Comprehensive News Analysis 23-06-2022

By Kriti Gupta (BYJU'S IAS)|Updated : June 23rd, 2022

Comprehensive News Analysis covers all the important articles and editorials of 'The Hindu' from the UPSC/IAS examination point of view.

Category: ECONOMY

1. Towards a single low tax regime

Syllabus: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

Mains: Concerns with the current GST system and recommendations to improve it

Background:

  • The introduction of the Goods and Services Tax system has been able to remove the barriers to free trade and economic growth and avenues for corruption as observed in the earlier regime of taxes and cesses.
  • However, many proposed reforms in the GST system to streamline it are yet to materialize. The proposal to end the multiple slabs and bring in a single standard rate under the GST system made as back as December 2018 is yet to be realized.

Concerns with the current GST system:

Complex and confusing:

  • The GST system is still a complicated tax regime with different slabs. It is not easy to comprehend or comply with.
  • Also, the addition of more categories every day and the need to categorize them under the differential tax slabs in the GST regime is open to interpretation, harassment and avoidable litigation. This goes against the spirit of improving the ease of doing business in India.

Higher taxes on some segments:

  • The imposition of high GST rates (often referred to as ‘Sin’ taxes) in some areas is not in the interest of sustainable economic growth and development.
  • The higher taxes on five-star hotels, automobiles, etc. fail to comprehend the effect that these segments could have on employment generation both direct and indirect and the economic ripple effect downstream, in a complex web of businesses that have symbiotic relationships.
  • Hence such taxes might be contradictory to the government’s policy of generating growth and creating jobs under ‘Make in India’.
  • A more moderate tax rate for these segments can spur their demand in the economy and result in a virtuous impact on economic growth and development.

Exemptions from GST:

  • Some items continue to remain exempt from GST. Petrol, diesel, and aviation turbine fuel are not under the purview of GST, but come under Central excise and State taxes.
  • This is not in line with the principle of simplifying the tax system in India as these goods account for a substantial share of taxes in India.

Recommendation:

  • The article calls for doing away with the multiple tax slabs and bringing in a single low tax regime along with a limited list of exempt items as observed in other countries with similar systems.
Nut Graf

A single low tax regime along with a limited list of exempt items under the GST system can help ensure better compliance, widen the tax net, improve ease of doing business, boost the economy, create jobs, increase tax collections, and reduce corruption.

2. Crypto came tumbling after

Syllabus: Issues relating to Mobilization of Resources, Growth and Development- Cryptocurrencies

Mains: Factors affecting the price of cryptocurrencies

Context:

  • Bitcoin has witnessed a steep fall in its price from a record high of $69,000 in November 2021 to around $20,000 in recent weeks. There has been a significant correction in the prices of Bitcoin in particular and cryptocurrencies in general in the recent past. This has resulted in huge losses to investors around the world and has raised questions over the financial viability of such cryptocurrencies.
  • In this context, the article analyzes the factors affecting the price volatility of cryptocurrencies.

Factors affecting the price of cryptocurrencies:

  • Cryptocurrencies are basically a form of asset that allows people to keep their money outside the formal financial system and make it accessible so that it can be used anywhere in the world. Hence their prices which depend on the demand for them are open to the influence of many factors including changes in the global liquidity conditions.
  • Most of the fluctuations in the price of Bitcoin are brought about by changes in the demand side as the asset’s supply is almost stagnant or moves very slowly given the enormous cost of mining an additional Bitcoin.
  • The boom in the price of crypto assets during the onset of the pandemic was because investors were looking to invest their funds in crypto assets in the absence of other reliable investment opportunities. With the pandemic slowing down and economies opening up, investors are looking to move their funds out of crypto assets into more profitable investment opportunities. This is leading to a decline in prices.
  • Recently, there have been changes in the price of an important class of assets: government bonds issued by the governments of developed countries. The policy interest rates on these bonds have been rising in recent times. These are considered safer investment options and the higher interest rates on them are adding to the investors’ interest in these assets. As a result, investors in crypto assets are shifting their investments out from crypto assets into government bonds. This has resulted in a fall in demand for crypto-assets and consequently has had a downward impact on the price of cryptocurrencies such as bitcoin.
Nut Graf

Given the nature of crypto assets and the interconnectedness of financial markets at the global level, the price of crypto assets will continue to remain sensitive to changes in the global liquidity conditions.

