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DAILY CURRENT AFFAIRS, 10 SEPTEMBER 2024

GOODS AND SERVICE TAX (GST)

 
 
1. Context
 
GST Council under Union Finance Minister discusses whether the rate should be reduced or the levy scrapped altogether, who should be exempted if at all, and how group insurance policies should be treated; mandates 50-day deadline to review the rates; new ministerial group being formed to deliberate on future of GST Compensation Cess
 
2. What is the Goods and Services Tax (GST)?
  • The Goods and Services Tax (GST) is a value-added tax levied on the supply of goods and services at each stage of the production and distribution chain. It is a comprehensive indirect tax that aims to replace multiple indirect taxes imposed by the central and state governments in India.
  • GST is designed to simplify the tax structure, eliminate the cascading effect of taxes, and create a unified national market. Under the GST system, both goods and services are taxed at multiple rates based on the nature of the product or service. The tax is collected at each stage of the supply chain, and businesses are allowed to claim a credit for the taxes paid on their inputs.
  • The GST system in India came into effect on July 1, 2017, replacing a complex tax structure that included central excise duty, service tax, and state-level taxes like VAT (Value Added Tax), among others. The GST Council, consisting of representatives from the central and state governments, is responsible for making decisions on various aspects of GST, including tax rates and rules.
  • GST is intended to create a more transparent and efficient tax system, reduce tax evasion, and promote economic growth by fostering a seamless flow of goods and services across the country. It has a significant impact on businesses, as they need to comply with the new tax regulations and maintain detailed records of their transactions for GST filing

3.Goods and Services Tax (GST) and 101st Amendment Act, 2016

The Goods and Services Tax (GST) in India was introduced through the 101st Amendment Act of 2016. This constitutional amendment was a crucial step in the implementation of GST, which aimed to create a unified and comprehensive indirect tax system across the country.

Here are some key points related to the 101st Amendment Act and GST:

 

  • The 101st Amendment Act was enacted to amend the Constitution of India to pave the way for the introduction of the Goods and Services Tax.
  • It added a new article, Article 246A, which confers concurrent powers to both the central and state governments to levy and collect GST
  • The amendment led to the creation of the GST Council, a constitutional body consisting of representatives from the central and state governments. The council is responsible for making recommendations on GST rates, exemptions, and other related issues
  • The amendment introduced a dual GST structure, where both the central government and the state governments have the power to levy and collect GST on the supply of goods and services
  • For inter-state transactions, the 101st Amendment Act provides that the central government would levy and collect the Integrated Goods and Services Tax (IGST), which would be a sum total of the central and state GST
  • The amendment also included a provision for compensating states for any revenue loss they might incur due to the implementation of GST for a period of five years
The 101st Amendment Act was a critical legislative step that provided the constitutional framework for the implementation of GST in India. It addressed the need for a unified tax system, simplifying the tax structure and promoting a common market across the country. The subsequent establishment of the GST Council has played a pivotal role in the ongoing management and evolution of the GST system in India
 
4. What are the different types of Goods and Services Tax (GST)?

In India, the Goods and Services Tax (GST) is structured into different tax rates based on the nature of the goods and services. As of my last knowledge update in January 2022, the GST rates are divided into multiple slabs. It's important to note that tax rates may be subject to changes, and new amendments could have been introduced since then. As of my last update, the GST rates are as follows:

  • Nil Rate:

    • Some goods and services are categorized under the nil rate, meaning they attract a 0% GST. This implies that no tax is levied on the supply of these goods or services.

  • 5% Rate:

    • This is a lower rate, applicable to essential goods such as certain food items, medical supplies, and other basic necessities.

  • 12% Rate:

    • Goods and services falling in this category attract a 12% GST rate. Items such as mobile phones, processed foods, and certain services fall under this slab.

  • 18% Rate:

    • A higher rate of 18% is applicable to goods and services such as electronic items, capital goods, and various services.

  • 28% Rate:

    • The highest GST rate of 28% is applied to luxury items, automobiles, and certain goods and services that are considered non-essential or fall into the luxury category.

  • Compensation Cess:

    • In addition to the above rates, some specific goods attract a compensation cess, which is levied to compensate the states for any revenue loss during the transition to GST. This is often applied to items like tobacco and luxury cars.

  • Zero Rate:

    • Certain categories of goods and services may be specified as "zero-rated," which means they are effectively taxed at 0%. This is different from the nil rate, as it allows businesses to claim input tax credit on inputs, capital goods, and input services.

