GAGANYAAN
1. Context
One of the four astronauts undergoing training for the Gaganyaan mission will travel to the International Space Station as part of a collaborative effort with NASA, Union Minister Jitendra Singh has informed the Lok Sabha.
2. Gaganyaan Mission
- Gaganyaan, meaning "Sky Craft" in Sanskrit, is India's ambitious human spaceflight program aimed at sending Indian astronauts to space.
- It is a testament to India's growing prowess in the field of space exploration and a source of immense national pride.
- The program, spearheaded by the Indian Space Research Organisation (ISRO), envisions launching a crewed orbital spacecraft into low Earth orbit (LEO) for a period of up to seven days.
- The spacecraft will carry three astronauts, marking a historic first for India.
3. About The TV-D1 Mission
- The TV-D1 mission consists of two abort missions designed to test the safety mechanisms that will allow the Gaganyaan crew to escape the spacecraft during emergencies.
- In this mission, a rocket will ascend to an altitude of nearly 17 km before an abort signal triggers the separation of the crew module.
- The crew module will then descend using a parachute for a splashdown in the Bay of Bengal.
- The TV-D1 mission will have a total duration of 532 seconds, from liftoff at 8 a.m. to the crew module's splashdown about 10 km from the Sriharikota coast.
- The rocket used for this mission is ISRO's low-cost Test Vehicle, designed specifically for system testing.
- During the flight, the rocket will reach a peak relative velocity of 363 meters per second, approximately 1307 km per hour. It's important to note that the crew module will be empty for this test.
4. Key Objectives of the TV-D1 Mission
The TV-D1 mission serves two primary objectives.
- It aims to demonstrate the capabilities of the new Test Vehicle, hence its name Test Vehicle-Demonstration 1 (TV-D1).
- It will showcase a basic version of the crew module, testing the systems responsible for separating the crew module from the rocket during an abort mission and ensuring the safe escape of astronauts.
The TV-D1 mission simulates an abort condition during the ascent trajectory, corresponding to a Mach number of 1.2, as anticipated in the Gaganyaan mission.
5. The Low-Cost Test Vehicle
- Unlike the upcoming full-fledged test flight of the crew module into space and back, which will use the human-rated LVM3 rocket in 2024, the TV-D1 mission employs a low-cost basic rocket.
- This Test Vehicle utilizes existing liquid propulsion technology but introduces innovations such as the throttleable and restartable L110 Vikas engine, capable of controlling propellant use.
- ISRO developed this cost-effective solution as each GSLV Mk III launch, which was previously used for such missions, costs between Rs 300-400 crore.
6. Safety and Crew Escape System
- Safety remains a top priority for ISRO in the Gaganyaan project, especially in light of international incidents involving space missions.
- The TV-D1 mission aims to test the systems ensuring the crew module's safety, such as environmental control, life support systems, and an integrated vehicle health management system.
- This system can detect anomalies that may jeopardize astronauts' safety and initiate mission abort procedures.
7. Preparations and Timeline for Gaganyaan
- ISRO has set a target timeframe for the Gaganyaan mission in 2024, with flexibility based on the development stages and ensuring the mission's safety.
- The schedule includes an unmanned mission at the beginning of the next year, abort missions this year, and discussions of the manned mission for late 2024 or early 2025.
- ISRO has completed the human rating of the LVM 3 rocket and performed static tests for human-rated solid rocket boosters.
8. Conclusion
The TV-D1 mission represents a significant milestone in the Gaganyaan program, as it integrates a near-complete system for a flight test. The success of this mission paved the way for further qualification tests and unmanned missions, ultimately leading to the first Gaganyaan mission with Indian astronauts. ISRO's dedication to safety and rigorous testing is paramount as India advances its space exploration endeavours.
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For Prelims: Gaganyaan programme, TV-D1 mission, Low Earth Orbit, Isro, LVM3, GSLV Mk III,
For Mains:
1. Discuss the key objectives of the TV-D1 mission within the Gaganyaan program. How does this mission contribute to astronaut safety and the overall success of Gaganyaan? (250 Words)
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Previous Year Questions
1. With reference to India's satellite launch vehicles, consider the following statements: (UPSC 2018)
1. PSLVs launch satellites useful for Earth resources monitoring whereas GSLVs are designed mainly to launch communication satellites.
2. Satellites launched by PSLV appear to remain permanently fixed in the same position in the sky, as viewed from a particular location on Earth.
3. GSLV Mk III is a four-stage launch vehicle with the first and third stages using solid rocket motors; and the second and fourth stages using liquid rocket engines.
