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DAILY CURRENT AFFAIRS, 24 SEPTEMBER 2025

PARIS AGREEMENT

1. Context

The NDCs are of particular significance this year because Brazil, which assumes the COP presidency in Belém, has stressed that a major effort this year will be to assess what hindered countries from achieving their stated NDCs.

All commitments by countries, even if achieved perfectly, cannot stop the globe from heating to an average of 3 degrees Celsius by the century – well short of the Paris Agreement goals.

2. What is Paris Agreement?

  • Paris Agreement is a multinational agreement that was signed as part of the UNFCCC with the intention of reducing and mitigating greenhouse gas emissions.
  • 196 nations ratified the climate change agreement at the Conference of the Parties (COP 21) in Paris in December 2015. It is an international agreement that is binding on all parties involved.
  • Achieving the long-term temperature goal was the purpose of the Paris Climate Accord. To attain a world without greenhouse gas emissions by the middle of the century, nations strive to peak global greenhouse gas emissions as soon as possible.
  • The Paris Climate Accord's major objective is to keep global warming well below 2° Celsius and ideally below 1.5° Celsius in comparison to pre-industrial levels.
  • The Paris Agreement is a watershed moment in the multilateral climate change process because it brings all nations together for the first time in a binding agreement to undertake ambitious efforts to combat climate change and adapt to its effects.

3. COP21

  • To keep the rise in the average world temperature to well under 2°C above pre-industrial levels. To continue making efforts to keep global warming to 1.5°C over pre-industrial levels, knowing that doing so would greatly lessen the dangers and effects of climate change.
  • The Agreement also mentions achieving the global peaking of emissions by the middle of the century while taking into account the fact that developing nation Parties will have a longer peaking period.

4. What are NDCs

  • At the Conference of the Parties (COP21) of the U.N. Framework Convention on Climate Change (UNFCCC), which took place in Paris in December 2015, nations from all over the world pledged to establish a new global climate agreement by that time.
  • In advance of a new international agreement, nations have committed to publicly state their Intended Nationally Determined Contributions or the climate activities they plan to take after 2020.
  • The 2015 agreement's ambitious goals and whether the world is put on a course toward a low-carbon, climate-resilient future will be largely determined by the INDCs.
  • The Intended Nationally Determined Contribution (INDC) of India has also been submitted to the United Nations Framework Convention on Climate Change.
  • Countries communicate actions they will take to reduce greenhouse gas emissions to meet the Paris Agreement's goals in their NDCs.
  • Countries also communicate actions they will take to build resilience to adapt to the effects of rising temperatures in their NDCs.
Image Source: The Hindu

5. Highlights of the report on the performance of the Paris Agreement

  • After the signing of the Agreement, the last eight years (2015-2022) have consecutively been the warmest years on record globally.
  • The situation could have been far worse if the La Nina weather event had not occurred in the past three years, which has a cooling effect on the weather system.
  • Globally updated Nationally Determined Contributions (NDCs) to limit global warming to 1.5 degrees Celsius have failed even to achieve a 2-degree Celsius target.
  • The Paris Agreement has not been able to equitably phase out fossil fuels predominantly responsible for the climate crisis.
  • Neither the NDCs nor the disaster risk reduction and climate risk management plans are in place to combat climate-induced extreme weather phenomena.

