📰 How Tez works
How does it work?
•Google Tez is a mobile wallet based on the Unified Payments Interface (UPI) platform built by the National Payments Corporation of India (NPCI). UPI-enabled wallets permit users to transfer money without the recipient’s bank account details. The UPI ID of the recipient is used as a proxy for the account number and IFSC code, thereby simplifying the money transfer.
How is it different from digital wallets?
•Tez does not require money to be stored in the app to make digital payments. It works as an extension of one’s bank account, So, unused money remains in the bank, earning interest. Each transaction is initiated by the sender entering his UPI pin with the additional security of existing phone locks.
How can you transfer money using Tez?
•After installing the app on an Android or an iOS device, users have to sync their wallets with their Google account, and the mobile number linked to it. Access to the wallet from the app drawer is protected by a Google PIN and by security settings on the device, such as passcodes, fingerprints and pattern locks.
•Integration of one’s bank account with the wallet is done via SMS, and will not be completed if the phone number associated with the account does not match, or if the user holds an NRI account which is not supported for this feature. Users without a UPI id will have to create one and enter a secure UPI pin.
•Once the user’s bank account is linked, money can be transferred using the recipient’s UPI id. Users also have the option of making transfers to bank accounts by entering the account number of the recipient and the related IFSC code.
•Other means of making payments is by using the camera to scan a QR code, or entering the phone number of the recipient. The app automatically identifies contacts who have successfully registered with the Tez database. A fourth alternative is the ‘Cash Mode’ that allows quick transfers with nearby Tez users without sharing phone numbers. Cash Mode can be used to pay as well as receive money from devices within its range.
📰 Rohingya have terror links: Centre
Any indulgence shown by court will encourage their influx, says affidavit in SC
•The Centre told the Supreme Court on Monday that the Rohingya were a serious threat to national security with links to terror outfits, such as the Islamic State, and those in Pakistan and other countries.
•The Centre said that unless the government took action now, illegal immigrants like the Rohingya would eat into welfare meant for India’s citizens. It said the decision whether or not to deport them fell within its exclusive domain. The court should refrain from hearing them. “Any indulgence shown by the highest court would encourage the influx of illegal migrants into our country and thereby deprive the citizens of India of their fundamental and basic human rights,” the Home Ministry said in an affidavit.
•“If anything untoward happens to us, we will come to you,” senior advocate Fali Nariman, appearing for two Rohingya representing their 40,000-strong community, insisted at the short hearing.
•“Who has stopped you?” Chief Justice of India Dipak Misra, heading a Bench comprising Justices A.M. Khanwilkar and D.Y. Chandrachud, responded.
•Chief Justice Misra, however, said the court would first have to “see the legal position, whether we have jurisdiction and what kind of jurisdiction we have.” He posted the case for detailed hearing on October 3.
📰 Norms eased for fund raising by REITs, InvITs
SEBI allows issue of debt securities
•The Securities and Exchange Board of India (SEBI) has relaxed the guidelines for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) in order to broaden the scope of fund raising by such instruments.
•The board of SEBI, which met on Monday, decided to allow REITs and InvITs to raise capital by issuing debt securities while also giving approval for the former to lend to an underlying holding company or a special purpose vehicle (SPV).
•The regulator also allowed single-asset REITs on similar lines as InvITs while amending the definition of ‘valuer’ for both REITs and InvITs. REITs allow investors to invest in real estate, while InvITs allow one to invest in infrastructure projects.
•Market participants said the relaxation would help these investment products gain traction as only a few entities have so far managed to raise such funds. On the BSE, only two InvITs, India Grid Trust & IRB InvIT Fund, are listed.
•“Through these proposals, SEBI has reiterated its intent to adopt a consultative approach in refining the regulations to make REITs and InvITs successful platforms in India,” said Bhairav Dalal, partner, real estate (tax), PwC India.