Which of the statements given above is/are correct?
A. 1 only
B. 2 and 3
C. 1 and 2
D. 3 only
Answer: A
2. India's first human space mission "Gaganyaan" will be launched in which year? (ESIC UDC 2022)
A. 2022 B. 2023 C. 2024 D. 2025 E. 2026
Answer: B
3. Find the incorrect statements, about the Gaganyaan Mission of India. (MPSC 2020)
1. Four pilots from Indian Air Force were shortlisted to be astronauts of Gaganyaan.
2. They will be trained at Yuri Gagarin Cosmonaut Centre in Russia.
3. This mission was announced by Prime Minister in 2014.
4. It is scheduled for 2022 with a team of 5 crew members and a month-long stay in space.
A. 1, 2, 3, 4 B. 2, 3, 4 C. 3, 4 D. 2, 3
Answer: C
4. ISRO is related to: (SSC JE EE 2020)
A. space research B. agricultural research C. seed research D. marine research Answer: A
5. Which of the following pairs is/are correctly matched? (UPSC 2014) Spacecraft Purpose
Select the correct answer using the code given below: (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3 Answer: B 6. Consider the following statements: (UPSC 2016) The Mangalyaan launched by ISRO 1. is also called the Mars Orbiter Mission
2. made India the second country to have a spacecraft orbit the Mars after USA
3. made India the only country to be successful in making its spacecraft orbit the Mars in its very first attempt
Which of the statements given above is/are correct? (a) 1 only (b) 2 and 3 only (c) 1 and 3 only (d) 1, 2 and 3 Answer: C |
Source: The Indian Express
NATIONAL GREEN TRIBUNAL
1. Context
A high-powered committee (HPC), appointed by the National Green Tribunal (NGT) and tasked with revisiting the green clearance for the Great Nicobar infrastructure project, has concluded that a proposed transshipment port does not fall in the Island Coastal Regulation Zone-IA (ICRZ-IA), where ports are prohibited, but is in ICRZ-IB where these are permitted.
2. What is National Green Tribunal (NGT)?
- The National Green Tribunal (NGT) is a specialized judicial body established in India to handle cases related to environmental protection and conservation.
- It was established under the National Green Tribunal Act, of 2010, and its primary objective is to effectively and expeditiously address environmental disputes and promote sustainable development.
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With the establishment of the NGT, India became the third country in the world to set up a specialized environmental tribunal, only after Australia and New Zealand, and the first developing country to do so.
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NGT is mandated to make disposal of applications or appeals finally within 6 months of the filing of the same.
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The NGT has five places of sittings, New Delhi is the Principal place of sitting, and Bhopal, Pune, Kolkata and Chennai are the other four.
3. Structure of the National Green Tribunal (NGT)
- Chairperson: The NGT is headed by a full-time Chairperson who is a retired judge of the Supreme Court of India. The Chairperson is responsible for the overall administration and functioning of the tribunal.
- Judicial Members: The NGT consists of judicial members who are retired judges of either the Supreme Court or a High Court. These members have extensive legal knowledge and experience in handling environmental matters.
- Expert Members: The tribunal also includes expert members who possess expertise in areas such as environmental science, ecology, hydrology, and forestry. These members provide valuable technical insights and guidance in the resolution of environmental disputes.
- The NGT is organized into multiple benches located across different regions of India. These benches are responsible for hearing cases specific to their respective jurisdictions. Each bench is headed by a judicial member and consists of one or more expert members, as required.
4. What are the Important Landmark Judgements of NGT?
The National Green Tribunal (NGT) has delivered several landmark judgments that have had a significant impact on environmental protection and conservation in India. Here are some of the important landmark judgments delivered by the NGT:
- Vardhaman Kaushik v. Union of India (2013): This case dealt with the issue of groundwater depletion due to illegal extraction by industries in Uttar Pradesh. The NGT directed the closure of industries that were extracting groundwater without proper permissions and ordered the payment of compensation for environmental damage caused.
- Alembic Pharmaceuticals Ltd. v. Rohit Prajapati & Ors. (2014): In this case, the NGT ordered the closure of an industrial unit in Gujarat for releasing untreated effluents into a water body, causing pollution and harm to the environment and public health.
- M.C. Mehta v. Union of India (2014): The NGT issued a landmark judgment in this case regarding the pollution of the Yamuna River. It directed several measures to clean and rejuvenate the river, including the establishment of sewage treatment plants and the regulation of industries contributing to pollution.