6. A series of climate records fell over in 2022, the report showed. 

  • Global mean temperature rising: The global mean temperature in 2022 was 1.15°C, ranging from 1.02°C to 1.28°C above the 1850–1900 average. This was the highest on record for the past eight years. The value is about 0.2°C higher than the statistic before 2015. The pre-industrialisation era is considered a benchmark as there was no significant anthropogenic emission at the time.
  • Record melting of Antarctica ice: Sea ice in Antarctica dropped to an all-time low, 1.92 million square kilometres, on February 25, 2022. This was almost a million sq km below the mean of the last three decades till 2020. 
  • Greenhouse gases surged: The levels of three major greenhouse gases — carbon dioxide, methane, and nitrous oxide — continued to increase in 2022. The data shows that growth rates of all three gases have increased around 20 per cent compared to 2011-15 levels.
  • Sea level rise doubled: Global mean sea level continued to rise in 2022. It has doubled to 4.62 millimetres per year during 2013–2022 from 2.27 mm recorded in the first decade of the satellite record (1993–2002). The rate of increase quickened after 2015. Ocean heat content, which measures this gain in energy, reached a new observed record.
  • Record thinning of glaciers: Long-term observational data is available for glaciers, which were found to have thinned over 1.3 metres between October 2021 and October 2022. The loss is much larger than before. The cumulative thickness loss since 1970 amounts to almost 30 metres.
  • More than half of the oceans saw marine heatwaves in 2022:  Despite continuing La Nina conditions, 58 per cent of the ocean surface experienced at least one marine heatwave during 2022. 
  • Heatwaves killed 15,000 in Europe: Record-breaking heatwaves affected China and Europe during the summer, with excess deaths associated with the heat in Europe exceeding 15000. Casualties were reported across Spain, Germany, the United Kingdom, France and Portugal.
  • 1,600 suffered deaths from weather extremes in India: India suffered from significant flooding at various stages during monsoon, particularly in the northeast in June, with over 700 deaths reported from flooding and landslides and a further 900 from lightning.
For Prelims: Paris Agreement, Conference of the Parties (COP 21), World Meteorological Organization (WMO), UNFCCC, Nationally Determined Contributions (NDCs).
For Mains: 1. Describe the major outcomes of the 26th session of the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC). What are the commitments made by India in this conference? (UPSC 2021)

 

Previous year Question

1. With reference to the Agreement at the UNFCCC Meeting in Paris in 2015, which of the following statements is/are correct? (UPSC 2016)

1. The Agreement was signed by all the member countries of the UN and it will go into effect in 2017.

2. The Agreement aims to limit greenhouse gas emissions so that the rise in average global temperature by the end of this century does not exceed 2°C or even 1.5°C above pre-industrial levels.

3. Developed countries acknowledged their historical responsibility for global warming and committed to donate $1000 billion a year from 2020 to help developing countries cope with climate change.
 
Select the correct answer using the code given below
A. 1 and 3 only
B.  2 only
C.  2 and 3 only
D.  1, 2 and 3
Answer: B
 
2. The term ‘Intended Nationally Determined Contributions’ is sometimes seen in the news in the context of ( UPSC 2016)

A. pledges made by the European countries to rehabilitate refugees from the war-affected Middle East

B. plan of action outlined by the countries of the world to combat climate change

C. capital contributed by the member countries in the establishment of the Asian Infrastructure Investment Bank

D. plan of action outlined by the countries of the world regarding Sustainable Development Goals

Answer: B

Source: Down to Earth

 

SUB QUOTAS OF SCHEDULED CASTE (SC)

 
 
1. Context
The Andhra Pradesh Assembly has passed a Bill to implement sub-classification among the State’s 59 Scheduled Castes (SCs), aiming to ensure a fairer distribution of reservation benefits in education and public employment.
 
2. 2004 Judgement
 
  • The Andhra Pradesh Scheduled Castes (Rationalisation of Reservation) Ordinance, 1999, and the subsequent Act created four groups—A, B, C, and D—within the Scheduled Castes, each allocated different reservation percentages.
  • This sub-classification aimed to address the varying levels of advancement among the communities listed as Scheduled Castes and to ensure representation for the less advanced castes. The Andhra Pradesh High Court upheld the Act against legal challenges.
  • However, the Supreme Court's Constitution Bench of five judges declared this sub-classification unconstitutional. In the November 2004 judgment in E.V. Chinnaiah vs State of Andhra Pradesh, the Court emphasized that under Article 341 of the Constitution, the President is responsible for notifying the Scheduled Castes list, which can only be altered by an act of Parliament, not by further notifications.
  • The Bench ruled that once listed under Article 341, Scheduled Castes form a single homogeneous class, and state legislatures lack the authority to further classify them into separate groups
 
