
5. Emergence of the New Collective Quantified Goal on Climate Finance (NCQG)
6. Shaksgam Valley
7. Drip Pricing

 Issues Faced by MSMEs

Context:

The Union Budget 2023-24 implemented a new provision in the Income-Tax (IT) Act to ensure prompt payments to micro, small, and medium enterprises (MSMEs) within 45 days of the supply of goods or services. However, an unexpected consequence has arisen from this provision. Large companies are reportedly canceling orders placed with registered MSMEs and transferring them to unregistered ones.

Relevance:

GS III: Indian Economy

Dimensions of the Article:

1. MSMEs in India
2. Government Initiatives to Boost MSME Sector
3. Understanding the Latest Tax Compliance Guidelines for MSMEs
4. Concerns Raised by Big Companies and MSMEs

MSMEs in India:

• Key Contributors to Economy: MSMEs play a pivotal role in India’s economy by significantly contributing to employment generation, exports, and overall economic growth.
• Employment and GDP Contribution: They provide over 11 crore jobs and contribute approximately 27.0% to India’s GDP.
• Scale and Employment: With around 6.4 crore MSMEs, including 1.5 crore registered on the Udyam portal, they employ around 23.0% of the Indian labor force, making them the second-largest employer after agriculture.
• Manufacturing Output and Exports: MSMEs account for 38.4% of total manufacturing output and contribute 45.03% to the country’s total exports.

Significance of MSMEs and Challenges:

• Inclusive Growth: MSMEs promote inclusive growth, financial inclusion, and innovation.

Challenges Faced:

• Dwarfs vs. Infant Firms: Dwarfs, despite their longevity, contribute less to job creation and economic growth compared to infant firms.
• Informal Funding: Around 90% of MSME funding comes from informal sources.
• Technological Integration: Adoption of Industry 4.0 technologies like big data, AI, and virtual reality is still in its early stages.
• Cleantech Innovation: Lack of innovation and entrepreneurship in cleantech, hindering the transition to a circular and low-carbon economy.

Government Initiatives to Boost MSME Sector:

• Policy Focus: The government has prioritized MSME ecosystem development for achieving Atma Nirbhar Bharat (self-reliant India).
• Make in India Campaign: The Make in India campaign aims to elevate India in the global manufacturing landscape.
• Production Linked Incentives (PLI) and ZED Certification: Schemes like PLI and ZED certification promote sectoral growth and quality enhancement.
• Prime Minister’s Employment Generation Programme (PMEGP): PMEGP fosters self-employment and microenterprises, supporting over 7 lakh economically viable ventures.
• Digital Initiatives: Digital Saksham initiatives and interlinked portals like Udyam, e-Shram, NCS, and ASEEM facilitate targeted digitalization for MSMEs.

Understanding the Latest Tax Compliance Guidelines for MSMEs:

• Standard Business Recording: Businesses in India typically record expenses when they occur (accrual basis), irrespective of payment status.
• Compliance Regulations: The MSMED Act 2006, along with the newly enacted Section 43B(h) of the IT Act, mandates payment to MSME Registered Enterprises within 15 days, or up to 45 days with an agreement.
• Tax Implications: Failure to comply results in the inability to deduct these payments as expenses in the same fiscal year, potentially increasing taxable income and business taxes.
• Interest Penalties: Late payment to MSMEs subjects the payer to pay interest on the outstanding amount.

Concerns Raised by Big Companies and MSMEs:

• Tax Liability Concerns: Larger companies express worries about increased tax liabilities, while MSME owners report order cancellations due to the new tax clause.
• Shift to Unregistered MSMEs: MSMEs highlight the trend of big companies redirecting business to unregistered MSMEs, allowing them to bypass mandatory provisions and extend payment cycles to 90-120 days.
• Legal Actions and Ministry Intervention: Some MSME associations have approached the Supreme Court against the regulation, prompting the Union MSME Ministry to engage with industry stakeholders for resolution.
• Stakeholder Engagement for Solutions: The Ministry invites suggestions from stakeholders to address issues stemming from the I-T Act and propose alternate mechanisms for timely settlement of MSME bills.

-Source: Indian Express

PRS Legislative Research Releases Annual Review of State Laws 2023

Context:

PRS Legislative Research has published its “Annual Review of State Laws 2023,” offering a comprehensive analysis of the performance and functioning of State legislatures across India. The report provides valuable insights into various key aspects of state legislation and governance.