- Subhash Chandra Sharma v. Union of India (2015): This case focused on the issue of air pollution caused by solid waste burning in open areas. The NGT imposed a ban on burning waste in open spaces and directed municipal authorities to take measures to manage waste effectively.
- Raghu Nath Sharma v. State of Himachal Pradesh (2016): The NGT ordered the closure of illegal hotels and structures in the eco-sensitive Rohtang Pass area of Himachal Pradesh to protect the fragile Himalayan ecosystem.
- Yamuna Muktikaran Abhiyan v. Union of India (2017): This case dealt with the rejuvenation of the Yamuna River and led to the NGT issuing directions to clean and restore the river, including measures to prevent encroachments and pollution.
- M.C. Mehta v. Union of India (2017): The NGT banned the use of disposable plastic in Delhi and the National Capital Region (NCR) and directed authorities to take steps to prevent the use and sale of such plastic.
- Shailesh Singh v. Hotel Holiday Regency (2019): In this case, the NGT imposed heavy fines on a hotel in Shimla, Himachal Pradesh, for causing air pollution by running diesel generators without proper emission control measures.
- Subhash Chandran vs. Tamil Nadu Pollution Control Board (2020): This judgment highlighted the importance of safeguarding coastal areas and wetlands from unauthorized construction and development activities, emphasizing the need for stringent environmental norms.
- In Re: Report by Comptroller and Auditor General of India (2021): The NGT directed the formulation of guidelines for the regulation of groundwater extraction and management to prevent overexploitation and depletion.
5. What is a dissolved oxygen level?
- Dissolved oxygen (DO) level refers to the concentration of oxygen gas (O2) that is dissolved in a liquid, typically water.
- It is a crucial parameter in aquatic ecosystems as it directly affects the survival and well-being of aquatic organisms.
- In natural water bodies like lakes, rivers, and oceans, oxygen dissolves from the atmosphere through processes such as diffusion and aeration.
- Aquatic plants, algae, and phytoplankton also contribute to the production of oxygen through photosynthesis. However, the level of dissolved oxygen can fluctuate based on various factors, including temperature, altitude, water flow, pollution, and organic matter decomposition.
- Dissolved oxygen is essential for aquatic organisms because they rely on it for their respiration process, similar to how animals breathe oxygen from the air.
- Insufficient levels of dissolved oxygen can lead to hypoxia, a condition where organisms are deprived of the oxygen they need to survive. This can result in stress, reduced growth, reproductive issues, and even mortality in aquatic species.
Different species of aquatic organisms have varying tolerance levels for dissolved oxygen. For example:
- Fish and other aquatic animals often require dissolved oxygen levels between 4 to 6 milligrams per liter (mg/L) to thrive.
- Some species of fish, insects, and other aquatic organisms can tolerate lower levels of dissolved oxygen, even below 2 mg/L, while others require higher concentrations.
6. What are chemical oxygen demand and biological oxygen demand?
Chemical Oxygen Demand (COD):
- COD is a measure of the amount of oxygen required to chemically oxidize and break down organic and inorganic substances present in water.
- It provides an indication of the total amount of pollutants that can be chemically oxidized by a strong oxidizing agent. COD is expressed in milligrams per liter (mg/L) of oxygen consumed.
- COD is useful in assessing the overall pollution load in a water sample, including both biodegradable and non-biodegradable substances.
- It is commonly used for industrial wastewater monitoring, as it provides a rapid estimation of the organic content and potential pollution levels. However, COD does not differentiate between different types of pollutants or indicate the potential impact on aquatic life.
Biological Oxygen Demand (BOD):
- BOD measures the amount of dissolved oxygen consumed by microorganisms (bacteria) during the biological degradation of organic matter in water.
- It is a key indicator of the level of biodegradable organic pollutants present in water. BOD is expressed in milligrams per liter (mg/L) of oxygen consumed over a specific time period, usually 5 days (BODâ‚…).
- BOD is particularly important in assessing the impact of organic pollution on aquatic ecosystems.
- High BOD levels indicate that a water body may have a significant amount of organic pollutants, which can lead to oxygen depletion as microorganisms break down the organic matter. This oxygen depletion, known as hypoxia, can harm aquatic organisms and disrupt the ecological balance of the water body.
Comparing BOD and COD:
- BOD primarily measures the biologically degradable organic matter and provides information about the potential impact on aquatic life.
- COD measures both biologically and chemically degradable pollutants, giving an indication of the overall pollution load and oxygen demand.
- BOD is a more specific and ecologically relevant parameter, but it takes longer to determine (5 days), while COD can be measured more quickly.