3. Latest Judgement
 
  • Six of the seven judges have now determined that the 2004 ruling was incorrect. Chief Justice D.Y. Chandrachud, along with Justice Manoj Mishra, concluded that SC communities should not be considered a homogeneous class as previously judged.
  • He contested the notion that listing SCs creates a presumption of uniform status among them. While SCs share a common constitutional identity due to their shared experiences of untouchability and discrimination, this does not negate the diversity within these communities.
  • Citing both historical and empirical evidence, Chief Justice Chandrachud demonstrated that significant differences exist among SC communities, with instances where some SC groups have faced discrimination from others within the same category.
  • Thus, sub-classification is permissible if it is based on a clear and rational distinction with a valid purpose. This sub-classification is subject to judicial review, and the State must justify it with empirical data.
  • Chief Justice Chandrachud also clarified that sub-classification does not alter the Presidential list of SCs and does not breach Article 341, which gives the President exclusive authority to notify Scheduled Castes.
  • Article 341 serves to define who falls under the SC category, but states have the autonomy to recognize varying degrees of backwardness and provide special provisions or extend reservation benefits accordingly.
  • The new ruling is anticipated to encourage states to allocate sub-quotas for the most marginalized Dalit sections who have not benefited from reservations to date.
  • In her dissent, Justice Bela Trivedi upheld the Chinnaiah doctrine, arguing that sub-classification of a homogeneous class is impermissible and constitutes an alteration of the President’s list under Article 341
4.Exclusion of Creamy layer
 
  • The creamy layer concept is currently applicable only to Other Backward Classes (OBCs) and has not been extended to Dalit communities. Justice B. R. Gavai, who concurs with the Chief Justice in a separate opinion, elaborated on the need to identify more advanced members within the Scheduled Castes and exclude them from affirmative action benefits.
  • Justice Gavai argued that treating all members of a community equally may not be just, especially when considering differences in social and economic status.
  • He questioned whether the children of IAS or IPS officers should be given the same benefits as children from remote villages within the same community, given their differing access to resources and opportunities.
  • He emphasized that combining such disparate groups under the same category would undermine the principle of equality. However, he also noted that the criteria for excluding the creamy layer among SCs should differ from those used for OBCs. Three other judges supported his perspective. Despite this, their opinions do not mandate the government to apply the creamy layer concept to SCs, as this issue was not directly addressed in the case at hand
 
5. Way forward
 
The ongoing judicial debates and rulings concerning the classification and reservation policies for Scheduled Castes (SCs) and Other Backward Classes (OBCs) reflect a nuanced approach to addressing socio-economic inequalities within these groups. The Supreme Court's recent judgments, which have revisited earlier rulings, highlight the complex interplay between ensuring equitable access to affirmative action benefits and recognizing the diverse needs within these communities
 
 
For Prelims: Current events of national and international importance
For Mains: GS-II: Government policies and intervention
 
Previous Year Questions

Prelims

1.Consider the following statements about Particularly Vulnerable Tribal Groups (PVTGs) in India: (UPSC CSE 2019)

1. PVTGs reside in 18 states and one Union Territory.

2. A stagnant or declining population is one of the criteria for determining PVTG status.

3. There are 95 PVTGs officially notified in the country so far.

4. Irular and Konda Reddi tribes are included in the list of PVTGs.

Which of the statements given above are correct?

(a) 1, 2 and 3

(b) 2, 3 and 4

(c) 1, 2 and 4

(d) 1, 3 and 4

Answer (c)

  • PVTGs reside in 18 states and one Union Territory: This is correct. PVTGs are distributed across various states and one Union Territory in India.

  • A stagnant or declining population is one of the criteria for determining PVTG status: This is correct. Criteria for identifying PVTGs include factors like a stagnant or declining population, pre-agricultural level of technology, extremely low literacy, and a subsistence level of economy.

  • There are 95 PVTGs officially notified in the country so far: This statement is incorrect. There are 75 PVTGs officially notified in the country.

