KUKI-ZOMI TRIBE
1. Context
Union Home Ministry officials arrived in Churachandpur, as the Kuki-Zo-dominated district was reopened for economic activities, three days after the violent clashes of March 8.
2. About Kuki and Zomi tribes
The Kuki-Zomi people are a diverse group of ethnicities inhabiting the mountainous regions of Northeast India, Myanmar, and Bangladesh. They share a common ancestry and cultural heritage, and their name reflects this shared identity: "Kuki" is a more general term encompassing various sub-tribes, while "Zomi" is a relatively recent term adopted by some Kuki communities to emphasize their distinct identity and cultural heritage.
- The exact origins of the Kuki-Zomi people remain unclear, but linguistic evidence suggests they migrated from Southeast Asia centuries ago. Today, they are found primarily in the Indian states of Manipur, Mizoram, Assam, Nagaland, and Tripura, as well as in Chin State, Myanmar, and the Chittagong Hill Tracts of Bangladesh.
- The Kuki-Zomi people comprise numerous sub-tribes, each with its own distinct dialect and cultural practices. Some of the major sub-tribes include the Hmar, Thadou, Paite, Gangte, Vaiphei, Zou, Aimol, and Anal. These sub-tribes speak various Kuki-Chin languages, which belong to the Tibeto-Burman language family.
- The Kuki-Zomi people have a rich and vibrant culture characterized by strong communal bonds, traditional music and dance, and colorful handicrafts. Their traditional attire is often adorned with intricate beadwork and embroidery, reflecting their artistic skills and cultural pride.
- The Kuki-Zomi people have faced various challenges throughout their history, including displacement, conflict, and marginalization. However, they have demonstrated remarkable resilience and adaptability, preserving their unique culture and traditions despite these hardships.
- In recent years, the Kuki-Zomi people have made significant strides in education, entrepreneurship, and political representation. They are increasingly active in advocating for their rights and cultural identity, and their contributions to the social and economic development of the regions they inhabit are becoming increasingly recognized.
3. Delisting Proposal in Manipur
- The representation calling for the potential removal of specific Kuki and Zomi tribes from the Scheduled Tribes (ST) list in Manipur stems from the ongoing ethnic conflict that has persisted for eight months.
- This conflict, initiated on May 3, 2023, arose following an order from the Manipur High Court directing the State government to recommend the inclusion of Meiteis in the ST list to the Centre.
- As the Centre now requests the State government to examine the representation for the delisting of Kuki and Zomi tribes, there is a risk of exacerbating existing tensions between the valley-based Meitei people and the hills-based Kuki-Zo (ST) people in the State.
- One significant factor driving the Meiteis' demand for ST status is their inability to own land in the forested hill districts, where only STs are permitted to own land.
- Notably, this marks the first instance where members of the Meitei community are advocating for their inclusion in the ST list by contending that specific Kuki and Zomi tribes should not be part of it.
- This development may also have broader implications for the criteria used to designate groups as Scheduled Tribes, a framework that has remained unchanged since its introduction by the Lokur Commission in 1965.
Key Arguments in the Kuki-Zomi Delisting Proposal
- In Mr. Thounaojam’s representation, objections have been raised against the inclusion of three specific entries in the Scheduled Tribes (ST) list of Manipur namely, “Any Mizo(Lushai) Tribes,” “Zou,” and “Any Kuki Tribes.”
- The primary argument put forth for the exclusion of these entries is that they are not considered "indigenous" to the land of Manipur.
- According to the representation, there is no historical mention of these specific tribes residing in Manipur in pre-Independence Censuses.
- Furthermore, the representation contends that the vagueness surrounding the terms "Any Mizo (Lushai) Tribes" and "Any Kuki Tribes" in the ST list has purportedly facilitated illegal immigrants from Myanmar and Bangladesh in wrongfully obtaining benefits intended for Scheduled Tribes in India.
4. About Lokur Commission
The Lokur Commission, officially known as the Advisory Committee on the Revision of Lists of Scheduled Castes and Scheduled Tribes, played a significant role in shaping the landscape of tribal communities in India. Established in 1965 by the Government of India. Chaired by Justice N.N. Lokur, a former Chief Justice of India. Tasked with revising the lists of Scheduled Castes (SCs) and Scheduled Tribes (STs) in a rational and scientific manner.