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For Prelims: National Green Tribunal (NGT), National Green Tribunal Act, of 2010, Dissolved oxygen (DO), Chemical Oxygen demand (COD), and Biological Oxygen Demand (BOD).
For Mains: 1. Discuss the significance of Chemical Oxygen Demand (COD) and Biological Oxygen Demand (BOD) as critical indicators for assessing water pollution and quality. (250 Words)
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Previous year Question1. How is the National Green Tribunal (NGT) different from the Central Pollution Control Board (CPCB)? (UPSC 2018)
1. The NGT has been established by an Act whereas the CPCB has been created by the executive order of the Government.
2. The NGT provides environmental justice and helps reduce the burden of litigation in the higher courts whereas the CPCB promotes cleanliness of streams and wells, and aims to improve the quality of air in the country.
Which of the statements given above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2
Answer: B
2. The National Green Tribunal Act, 2010 was enacted in consonance with which of the following provisions of the Constitution of India? (UPSC 2012)
1. Right of a healthy environment, construed as a part of the Right to life under Article 21
2. Provision of grants for raising the level of administration in the Scheduled Areas for the welfare of Scheduled Tribes under Article 275(1)
3. Powers and functions of Gram Sabha as mentioned under Article 243(A)
Select the correct answer using the codes given below:
A. 1 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: A
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Source: The Indian Express
CYBERCRIME
1. Context
On the sidelines of the ASEAN meeting in Vientiane, External Affairs Minister S Jaishankar held a slew of meetings with his counterparts from Laos, Cambodia and Thailand on the issue of trafficking of Indian citizens through cyber scam centres and sought their early return. Hundreds of Indians are believed to be the victims of the cybercrime gangs operating in these countries
2. About cybercrime
Cybercrime is essentially any illegal activity that involves computers, networks, or digital devices. Criminals can use these tools to steal data, commit fraud, disrupt computer systems, or cause other harm. Some common types of cybercrime include:
- Stealing someone's personal information like their name, Social Security number, or credit card details to impersonate them and commit fraud.
- Tricking people into giving up their personal information or clicking on malicious links by disguising emails or websites as legitimate ones.
- Malicious software that can be installed on a computer to steal data, damage files, or disrupt operations.
- Gaining unauthorized access to a computer system or network to steal data, install malware, or cause damage.
3. What is NCRP?
The National Cybercrime Reporting Portal is an online platform established by the government of India to facilitate the reporting of cybercrimes by citizens. The portal allows individuals to report incidents of cybercrime in a streamlined and accessible manner.
Key features and functions of the National Cybercrime Reporting Portal include
- Individuals can report various types of cybercrimes such as online harassment, financial fraud, ransomware attacks, and identity theft. The portal provides specific categories for different types of cyber incidents to ensure proper documentation and handling.
- The portal places a special emphasis on crimes related to women and children, providing a dedicated section to report cases of online harassment, child pornography, and other related offences.
- The portal allows users to report crimes anonymously if they choose, ensuring the confidentiality and privacy of the complainant.
- Once a complaint is filed, the portal provides a tracking number which can be used to follow up on the status of the complaint.
- The portal offers resources and guidelines on how to protect oneself from cybercrime, as well as information on legal recourse and support available for victims.
4. What is the Indian Cyber Crime Coordination Centre (I4C)?
The Indian Cyber Crime Coordination Centre (I4C), established by the Ministry of Home Affairs (MHA), is essentially India's central command centre for combating cybercrime.
Functions
- The I4C serves as a focal point for coordinating efforts between various Law Enforcement Agencies (LEAs) across the country to tackle cybercrime effectively.
- It facilitates the exchange of information on cybercrime investigations, cyber threat intelligence, and best practices among LEAs. This allows for a more unified approach to combating cyber threats.
- The I4C is citizen-centric. It played a role in launching the National Cybercrime Reporting Portal (NCRP) which allows people to report cybercrime complaints online. There's also a National Cybercrime Helpline (1930) to report incidents and get assistance.
- The I4C identifies the need for adapting cyber laws to keep pace with evolving technology. They recommend amendments to existing laws and suggest the creation of new ones if necessary.
- The I4C works with academia and research institutes to develop new technologies and forensic tools to aid in cybercrime investigations.
- They promote collaboration between the government, industry, and academia to raise awareness about cybercrime and develop standard operating procedures (SOPs) for containing and responding to cyberattacks.
