Current Affairs -Indian IAS Academy module-4

1. Panel moots ‘handling’ levy on cash payments

·   Union Budget 2017-18 should allow merchants as well as government departments to levy a handling charge for cash payments above a certain limit, the Committee on Digital Payments has advised the finance ministry.

·     It also recommended a reduction in the mandatory threshold for quoting PAN card numbers for cash transactions from Rs. 50,000 and Rs. 2,00,000, applicable in different cases currently.

·     The committee, headed by former Finance Secretary Ratan P Watal, proposed that Aadhaar be used as an alternate for KYC for people who don’t have a PAN. “Permit merchants, including government agencies to levy a cash handling charge for payments in cash above a certain threshold. The cash handling charge so collected should be exclusively used to fund new infrastructure for acceptance of digital payments (like PoS devices).”

PAN threshold:-

·     Gradually, the Centre should reduce the threshold for quoting of PAN, which is currently mandated for banking transactions above Rs. 50,000 and merchant transactions of more than RS. 2 lakh, the panel suggested.

·      To create parity between cash and digital payments, the panel proposed that eKYC requirements in digital payments should be in consonance with KYC norms for transacting in cash. “Transactions which are permitted in cash without KYC should also be permitted on prepaid wallets without KYC,” .

·    The committee’s report, on which public comments and suggestions have been invited over the next fortnight, has also pitched for allowing tax payments by debit cards and e-wallets, against the current option of net banking only. “CBDT and CBEC should develop an e-commerce based model where their web portals generate the tax challans and accept payments from all electronic modes.”

·    A recommendation has also been made to make Aadhaar numbers compulsory in Income Tax returns, although the committee has stressed such an amendment must only be made after seeking the Attorney General’s opinion. Income tax payers already have PAN cards.

·        It further said that CBEC should issue necessary instructions to facilitate Service Tax input credit on price of digital transactions. Amendments have also been mooted to the General Financial Rules, 2005 and Central Government Account (Receipt and Payment) Rules, 1983, to include digital modes of payment.

·       The panel also recommended that when government acts as a merchant, it should bear the cost of electronic payments and not pass them on to consumers.

·     Digital payments for low value transactions, such as parking charges, toll charges or health services at government hospitals and health centres, also need to be promoted. “The low value routine transactions need special attention. These are payments that touch the lives of people every day.”

·        Pushing for adoption of digital payments for all government transactions, it has also proposed that utility bills and payments to government above a certain threshold be made only in digital mode. Also, convenience or service charge levied by utility service providers, petrol pumps, railways, airlines on electronic payments should be withdrawn.

·     Customs and excise duties on import of equipment which form a part of retail payment system infrastructure must be cut in the Budget, it recommended. The list includes micro ATMs used by business correspondents; fingerprint readers and biometric readers either as spare parts or as integrated electronic data capture machines and point- of-sale (PoS) terminals.

Cash heavy economy:-

·       India is a cash heavy economy, with almost 78 per cent of all consumer payments being effected in cash. This imposes an estimated cost of Rs. 21,000 crore, without factoring in other effects of cash reliance, such as counterfeit currency and black money.

·    Transitioning to digital payments was estimated to bring about a significant reduction in costs incurred on account of inefficiencies associated with cash and other paper based payments.

·   “For instance, by certain estimates, transitioning to an electronic platform for government payments itself could save approximately Rs. 100,000 crore annually, with the cost of the transition being estimated at Rs. 60,000 to Rs. 70,000 crore.”

2.Status of tribal development remains poor: Ministry report

·    The tribal population in India lags behind other social groups on various social parameters, such as child mortality, infant mortality, number of anaemic women, says the latest annual report of the Ministry of Tribal Affairs.

·     Tribal population, with a vast majority engaged in agricultural labour, has a higher incidence of anaemia in women when compared to other social groups.

·   The community also registered the highest child mortality and infant mortality rates, when compared to other social groups, the data indicates.