Criteria for Scheduled Tribes:
- The Commission established five key criteria for identifying a community as an ST:
- Primitive Traits and Distinctive Culture
- Geographical Isolation
- Shyness of Contact with the Community at Large
- Backwardness
- Pre-dominantly Tribal Population
Impact on Tribal Communities
- The Lokur Commission's recommendations led to the addition of several new communities to the ST list, granting them access to educational and economic benefits reserved for STs.
- However, the criteria employed, particularly the emphasis on "primitive traits," have been criticized for being outdated, stereotypical, and potentially hindering social progress for tribal communities.
Criticisms and Debates
- The Commission's classification of certain communities as "primitive" has been challenged for being derogatory and inaccurate.
- The criteria used have been accused of being subjective and open to misinterpretation, leading to inconsistencies and exclusion of deserving communities.
- Debates continue regarding the need for revising or even abolishing the existing criteria altogether, with calls for a more nuanced approach based on social, economic, and cultural factors.
Legacy
- Despite the criticisms, the Lokur Commission's work remains influential in the administration of tribal affairs in India.
- Its report and recommendations form the basis for the current ST list and continue to be referenced in discussions about tribal inclusion and development.
- The Commission's legacy highlights the importance of ongoing discussions about the definition of "tribal" identity and the need for criteria that are fair, inclusive, and responsive to the evolving realities of tribal communities in India.
5. The National Commission for Backward Classes
The National Commission for Backward Classes (NCBC) stands as a crucial advocate for the rights and welfare of Other Backward Classes (OBCs) in India. Established in 1993 and elevated to constitutional status in 2018, the NCBC plays a multi-faceted role in ensuring social justice and equality for OBC communities.
Mandate and Responsibilities
- The NCBC probes cases of discrimination and denial of rights due to OBC status. It monitors the implementation of various government policies and schemes aimed at OBC development.
- The Commission regularly assesses the social, educational, and economic advancement of OBCs. It provides recommendations to the government on policies and programs to bridge existing gaps and address emerging challenges.
- Individuals from OBC communities can approach the NCBC with complaints related to violations of their rights or benefits. The Commission takes necessary action to address these grievances and ensure justice.
- The NCBC conducts research on the diverse OBC communities, analyzing their specific needs and vulnerabilities. It promotes awareness about OBC issues and advocates for their inclusive participation in various spheres of Indian society.
Key Achievements
- The NCBC played a significant role in implementing the Right to Education Act (2009) and ensuring reservation quotas for OBC students in educational institutions.
- The Commission has been instrumental in promoting entrepreneurship and skill development programs among OBC communities, leading to greater economic participation and self-reliance.
- The NCBC has consistently pushed for legislation and policy changes that benefit OBCs, such as reservations in government jobs and promotions, access to healthcare, and land rights.
Challenges and Future Directions
- OBCs are a diverse group with varying needs and levels of marginalization. The NCBC faces the challenge of addressing these internal disparities and ensuring inclusivity within its advocacy efforts.
- The Commission often operates with limited resources, hindering its ability to effectively reach out to remote OBC communities and conduct comprehensive research.
- Ensuring proper implementation of the NCBC's recommendations on the ground remains a crucial challenge. Stronger collaboration with state governments and local authorities is essential.
6. Examining Claims of Non-Indigeneity and Misuse
7. The Way Forward
The Kuki-Zomi delisting proposal in Manipur raises intricate questions about tribal identity, historical claims, and potential consequences for inter-community relations. Examining the arguments, historical context, and the role of institutions like the NCBC is essential for understanding the complexities of this issue and finding solutions that respect the rights and identities of all involved communities.