  • Irular and Konda Reddi tribes are included in the list of PVTGs: This is correct. Both the Irular and Konda Reddi tribes are recognized as PVTGs.

Given this analysis, the correct statements are 1, 2, and 4

Mains

1.What are the two major legal initiatives by the state since independence addressing discrimination against Scheduled Tribes (STs)? (UPSC CSE 2017)
 
Source: The Hindu
 

INDIA - CHINA BORDER DISPUTE

 
 
1. Context
 
In a three-part series on the India-China border issue that appeared in the columns of The Hindu from September 5-9, 2025, the author, Manoj Joshi, develops a narrative on the assertion that the India-China border was not properly defined. This article presents another view on the same.
 
2. Standoff between India and China
 
The standoff between India and China, particularly along the Line of Actual Control (LAC), has been a recurring issue rooted in historical disputes, strategic rivalries, and geopolitical ambitions.
Here is an analysis of the situation:
 

Border Dispute:

  • The India-China border is divided into three sectors:
    • Western Sector: Aksai Chin, claimed by India but controlled by China.
    • Middle Sector: Less contentious, but areas like Barahoti in Uttarakhand witness minor disputes.
    • Eastern Sector: Arunachal Pradesh, claimed by China as part of South Tibet.
  • The Sino-Indian War of 1962 remains a significant point of contention, with unresolved border claims.

Recent Standoffs

  • Doklam (2017):

    • A 73-day standoff occurred at the tri-junction of India, China, and Bhutan.
    • Triggered by Chinese road construction near Bhutanese territory, viewed as a threat to India's strategic Siliguri Corridor (Chicken’s Neck).

  • Galwan Valley (2020):

    • Marked by the first casualties in 45 years; 20 Indian soldiers and an unknown number of Chinese troops died.
    • Followed by a series of disengagement talks.

  • Eastern Ladakh (2020-present):

    • Ongoing disputes in areas like Pangong Tso Lake, Depsang Plains, and Hot Springs.
    • Despite disengagement in some areas, tensions persist.
 
3. Line of Actual Control (LAC)
 

The Line of Actual Control is a 4,057-kilometer-long (2,520 mile) disputed border line that separates Indian-controlled territory from Chinese-controlled territory in the Himalayan region. It runs through the disputed border regions of Ladakh, Aksai Chin, and other areas along the India-China border.

Key characteristics of the LAC include:

  • Undefined Demarcation: Unlike most international borders, the LAC is not precisely demarcated or delineated. It is essentially a loose line of perception where both Indian and Chinese troops are positioned.
  • Historical Context: The LAC emerged after the Sino-Indian War of 1962, which resulted in a ceasefire but did not resolve the underlying territorial disputes.
  • Disputed Sections: There are multiple areas along the LAC where both countries have different perceptions of where the actual line should be, leading to occasional tensions and military standoffs.
  • Strategic Importance: The region is geographically challenging, with high-altitude terrain including mountain passes, glaciers, and rugged landscapes.
  • Periodic Tensions: In recent years, particularly in 2020, there have been significant military confrontations between Indian and Chinese troops, most notably in the Galwan Valley region of Ladakh.

The LAC is divided into three sectors:

  • Western Sector (Ladakh)
  • Middle Sector (Uttarakhand, Himachal Pradesh)
  • Eastern Sector (Arunachal Pradesh)
 
4. India-China Relations during the Nehruvian Era
 
The India-China relationship during the Nehruvian era (1947–1964) was characterized by idealism, cooperation, and eventual conflict. It began with mutual admiration and solidarity as post-colonial nations but deteriorated into distrust and confrontation, culminating in the Sino-Indian War of 1962
 
Key Phases India China relations during Nehruvian Era
 

Early Friendship (1947–1954)

  • Common Goals and Anti-Colonial Sentiments:

    • India and China, as newly independent nations, sought to rebuild their societies and oppose colonialism and imperialism.
    • Prime Minister Jawaharlal Nehru admired China’s cultural legacy and revolutionary transformation under the Communist regime led by Mao Zedong.