Relevance:

GS II: Polity and Governance

Dimensions of the Article:

1. Key Highlights of the Report
2. Improving Legislation for Better Governance and Accountability
3. Conclusion

Key Highlights of the Report:

Budget Passage Without Discussion:

• In 2023, approximately 40% of the Rs 18.5 lakh crore budget presented by 10 States was passed without discussion.
• Madhya Pradesh saw the highest proportion, with 85% of its Rs 3.14 lakh crore budget passed without discussion.
• The process involves general discussion, scrutiny of demands by committees, discussion, and voting on Ministry expenditure, following six stages.
• Kerala, Jharkhand, and West Bengal had similar trends, raising concerns about transparency and scrutiny of state finances.

Public Accounts Committee (PAC):

• In 2023, the PAC held 24 sittings and tabled an average of 16 reports in the States considered.
• Five states, including Maharashtra, did not table any reports, while Tamil Nadu led with 95 reports, highlighting disparities in accountability.
• Bihar and Uttar Pradesh witnessed significant PAC sittings without tabling any reports.

Swift Legislative Action:

• 44% of bills were passed either on the same day of introduction or the following day, consistent with previous years.
• States like Gujarat, Jharkhand, Mizoram, Puducherry, and Punjab passed all bills on the same day of introduction.
• Kerala and Meghalaya exhibited a slower but potentially more deliberative process, taking longer than five days to pass over 90% of their bills.

Ordinances:

• Uttar Pradesh issued the highest number of ordinances (20), followed by Andhra Pradesh (11) and Maharashtra (9), covering various subjects.
• Kerala showed a significant decrease in ordinances compared to 2022, prompting questions about their necessity and effectiveness.

Overview of Law Making:

• On average, states passed 18 bills each in 2023, with Maharashtra leading with 49 bills and Delhi and Puducherry passing only 2 each.
• While 59% of bills received assent within a month, delays were observed in states like Assam, Nagaland, and West Bengal.
• Only 23 out of over 500 bills passed were referred to legislative committees for deeper examination before being passed.

Improving Legislation for Better Governance and Accountability:

Standardize PAC Operations:

• Establish guidelines and protocols for PAC operations, including sitting frequency, reporting requirements, and timelines for report submission.
• Implement mechanisms to monitor and evaluate PAC performance regularly to ensure substantive discussions and timely report tabling.

Time Limit for Governor’s Assent:

• Introduce a legislative framework setting a time limit for the Governor’s assent to bills.
• Mandate the Governor to provide clear and specific reasons for any delay in granting assent to enhance transparency in the process.

Enhanced Budgetary Discussions:

• Advocate for thorough discussions and debates on budgets before passage in the legislature.
• Strengthen the role of State Finance Commissions, ensuring their recommendations are considered during legislative budget discussions.

Implement Recommendations:

• Implement recommendations from commissions such as the Sarkaria Commission and the National Commission to Review the Working of the Constitution.
• Introduce mechanisms for public scrutiny of parliamentarians via a parliamentary ombudsman and ensure adequate session days for state legislatures and the national parliament.

Conclusion:

The findings highlight the imperative for enhanced transparency and accountability mechanisms in state legislatures to ensure effective governance. Addressing disparities in budgetary processes, accountability mechanisms, legislative efficiency, and the utilization of ordinances is paramount for upholding democratic principles and ensuring efficient governance at the state level.

-Source: The Hindu

Tamil Nadu Accuses Kerala of Hindering Mullaperiyar Dam Maintenance

Context:

Tamil Nadu has lodged a complaint against Kerala in the Supreme Court, alleging that while Kerala raises concerns about the safety of the Mullaperiyar dam, it obstructs essential maintenance work on the dam. According to Tamil Nadu, Kerala has delayed routine maintenance tasks, such as painting, patchwork, and staff quarters repair, for periods ranging from two months to over a year. Tamil Nadu has requested the court to instruct Kerala to permit the completion of strengthening work on both the smaller dams and the main dam, including the felling of 15 trees. Additionally, Tamil Nadu has criticized the supervisory committee under the Dam Safety Act, 2021, for not ensuring that Kerala facilitates and supports the dam’s strengthening and related activities.

Relevance:

GS-II: Polity and Constitution (Interstate water disputes), GS-I: Geography (Water Sources), GS-III: Disaster management

Dimensions of the Article:

1. About Mullaperiyar Dam
2. About the Dispute regarding Mullaperiyar river
3. Background on Dams in India
4. Ageing dams in India: Highlights of the UN Report
5. Issues with Ageing Dams in India
6. Way Forward

About Mullaperiyar Dam

• The Mullaperiyar Dam is a masonry gravity dam on the Periyar River in Kerala – built at the confluence of Mullayar and Periyar rivers.
• It is located on the Cardamom Hills of the Western Ghats and it was constructed between 1887 and 1895 (by John Pennycuick).
• The Periyar National Park in Thekkady is located around the dam’s reservoir.
• The catchment area of the Mullaperiyar Dam itself lies entirely in Kerala and it is argued that it is not an inter-State river, however, by the principle of estoppel (new argument cannot be against previous action/agreemet/statement) it is considered otherwise.