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For Prelims: kuki-zomi tribes, manipur, National Commission for Backward classes, STs, Lokur Commission, Other Backward Classes
For Mains:
1. Discuss the potential political and developmental implications of the proposed delisting. How might it affect land rights, access to resources, and inter-community relations in Manipur? (250 Words)
2. Assess the role of the National Commission for Backward Classes (NCBC) in addressing the complexities of tribal identity and ensuring social justice for marginalized communities. How can the NCBC be strengthened to better address issues like the Kuki-Zomi delisting proposal? (250 Words)
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Previous Year Questions
1. Who was appointed as the head of the OBC Sub-categorisation Commission?
(Maharashtra Talathi 2019)
A. Justice Geeta Mittal
B. Justice Manjula Chellur
C. Justice Tahilramani
D. Justice G. Rohini
2. Which of the following pairs of list and contents is/are correctly matched? (UPSC CAPF 2019)
1. State list Public health and sanitation
2. Union list Citizenship, naturalisation and aliens
3. Concurrent list Legal, medical and other
Select the correct answer using the code given below:
A. 1 only B. 1, 2 and 3 C. 2 and 3 only D. 3 only
Answers:1-D, 2- B
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Source: The Hindu
GOODS AND SERVICE TAX (GST)
1. Context
A recent “India Business Corruption Survey 2024” presents a troubling picture: 66% of business entities admit to paying bribes, with 54% stating they were coerced to expedite government processes, obtain permits, ensure compliance, or acquire duplicate licences. The problem is most acute in sectors governed by overreaching officials in labour, Goods and Services Tax (GST), income tax, pollution, provident funds, property registration, drug, and health departments.
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:
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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.
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5% Rate:
- This is a lower rate, applicable to essential goods such as certain food items, medical supplies, and other basic necessities.
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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.
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18% Rate:
- A higher rate of 18% is applicable to goods and services such as electronic items, capital goods, and various services.
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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.
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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.
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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.
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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
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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 |
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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)
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Source: Indianexpress
FOREIGN DIRECT INVESTMENT (FDI)
1. Context
India has emerged as the key source country for Foreign Direct Investment (FDI) into Dubai as the desert city has retained its top position as Global FDI Destination in 2024
2. FDI in India
- India's net foreign direct investment (FDI) inflows experienced a decline, decreasing by nearly 31% to $25.5 billion during the first 10 months of the 2023-24 fiscal year. The Finance Ministry attributed this decline to a broader trend of slowing investments in developing countries, while expressing optimism for a potential increase in investments in the current calendar year.
- Although global FDI flows overall saw a 3% rise to approximately $1.4 trillion in 2023, economic uncertainty and elevated interest rates impacted global investment, resulting in a 9% decrease in FDI flows to developing nations, as outlined in the Ministry's February assessment of economic performance.
- Reflecting the global trend of reduced FDI flows to developing countries, gross FDI inflows to India also experienced a slight decline, from $61.7 billion to $59.5 billion during the period from April 2023 to January 2024. In terms of net inflows, the corresponding figures were $25.5 billion versus $36.8 billion. The decrease in net inflows was primarily attributed to an increase in repatriation, while the decline in gross inflows was minimal.
- While a modest uptick in global FDI flows is anticipated for the current calendar year, attributed to a decrease in inflation and borrowing costs in major markets that could stabilize financing conditions for international investment, significant risks persist, according to the Ministry. These risks include geopolitical tensions, elevated debt levels in numerous countries, and concerns regarding further fragmentation of the global economy
3. Foreign Direct Investment (FDI)
Foreign Direct Investment (FDI) refers to the investment made by individuals, businesses, or governments from one country (the home country) into another country (the host country) with the objective of establishing a lasting interest or significant degree of influence in the foreign business or enterprise
Key Aspects:
- FDI involves the transfer of funds and resources from one country to another. This capital inflow can help stimulate economic growth in the host country by providing funds for investment in infrastructure, technology, and other areas.
- FDI often leads to the creation of jobs in the host country. When foreign companies establish subsidiaries or invest in existing businesses, they typically hire local employees, which can help reduce unemployment and improve living standards
- Foreign investors often bring advanced technologies, processes, and management practices to the host country. This technology transfer can enhance the host country's productivity, competitiveness, and industrial capabilities
- FDI can provide access to new markets for both the host country and the investing company. Foreign investors can tap into the host country's consumer base, while the host country gains access to the investing company's global distribution networks.
- FDI can contribute to overall economic development in the host country by promoting industrialization, improving infrastructure, and fostering innovation and entrepreneurship.