  • Support for China on the Global Stage:

    • India was one of the first non-communist nations to recognize the People’s Republic of China (PRC) in 1949.
    • Nehru supported China's entry into the United Nations, arguing that the PRC represented the Chinese people rather than Taiwan (Republic of China).

  • Signing of the Panchsheel Agreement (1954):

    • India and China signed the Panchsheel Agreement, based on five principles of peaceful coexistence:
      1. Mutual respect for sovereignty and territorial integrity.
      2. Non-aggression.
      3. Non-interference in each other's internal affairs.
      4. Equality and mutual benefit.
      5. Peaceful coexistence.
    • The slogan "Hindi-Chini Bhai-Bhai" symbolized the optimism in bilateral ties

Emerging Tensions (1954–1959)

  • The Tibetan Question:

    • China's annexation of Tibet (1950–51) and its suppression of Tibetan uprisings created friction.
    • India’s grant of asylum to the 14th Dalai Lama in 1959 after the failed Tibetan rebellion was viewed as interference by China.

  • Border Disputes:

    • Despite the Panchsheel Agreement, India and China had unresolved territorial disputes:
      • Aksai Chin (Western Sector): Controlled by China, claimed by India.
      • Arunachal Pradesh (Eastern Sector): Claimed by China as South Tibet.
    • Discovery of China's construction of a road in Aksai Chin (1957–58) intensified tensions

Deterioration and War (1959–1962)

  • Border Incursions and Skirmishes:

    • China’s aggressive patrols and incursions along the Line of Actual Control (LAC) exacerbated hostilities.
    • Nehru’s "Forward Policy" (establishing advanced Indian outposts along the disputed border) was seen as provocative by China.

  • Sino-Indian War (October–November 1962):

    • China's invasion of Aksai Chin and parts of Arunachal Pradesh marked a turning point.
    • The war exposed India's military vulnerabilities, resulting in territorial losses in Aksai Chin.
    • China declared a unilateral ceasefire and withdrew from Arunachal Pradesh but retained control over Aksai Chin.
5.‘De-induction’ ‘Disengagement’ and ‘De-escalation
 
The terms ‘De-induction’, ‘Disengagement’, and ‘De-escalation’ are often used in the context of military and diplomatic operations, particularly in situations of conflict or standoff. They are critical stages in reducing tensions and maintaining peace, especially in border conflicts like those between India and China along the Line of Actual Control (LAC).
 

Differences Between the Terms

Term Scope Focus Finality
De-induction Broader withdrawal Long-term stability Final withdrawal of troops
Disengagement Specific sites/areas Preventing skirmishes Temporary or site-specific
De-escalation Entire conflict zone Reducing overall tensions Long-term trust-building
 
 
 
For Prelims: Current events of national and international importance.
 
For Mains: General Studies II: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
 
Previous Year Questions
 
1.“Belt and Road Initiative” is sometimes mentioned in the news in the context of the affairs of : (UPSC CSE 2016)
(a) African Union
(b) Brazil
(c) European Union
(d) China
 
Answer (d)
 

The Belt and Road Initiative (BRI) is a global development strategy launched by China in 2013 under President Xi Jinping. It aims to enhance connectivity and cooperation among countries primarily in Asia, Africa, and Europe through infrastructure projects, investments, and trade networks. The BRI includes two main components:

  1. Silk Road Economic Belt: Land-based connectivity linking China to Europe through Central Asia.
  2. 21st Century Maritime Silk Road: Sea-based routes connecting China to Southeast Asia, South Asia, Africa, and beyond.