5. What is the Budapest Convention?
The Budapest Convention, also known as the Council of Europe Convention on Cybercrime, is the world's first international treaty specifically designed to address cybercrime. It came into effect in 2004 with three main objectives:
- The convention aims to improve how countries investigate cybercrime by setting standards for collecting electronic evidence and fostering cooperation between law enforcement agencies.
- It facilitates cooperation among member states in tackling cybercrime. This includes sharing information, assisting with investigations, and extraditing cybercriminals.
- The convention encourages member countries to harmonize their national laws related to cybercrime. This creates a more unified approach to defining and prosecuting cyber offences.
India's Stand: India is not currently a party to the Budapest Convention. There are concerns that some provisions, like data sharing with foreign law enforcement agencies, might infringe on India's national sovereignty. India has also argued that it wasn't involved in drafting the initial convention.
6. What is the Global Cybersecurity Index?
The Global Cybersecurity Index (GCI) is an initiative by the International Telecommunication Union (ITU) to measure and rank the cybersecurity capabilities of countries around the world. The index provides insights into the commitment of countries to cybersecurity at a global level, assessing their strengths and identifying areas for improvement. The key aspects of the Global Cybersecurity Index
Purpose
- To promote cybersecurity awareness and foster a global culture of cybersecurity.
- To encourage countries to enhance their cybersecurity infrastructure and strategies.
- To facilitate knowledge sharing and cooperation among nations.
Assessment Criteria
The GCI evaluates countries based on five main pillars:
- Examines the existence of cybersecurity legislation and regulatory frameworks.
- Assesses the implementation of cybersecurity technologies and technical institutions.
- Looks at national cybersecurity strategies, policies, and dedicated agencies.
- Evaluate the availability of cybersecurity education, training, and awareness programs.
- Measures the extent of international and national cooperation in cybersecurity efforts.
Methodology
The assessment is conducted through a comprehensive survey sent to ITU member states, followed by analysis and validation of the responses. The countries are then scored and ranked based on their overall cybersecurity posture.
Impact
The GCI serves several important functions:
- Provides a benchmarking tool for countries to assess their cybersecurity maturity.
- Helps policymakers identify gaps and prioritize areas for improvement.
- Encourages international cooperation and collaboration to tackle global cyber threats.
The GCI reports typically highlight the growing importance of cybersecurity due to increasing digital transformation and the rising number of cyber threats. They showcase best practices and successful initiatives from top-ranking countries, serving as models for others.
7. The challenges related to cyber security in India
India faces numerous challenges related to cybersecurity, reflecting its rapidly growing digital economy and increasing reliance on technology.
Increasing Cyber Threats:
- India has seen a significant rise in cybercrimes, including hacking, phishing, ransomware attacks, and identity theft. Sophisticated, state-sponsored attacks targeting critical infrastructure and sensitive data are becoming more common.
- Many public and private sector systems rely on outdated technology, making them vulnerable to attacks. Inadequate implementation of robust cybersecurity measures and protocols leaves systems exposed.
- There is a significant gap in the number of trained cybersecurity experts needed to protect against and respond to cyber threats. Ongoing education and training programs are insufficient to keep pace with evolving cyber threats.
- The absence of a unified regulatory framework complicates cybersecurity management. While laws like the IT Act 2000 exist, enforcement and implementation remain inconsistent and weak.
- Many individuals and small businesses lack awareness of basic cybersecurity practices. Practices like using weak passwords, not updating software, and falling for phishing scams are common.
- The absence of robust data protection legislation makes it difficult to safeguard personal and sensitive data. Ensuring privacy and protection of personal information remains a significant challenge.
- Effective cybersecurity often requires international cooperation, which is currently limited and inconsistent. Cross-border cyber threats and geopolitical tensions complicate collaboration and response efforts.
- The rapid adoption of IoT devices, often with minimal security features, increases vulnerabilities. While AI can enhance security, it also introduces new risks and attack vectors.
- Sectors like banking, healthcare, and energy are increasingly targeted, requiring enhanced protection measures. Ensuring coordinated efforts among various governmental and private entities involved in critical infrastructure protection is challenging.
- Limited financial resources allocated for cybersecurity initiatives hinder the development and implementation of comprehensive security measures.
- Staying abreast of the latest cybersecurity technologies and tools is difficult due to financial and logistical constraints.
8. Way Forward
Addressing these challenges requires a multifaceted approach involving improved regulatory frameworks, enhanced public awareness, investment in cybersecurity infrastructure, international cooperation, and the development of a skilled workforce. By strengthening these areas, India can better safeguard its digital ecosystem against the growing threat of cybercrime.