📰 Reimagining the OBC quota
Sub-categorisation of OBCs provides an opening to ensure social justice works better
•Regardless of the political impulse that led the government to announce creation of a committee to look into sub-categorisation of Other Backward Classes (OBC), it provides an opening to ensure social justice in an efficient manner. The biggest challenge India faces is that the groups perceived to be disadvantaged consist of a very large segment of Indian society, while public policies are highly limited in scope.
The jobs-claimants mismatch
•Some illustrative statistics are eye-opening. The National Sample Survey (NSS) data from 2011-12 show that about 19% of the sample claims to be Dalit, 9% Adivasi, and 44% OBC. While some of these claims may be aspirational rather than real, this totals a whopping 72%. Among the population aged 25-49, less than 7% have a college degree. By most estimates, less than 3% of the whole population is employed in government and public-sector jobs. Since reservations cover only half the college seats and public-sector jobs, the mismatch is obvious. A vast proportion of the population eligible for reservations must still compete for a tiny number of reserved and non-reserved category jobs. It is not surprising that there is tremendous internal competition within groups.
•If we want reservations to make a significant difference in the lives of the marginalised groups, there are only two options. Either the government must drastically increase availability of government jobs and college seats or it must reduce the size of the population eligible for these benefits. While the Supreme Court would not allow reservations to exceed 50%, frankly it does not matter. Whether available public sector jobs cover 1.5% of the population or 3%, these will only offer opportunities to a minuscule fraction of individuals in reserved categories. Hence, the only viable option is to reduce the size of the eligible population, possibly along the lines of sub-categorisation proposed by the government.
•However, while the media and claimants to the coveted OBC status such as Jats, Kapus and Patels are busy arguing over the merits of this proposal, very little attention is paid to the practical challenges facing sub-categorisation. How will we know which castes are the most disadvantaged? At the moment, the only reputable nationwide data on caste comes from the 1931 colonial Census and some of the ad hoc surveys conducted for specific castes.
Lack of credible data
•The Socio-Economic Caste Census (SECC) of 2011 was supposed to provide up-to-date comprehensive data. However, the results remain shrouded in mystery. When releasing poverty and deprivation data from the SECC in 2015, it was found that about 4.6 million distinct caste names, including names of gotra, surname and phonetic variations were returned, making the results almost impossible to interpret. For nearly 80 million individuals, caste data were believed to be erroneous. Since then we have heard little about the quality of caste data in SECC and even less about its results. In 2015, the then NITI Aayog Vice Chairperson, Arvind Panagariya, was asked to head a committee to chair the caste classification using SECC data. Little seems to have come of it.
•It is not surprising that SECC data have not been able to shed light on socio-economic disadvantages faced by different caste groups: addition of caste information was an ill-conceived graft on what was supposed to be a Below Poverty Line (BPL) survey. This patchwork solution had to be adopted because in spite of widespread demands to include caste data in the Census of 2001 and 2011, the Office of the Registrar General was reluctant to add this burden to the decennial exercise. As a way of appeasing the OBC lobby, it was decided that the BPL census would incorporate caste information.
•After the probable failure of this effort, it would make sense to rethink collection of caste data in Census. Preparations for Census 2021 are ongoing. There is still time to create an expert group to evaluate the methodology for collecting caste data and include it in the Census forms. Losing this opportunity would leave us hanging for another 10 years without good data for undertaking sub-categorisation of OBC quota or evaluating claims to OBC status by groups like Jats and Patels.
Address caste-based inequalities
•A broader issue, however, focusses on whether we want to radically rethink our approach to affirmative action. What would it take to eliminate caste-based disadvantages in next three or four decades? A two-pronged approach that focusses on eliminating discrimination and expanding the proportion of population among the disadvantaged groups that benefits from affirmative action policies could be a solution.
•The present policies focus on preferential admission to colleges and coveted institutions like IITs and IIMs. But these benefits may come too late in the life of a Kurmi or Gujjar child. Their disadvantage begins in early childhood and grows progressively at higher levels of education. The India Human Development Survey of 2011-12 found that among families where no adult has completed more than Class X, 59% children from the forward castes are able to read a simple paragraph while the proportion is only 48% for OBCs, 41% for Dalits and 35% for Adivasis. We know little about what goes on in schools to create these disadvantages but improving quality of education for all, including those from marginalised groups, must be a first step in addressing caste-based inequalities.