BRI is often in the news due to its economic, geopolitical, and strategic implications for participating countries and its criticism for creating debt traps

Mains

1.‘China is using its economic relations and positive trade surplus as tools to develop potential military power status in Asia’, In the light of this statement, discuss its impact on India as her neighbour. (UPSC CSE GS2, 2017)

2.With respect to the South China sea, maritime territorial disputes and rising tension affirm the need for safeguarding maritime security to ensure freedom of navigation and over flight throughout the region. In this context, discuss the bilateral issues between India and China. (UPSC CSE GS2, 2014)
Source: Indianexpress
 
 

TARIFFS

 
 
1. Context
 
India’s diamond and jewellery sector has been hit due to the U.S. tariffs. While the U.S. has imposed a 50% import duty on India’s cut and polished diamonds, it has imposed a 50-57% duty on studded and non-studded jewellery, upsetting decades of well-set trade. At such a time, the sector wants government intervention which could absorb the shock caused by U.S. tariffs.

2. What is a Tariff?

  • Most countries are limited by their natural resources and ability to produce certain goods and services.
  • They trade with other countries to get what their population needs and demands. However, trade isn't always conducted in an amenable manner between trading partners.
  • Policies, geopolitics, competition, and many other factors can make trading partners unhappy. One of the ways governments deal with trading partners they disagree with is through tariffs.
  • A tariff is a tax imposed by one country on the goods and services imported from another country to influence it, raise revenues, or protect competitive advantages.

3. Key Take Aways

  • Governments impose tariffs to raise revenue, protect domestic industries, or exert political leverage over another country.
  • Tariffs often result in unwanted side effects, such as higher consumer prices.
  • Tariffs have a long and contentious history, and the debate over whether they represent good or bad policy still rages.

4. History of Tariffs

4.1 Pre Modern Europe

  • In pre-modern Europe, a nation's wealth was believed to consist of fixed, tangible assets,  such as gold, silver, land, and other physical resources.
  • Trade was seen as a Zero-sum game that resulted in either a clear net loss or a clear net gain of wealth.
  • If a country imported more than it exported, a resource, mainly gold, would flow abroad, thereby draining its wealth. Cross-border trade was viewed with suspicion, and countries preferred to acquire colonies with which they could establish exclusive trading relationships rather than trading with each other.
  • This system, known as mercantilism, relied heavily on tariffs and even outright bans on trade. The colonizing country, which saw itself as competing with other colonizers, would import raw materials from its colonies, which were generally barred from selling their raw materials elsewhere.
  • The colonizing country would convert the materials into manufactured wares, which it would sell back to the colonies. High tariffs and other barriers were implemented to ensure that colonies only purchased manufactured goods from their home countries. 

4.2 Late 19th and early 20th Centuries

  • Relatively free trade enjoyed a heyday in the late 19th and early 20th centuries when the idea took hold that international commerce had made large-scale wars between nations so expensive and counterproductive that they were obsolete.
  • World War I proved that idea wrong, and nationalist approaches to trade, including high tariffs, dominated until the end of World War II.
  • From that point on, free trade enjoyed a 50-year resurgence, culminating in the creation in 1995 of the World Trade Organisation  (WTO), which acts as an international forum for settling disputes and laying down ground rules.
  • Free trade agreements, such as the North American Free Trade Agreement (NAFTA) now known as the United States-Mexico-Canada Agreement (USMCA) and the European Union (EU), also proliferated.

4.3 In the 21st Century

  • Skepticism of this model sometimes labeled neoliberalism by critics who tie it to 19th-century liberal arguments in favor of free trade grew, however, and Britain in 2016 voted to leave the European Union.
  • That same year Donald Trump won the U.S. presidential election on a platform that included a call for tariffs on Chinese and Mexican imports, which he implemented when he took office.
  • Critics of tariff-free multilateral trade deals, who come from both ends of the political spectrum, argue that they erode national sovereignty and encourage a race to the bottom regarding wages, worker protections, and product quality and standards.
  • Meanwhile, the defenders of such deals counter that tariffs lead to trade wars, hurt consumers, and hamper innovation.

5. Understanding Tariffs

  • Tariffs are used to restrict imports. Simply put, they increase the price of goods and services purchased from another country, making them less attractive to domestic consumers.
  • A key point to understand is that a tariff affects the exporting country because consumers in the country that imposed the tariff might shy away from imports due to the price increase. However, if the consumer still chooses the imported product, then the tariff has essentially raised the cost to the consumer in another country.