4.FDI Routes in India
India has several routes through which Foreign Direct Investment (FDI) can enter the country. These routes are regulated by the Reserve Bank of India (RBI) and the Department for Promotion of Industry and Internal Trade (DPIIT), and they define the conditions, limits, and sectors in which FDI is allowed
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Automatic Route: Under the automatic route, FDI is allowed without the need for prior approval from the RBI or the government. Investors only need to notify the RBI within a specified time frame after the investment is made. This route is available for most sectors, except those that are prohibited or require government approval.
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Government Route: In sectors or activities that are not covered under the automatic route, FDI requires government approval. Investors must apply for approval through the Foreign Investment Facilitation Portal (FIFP) or the Foreign Investment Promotion Board (FIPB), depending on the sector.
4.1. Examples
- Under the automatic route, FDI of up to 100% is allowed for manufacturing of automobiles and components.
- For the manufacturing of electric vehicles (EVs), 100% FDI is allowed under the automatic route.
- In single-brand retail trading, 100% FDI is allowed, with up to 49% allowed under the automatic route. Beyond 49%, government approval is required.
- Multi-brand retail trading (supermarkets and department stores) with FDI is permitted in some states, subject to certain conditions and restrictions. The FDI limit is typically capped at 51%.
- FDI in the insurance sector is allowed up to 74%, with up to 49% under the automatic route. Beyond 49%, government approval is needed
- In the telecom sector, 100% FDI is allowed, with up to 49% under the automatic route. Beyond 49%, government approval is required
- In the defense sector, FDI up to 74% is allowed under the automatic route, with government approval required for investments beyond 49%
- In most segments of the media and broadcasting sector, including print and digital media, 100% FDI is allowed, with up to 49% under the automatic route
4.2.Sectors where FDI Prohibited
- FDI is prohibited in the atomic energy sector, which includes activities related to the production of atomic energy and nuclear power generation.
- FDI is generally prohibited in the gambling and betting industry, which includes casinos and online betting platforms
- FDI is not allowed in the lottery business, except for state-run lotteries
- FDI is prohibited in chit funds, which are traditional Indian savings and credit schemes.
- Nidhi companies are non-banking finance companies (NBFCs) that facilitate mutual benefit funds. FDI is typically not permitted in these entities
- While FDI is allowed in single-brand retail trading, it is generally prohibited in multi-brand retail trading of agricultural products. Some states have allowed it under specific conditions, but this remains a highly regulated area.
- FDI is not allowed in the trading of transferable development rights (TDRs) pertaining to the construction of real estate
5. Foreign Portfolio Investors (FPIs)
Foreign Portfolio Investors (FPIs) refer to foreign individuals, institutions, or funds that invest in financial assets in a country, such as stocks, bonds, mutual funds, and other securities. FPIs are distinct from Foreign Direct Investors (FDIs), who typically make long-term investments in companies and assets to establish a lasting interest
Key Aspects:
- FPIs invest in a country's financial markets, primarily by buying and selling securities traded on stock exchanges and fixed-income instruments like bonds and government securities
- FPIs often seek to diversify their investment portfolios by spreading their investments across different asset classes, sectors, and countries. This diversification helps manage risk and enhance returns
- FPIs have the flexibility to buy and sell securities in the secondary market, providing liquidity to the market and contributing to price discovery
- FPIs typically have a shorter investment horizon compared to Foreign Direct Investors (FDIs). They may engage in short-term trading or hold securities for a few months to a few years.
- FPIs are subject to regulatory frameworks and restrictions in the countries where they invest. These regulations are designed to ensure that foreign investments do not pose undue risks to the local financial markets and economy.