•The second line of attack must focus on ensuring that benefits of reservations are widely spread. It makes little sense for a young man to obtain admission to a prestigious college, get admitted to a postgraduate course, get a job as an assistant professor, and be promoted to the position of a professor using the same caste certificate. It would make even less sense if his children are also able to obtain preferential treatment using the same caste certificate. Thus, use of the OBC quota must be limited to once in a person’s lifetime, allowing for a churn in the population benefitting from reservations. Linking the Aadhaar card to use of benefits makes it possible that individuals use their caste certificates only once, spreading the benefits of reservations over a wider population.
•The present move by the government to rethink OBC quota creates a wedge that could potentially be used to ensure that we have better data on caste-based disadvantages for future discourse. It is somewhat disheartening to think that even after 70 years of Independence, we still must rely on a colonial Census to tell us about the condition of various castes in India. It also indicates a mood that wants to ensure that the benefits of reservation are widely spread. Increased attempts at linking benefits to Aadhaar allow us with an option to ensure that reservation benefits are not captured by a few. Let us use this opportunity to reshape the nature of affirmative action in India.
📰 Gauging the status quo
With China’s critical 19th Party Congress set to take place soon, peace on its periphery is a necessity
•The Brazil, Russia, India, China and South Africa grouping (BRICS) has since long ceased to be of material significance as multilateral institutions go. The recent BRICS Summit in Xiamen (China) only seemed to confirm this. It suggests that BRICS may be going the way of quite a few other organisations.
Inconsequential declaration
•Little of consequence appears to have happened, or to have emerged, from the latest summit. The Xiamen Declaration is proof of this. Considering that this meeting was taking place in the shadow of significant global events, notably North Korea’s nuclear provocations and the U.S. response, other serious developments in Asia, including Afghanistan and West Asia, apart from issues of consequence elsewhere, the absence of any reference to these events in the Summit Declaration suggests that BRICS is clearly out of sync with current realities.
•Much has been made by the media about the inclusion of Pakistan-based terrorist groups such as the Lashkar-e-Taiba and the Jaish-e-Mohammed among the many terrorist groups active in the region. It, however, needs to be understood that this was merely a reiteration of something already mentioned in the declaration of the Heart of Asia Conference held in India in December 2016.
•The Heart of Asia declaration had highlighted the ‘gravity of the security situation in Afghanistan and in the region, drawing attention to the high levels of violence caused by the Taliban, terrorist groups including the Islamic State, al-Qaeda and its affiliates, the Haqqani network, Islamic Movement of Uzbekistan, East Turkestan Islamic Movement (ETIM), Lashkar-e-Taiba, Jaish-e-Mohammed, Tehreek-e-Taliban Pakistan, Jamaat-ul-Ahrar, Jundullah and other foreign terrorist groups’. To attach special significance to the inclusion of this passage in the Xiamen Declaration, and view it as China administering a resounding slap on its ally, would be a profound mistake.
•The BRICS declaration is perhaps more significant for what it did not include. Absence of any mention of China’s Belt and Road Initiative (BRI) — even though Beijing sets such great store by it — is one. At this point one can only speculate on the reason. It is possible that China may not have wanted to introduce a discordant note into the proceedings — knowing India’s reservations regarding the project — of a conference that it was presiding over. Or perhaps, China does not think that BRICS could make a material contribution to the achievement of its objective.
BRICS’ limited scope
•One takeaway from the conference also could be that China sees little use of BRICS to achieve its geopolitical and geo-economic objectives across Asia and beyond. BRICS as a body can hardly help China in dealing with a knotty problem like North Korea. It has no need for BRICS to deal with problems such as the South China Sea and freedom of navigation on the seas. From its point of view, BRICS is an outlier as far as pressing problems in the region and beyond are concerned.