  • Exempt Supplies:

    • Some goods and services may be exempt from GST altogether. This means that they are not subject to any GST, and businesses cannot claim input tax credit on related inputs
 
5.Central GST (CGST), State GST (SGST), Union territory GST (UTGST) and Integrated GST (IGST)
 
 
Subject Central GST (CGST) State GST (SGST) Union Territory GST (UTGST) Integrated GST (IGST)
Levied by Central Government Respective State Governments Union Territory Administrations Central Government (on inter-state transactions)
Applicability On intra-state supplies (within the same state) On intra-state supplies (within the same state) On intra-union territory supplies (within the same union territory) On inter-state supplies (across states or union territories)
Rate Determination Determined by the Central Government Determined by the Respective State Government Determined by the Union Territory Administration IGST rate is a sum of CGST and SGST rates
Revenue Collection Collected by the Central Government Collected by the Respective State Government Collected by the Union Territory Administration Collected by the Central Government (on inter-state transactions)
Utilization of Revenue Shared between Central and State Governments Retained by the Respective State Government Retained by the Union Territory Administration Shared between Central and State Governments
Purpose Part of the dual GST structure, meant to cover central taxes Part of the dual GST structure, meant to cover state taxes Applicable in union territories for intra-territory supplies Applied to regulate and tax inter-state supplies
Input Tax Credit (ITC) ITC available for CGST paid on inputs and services ITC available for SGST paid on inputs and services ITC available for UTGST paid on inputs and services ITC available for both CGST and SGST paid on inputs
Tax Jurisdiction Applies within a particular state Applies within a particular state Applies within a particular union territory Applies to transactions across states and union territories
GSTN Portal for Filing Returns Central GSTN portal State-specific GSTN portals UTGSTN portal Integrated GSTN portal
 
 
6.What are the benefits of Goods and Services Tax (GST) in India?
 
The Goods and Services Tax (GST) in India was implemented with the aim of bringing about significant reforms in the indirect tax structure. Several benefits have been associated with the introduction of GST.
 
Here are some key advantages:
 
  • GST replaced multiple indirect taxes levied by the central and state governments, simplifying the tax structure. This streamlined system reduces the complexity of compliance for businesses
  • GST eliminates the cascading effect of taxes, where taxes are levied on top of other taxes. With a seamless credit mechanism, businesses can claim input tax credit on the taxes paid on their purchases, leading to a more transparent and efficient system
  • GST has facilitated the creation of a common national market by harmonizing tax rates and regulations across states. This has reduced trade barriers and promoted the free flow of goods and services throughout the country
  • The GST system has incorporated technology-driven processes, including electronic filing and real-time reporting, making it harder for businesses to evade taxes. This has contributed to increased tax compliance
  • The input tax credit mechanism under GST benefits manufacturers, as they can claim credits for taxes paid on raw materials and input services. This has a positive impact on the cost of production and enhances the competitiveness of Indian goods in the international market
  • GST brings transparency to the taxation system. The online filing of returns and the availability of transaction-level data make it easier for tax authorities to monitor and track transactions, reducing the scope for corruption
  • GST has replaced a complex system of filing multiple tax returns with a more straightforward mechanism. Businesses now need to file fewer returns, reducing the compliance burden
  • The implementation of GST has contributed to an improvement in the ease of doing business in India. The unified tax system has made it simpler for businesses to operate across states and has reduced the paperwork and bureaucratic hurdles associated with tax compliance
  • GST has led to the harmonization of tax rates across states and union territories, minimizing the tax rate disparities that existed earlier. This creates a more predictable tax environment for businesses
7.Goods and Services Tax (GST)-Issues and Challenge
 
  • Despite the intention to simplify the tax structure, the multi-tiered rate system (0%, 5%, 12%, 18%, and 28%) and the inclusion of cess on certain goods have introduced complexity. The classification of goods and services under different tax slabs can be challenging, leading to disputes and confusion
  • The successful implementation of GST relies heavily on technology. Issues such as technical glitches on the GSTN (Goods and Services Tax Network) portal, especially during the initial phases, have caused difficulties for businesses in filing returns and complying with regulations
  • The compliance requirements for businesses under GST, including multiple returns filing, have been perceived as burdensome. Smaller businesses, in particular, may find it challenging to adapt to the new system and comply with the various provisions
  • The transition from the previous tax regime to GST posed challenges, especially for businesses in terms of understanding the new tax structure, reconfiguring accounting systems, and ensuring a smooth transition of credits from the old tax system to the GST system
  • The classification of certain goods and services into specific tax slabs has been a source of contention. Ambiguities in classification have led to disputes and litigations, with businesses seeking clarity on the applicable tax rates
  • The implementation of GST has increased compliance costs for businesses due to the need for sophisticated IT infrastructure, the hiring of tax professionals, and efforts to ensure accurate reporting and filing
  • Challenges related to availing and matching input tax credits have been reported. Timely matching of credits and resolving discrepancies can be cumbersome, leading to concerns about the seamless flow of credit across the supply chain
  • The anti-profiteering provisions were introduced to ensure that businesses pass on the benefits of reduced tax rates to consumers. However, the implementation of anti-profiteering measures has been criticized for its complexity and potential for disputes
  • The periodic changes in the GST return filing system have created challenges for businesses in adapting their processes. Delays and complexities in return filing can affect working capital management
8.Goods and Services Tax Council (GST Council)
 