6.Foreign Portfolio vs. Foreign Direct Investment
| FPI (Foreign Portfolio Investment) | FDI (Foreign Direct Investment) |
| FPI involves the purchase of financial assets such as stocks, bonds, mutual funds, and other securities in a foreign country. These investments are typically made with the intention of earning returns on capital and do not result in significant control or ownership of the underlying businesses | FDI entails making an investment in a foreign country with the primary objective of establishing a lasting interest and significant control or influence over a business enterprise or physical assets. FDI often involves the acquisition of a substantial ownership stake (typically at least 10%) in a company or the establishment of new business operations. |
| FPI is generally characterized by a shorter investment horizon. Investors in FPI may engage in trading and portfolio rebalancing activities, and their investments are often more liquid. The focus is on earning capital gains and income from investments. | FDI is characterized by a longer-term commitment. Investors in FDI intend to engage in the day-to-day management or decision-making of the business, contribute to its growth and development, and generate profits over an extended period. |
| FPI investors typically have little to no influence or control over the companies in which they invest. They are passive investors who participate in the financial markets and rely on market dynamics to drive returns. | FDI investors actively participate in the management and decision-making of the businesses they invest in. They often seek to exercise control over company operations and strategy, which may include appointing board members or key executives. |
| FPI investments are often made through financial instruments like stocks, bonds, and securities. Investors may use instruments like mutual funds or exchange-traded funds (ETFs) to gain exposure to foreign markets | FDI investments involve a direct equity stake in a company, either through share acquisition or the establishment of a subsidiary or branch in the host country. FDI can also involve the purchase of real assets such as land, factories, or infrastructure |
| FPI can provide short-term capital inflows, but it may be more susceptible to market volatility and sudden capital outflows. It may not have as direct an impact on job creation and economic development as FDI. | FDI often contributes to long-term economic development by creating jobs, stimulating infrastructure development, transferring technology and expertise, and enhancing the competitiveness of local industries |
| FPI investments are subject to regulations that vary by country and may include foreign ownership limits, reporting requirements, and tax considerations. | FDI is subject to regulations that can be more stringent and may involve government approval, sector-specific conditions, and investment protection measures |
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For Prelims: Economic and Social Development-Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc
For Mains: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment
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Previous Year Questions
1. Both Foreign Direct Investments (FDI) and Foreign Institutional Investor (FII) are related to investment in a country. (UPSC CSE 2011)
Which one of the following statements best represents an important difference between the two?
A.FII helps bring better management skills and technology, while FDI only brings in capital
B.FII helps in increasing capital availability in general, while FDI only targets specific sectors C.FDI flows only into the secondary markets, while FII targets primary market
D.FII is considered to the more stable than FDI
Answer (B)
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Source: indianexpress
DANDI MARCH
1. Context
12 March marks the 95th anniversary of the historic salt march led by Mahatma Gandhi from Sabarmati Ashram to Dandi in Gujarat. The 24-day march from March 12 to April 5, 1930, ended with the defiance of the law after he made salt at Dandi marking the inauguration of the civil disobedience movement.
2. Dandi March and more
- On April 6, 1930, Mahatma Gandhi and his followers openly defied the British salt law by producing salt from seawater. Speaking to a Free Press representative, Gandhi asserted, "With this, I am shaking the foundations of the British Empire."
- This act of defiance ignited a widespread movement across rural India, leading to the arrest of approximately 60,000 individuals. According to the Gandhismriti website, Jawaharlal Nehru, Mahadev Desai, and Gandhi’s son Devdas were among the first to be imprisoned.
- In response, the British government declared the Indian National Congress illegal. Gandhi informed the Viceroy of his intention to march towards the Dharasana Salt Works, but before he could proceed, he was detained and sent to Yeravda Central Jail
- Following Gandhi’s arrest, the leadership of the Dharasana march was taken over by Abbas Tyabji, who was subsequently arrested. Sarojini Naidu then led the march but encountered severe police violence.
- An American journalist, Miller, reported that the police struck the marchers with steel-tipped batons, yet none of them retaliated or even raised an arm in defense. Instead, they fell one after another like dominoes
- The movement rapidly spread to different regions of India. Numerous colonial laws were violated, and people engaged in boycotts of foreign cloth and liquor. The Salt Satyagraha soon evolved into a broader civil disobedience movement.
- In Bengal, activists led by Satish Chandra Dasgupta walked from Sodepur Ashram to Mahisbathan to make salt. In Bombay, K.F. Nariman led a group to Haji Ali Point, where they prepared salt in a nearby park.