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For Prelims: Cyber Crime, Artificial Intelligence, Internet of Things, Indian Cyber Crime Coordination Centre, National Cybercrime Reporting Portal, Budapest Convention, Global Cybersecurity Index, International Telecommunication union
For Mains:
1. India witnesses a high number of cybercrimes originating from Southeast Asia. Analyze the challenges this poses for Indian Law Enforcement Agencies and suggest measures to improve cross-border cooperation in tackling cybercrime. (250 words)
2. What are the key functions of the Indian Cyber Crime Coordination Centre (I4C)? Critically evaluate its effectiveness in combating cybercrime in India. (250 words)
3. The rise of Internet of Things (IoT) devices introduces new vulnerabilities in cyberspace. Analyze the cybersecurity challenges posed by IoT and suggest measures to mitigate these risks. (250 words)
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Previous Year Questions
1. In India, under cyber insurance for individuals, which of the following benefits are generally covered, in addition to payment for the loss of funds and other benefits? (UPSC 2020)
1. Cost of restoration of the computer system in case of malware disrupting access to one's computer
2. Cost of a new computer if some miscreant wilfully damages it, if proved so
3. Cost of hiring a specialized consultant to minimize the loss in case of cyber extortion
4. Cost of defence in the Court of Law if any third party files a suit
Select the correct answer using the code given below:
A.1, 2 and 4 only B.1, 3 and 4 only C.2 and 3 only D.1, 2, 3 and 4
2. Global Cyber Security Index (GCI) 2020 is released by which of the following organizations? (RRB Clerk Mains 2021)
A. World Bank
B. United Nations Development Programme
C. International Telecommunication Union
D. World Economic Forum
E. None of these
Answers: 1-D, 2-C
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Source: The Indian Express
CAPITAL GAIN TAX (CGT)
1. Context
The changes in the long-term capital gains (LTCG) tax regime, particularly the withdrawal of the indexation benefit, has emerged as one of the most contentious decisions announced in the Union Budget for 2024-25
2. What is Capital Gain Tax (CGT)?
Capital Gain Tax is a tax on the profit realized from the sale of a capital asset, such as stocks, bonds, real estate, or other investments. When you sell an asset for more than its purchase price, the difference is considered a capital gain and may be subject to taxation
Types of Capital Gains:
- Short-Term Capital Gains: Gains from assets held for a short period, typically less than one year. These gains are usually taxed at the individual's regular income tax rate.
- Long-Term Capital Gains: Gains from assets held for more than one year. These gains are often taxed at a lower rate than short-term gains, as an incentive for long-term investment.
3. Advantages and Disadvantages of CGT
Advantages:
- Capital gains tax provides a significant source of revenue for governments, which can be used to fund public services such as healthcare, education, infrastructure, and social programs
- It helps in balancing budgets and reducing deficits by tapping into the wealth generated from investments
- Capital gains tax can be structured to be progressive, meaning higher-income individuals who are more likely to benefit from substantial capital gains pay a higher rate, promoting income equality
- Ensures that individuals who gain from the appreciation of their investments contribute a fair share to public finances, as opposed to relying solely on wage earners for tax revenue
- By taxing short-term gains at a higher rate, it can discourage speculative trading and promote more stable, long-term investment behavior
- Reducing excessive speculation can lead to more stable and efficient markets, with prices more accurately reflecting underlying values
- Differential rates for short-term and long-term capital gains can incentivize investors to hold assets for longer periods, potentially leading to more sustainable and thoughtful investment decisions
- Encourages investment in businesses, as individuals may prefer to hold onto their stocks or other investments longer to benefit from lower long-term capital gains rates
Disadvantages:
- Calculating capital gains can be complex, requiring detailed record-keeping and familiarity with tax laws. This complexity can lead to increased administrative burdens for taxpayers
- Individuals and businesses may incur additional costs for tax preparation and professional advice to ensure compliance with CGT regulations
- Investors may be reluctant to sell assets to avoid triggering CGT, leading to inefficient allocation of capital. This "lock-in" effect can prevent the reallocation of resources to more productive investments
- ax considerations can distort investment decisions, leading investors to prioritize tax-efficient strategies over economically optimal ones
- CGT can disproportionately affect entrepreneurs and small business owners, who often rely on the sale of their businesses as a significant source of retirement funds.
4.Way Forward
Capital gains tax (CGT) is a crucial element of modern tax systems, offering significant benefits such as generating government revenue, promoting fairness, and encouraging long-term investment. Its advantages include providing funds for public services, incentivizing stable investment behavior, and contributing to economic stability and equity. However, CGT also presents several challenges, including complexity in compliance, potential distortions in investment decisions, and impacts on specific groups such as entrepreneurs and retirees
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For Prelims: Economic and Social Development-Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc.