The Goods and Services Tax Council (GST Council) is a constitutional body in India that makes recommendations on the Goods and Services Tax (GST). It was established under the Constitution (122nd Amendment) Act, 2016, which introduced the GST in India

The GST Council consists of the following members:

  • The Union Finance Minister, who is the Chairperson of the Council.
  • The Union Minister of State in charge of revenue or any other Minister of State nominated by the Union Government.
  • One Minister from each state, nominated by the Governor of that state.
  • The Chief Secretary of each state, ex-officio.
  • If the President, on the recommendation of the Council, so directs, one representative of each Union territory which has a legislature, to be nominated by the Lieutenant Governor of that Union territory.
  • Three to seven members (other than Ministers) to be nominated by the Union Government, of whom at least one member shall be from the field of economics and another from the field of chartered accountancy, legal affairs or public finance
9. Way forward
 
It's important to note that the composition and structure of the GST Council may evolve over time, and there might have been changes since my last update in January 2022. To obtain the latest and most accurate information about the GST Council and its members, it is recommended to refer to official government sources or recent announcements by the relevant authorities

 

For Prelims: Economic and Social Development and Indian Polity and Governance
For Mains: General Studies II: Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein

General Studies III: Inclusive growth and issues arising from it
 
 
Previous Year Questions
 
1.Which of the following are true of the Goods and Services Tax (GST) introduced in India in recent times? (UGC Paper II 2020)
A. It is a destination tax
B. It benefits producing states more
C. It benefits consuming states more
D. It is a progressive taxation
E. It is an umbrella tax to improve ease of doing business
Choose the most appropriate answer from the options given below:
A.B, D and E only
B.A, C and D only
C.A, D and E only
D.A, C and E only
Answer (D)
 
Source: Indianexpress
 

BRICS

 

1. Context

National Security Adviser Ajit Doval will attend a three-day meeting of BRICS and BRICS Plus high-level security officials beginning on Wednesday in St. Petersburg, where he will engage with Russian NSA Sergei Shoigu in their first meeting since Prime Minister Narendra Modi’s visit to Ukraine, as well as China’s top diplomat Wang Yi

2. BRICS

  • The BRICS alliance, composed of Brazil, Russia, India, China, and South Africa, has evolved from an economic consortium to a multifaceted geopolitical force.
  • Emerging economies with considerable potential, these countries together form a collective that challenges traditional power dynamics and fosters cooperation in an increasingly interconnected world.

3. Formation and Evolution

  • BRICS was officially established in 2006, with the objective of fostering economic growth, development, and cooperation among member nations.
  • Over time, it has transformed into a platform for addressing a broader spectrum of global challenges, encompassing political, security, and social concerns alongside economic issues.

4. Geopolitical Relevance

  • Counterbalance to Western Influence: BRICS serves as a counterweight to the dominance of Western powers. The coalition's diverse representation from different regions empowers non-Western countries to assert their interests on the global stage.
  • Global South Unity: BRICS resonates with many countries in the Global South that seek a voice in international affairs. It presents an alternative to the traditional Western-dominated institutions, offering a platform for collaboration and advocacy.

5. Economic Cooperation and Growth

  • Economic Powerhouses: Collectively, BRICS nations account for a substantial portion of the world's population and GDP. Their economic potential has led to discussions on reforming global financial institutions to better reflect contemporary realities.
  • Intra-BRICS Trade: Trade among BRICS members has grown significantly. Initiatives like the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA) bolster financial cooperation and stability within the group.

6. Geopolitical Challenges and Opportunities

  • Diverse Interests: As BRICS expands and diversifies, differing geopolitical interests may arise, potentially leading to internal divisions. However, this diversity also presents opportunities for creative solutions to global challenges.
  • Diplomatic Outreach: BRICS engages with other regional and international organizations, strengthening its influence. The expansion of the group's membership underscores its growing geopolitical relevance.