About the Dispute regarding Mullaperiyar river

• The dam is located in Kerala on the river Periyar, but is operated and maintained by the neighbouring state of Tamil Nadu.
• For Tamil Nadu, the Mullaperiyar dam acts as a lifeline for Theni, Madurai, Sivaganga, Dindigul and Ramnad districts, providing water for irrigation and drinking, and also for the generation of power in Lower Periyaru Power Station.
• While Kerala has pointed out the unfairness in the 1886 lease agreement and has challenged its validity, Tamil Nadu has insisted on exercising the unfettered colonial rights to control the dam and its waters, based on the 1886 lease agreement.
• There is also the issue of concerns regarding the ageing Mullaperiyar dam (including alleged leaks and cracks in the structure) have been repeatedly raised by the Kerala Government while the Tamil Nadu governments have sought to downplay these concerns.
• While Tamil Nadu has sought to increase the limit of maximum water level in the dam to 152 ft, Kerala has strongly argued against such a move citing safety concerns.
• Kerala’s proposal for decommissioning the dam and constructing a new one has been challenged by Tamil Nadu.

Rule of Curve issue

• A rule curve or rule level specifies the storage or empty space to be maintained in a reservoir during different times of the year.
• It decides the fluctuating storage levels in a reservoir.
• The gate opening schedule of a dam is based on the rule curve. It is part of the “core safety” mechanism in a dam.
• The TN government often blames Kerala for delaying the finalization of the rule curve.

Background on Dams in India

• India has 4,407 large dams, the third highest number in the world after China (23,841) and the USA (9,263).
• India is ranked third in the world in terms of building large dams.
• Tehri Dam in Uttarakhand is the highest dam in India built on Bhagirathi River.
• Hirakud Dam in Odisha built on river Mahanadi is the longest dam of India.
• Kallanai Dam in Tamil Nadu is the oldest dam of India. It is built on the Kaveri River and is about 2000 years old.

Ageing dams in India: Highlights of the UN Report

• India is ranked third in the world in terms of building large dams.
• Over a thousand large dams in India will be roughly 50-years-old in 2025 and such aging structures pose a growing threat.
• There are also more than four thousand large dams in the country that will be over 50-years-old in 2050 and 64 large dams will be more than 150-years-old in 2050.
• Ageing signs include increasing cases of dam failures, progressively increasing costs of dam repair and maintenance, increasing reservoir sedimentation, and loss of a dam’s functionality and effectiveness, “strongly interconnected” manifestations
• Krishna Raja Sagar dam was built in 1931 and is now 90 years old.
• Mettur dam was constructed in 1934 and is now 87 years old.
• The report said that approximately 3.5 million people are at risk if India’s Mullaperiyar dam in Kerala, built over 100 years ago, “were to fail”.

Issues with Ageing Dams in India

• As dams age, soil replaces the water in the reservoirs. Therefore, the storage capacity cannot be claimed to be the same as it was in the 1900s and 1950s.
• Studies show that the design of many of India’s reservoirs is flawed in the sense that the designs underestimate the rate of siltation and overestimate live storage capacity created.
• When soil replaces the water in reservoirs, supply gets choked. The cropped area begins receiving less and less water as time progresses.
• The net sown water area either shrinks in size or depends on rains or groundwater, which is overexploited.
• The designed flood cushions within several reservoirs across many river basins may have already depleted substantially due to which floods have become more frequent downstream of dams.

Way Forward

• Assuring the safety of the downstream population should be the topmost priority in this scenario. The remaining works to strengthen the Mullaperiyar dam are to be done at the earliest.
• There is a need to assure Kerala that all the instruments for monitoring the safety and health of the dam are installed and are functioning properly.
• As there are sufficient scientific and technological tools to respond effectively to any legitimate and genuine concern, every stakeholder should adopt a rational approach while deciding on the storage levels and safety aspects of the dam.

-Source: The Hindu

Tamil Nadu School Education Department Releases Guidelines to Eliminate Corporal Punishment

Context:

The Tamil Nadu School Education Department has issued guidelines aimed at eradicating corporal punishment in schools. Known as the GCEP (Guidelines for Child-Friendly Education Practices), these directives prioritize the protection of students’ physical and mental well-being. Beyond banning corporal punishment, the guidelines also address various forms of harassment faced by students.

