Economy (Part -2) - Current Affairs, November 2017 PDF Download

NATIONAL ANTI-PROFITEERING AUTHORITY

Why in news?

• The GST council has approved the creation of National Anti- Profiteering Authority (NAA) to ensure that benefits of input tax credit and tax reductions are passed on to the end consumer.

More about NAA

• In wake of the recent rate reduction in GST, the government has
• formed NAA under the GST law.
• Along with NAA, a Standing Committee, Screening Committees in every State and the Directorate General of Safeguards in the Central Board of Excise & Customs (CBEC)
• have also been instituted under anti-profiteering measures.
• In event of application of anti-profiteering measures, NAA can order the supplier/business concerned to reduce its prices or return the undue benefit availed by it along with interest to the recipient of the goods or services.
• If the undue benefit cannot be passed on to the recipient, it can be ordered to be deposited in the Consumer Welfare
• Fund.
• In extreme cases, the NAA can impose a penalty on the defaulting business entity and even order the cancellation of its registration under GST.

Issues involved

• It may be worthwhile to debate whether the NAA is the agency best suited to investigating pricing abuse, or whether this function should be assigned to a pre-existing agency with an overlapping mandate. For instance, Australia mandated its own competition commission to investigate related pricing violations when it passed its GST law.
• The passing on GST benefits to consumers is a function of the market structure, which determines pricing power. Protecting consumer interest is important, but the prospect of the government monitoring prices and asking businesses to justify pricing decisions instead of letting market forces play out is unnerving.
  
  
  
  Way Forward
   
• The NAA could take a cue from, if not partner, the Competition Commission of India, and focus on firms raising prices indiscriminately in markets where they enjoy a dominant position, or forming pricing cartels.
• Care should also be taken to ensure that investigations are cost-effective. This can be achieved by narrowly scoping areas for investigation and by pre-specifying and adhering to rules of operation.
• In summary, the setting up of the NAA has the commendable intent of protecting consumers from GST-related pricing abuse. At the same time, the government must ensure that the authority’s powers are used transparently and only where there is genuine consumer/public interest at stake.

TRAI RECOMMENDATIONS FOR THE TELECOM SECTOR

NET NEUTRALITY

Why in news?

• Telecom Regulatory Authority of India (TRAI) has issued its recommendations on net neutrality.

Recommendation

• Non-Discriminatory treatment: It prohibits any discrimination whether based on the sender or receiver of the content, the protocols used or the equipment being used to access the internet. In addition, TRAI recommends specific rules against blocking, degrading, slowing down or granting preferential treatment to any content.
• Specialised Service: TRAI allows some specialised service (require a minimum assured quality of service for their functioning) to be exempted from neutrality framework, in order to regulate the flow of traffic, such as; tele-surgery, Voice over Internet Protocol (VoIP) and IPTV services etc.
• Content delivery Network (CDN) platform: the Authority recommends that CDNs should not be included within the scope of any restrictions on non-discriminatory treatment, which are designed specifically to cover the providers of Internet Access Services.
  
  
• Reasonable traffic Management practices: in this regards TRAI may, from time to time, frame appropriate regulations to specify further details regarding the scope and assessment of reasonable traffic management practices.
• Regulatory Body: TRAI suggested DoT may establish a multi-stakeholder body with framework for collaborative mechanism among the stakeholders for monitoring the net-neutrality.

Significance of recommendations

• The recommendation preserves the democracy of internet and promotes equitable access to the internet for every citizen.
• It would ensure a level playing field for IT and OTT (over-the-top) services providers to innovate and customize in India and provide a constantly expanding range of new services relevant to every individual.
• The CDN exemption is likely to benefit integrated operators trying to attract users. CDN enables telecom service providers to deliver content within their network without going through the public internet.

Shortcoming of Recommendation

• TRAI has taken an extremely simplistic view towards net neutrality, especially omitting the economics of providing connectivity and content to users.
• It’s a recommendation, and not yet a rule, as it is to be implemented by amending the license agreements that govern all providers of internet access.

 SPECTRUM RELAXATION

Why in news?

The Telecom Regulatory Authority of India has proposed to relax spectrum holding norms.

What is spectrum and how does it work?
Spectrum refers to the radiowaves that are used by mobile phones to transmit data.
The spectrum has been divided into bands by the government for uninterrupted transmission of data.
Carriers in India use airwaves in the 800 Mhz, 900 Mhz, 1800 Mhz, 2100 Mhz, 2300 Mhz and 2500 Mhz bands.
Although 700 Mhz was put up for auction but it is not being used by any carrier in India currently.
In order to manage the spectrum across the country, the government divided India into 22 telecom circles

Please refer to the October issue of the Vision IAS current affairs to know more about the telecom sector and SNT Mains 365 issue for net neutrality.

RELAXATION ON BILATERAL TRANSFER PRICING POLICY

Why in news?

• Central Board of Direct Taxes (CBDT) has relaxed norms for

Mutual Agreement Procedure (MAP) and Advance Pricing
Agreements (APAs).

What is it?