For Mains: GSIII: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment
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Previous Year Questions
1.Enumerate the indirect taxes which have been subsumed in the Goods and Services Tax (GST) in India. Also, comment on the revenue implications of the GST introduced in India since July 2017. (UPC CSE GS III 2019)
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Source: Indianexpress
FREE TRADE AGREEMENT
1. Context
The Finance Ministry is developing a new risk management system to prevent foreign exporters from claiming duty concessions under a Free Trade Agreement (FTA) by rerouting goods from a third country, thereby breaching value addition norm
2. About the Free Trade Agreement
- A Free Trade Agreement (FTA) is an agreement between two or more countries to reduce or eliminate barriers to trade, such as tariffs, quotas, and subsidies.
- FTAs can also include provisions on other issues, such as investment, intellectual property, and labour standards.
- The goal of an FTA is to promote trade and economic growth between the signatory countries.
- By reducing or eliminating trade barriers, FTAs can make it easier for businesses to export their goods and services to other countries, which can lead to increased production, employment, and innovation.
3. Types of Free Trade Agreement
- Bilateral Free Trade Agreement (BFTA) involves two countries, aiming to promote trade and eliminate tariffs on goods and services between them. It establishes a direct trade relationship, allowing for a more focused and tailored agreement between the two nations.
- Multilateral Free Trade Agreement (MFTA) Involving three or more countries, an MFTA seeks to create a comprehensive trade bloc, promoting economic integration on a larger scale. It requires coordination among multiple parties, addressing diverse economic interests and fostering a broader regional economic landscape.
- Regional Free Trade Agreement (RFTA) involves countries within a specific geographic region, aiming to enhance economic cooperation and integration within that particular area. It focuses on addressing regional economic challenges and fostering collaboration among neighbouring nations.
- Preferential Trade Agreement (PTA) involves a reciprocal reduction of tariffs and trade barriers between participating countries, granting preferential treatment to each other's goods and services. It allows countries to enjoy trading advantages with specific partners while maintaining autonomy in their trade policies with non-participating nations.
- Comprehensive Economic Partnership Agreement (CEPA) is a broad and advanced form of FTA that goes beyond traditional trade barriers, encompassing various economic aspects such as investment, intellectual property, and services. It aims for a more comprehensive economic partnership, encouraging deeper integration and collaboration between participating countries.
- Customs Union While not strictly an FTA, a Customs Union involves the elimination of tariffs among member countries and the establishment of a common external tariff against non-member nations. It goes beyond standard FTAs by harmonizing external trade policies, creating a unified approach to trade with the rest of the world.
- Free Trade Area (FTA) with Trade in Goods (TIG) and Trade in Services (TIS): Some FTAs specifically emphasize either trade in goods or trade in services, tailoring the agreement to the specific economic strengths and priorities of the participating countries. This approach allows nations to focus on areas where they have a comparative advantage, fostering specialization and efficiency.
4. India's Free Trade Agreements
India is a member of several free trade agreements (FTAs) and is currently negotiating others. India's FTAs have helped to reduce trade barriers and promote trade and economic growth. They have also helped to attract foreign investment and create jobs.
- The South Asian Free Trade Agreement (SAFTA) was signed in 1995 by the seven countries of the South Asian Association for Regional Cooperation (SAARC). SAFTA aims to reduce or eliminate tariffs on trade between the member countries.
- The India-Bangladesh FTA was signed in 2010 and came into force in 2011. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Sri Lanka FTA was signed in 1999 and came into force in 2000. It is a comprehensive FTA that covers goods, services, and investments.
- The India-ASEAN Free Trade Agreement was signed in 2002 and came into force in 2010. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Korea Comprehensive Economic Partnership Agreement (CEPA) was signed in 2010 and came into force in 2011. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Japan Comprehensive Economic Partnership Agreement(CEPA) was signed in 2022 and came into effect in 2023. It is a comprehensive FTA that covers goods, services, and investments.
- The India-UAE Comprehensive Partnership Agreement (CEPA) was signed in 2022 and came into effect in 2022. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Australia Economic Cooperation and Trade Agreement (ECTA) was signed in 2022 and came into effect in 2022. It is a comprehensive FTA that covers goods, services, and investments.
- The India-Malaysia Comprehensive Economic Cooperation Agreement (CECA) was signed in 2010 and aims to enhance economic ties by addressing trade in goods and services, as well as investment and other areas of economic cooperation.