Relevance:

GS II: Polity and Governance

Dimensions of the Article:

1. Guidelines Overview
2. Understanding Corporal Punishment
3. Constitutional and Legal Framework Regarding Corporal Punishment:
4. About NCPCR

Guidelines Overview:

• Promoting Safe Environments: The guidelines aim to establish safe and nurturing environments for students by addressing issues like physical punishment, mental harassment, and discrimination.
• GECP Initiatives: The GECP includes measures to safeguard students’ mental well-being, raise awareness through camps, and align with NCPCR guidelines.
• Establishment of Monitoring Committees: Emphasis is placed on setting up monitoring committees at schools, comprising various stakeholders, to oversee guideline implementation and address any arising issues.
• Affirmative Actions: The department also outlines affirmative actions against corporal punishment, including multidisciplinary interventions, life-skills education, and platforms for children’s voices.

Understanding Corporal Punishment:

• Definition and Scope: Corporal punishment, as defined by the UN Committee on the Rights of the Child, involves the use of physical force to cause pain or discomfort, primarily through actions like hitting or spanking.
• Prevalence and Impact: Globally, around 60% of children aged 2–14 years face physical punishment, leading to adverse effects such as anxiety, depression, lower self-esteem, and aggression.
• Types and Consequences: Corporal punishment encompasses physical actions like coercive positioning and forced ingestion, as well as mental mistreatment through ridicule and humiliation, resulting in emotional distress and physical injuries.

Effects of Corporal Punishment:

• Psychological Impact: Corporal punishment can instill feelings of fear and insecurity in children, leading to psychological issues like anxiety and depression, ultimately affecting academic performance.
• Social and Behavioral Ramifications: Children subjected to corporal punishment may develop lower self-esteem, aggression, and difficulties in forming healthy relationships, increasing the likelihood of substance abuse in adulthood.
• Physical Consequences: Physical injuries ranging from minor bruises to serious harm can result from corporal punishment, posing risks to children’s physical well-being and long-term health.

Constitutional and Legal Framework Regarding Corporal Punishment:

Statutory Provisions:

• Right to Education Act (RTE), 2009:
  • Section 17 prohibits corporal punishment and mental harassment, prescribing disciplinary action against offenders as per applicable service rules.
• Juvenile Justice (Care and Protection of Children) Act, 2015:
  • Section 23 stipulates penalties for individuals causing mental or physical pain to juveniles under their control, including imprisonment or fines.

Legal Provisions:

• Indian Penal Code,1860:
  • Sections 305, 323, and 325 address abetment of suicide by a child, voluntarily causing hurt, and voluntarily causing grievous hurt, respectively.

Judicial Precedents:

• In the case of Ambika S. Nagal Vs State of Himachal Pradesh (2020), the High Court held that parents impliedly consent to punishment and discipline when sending their children to school.
• The Kerala High Court, in the case of Rajan Vs Sub-Inspector of Police (2014), upheld corporal punishment as beneficial to children, granting teachers discretion in its application.

Constitutional Provisions for Child Protection:

• Articles 21 A, 24, 39(e), 45, and 51A(k) of the Constitution outline provisions for compulsory education, prohibition of child labor, protection from economic abuse, care for children under six years, and parental duty to ensure education, respectively.

Statutory Bodies:

• The National Commission for Protection of Child Rights (NCPCR) mandates schools to establish mechanisms, including a Corporal Punishment Monitoring Cell, to address student grievances.

International Laws:

• Article 19 of the UN Convention on the Rights of the Child (UNCRC) prohibits violence-based discipline, ensuring children’s protection from physical and mental harm.

About NCPCR

• It is an Indian statutory body that was established in 2007 under an Act of Parliament – the Commission for Protection of Child Rights Act, 2005 – and works under the auspices of the Union Ministry of Women and Child Development (WCD).
• Its mandate is to ensure that all laws, policies, programmes, and administrative systems conform to the vision of children’s rights (ages 0 to 18 years) as enunciated in the Indian Constitution and the UN Convention on the Rights of the Child.
• The Commission envisions a rights-based approach that pervades national-state-local policies and programmes.
• As a result, the Commission envisions the state playing an indispensable role in ensuring o Children and their well-being, o Strong institution-building processes, o Respect for local bodies and decentralisation at the community level, and greater social concern in this direction.