• APAs and MAP are alternative tax dispute mechanism in matters involving transfer pricing.
• APA is a contract between a taxpayer and at least one tax authority (one of the two countries that have signed the bilateral treaty) specifying the pricing method that the
• taxpayer will apply to its related-company transactions. It is signed prior to the transaction taking place.
• MAP is a way by which taxpayer can seek relief in his country of residence when he feels that he is not being taxed according to the terms of the bilateral treaty between the two countries.
• Prior to the recent relaxation, Income Tax Department was open to receiving bilateral APAs and MAP only in case of existence of “corresponding adjustment” clause in the double tax avoidance agreement (DTAA) with the concerned countries.
• Now, the income tax department will continue to receive applications from companies despite the absence of ‘corresponding adjustment’ clause in the double taxation avoidance agreement (DTAA) with the countries concerned.
• The ‘corresponding adjustment’ clause in transfer pricing matters provides that if tax demand is raised on a company by a DTAA-signatory country, the revenue authorities in
• India would reduce the tax liability of the parent company based in India.
  
  
  
  Significance

• This move brings India in the line with the commonly accepted practices abroad as outlined by the OECD.

• It strengthens the government resolve to establish a non-adversial tax regime and thereby improving India’s ease of doing business prospects.
• It will open the gates for clearing of many pending transfer pricing cases currently under litigation.

WHITE PAPER ON DATA PROTECTION FRAMEWORK

Why in news?

Recently Ministry of Electronics and IT has put a white paper in public domain aimed on data protection framework on the basis of recommendations of expert committee headed by Justice BN Srikrishna.

Need of Data Protection in India

• Digital Economy: The database protection framework is indispensable to develop an ecosystem of data driven innovation and entrepreneurship and thus ensuring growth of digital economy in India.
• Protection of Privacy: Privacy can be
   

  7 Principles for data protection given by the committee Technology agnosticism: Law should be flexible to take into account changing technologies, Holistic application: It must apply to both government and private sector entities, Informed Consent: Consent should be genuine, informed, and meaningful Data Minimisation: Processing of data should be minimal and only for the purpose for which it is sought Controller Accountability: Entities controlling the data should be accountable for any data processing, Structured Enforcement: Enforcement of the data protection framework should be by a high-powered statutory authority, and Deterrent Penalties: Penalties should be adequate to discourage any wrongful acts.

   

understood as :
o Spatial privacy: the privacy pertaining to
physical spaces, bodies and things;
o Decisional privacy: the privacy of certain
significant self-defining choices and
o Informational Privacy: The privacy of personal information

Although the concept of data protection is primarily linked with the idea of informational privacy yet its impact on decisional privacy and spatial privacy is also discernible.

• Emerging Technological Challenges: Technologies such as Big Data, the Internet of Things and Artificial Intelligence, have necessitated that a balance between innovation and privacy need to be struck while accommodating the traditional privacy principles.
• Cyber Security threats such as ransomware Wannacry may otherwise result into heavy damages, including loss of data and disruptions in business and need to be accounted for in legislative framework.
• Sensitive Financial Information on debts and defaults collected by the Information utilities set up under bankruptcy code also needs to be safeguarded for fair process and sound financial decision making.
• Sovereign Ratings: In line with FDI liberalisation and capital flows across borders it becomes impertinent for India to follow global standards on data privacy as data breaches may lead to cutting of sovereign ratings.

Status of Data protection in India:

• Judicial Developments: Supreme Court in Puttaswamy case held the right to privacy as an intrinsic part of the right to life and personal liberty and recognised that ‘informational privacy’ is an important aspect of the right to privacy that can be claimed against state and non-state actors.
• Legislative Developments:
  o Information Technology (Reasonable Security Practices and Sensitive Personal Data or Information) Rules, 2011 provide for protection of sensitive personal data. But they deal only with the corporate sector leaving the government out of its ambit and even obviating the need of consent of provider in sharing information with government agencies.
  o Aadhaar Act 2016 provides for collection of biometric information and establishes UIDAI to deals with privacy and security of personal data. But it has been proved ineffective in the face of multiple data leaks.
  o Financial Sector: Financial information is a highly sensitive category of information and data is protected through Credit Information Companies Regulation, 2006 (CIC Regulations) and circulars issued by the Reserve Bank of India (RBI).
  o Telecom Sector: Data protection norms in the telecom sector are primarily dictated by the Unified License Agreement (ULA) and TRAI reglations. But TRAI regulations deal with communication through phones, and do not cover an email application or advertisements appearing on browsers.

Health Sector: The limited privacy safeguards and absence of an enforcement mechanism in the Indian Medical Council Code(IMC) largely inadequate to address the concerns surrounding health information

Thus Indian privacy and data protection framework is to be developed in considering all these laws and regulations in mind.
Possible Approaches of Data Protection

•  The committee considered rights based stringent data protection model of EU and USA’s model which seeks to protect the individual “from excessive State regulation” and encourage innovation by allowing collection of personal information as long as the individual is informed of such collection and use.
•  In India, there is a need is to encourage innovation while holding privacy to be fundamental, yet limited by reasonable restrictions thus placing Indian data protection model somewhere in between.
• Issues under Debate in Data Protection Legislation:
• Scope and exemptions: It includes territorial applicability of law, definition of personal data and categories of exemption including the safeguards that need to be ensured while processing data.
• Grounds for data processing, obligation on entities and rights of individuals: It includes conditions determining a valid consent, specifying purpose of collection of data and rights based on European Union guidelines(derived from OECD principles) such as the right to object to data processing, right to be forgotten etc.
• Regulation and enforcement: It includes decision on Enforcement models to be used for code of conduct, breach of personal data and provisions of Penalty or Compensation as the case may be.