·    While educational achievements on the whole has improved, statistics cited elsewhere in the Report shows that the gross enrolment ratio among tribal students in the primary school level has declined from 113.2 in 2013-14 to 109.4 in 2015-16. Besides, the dropout rate among tribal students has been at an alarming level.

·    While the overall poverty rates among the tribal population have fallen compared to previous years, they remain relatively poorer when weighed against other social groups.

·         Health infrastructure has also been found wanting in tribal areas.

Gaps in rehabilitation:-

·     Further, it exposes the gap in rehabilitation of tribal community members displaced by various development projects. Out of an estimated 85 lakh persons displaced due to development projects and natural calamities, only 21 lakh were shown to have been rehabilitated so far.

·  “Rehabilitation only happens on paper, and any compensation for displaced adivasi folks is siphoned off by others in their name,”.

·   In 2014, the Central government initiated the VanbandhuKalyanYojana for the holistic development and welfare of tribal population on a pilot basis. However, the Annual Report points out that the token budgetary provisions being made under the scheme to the tune of Rs.100.00 crore and Rs.200.00 crore for 2014-15 and 2015-16, respectively, is minuscule and barely sufficient to meet the purpose of the Scheme given that it intends to cover 27 States across the country.

·         The Ministry has emphasised that more funds be provided for the Scheme from the year 2016-17 onwards.

3.Nepal rejects India’s ‘open sky’ offer

·         Nepal has rejected India’s ‘open sky’ offer to allow unlimited flights between the two countries at a meeting held here on December 20.

·     Nepal said it was not yet ready for the agreement. India has been keen on countering Nepal’s recent engagement with China on the road, railways and port connectivity. “Nepal said it was not yet ready for the ‘open-sky’ agreement and it might consider the proposal two years later,” said a senior official of the Ministry. Airlines from India and Nepal are now allowed to operate 30,000 seats from each side.

·       India and Nepal signed a memorandum of understanding to set up a joint technical committee to examine Nepal’s request for developing new air routes and air entry points at Janakpur, Bhairahawa and Nepalgunj. “The committee will meet in the first week of February to examine the feasibility of the proposed routes,”.

·   The latest development comes days after India signed an agreement with Sri Lanka, Jamaica, Guyana, Czech Republic, Finland and Spain to allow airlines to operate unlimited flights to Delhi, Mumbai, Kolkata, Chennai, Hyderabad and Bengaluru.

·      Nepal has long been pushing for new airspaces to ease congestion on the existing routes and to save time and cost for air passengers.

·        “Nepal is building a major international airport at Bhairwaha, near the Uttar Pradesh border, and the airport at Pokhara will soon be brought to international standards.

·    The issue of increased air service and additional routes was part of the joint statement issued during the visit of Prime Minister Pushpa Kamal Dahal ‘Prachanda.’ In it, Prime Minister NarendraModi had said India’s initiatives for ‘open sky’ and cross-border connectivity “would directly benefit Nepal and help strengthen our economic partnership.”

·      Under the National Civil Aviation Policy, approved by the Union Cabinet earlier this year, India intends to enter into ‘open-sky’ agreements with SAARC countries and with those beyond the 5,000-km radius from Delhi.

·       Countries sign air services agreements (ASAs) through bilateral negotiations to decide the number of flights airlines can fly. Under the ‘open-sky’ agreement, there is no restriction on flights or seats.

Among SAARC countries:-

·    India doesn’t have any ‘open sky’ agreement with Pakistan, Nepal and Afghanistan. It allows unlimited flights from Bangladesh and Maldives at 18 domestic airports, from Sri Lanka at 23 airports, and from Bhutan at all its airports.

Air transport agreement:-

·       A air transport agreement (also sometimes called an air service agreement or ATA or ASA) is an agreement which two nations sign to allow international commercial air transport services between their territories.

·     The bilateral system has its basis under the Chicago convention and associated multilateral treaties.

·     The Chicago Convention was signed in December 1944 and has governed international air services since then. the convention also has a range of annexes covering issues such as aviation security, safety oversight, air worthiness, navigation, environmental protection and facilitation (expediting and departure at airports).