7. India's Role and Beyond

  • India's Diplomacy: India has played an active role within BRICS, emphasizing issues such as counter-terrorism, cybersecurity, and climate change. Its strategic partnerships contribute to the coalition's expansion and its influence in shaping its direction.
  • Global Impact: BRICS expansion into a broader coalition incorporating West Asian countries like Egypt, Iran, Saudi Arabia, and the UAE signifies a deliberate shift towards greater global political relevance. This expansion highlights BRICS' adaptability to changing geopolitical dynamics.

8. BRICS New Members Dynamics

  • Unanimous Decisions: BRICS decisions require unanimous agreement, reflecting collective decision-making.
  • Geopolitical Partnerships: While Russia and China confront West-related challenges, Brazil, South Africa, and India maintain significant partnerships with the US and Europe.
  • China's Expansion Drive: China spearheads BRICS expansion, prioritizing membership growth.
  • Inclusion of Iran: China and Russia's influence is seen in Iran's inclusion, showcasing their collaboration.
  • Mediation Efforts: China's role reconciles rivals Saudi Arabia and Iran within the alliance.
  • Saudi Arabia's Shift: Saudi Arabia's entry signifies a move towards an independent foreign policy, diverging from the US alliance.
  • Global Significance for Russia and Iran: BRICS membership elevates Russia and Iran's global partnerships, challenging Western dominance.

9. Implications for India

  • Strategic Role: India played a lead role in drafting BRICS membership criteria, demonstrating its strategic influence within the alliance.
  • Expanded Influence: The inclusion of new members who are strategic partners of India enhances its influence within BRICS.
  • Geopolitical Balancing: BRICS expansion allows India to navigate between its ties with the West and its position within this non-Western coalition.
  • Global Advocacy: With more representation and diverse members, India can push for UN reforms and increased Global South representation.
  • Diplomatic Challenges: India might need to exert more effort to assert its influence in an alliance with a wider range of members and potential competing interests.
  • Economic Opportunities: Collaboration with economically strong members like China can lead to enhanced trade and investment prospects for India.
For Prelims: BRICS, Global South Unity, Western Influence, New Development Bank (NDB), and Contingent Reserve Arrangement (CRA).
For Mains: 1. Discuss the Implications of BRICS' Expansion for India's Geopolitical Positioning and Influence within the Alliance.
2. Analyze India's Role in Shaping BRICS' Membership Criteria and Its Strategic Significance in the Expanded Coalition.
 

Previous year Questions

1. With reference to a grouping of countries known as BRICS, consider the following statements: (UPSC 2014)
1. The First Summit of BRICS was held in Rio de Janeiro in 2009.
2. South Africa was the last to join the BRICS grouping.
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. With reference to BRIC countries, consider the following statements: (UPSC 2010)
1. At present, China's GDP is more than the combined GDP of all three other countries.
2. China's population is more than the combined population of any two other countries.
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: A
 
3. The 'Fortaleza Declaration', recently in the news, is related to the affairs of  (UPSC 2015)
A. ASEAN
B. BRICS
C. OECD
D. WTO
Answer: B
Source: The Hindu
 

MONKEYPOX 

 
 
 
1. Context
 

The Union Health Ministry confirmed that a person had tested positive for Mpox caused by the clade 2 strain of the virus.

“The previously suspected case of Mpox has been verified as a travel-related infection,” the Ministry said in a statement.

 
2. What is mpox?
 
  • Mpox, also known as monkeypox, is an uncommon zoonotic disease (a disease transmitted from animals to humans) caused by the monkeypox virus, which is part of the Orthopoxvirus genus within the Poxviridae family.
  • This family of viruses also includes those responsible for diseases like smallpox and cowpox.
  • The mpox virus spreads to humans through physical contact with an infected person, such as through direct exposure to infected blood, bodily fluids, or lesions on the skin or mucous membranes.
  • Additionally, mpox can be transmitted via contact with contaminated objects, bites or scratches from infected animals, or through activities like hunting, handling, or consuming infected animals.
  • There are currently two genetic groups, or clades, of mpox: clade I, primarily found in central and eastern Africa, and clade II, which is associated with more cases in western Africa.
  • Although the exact source of mpox is still unclear, small mammals such as squirrels and monkeys are believed to be potential carriers
3. Symptoms
 
  • In humans, the mpox virus typically manifests as rashes, which can progress into fluid-filled blisters that may be itchy or painful. Other symptoms include fever, sore throat, headache, muscle aches, back pain, low energy, and swollen lymph nodes.
  • Individuals who are infectious can transmit the virus to others until all sores have healed and a new layer of skin has formed.
  • Symptoms of mpox generally appear within a week of infection but can start anywhere from 1 to 21 days after exposure.
  • The symptoms usually last between 2 to 4 weeks. While most people experience milder symptoms, some may develop more severe illness and require medical care.
  • Children, pregnant women, and immunocompromised individuals are at higher risk of contracting the virus
 