NOTE: For details on Privacy judgment and threats to privacy Please refer Polity Main 365 Updated material for 2017.

 COASTAL ECONOMIC ZONE
Why in News?

• Recently, government has given the approval for setting up India’s first mega coastal economic zone (CEZ) at Jawaharlal Nehru Port (JNPT) in Maharashtra.

More on News

• The CEZ will stretch along north Konkan region spread across Nashik, Thane, Mumbai, Pune and Raigarh.
• This is the part of setting up of 14 mega CEZs under the National Perspective Plan of the Sagarmala Programme.

Sagarmala Programme

• It is coastal and port city development plan, where manufacturing units will be set up to generate jobs.
• Its aims to harness country 7,500 km long coastline, 14,500 km of potentially navigable waterways and strategic location on key international maritime trade routes.
• The Sagarmala program has taken shape using the government’s core philosophy of cooperative federalism.

National Perspective Plan (NPP) of the Sagarmala Programme.

• It takes forward Sagarmala’s vision of substantially reducing export-import and domestic trade costs with a minimal investment.
• Components of NPP of Sagarmala Programme ;
  o Port Modernization & New Port Development : through the mechanization of berths and deepening of drafts to accommodate larger vessels and building of 5-6 new ports and 40 ports enhancement capacity programme.
  o Port Connectivity Enhancement: 80 projects are being planned, include connectivity infrastructure projects like a heavy-haul rail corridor, freight-friendly expressways for efficient movement and development of strategic inland waterways.
  o Port-linked Industrialization: 14 Coastal Economic Zones (CEZs) along the coastline, with cluster of industrial such as energy, bulk materials as well as discrete manufacturing segments.

Coastal Community Development: developing opportunities for fishermen, focus on focused skill- development to support port- led industrialization. A separate costal communitydevelopment fund would be earmark for the purpose​ 

.

NPP is based on four strategic levers:

1.Optimizing multi-modal transport to reduce the cost of domestic cargo,
2.Minimizing the time and cost of export-import cargo logistics
3. Lowering costs for bulk industries by locating them closer to the coast
4. Improving export competitiveness by locating discrete manufacturing clusters near ports

What is Coastal Economic Zone?

• It is conceptualised as a spatial-economic region which could extend along 300-500 km of coastline and around 200-300 km inland from the coastline. Each CEZ will be an agglomeration of coastal districts within a State.
• The concept is based in China based Shenzhen-style Coastal Economic Zone. It will provide the geographical boundary within which port led industrialization will be developed by having a uniform policy along the ports and coastal states.
• The CEZs have been envisaged to tap synergies with the planned industrial corridors like Vizag Chennai
• Industrial Corridor and Delhi Mumbai Industrial Corridor.
• Under CEZ investors will get business friendly ecosystem including ease of doing business, especially ease of exporting and importing, swift decisions for environmental clearances etc.

Benefits of CEZs

• Employment: Niti Aayog has pointed out that low growth in job can be boosted by export led coastal economy, based on labour intensive sectors such as apparel, footwear, electronic and electrical products and other light manufactures.
• Boost Export: large manufacturing firm assisted by ancillary firm will provide robust export led coastal eco-system.
• Foreign Capital: It would attract large foreign firms which would bring with them technology, capital, good management and links to the world
• markets.
• Cluster-Development: It would generate an ecosystem around them in which productive cluster small and medium firms would emerge and flourish.
   

  Other information about Sagarmal Programme National Sagarmala Apex Committee (NSAC) chaired by the Minister in-charge of Shipping, is envisaged for overall policy guidance and high level coordination, and to review various aspects of planning and implementation of the plan and projects. Sagarmala Development Company (SDC) has been incorporated under administrative control of the Ministry of Shipping to assist the State level/zone level Special Purpose Vehicles (SPVs). SDC would be raising funds by leveraging resources provided by the government and from multi-lateral and bilateral funding agencies. In order to execute the last mile connectivity rail connectivity and internal rail projects of the Major Ports a Special Purpose Vehicle (SPV) – The Indian Port Rail Corporation (IPRC) is incorporated under the Companies Act 2013, under the administrative control of the Ministry of Shipping.

Challenges

• Land resource: Non-availability of land parcels with the states along with huge acquisition and compensation costs are delaying the execution of the project. 
• Lack of infrastructure-for evacuation of cargo at major and non-major ports leading to a sub-optimal transport modal mix, low penetration of coastal and inland shipping, lack of scale and deep draft at ports also contributed to the skewed growth.
• Fragmented approach-The involvement of multiple agencies might lead to fragmented approach in the development of infrastructure to promote industrialization, trade, tourism and transportation across the country.