F. Prelims Facts

1. Four new corals recorded from Indian waters

Syllabus: GS3; Biodiversity

Prelims: Azooxanthellate corals

Context

Scientists have discovered four species of corals for the first time in Indian waters.

Details

  • New species of Azooxanthellate corals were discovered in the waters of the Andaman and Nicobar Islands.
  • Scientists from the Zoological Survey of India (ZSI) said that all four groups of corals are from the same family, Flabellidae.
  • Truncatoflabellum crassum, T. incrustatum, T. aculeatum and T. irregulare under the family Flabellidae were earlier found in Japan, the Philippines and Australian waters, and only T. crassum was found in the Indo-West Pacific region.

Read more about – Corals Reefs

Azooxanthellate corals

  • The azooxanthellate corals are a group of corals that do not contain zooxanthellae and derive nourishment from capturing different forms of planktons and not from the sun.
  • Unlike the zooxanthellate corals, Azooxanthellate corals are not restricted to shallow waters. 
    • They live in the vast expanse of the ocean depths where there is less competition for space.
  • These corals are not limited by light or by temperature.
  • These are a group of hard corals and the newly found species are not only solitary but have a highly compressed skeletal structure.

2. Santhal tribe

Syllabus: GS1; Indian Society; Salient features of Indian Society, Diversity of India.

Prelims: Santhal Tribe

Context

  • As the National Democratic Alliance has nominated Droupadi Murmu for the Presidential election, the Santhal community has come under the spotlight.
  • If elected, Droupadi Murmu will be the first tribal person to become the President.

Santhal Tribe

  • Santhal is the third-largest Scheduled Tribe community in the country after Gond and Bhil.
  • According to the Scheduled Castes and Scheduled Tribes Research and Training Institute (SCSTRTI), Bhubaneswar, the word Santhal is derived from two words: 
    • Santha which means calm and peaceful 
    • Ala which means man
  • Earlier the Santhals led a nomadic life and eventually they settled down in the Chhotanagpur plateau.
  • Santhals speak “Santhali” which has its own script called “Ol Chiki” which was invented by Pandit Raghunath Murmu. 
    • Santhali in the Ol Chiki script has been included in the Eighth Schedule to the Constitution.
  • The Santhal population is mostly distributed in Odisha, Jharkhand and West Bengal.
  • In Odisha, Santhals are seen in Mayurbhanj, Keonjhar and Balasore.
    • Mayurbhanj has one of the largest concentrations of the tribe.
    • The literacy rate of the Santhals is very high as compared to other tribes in Odisha.

G. Tidbits

1. Earthquake kills over 1,000 in east Afghanistan

  • A powerful earthquake struck the rugged and mountainous region of eastern Afghanistan. The quake is said to be the deadliest in Afghanistan since 2002.
  • The Taliban in Afghanistan has appealed for international support after a devastating 6.1 magnitude earthquake.
  • The Indian Prime Minister expressed anguish and said that India is ready to provide all possible disaster relief materials at the earliest. 

2. Digital wearables can expose users to cyberattacks: IEEE

  • The Institute of Electrical and Electronics Engineers (IEEE) warned that digital wearables such as smartwatches and fitness trackers pose threats to the security and privacy of customer data by connecting a wearable to an extended ecosystem.
  • Cybersecurity experts look at this as a supply chain that includes a data generator, an analytics engine and a service provider. Each link in the chain, including the connecting networks, presents a potential risk.
  • According to the IEEE experts, most criminal intrusions of computer networks have a financial motive as stolen health data can be valuable because it includes personally identifiable information such as birthdays, email addresses and other login information that can be used for theft purposes.
  • In recent years, India has been experiencing a massive adoption of wearable technology with shipments crossing 13.9 million devices in the first quarter of 2022.

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