4. Treatment
 
  • At present, there is no specific treatment for mpox. The World Health Organization (WHO) suggests supportive care, such as using medication to manage pain or fever when necessary, but symptoms generally resolve on their own.
  • Individuals with mpox are encouraged to stay hydrated, eat well, get sufficient rest, avoid scratching their skin, and care for their rash by cleaning their hands before and after touching lesions, keeping the affected skin dry, and leaving it uncovered.
  • An antiviral called tecovirimat, originally developed for smallpox, was approved by the European Medicines Agency in January 2022 for treating mpox under exceptional circumstances, though experience with its use is limited.
  • Three vaccines — MVA-BN, LC16, and OrthopoxVac — initially developed for smallpox, are also approved for preventing mpox. However, vaccination is recommended only for individuals at risk, and WHO does not advise mass vaccination against mpox
5. Current Outbreak
 
  • Mpox infections have been reported closer to home, with Pakistan confirming three cases, as announced by the health department of Khyber Pakhtunkhwa province on August 16. Additionally, Sweden recently reported the first case of the clade I variant of mpox outside Africa.
  • According to the World Health Organization (WHO), over 15,600 cases and 537 deaths have been recorded this year, with the outbreak impacting 116 countries. The Democratic Republic of the Congo and its neighboring countries have been the hardest hit. In June 2024, 19% of reported cases were in the Americas, while 11% were in Europe.
  • The WHO has elevated the global mpox outbreak to an acute grade 3 emergency, the highest level under the WHO Emergency Response Framework. A grade 3 emergency demands a significant to maximum response from the WHO.
  • A Public Health Emergency of International Concern (PHEIC) is declared for extraordinary events involving the international spread of disease, potentially necessitating a coordinated global response.
  • The PHEIC, the highest alert level issued by the WHO, aims to mobilize immediate international action to prevent the event from escalating into a pandemic
6. Difference between Smallpox, monkeypox, chickenpox
 
Characteristic Smallpox Chickenpox Mpox
Causative Virus Variola virus (Orthopoxvirus genus) Varicella-zoster virus (Herpesvirus family) Monkeypox virus (Orthopoxvirus genus)
Mode of Transmission Direct contact, respiratory droplets, contaminated objects Direct contact, respiratory droplets, airborne particles Direct contact with infected animals or humans, contaminated materials
Incubation Period 7-17 days 10-21 days 1-21 days
Initial Symptoms High fever, fatigue, severe headache, back pain Mild fever, fatigue, headache, body aches Fever, headache, muscle aches, back pain, swollen lymph nodes
Rash Progression Begins on face and spreads; lesions progress uniformly Starts on face/trunk, spreads; lesions at different stages Begins on face and extremities; lesions progress uniformly
Lesion Characteristics Deep, firm, round vesicles; develop into pustules Superficial, itchy blisters Fluid-filled blisters; can be itchy or painful
Severity Often severe, high mortality rate (up to 30%) Generally mild, can be severe in adults Typically mild to moderate, can be severe in vulnerable populations
Complications Scarring, blindness, arthritis, death Bacterial infections, pneumonia, encephalitis Pneumonia, sepsis, encephalitis, death (rare)
Vaccine Availability Yes, smallpox vaccine (eradicated globally) Yes, Varicella vaccine Yes, smallpox vaccines (MVA-BN, LC16, OrthopoxVac) for prevention
Global Status Eradicated (last case in 1977) Common worldwide Endemic in some regions, outbreaks reported globally
Treatment No specific treatment; supportive care, antiviral (Tecovirimat) for severe cases Antivirals (Acyclovir), supportive care Supportive care, Tecovirimat under special circumstances
 
7. Way Forward
 
The recent surge in mpox cases worldwide, including in regions previously unaffected, underscores the urgent need for global vigilance and coordinated public health efforts. The WHO's classification of the outbreak as a grade 3 emergency and the declaration of a Public Health Emergency of International Concern highlight the severity of the situation. While cases have been reported in various countries, with significant impacts in regions like the Democratic Republic of the Congo, the spread to other areas, such as Pakistan and Sweden, signals that mpox remains a global health challenge. It is crucial for governments, healthcare providers, and the public to continue monitoring the situation, promote preventive measures, and ensure preparedness to mitigate the potential for further spread and escalation
 
 
 
 
For Prelims: Current events of national and international importance
 
For Mains: GS III - Science & technology
 
Previous Year Questions

1.The term ‘ACE2’ is talked about in the context of (UPSC CSE 2021)

(a) genes introduced in the genetically modified plants

(b) development of India’s own satellite navigation system

(c) radio collars for wildlife tracking

(d) spread of viral diseases

Answer (d)

1.Which of the following are the reasons for the occurrence of multi-drug resistance in microbial pathogens in India? (UPSC CSE 2019)

  1. Genetic predisposition of some people
  2. Taking incorrect doses of antibiotics to cure diseases
  3. Using antibiotics in livestock farming
  4. Multiple chronic diseases in some people

Select the correct answer using the code given below.