- Additionally, in raiyatwari regions, resistance took the form of refusing to pay the village police (chowkidari) tax and withholding rent. Violent clashes with law enforcement occurred, along with large-scale tribal incursions into forest areas in Maharashtra, Karnataka, and the Central Provinces
- In the North-West Frontier Province (NWFP), Khan Abdul Ghaffar Khan, widely known as the Frontier Gandhi, organized a non-violent volunteer force called the Khudai Khidmatgars (Red Shirts), who played a crucial role in the movement.
- The volunteers briefly took control of a town, but the British swiftly regained it, unleashing severe repression. Despite the violence, the Red Shirts adhered to their commitment to non-violence.
- Meanwhile, in Chittagong, a revolutionary group led by Surya Sen launched an attack against the British. They captured the local armory and declared independence under the name "Independent Republican Army." A fierce battle ensued at Jalalabad Hill, resulting in the deaths of several revolutionaries.
- In Tamil Nadu, C. Rajagopalachari spearheaded the Civil Disobedience Movement, organizing a march from Trichinopoly to Vedaranniyam on the Tanjore coast in April 1930 to challenge the salt law. This movement was followed by picketing of foreign cloth stores and anti-liquor campaigns.
- In Malabar, the salt march was led by Nair Congress leader Kelappan, while in Orissa, the movement was directed by Gopabandhu Chaudhary. Similarly, in Bihar, prominent leaders such as Ram Briksha Benipuri, Prof. Abdul Bari, and Acharya Kripalani took charge of the The British-imposed Salt Act of 1882 granted them exclusive control over salt production and distribution.
- Despite India's vast coastal resources, Indians were compelled to purchase salt from British authorities. Recognizing its fundamental importance to every Indian, Gandhi identified salt as the ideal symbol for launching mass civil disobedience against colonial rule
3. Gandhi Irwin Pact
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On January 31, 1930, Mahatma Gandhi presented Lord Irwin with an 11-point charter of demands. These included enforcing total prohibition, adjusting the exchange ratio, cutting land revenue by 50%, eliminating the salt tax, reducing military expenses, lowering the salaries of top government officials, imposing a protective tariff on foreign cloth, passing the Coastal Traffic Reservation Bill, releasing all political prisoners except those convicted of murder, disbanding the Criminal Investigation Department (C.I.D.), and granting firearm licenses for self-defense.
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Since Irwin showed no willingness to address these demands, Gandhi launched the historic Dandi March. Subsequently, on January 25, 1931, Viceroy Irwin announced the unconditional release of Gandhi and other Congress leaders to pave the way for discussions.
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The Gandhi-Irwin Pact, also known as the Delhi Pact, was formalized on March 5, 1931. This agreement led to the release of political prisoners not involved in violent crimes, remission of fines, and restitution of confiscated lands. Government employees who had resigned during the movement were treated leniently. In return, the Congress agreed to withdraw the Civil Disobedience Movement and participate in the Second Round Table Conference later that year
4. Significance of Dandi march
- Imports from Britain saw a significant decline, with textile imports, in particular, being reduced by half. This movement had a broader reach than its predecessors, witnessing large-scale participation from diverse sections of society, including women, peasants, workers, students, and urban groups such as merchants and shopkeepers. This extensive involvement elevated the Congress to an all-India status.
- The support from both the poor and the illiterate, in both rural and urban areas, was extraordinary. For Indian women, the movement proved to be a transformative experience, marking their active participation in public life for the first time.
- Although the Congress officially ended the Civil Disobedience Movement in 1934, its impact was far-reaching. The movement gained international recognition and played a crucial role in advancing the anti-colonial struggle
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For Prelims: Civil Disobedience movement, Dandi March
For Mains: Indian National movement, Civil disobediance movement and its significance
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Previous Year Questions
1.Which one of the following began with the Dandi March? (2009)
(a) Home Rule Movement Answer (c) 2.With reference to the British colonial rule in India, consider the following statements: (2019)
Which of the statements given above are correct? (a) 1 and 2 only Answer (b) 3.The 1929 Session of Indian National Congress is of significance in the history of the Freedom Movement because the (2014) (a) attainment of Self-Government was declared as the objective of the Congress Answer (b) 4.With which one of the following movements is the slogan “Do or Die” associated? (2009) (a) Swadeshi Movement Answer (d) |
Source: Indianexpress