-Source: The Hindu

Emergence of the New Collective Quantified Goal on Climate Finance (NCQG)

Context:

Amidst growing concerns over climate change, the New Collective Quantified Goal on Climate Finance (NCQG) has surfaced as a significant initiative. It aims to mobilize resources for developing countries to address climate challenges effectively. This initiative holds particular importance as discussions surrounding it are expected to feature prominently at the upcoming 29th Conference of the Parties (COP29) to the United Nations Framework Convention on Climate Change (UNFCCC). Scheduled to convene later this year in Baku, Azerbaijan, COP29 will likely see robust deliberations on climate finance and its role in combating the pressing threat of climate change.

Relevance:

Facts for Prelims

Introducing the New Collective Quantified Goal on Climate Finance (NCQG):

• Purpose: The NCQG serves as a novel annual financial target that developed nations must achieve starting from 2025 onwards, aimed at providing climate finance to developing countries.
• Replaces Previous Commitment: It replaces the earlier commitment made in 2009, where developed nations pledged USD 100 billion per year for climate finance but failed to meet this target.

Importance of NCQG:

• Addressing Disproportionate Impact: Developing countries often bear a disproportionate burden of climate change impacts despite contributing less to greenhouse gas emissions.
• Financial Support for Climate Action: The NCQG offers essential financial resources for developing nations to invest in clean energy, adaptation measures, and climate-resilient infrastructure.
• Catalyzing Climate Action: Climate change mitigation and adaptation necessitate substantial investments, and the NCQG can unlock funds necessary for implementing ambitious climate action plans aligned with the Paris Agreement’s objectives.
• Promoting a Just Transition: The NCQG can facilitate a just transition towards a low-carbon and climate-resilient economy, fostering new job opportunities while safeguarding vulnerable communities.
• Enhancing International Cooperation: Achieving the NCQG requires collaboration between developed and developing nations, thereby fostering international cooperation and strengthening the global response to climate change.

-Source: Down To Earth

Shaksgam Valley

Context:

India has lodged a strong protest with China for carrying out construction activities in the Shaksgam valley, in an “illegal” attempt to alter the situation on the ground.

Relevance:

Facts for Prelims

Understanding the Shaksgam Valley:

• Location and Status: The Shaksgam Valley, also known as the Trans Karakoram Tract, lies within the Hunza-Gilgit region of Pakistan-Occupied Kashmir (POK). It is a disputed territory claimed by India but controlled by Pakistan.
• Geographical Borders: Situated in the northern region, it shares borders with the Xinjiang Province of the People’s Republic of China (PRC) to the north, the Northern Areas of POK to the south and west, and the Siachen Glacier region to the east.
• History of Cession: In 1963, Pakistan ceded the Shaksgam Valley to China as part of a boundary agreement aimed at resolving border disputes between the two nations.
• Stipulations of the Agreement: Article 6 of the agreement highlighted that any final resolution of the Kashmir dispute between Pakistan and India would prompt a reopening of negotiations with China regarding the boundary described in the agreement. This clause reflects the conditional nature of the territory’s status.
• Development of Karakoram Highway: The agreement also facilitated the construction of the Karakoram Highway, a crucial transportation route connecting Pakistan and China. This highway, built in the 1970s, stands as a symbol of cooperation between the two nations in the region.

-Source: The Hindu

Drip Pricing

Context:

The Centre recently warned about “drip pricing”, saying it can surprise consumers with “hidden charges”.

Relevance:

Facts for Prelims

Understanding Drip Pricing:

• Definition: Drip pricing is a pricing strategy employed by businesses where they advertise only a portion of a product’s price upfront and gradually reveal additional charges during the purchasing process.
• Nature of Additional Charges: Initially, certain unavoidable fees, such as booking fees, service charges, resort fees, credit card fees, local taxes, or add-ons like internet access, may be concealed.
• Disclosure Method: These undisclosed costs are then revealed one by one or “dripped” to the buyer as they progress through the purchasing journey.
• Common Usage: Drip pricing is prevalent in industries such as hospitality, travel, and online payments.
• Purpose: Companies may adopt this strategy to attract customers into initiating the purchase process, banking on the likelihood that customers might not want to restart their search upon discovering the added costs.
• Consumer Perception: Consumers often find drip pricing frustrating as they prefer upfront clarity regarding the total cost of a product or service. The gradual revelation of additional charges can lead to a sense of being misled.
• Impact on Comparison Shopping: Drip pricing can complicate comparison shopping and disadvantage sellers who opt for transparency in their pricing strategies.
• Example: An instance of drip pricing is the sale of an airplane ticket without including baggage fees, which are revealed later in the purchasing process.

-Source: Hindustan Times