(a) 1 and 2

(b) 2 and 3 only

(c) 1, 3 and 4

(d) 2, 3 and 4

Answer (b)

Mains

1.Critically examine the role of WHO in providing global health security during the Covid-19 pandemic. (2020)
Source: The Hindu
 

MICRO SMALL MEDIUM ENTERPRISES (MSME)

 
 
 
1. Context
India’s Micro Small and Medium Enterprises (MSMEs) could be in for a fresh shock in the form of cost increases and supply disruptions, thanks to new stiff safety norms prescribed by the government for most machinery and electrical equipment, including pumps, cranes and compressors, a Global Trade Research Initiative (GTRI) report has warned
 
2. Definition of 'MSME'
Micro, Small, and Medium Enterprises (MSMEs) are businesses that are characterized by their relatively small size in terms of employees, assets, and revenue. These enterprises play a crucial role in economies around the world, contributing to employment generation, economic growth, and innovation. The definitions of MSMEs can vary from country to country, but there are general guidelines provided by international organizations like the World Bank and the United Nations.

The definition of MSME varies from country to country. In India, an MSME is defined as a business with:

  • Micro enterprise: Up to 10 employees and an investment of up to INR 1 crore (approximately USD 130,000)
  • Small enterprise: Up to 50 employees and an investment of up to INR 10 crore (approximately USD 1.3 million)
  • Medium enterprise: Up to 200 employees and an investment of up to INR 50 crore (approximately USD 6.5 million)
3. Importance of MSME's

The importance of MSMEs in an economy includes:

  • Employment Generation: MSMEs are significant contributors to employment, especially in economies with limited opportunities for large-scale industrial employment.

  • Local Economic Development: MSMEs often operate at a local level, contributing to the development of local communities and economies.

  • Innovation and Entrepreneurship: Many innovative ideas and entrepreneurial ventures start as MSMEs. They have the flexibility to adapt quickly to changing market demands and experiment with new business models.

  • Diversity and Resilience: A diverse ecosystem of MSMEs can contribute to a more resilient economy by reducing dependence on a few large corporations.

  • Contributions to GDP: The combined contributions of MSMEs to a country's Gross Domestic Product (GDP) can be significant, even if individual businesses are relatively small.

4. New Criteria for MSME's

The new criteria for the classification of micro, small and medium enterprises (MSMEs) in India was notified by the Ministry of Micro, Small and Medium Enterprises (MSME) on June 1, 2020. The new criteria are based on the investment in plant and machinery or equipment and the annual turnover of the enterprise.

The following are the new criteria for the classification of MSMEs:

  • Micro enterprise: An enterprise with:
    • Investment in plant and machinery or equipment not more than Rs.1 crore (approximately USD 130,000)
    • Annual turnover not more than Rs. 5 crore (approximately USD 650,000)
  • Small enterprise: An enterprise with:
    • Investment in plant and machinery or equipment not more than Rs.10 crore (approximately USD 1.3 million)
    • Annual turnover not more than Rs. 50 crore (approximately USD 6.5 million)
  • Medium enterprise: An enterprise with:
    • Investment in plant and machinery or equipment not more than Rs.50 crore (approximately USD 6.5 million)
    • Annual turnover not more than Rs. 250 crore (approximately USD 3.25 million)
5. Challenges faced by MSME's

Micro, small, and medium enterprises (MSMEs) play a vital role in the Indian economy, accounting for over 90% of all enterprises and employing over 40% of the workforce. However, MSMEs face a number of challenges, including:

  • Access to finance: MSMEs often find it difficult to obtain loans from banks and other financial institutions due to their lack of collateral and track record. This can make it difficult for them to expand their businesses or invest in new technologies.
  • Lack of skills: MSMEs often lack the skills and knowledge needed to compete in the global market. This can make it difficult for them to develop new products and services, or to adopt new technologies.
  • Competition from large businesses: MSMEs often face competition from large businesses, which have more resources and economies of scale. This can make it difficult for MSMEs to compete on price or quality.
  • Bureaucracy: MSMEs often face a number of bureaucratic hurdles, such as obtaining licenses and permits. This can be time-consuming and costly, and can discourage entrepreneurs from starting or expanding their businesses.
  • Infrastructure constraints: MSMEs often face infrastructure constraints, such as poor roads and electricity supply. This can make it difficult for them to transport their goods and services, or to operate their businesses efficiently.
  • Unstable government policies: MSMEs are often affected by unstable government policies, such as changes in tax rates or import duties. This can make it difficult for them to plan for the future and make investment decisions.
6. Government Schmes for MSME's
 

Here are some of the prominent schemes and programs for MSMEs by the Union Government of India:

  1. Micro Units Development and Refinance Agency (MUDRA) Yojana:

    • MUDRA Yojana aims to provide financial support to small and micro enterprises by offering loans through various financial institutions. It consists of three categories: Shishu, Kishor, and Tarun, based on the loan amount.

  2. Pradhan Mantri Mudra Yojana (PMMY):

    • PMMY is a scheme to provide financial assistance for the establishment, expansion, and modernization of MSMEs. It offers loans without collateral security up to a certain limit.

  3. Credit Linked Capital Subsidy Scheme (CLCSS):

    • CLCSS provides capital subsidy to MSMEs for technology upgradation, modernization, and replacement of their plant and machinery to improve competitiveness.

  4. Zero Defect Zero Effect (ZED) Certification Scheme:

    • ZED certification encourages MSMEs to adopt best practices and quality standards to enhance product quality while minimizing environmental impact.

  5. Make in India Initiative:

    • The Make in India campaign encourages domestic and foreign companies to manufacture products in India, fostering the growth of the manufacturing sector and MSMEs.

  6. Stand Up India Scheme:

    • This scheme aims to promote entrepreneurship among women and Scheduled Caste/Scheduled Tribe communities by providing loans for starting new enterprises.

  7. Technology Upgradation Support for MSMEs (TEQUP):

    • TEQUP focuses on supporting MSMEs in adopting modern technology and upgrading their production processes to improve quality and competitiveness.

  8. National Manufacturing Competitiveness Programme (NMCP):

    • NMCP includes various components such as Lean Manufacturing Competitiveness Scheme, Design Clinic Scheme, and more, aimed at enhancing the competitiveness of the manufacturing sector, including MSMEs.

  9. Entrepreneurial and Managerial Development of SMEs (EMD-SME):

    • EMD-SME focuses on providing training, capacity-building, and skill development to entrepreneurs and managers of MSMEs.

  10. Skill India Initiative:

    • While not exclusively for MSMEs, the Skill India program aims to provide skill training to individuals, including those in the MSME sector, to improve employability and entrepreneurship.

  11. Export Promotion Capital Goods (EPCG) Scheme:

    • The EPCG scheme allows MSMEs to import capital goods for the purpose of upgrading technology and enhancing export competitiveness with certain duty benefits.

  12. Udyog Aadhaar Registration:

    • The Udyog Aadhaar registration process simplifies the process of registering and obtaining various benefits for MSMEs, such as easier access to credit and government schemes.
7. Way forward
Addressing these challenges often requires a combination of government support, industry initiatives, access to finance, skill development programs, technology adoption, networking opportunities, and tailored solutions that take into account the unique needs of MSMEs.
 

Previous year Questions

1. Consider the following statements with reference to India: (UPSC 2023)
1. According to the 'Micro, Small and Medium Enterprises Development (MSMED) Act, 2006', the 'medium enterprises' are those with investments in plant and machinery between Rs. 15 crore and Rs. 25 crore.
2. All bank loans to the Micro, Small, and Medium Enterprises qualify under the priority sector.
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. Which of the following can aid in furthering the Government's objective of inclusive growth? (UPSC 2011)
1. Promoting Self-Help Groups
2. Promoting Micro, Small and Medium Enterprises
3. Implementing the Right to Education Act
Select the correct answer using the codes given below:
A. 1 only
B. 1 and 2 only
C. 2 and 3 only
D. 1, 2 and 3
Answer: D
 Source: The Hindu
 

SATURN

 
 
1. Context
NASA confirmed in 2018 that Saturn will indeed lose its rings for good. In fact Saturn’s rings are constantly being pulled towards the planet because of its gravity and magnetic field.
 