•BRICS suffers from other infirmities as well. Brazil and South Africa are increasingly becoming peripheral to BRICS’ aims and objectives. Russia is currently more preoccupied with establishing its supremacy in Eurasia, and its interest in BRICS is not of the same order as in the past. This leaves only India, and limits the scope of BRICS to issues and regions such as Afghanistan that have featured in previous BRICS meetings.
•The summit, however, provided an opportunity for leaders to meet and conduct business. For instance, Prime Minister Narendra Modi’s intervention at the BRICS Business Council helped highlight India’s emergence as one of the most open economies on the globe. At the BRICS Emerging Markets and Developing Countries Dialogue, Mr. Modi highlighted India’s long tradition of partnership with fellow developing countries. Among the ten commitments he listed was that of creating a safer world by “organised and coordinated actions on at least three issues: counter-terrorism, cyber security and disaster management”. The Prime Minister also called for a skilled, healthier and equitable world, as also the critical importance of sustainable development goals.
Bilaterals, Beijing détente
•Considerable significance attaches to the meetings held between Mr. Modi and the Russian and Chinese leaders on the sidelines of the summit. The emphasis during his meeting with Russian President Vladimir Putin seems to have been on the restoration of ties between the two countries to levels that existed in the past. Discussions also centred on ways to boost bilateral trade and investment, especially in the oil and natural gas sectors.
•The meeting with Chinese President Xi Jinping acquired particular significance coming as it did after the over two-month-long stand-off at the Doklam Plateau. The convergence between the two countries on international terrorism at the BRICS Summit seems to have led to a thaw for the time being. Assurances emanating from the meeting, and the adoption of a low-key approach, were aimed at enhancing mutual trust. The intention seemed to be to establish ‘new ways’ to prevent future incidents such as Doklam, and concentrate on essentials needed to establish better relations.
•Notwithstanding the carefully structured discussions between the two leaders — and while Doklam did not figure in the discussions — relations between India and China are unlikely to show any marked improvement in the near, and perhaps even in the medium, term. For the present, avoidance of a conflict will remain the principal objective on both sides, with China no doubt looking for an expansion of opportunities for trade. The key watchwords would, hence, be peace and tranquility.
The road after Doklam
•It would take much longer for trust to return; as it is, trust between the two countries had begun to be affected as India moved closer to the U.S., strengthened its relations with countries like Japan and Vietnam that were not too well disposed towards China, and participated in multilateral defence exercises which appeared to have an anti-China slant. In the circumstances, restoring trust is not going to be easy.
•In Astana in June this year, when the Indian and Chinese leaders met on the sidelines of the Shanghai Cooperation Organisation Summit, the emphasis was on not allowing “differences to become disputes”. This was reflected in the so-called Astana Understanding. Doklam effectively put paid to this. While Mr. Modi is possibly willing to put Doklam behind him, the Chinese are unlikely to do so and are more likely to moderate their response keeping the Doklam incident in mind. China may continue to reiterate the obvious and talk of ‘peaceful co-existence and mutually beneficial cooperation to strengthen bilateral relations’, but India needs to be cautious. China is likely to view India’s actions with even greater suspicion than hitherto.
•The kind of language employed by the Chinese side in the context of the meeting of the two leaders is an index of this. Mr. Xi observed that China and India are “each other’s opportunities and not threats”; India and China “need to show to the world that peaceful co-existence and win-win cooperation is the only right choice for the two countries”; China would like to work with India to uphold the Five Principles of Peaceful Co-existence (Panchsheel), advance political mutual trust, mutually beneficial cooperation and move forward the development of bilateral relations along the right track. This might sound like accenting the positive in Sino-Indian relations and moving to a more calibrated approach, but it does not necessarily reflect any greater willingness on the part of China to see the other side’s point of view.
•Evidently, the China-centric world view will continue to prevail. For the moment, China is anxious to maintain peace on its border with India, as China has lately been sensing opposition to its policies from many other countries, apart from a host of problems in its neighbourhood. In totality, these could undermine the Chinese Dream of Mr. Xi. North Korea is perhaps the most vexatious of the problems, one that is happening on China’s doorstep. Smaller countries of Southeast Asia such as Indonesia, and even Singapore and Vietnam, are signalling opposition to China’s restrictions on rites of maritime passage and freedom of navigation in the seas around China.