- The India-Thailand Free Trade Agreement was signed in 2003 and focuses on reducing tariffs and promoting trade in goods and services between India and Thailand.
- The India-Singapore Comprehensive Economic Cooperation Agreement (CECA) has been operational since 2005, this agreement covers trade in goods and services, as well as investment and intellectual property.
- The India-Nepal Trade Treaty While not a comprehensive FTA, India and Nepal have a trade treaty that facilitates the exchange of goods between the two countries.
- The India-Chile Preferential Trade Agreement was signed in 2006 and aims to enhance economic cooperation and reduce tariffs on certain products traded between India and Chile.
5. India - UK Free Trade Agreement
5.1. Background
- Both countries have agreed to avoid sensitive issues in the negotiations.
- The interim (early harvest agreement) aims to achieve up to 65 per cent coverage for goods and up to 40 per cent coverage for services.
- By the time the final agreement is inked, the coverage for goods is expected to go up to "90 plus a percentage" of goods.
- India is also negotiating a similar early harvest agreement with Australia, which is supposed to set the stage for a long-pending Comprehensive Economic Cooperation Agreement that both countries have been pursuing for nearly a decade.
- While the commencement of negotiations does mark a step forward in the otherwise rigid stance adopted and when it comes to trade liberalisation, experts point to impediments and the potential for legal challenges going ahead.
5.2. GATT (General Agreement on Trade and Tariffs)
- The exception to the rule is full-scale FTAs, subject to some conditions.
- One rider, incorporated in Article XXIV.8 (b) of GATT, stipulates that a deal should aim to eliminate customs duties and other trade barriers on "Substantially all the trade" between the WTO member countries that are signatories to an FTA.
- For this Agreement, a free-trade area shall be understood to mean a group of two or more customs territories in which the duties and other restrictive regulations of commerce are eliminated on substantially all the trade between the constituent territories in products originating in such territories.
- It is often beneficial to negotiate the entire deal together, as an early harvest deal may reduce the incentive for one side to work towards a full FTA.
- These agreements are not just about goods and services but also issues like investment.
- If you are trying to weigh the costs and benefits, it is always better to have the larger picture in front of you.
- In the case of the early harvest agreement inked with Thailand, automobile industry associations had complained that relaxations extended to Bangkok in the early harvest had reduced the incentive for Thailand to work towards a full FTA.
- Early harvest agreements may serve the function of keeping trading partners interested as they promise some benefits without long delays, as India becomes known for long-drawn negotiations for FTAs.
- Government emphasis on interim agreements may be tactical so that a deal may be achieved with minimum commitments and would allow for contentious issues to be resolved later.
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For Prelims: Free Trade Agreement, India-U.K, Bilateral Free Trade Agreement, G-20 Summit, Agenda 2030, Covid-19 Pandemic, SAARC, General Agreement on Trade and Tariffs, Comprehensive Economic Partnership Agreement, Multilateral Free Trade Agreement, Regional Free Trade Agreement, Preferential Trade Agreement, Customs Union,
For Mains:
1. Evaluate the potential impact of the India-UK FTA on the Indian economy, considering both positive and negative aspects (250 Words)
2. Critically evaluate the significance of Free Trade Agreements (FTAs) in promoting trade and economic growth, considering their potential benefits and drawbacks. (250 Words)
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Previous Year Questions
1. Consider the following countries:
1. Australia
2. Canada
3. China
4. India
5. Japan
6. USA
Which of the above are among the free-trade partners' of ASEAN? (UPSC 2018)
A. 1, 2, 4 and 5 B. 3, 4, 5 and 6 C. 1, 3, 4 and 5 D. 2, 3, 4 and 6
Answer: C
2. Increase in absolute and per capita real GNP do not connote a higher level of economic development, if (UPSC 2018) (a) Industrial output fails to keep pace with agricultural output. Answer: C 3. The SEZ Act, 2005 which came into effect in February 2006 has certain objectives. In this context, consider the following: (2010)
Which of the above are the objectives of this Act? (a) 1 and 2 only (b) 3 only (c) 2 and 3 only (d) 1, 2 and 3 Answer: A 4. A “closed economy” is an economy in which (UPSC 2011) (a) the money supply is fully controlled Answer: D 5. With reference to the “G20 Common Framework”, consider the following statements: (UPSC 2022)
1. It is an initiative endorsed by the G20 together with the Paris Club. 2. It is an initiative to support Low Income Countries with unsustainable debt. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Answer: C
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Source: The Hindu