2. About Saturn
Saturn is the sixth planet from the Sun in our solar system and the second-largest, after Jupiter. It is a gas giant with a prominent ring system that consists of nine continuous main rings and three discontinuous arcs. The planet is easily visible with the naked eye, and its rings make it one of the most iconic objects in our night sky.
Key Characteristics of Saturn:

Physical Characteristics:

    • Saturn is primarily composed of hydrogen and helium, similar to Jupiter.
    • It has a diameter of about 116,464 kilometers (72,366 miles) and is known for its low density.

Ring System:

    • Saturn's ring system is one of the most extensive and complex in the solar system.
    • The rings are made up of numerous particles, ranging in size from tiny dust grains to larger boulders.
    • The exact origin of the rings is not fully understood, but they are thought to be the remnants of moons, comets, or other objects that were shattered by tidal forces.

Moons:

    • Saturn has a diverse array of moons, with over 80 confirmed natural satellites.
    • The largest moon, Titan, is the second-largest natural satellite in the solar system, after Jupiter's Ganymede.
    • Titan is unique among Saturn's moons because it has a thick atmosphere, and it has been studied extensively by spacecraft, including the Cassini-Huygens mission.

Exploration:

    • The Cassini-Huygens spacecraft, a joint NASA-ESA-ASI mission, provided valuable data about Saturn and its moons. The Cassini orbiter studied the planet and its system for over 13 years, and the Huygens probe landed on Titan in 2005.
    • Other missions, such as Voyager 1 and 2, also provided significant information about Saturn during their flybys in the early 1980s.
3. Saturn and its rings
Saturn's rings are one of the most distinctive features of this gas giant and have captivated astronomers and skywatchers for centuries

Ring Formation:

    • Saturn's rings are composed primarily of ice particles, water ice, and rocky material.
    • The exact origin of the rings is not definitively known, but they are believed to be remnants of moons, comets, or other objects that were shattered by tidal forces.

Ring Structure:

    • Saturn's ring system is divided into several major ring groups, labeled alphabetically in the order of their discovery. The main rings are A, B, and C, with the Cassini Division separating the A and B rings.
    • The rings are surprisingly thin, with a thickness that varies but is generally just tens of meters.

Ring Dynamics:

    • The rings are not solid structures but consist of countless individual particles, ranging in size from tiny dust grains to larger chunks.
    • The particles in the rings orbit Saturn independently and collectively create the appearance of a continuous, flat disk.

Tilt and Changing Perspective:

    • Similar to Earth, Saturn has an axial tilt. Its axis of rotation is tilted by about 26.7 degrees.
    • As Saturn orbits the Sun, the tilt of its rings becomes apparent from Earth, creating a dynamic and changing perspective for observers. This tilt gives rise to a nodding effect as seen from Earth.

Visibility from Earth:

    • Saturn is visible to the naked eye from Earth, and its rings are a prominent feature even in small telescopes.
    • The visibility of the rings changes over time due to their tilt, providing different views to observers on Earth.

Potential Future Changes:

    • According to NASA, there is a possibility that Saturn might lose its rings over the next several hundred million years. The rings are gradually being pulled into the planet by its gravity, forming a dusty rain of ice particles under the influence of Saturn's magnetic field.

Exploration:

    • Spacecraft like Voyager 1 and 2 provided valuable data on Saturn and its rings during their flybys in the early 1980s.
    • The Cassini-Huygens mission, which concluded in 2017, provided an in-depth study of Saturn, its rings, and its moons.
4. Invisible rings of Saturn
 
Saturn rings.
  • Similar to Earth's axial tilt of 23.5 degrees, Saturn's axis of rotation is inclined at an angle of 26.7 degrees. Notably, Saturn's extensive ring system is also tilted concerning the plane of its orbit around the Sun.
  • Consequently, as Saturn completes its orbit, it appears to nod upward and downward when observed from Earth, resulting in a changing perspective of its rings.
  • Saturn's orbital period around the Sun is 29.5 years, and every 13 to 15 years, there is an alignment where the edge of its rings directly lines up with Earth.
  • Given the slim nature of the rings, typically just tens of meters thick in most areas, when they are in this specific position, they reflect minimal light, rendering them nearly invisible.
  • This alignment phenomenon makes it challenging to observe the rings during these periods, as explained by Vahe Peroomian, a professor of physics and astronomy at the University of Southern California

5.Disappearance of rings in future

As per a 2018 publication from the National Aeronautics and Space Administration (NASA), there is a likelihood that Saturn will shed its rings entirely within the next 300 million years, possibly even sooner. The anticipated cause for this phenomenon is the gravitational pull of the planet, drawing the rings inward. This gravitational influence, combined with Saturn's magnetic field, is causing a gradual descent of the rings in the form of a dusty rain of ice particles, as detailed in the report.

Source: Indianexpress

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