•China also faces an ever widening arc of threats from terrorists of different categories such as the ETIM, the Islamic Movement of Uzbekistan and Uighur separatists to its West. With the critical 19th Party Congress set to take place soon, peace and tranquillity on its periphery has thus become an imperative necessity.
📰 Questions about the GST cess
They relate to its legal validity and conformity with the Constitution
•As part of the Goods and Services Tax (GST) reforms, a new levy called the GST Compensation Cess has been introduced to make good apprehended losses to States in the first five years of GST implementation. The Cess has been introduced through the GST (Compensation to States) Act, 2017 and is levied on inter- and intra-State supply of notified goods such as aerated drinks, coal, tobacco, automobiles and the ambiguous category of ‘other supplies’. The proceeds of the cess will be distributed to loss-incurring States on the basis of a prescribed formula. The schedule to the Act mentions the maximum rates of the cess, which extend to 290%.
•While the policy flip-flop on the rates reveal the ad hoc implementation of the cess, there remains much to be said about the legal validity of the Act.
•A cess is a levy for a specific purpose. The quintessential feature of a cess is that it is levied for a ‘specific purpose’ and the proceeds are earmarked as such. Under Article 270 of the Constitution, a cess tax has special privilege as the proceeds can be retained exclusively by the Union and need not be shared with States. The object of granting this special status is to ensure expenditure for a specific purpose, as is evident from the Fourth Finance Commission Report.
Dilution of characteristics
•A cess must have an earmarked purpose and the contributor and beneficiary must be relatable. In the past, cesses were imposed by the Central government to raise finances for specific industries and labour welfare within chosen industries. If compensating State governments is considered to be a specific purpose, any general revenue raising measure can be considered to be backed by an earmarked purpose. Once the money is transferred to State governments, it can be used to fund just about any scheme and may even be used merely to adjust the respective State government’s fiscal deficit. Further, there is no relation between the persons contributing to the cess and the recipients, the State governments. All these factors make the cess look more like an additional tax or surcharge which becomes problematic as surcharge on the GST is prohibited under Article 271.
•Section 18 of the 122nd Constitution Amendment Bill, 2014 proposed a 1% additional tax to compensate States but this was withdrawn while enacting the Amendment Act. There is no provision in the Amendment Act for an additional tax to compensate the States for apprehended losses from GST implementation. As per Article 279A(4)(f), the GST Council’s power to recommend a special rate is confined to raising additional resources during any natural calamity or disaster. The cess cannot be justified under such power either. Moreover, pursuant to the 101st Constitution Amendment Act, 2016, Article 271 has been amended to state that an additional tax/surcharge cannot be imposed over and above the GST tax rates. Thus it appears that by enacting the cess, Parliament is seeking to do indirectly that which cannot be done directly, which amounts to it being a colourable piece of legislation.
Burdening select goods
•The goods identified in the Act, such as aerated drinks, coal, tobacco, automobiles and the ambiguous category of “other supplies”, do not form a distinct category or class deserving the liability to pay the cess so as to compensate States, and it is doubtful it will succeed if tested under the anvil of the right to equality under Article 14. While the sin goods argument is alluring, it is erroneous, looking at misfits such as coal and aerated drinks and the uncovered sin goods including luxury goods, jewellery, gadgets and the like. Similarly, “other supplies” leaves much to the unfettered discretion of the government.
•The cess reflects the same lack of coherence as the GST regime in general, the appeasement measures being weighed down by the legal entanglements created therein. It also raises the question as to whether the targeted goods have been chosen merely because of their inelasticity — less dependence of demand on price change — ensuring the generation of not just adequate but also surplus funds for the government. While the Delhi High Court has granted relief to a coal trader against implementation of the Act, it remains to be seen if the legislation will be tested by courts on constitutional violation and colourable action.