There are two types of tariffs:

  • A specific tariff is levied as a fixed fee based on the type of item, such as a $500 tariff on a car.
  • An ad-valorem tariff is levied based on the item's value, such as 5% of an import's value.

6. Why Government Imposes Tariffs?

Governments may impose tariffs for several reasons
6.1 Raise Revenues

Tariffs can be used to raise revenues for governments. This kind of tariff is called a revenue tariff and is not designed to restrict imports. For instance, in 2018 and 2019, President Donald Trump and his administration imposed tariffs on many items to rebalance the trade deficit. In the fiscal year 2019, customs duties received were $18 billion. In FY 2020, duties received were $21 billion.

6.2 Protect Domestic Industries

Governments can use tariffs to benefit particular industries, often doing so to protect companies and jobs. For example, in May 2022, President Joe Biden proposed a 25% ad valorem tariff on steel articles from all countries except Canada, Mexico, and the United Kingdom (the U.K. has a quota of an aggregate of 500,000 metric tons it can trade with the U.S.). This proclamation reopens the trade of specific items with the U.K. while taking measures to protect domestic U.S. steel manufacturing and production jobs.

6.3 Protect Domestic Consumers

By making foreign-produced goods more expensive, tariffs can make domestically-produced alternatives seem more attractive. Some products made in countries with fewer regulations can harm consumers, such as a product coated in lead-based paint. Tariffs can make these products so expensive that consumers won't buy them.

6.4 Protect National Interests

Tariffs can also be used as an extension of foreign policy as their imposition on a trading partner's main exports may be used to exert economic leverage. For example, when Russia invaded Ukraine, much of the world protested by boycotting Russian goods or imposing sanctions. In April 2022, President Joe Biden suspended normal trade with Russia. In June, he raised the tariff on Russian imports not prohibited by the April suspension to 35%.

7. Advantages of Tariffs

  • Produce revenues: As discussed, tariffs provide a government a chance to bring in more money. This can relieve some of the tax burdens felt by a county's citizens and help the government to reduce deficits.
  • Open negotiations: Tariffs can be used by countries to open negotiations for trade or other issues. Each side can use tariffs to help them create economic policies and talk with trade partners.
  • Support a nation's goals: One of the most popular uses for tariffs is to use them to ensure domestic products receive preference within a country to support businesses and the economy.
  • Make a market predictable: Tariffs can help stabilize a market and make prices predictable.

8. Disadvantages of Tariffs

  • Create issues between governments: Many nations use tariffs to punish or discourage actions they disapprove of. Unfortunately, doing this can create tensions between two countries and lead to more problems.
  • Initiate trade wars: A typical response for a country with tariffs imposed on it is to respond similarly, creating a trade war in which neither country benefits from the other.

For Prelims: Tariffs, Zero-sum game, Cross-border trade, World Trade Organisation  (WTO), North American Free Trade Agreement (NAFTA), United States-Mexico-Canada Agreement (USMCA), and the European Union (EU).

For Mains: 1. What is a Tariff and explain why government imposes tariffs. Discuss the advantages and disadvantages associated with Tariffs. (250 Words).
Source: Investopedia
 

H-1B VISA

1. Context

The Trump administration has deployed a $1,00,000 annual fee on H-1B visas, a move designed to obliterate the business models of India’s IT giants and Big Tech’s wage arbitrage schemes while leaving the U.S.’s universities and startups standing. Whether this crude instrument will achieve its intended effect without inflicting collateral damage on the U.S.’s innovation ecosystem remains an open question

2. The Genesis of H-1B Work Visas

  • In 1952, as the United States expanded its presence in science, technology, engineering, and mathematics (STEM) fields, it sought skilled workers to drive innovation at reasonable costs.
  • This led to the introduction of the H-1 work visa system, which includes H-1B, H-2B, L1, O1, and E1 visas, tailored to specific qualifications and job categories.
  • Among these, the H-1B visa emerged as the most popular due to its relatively better wage prospects.
  • H-1B visas are for temporary workers in speciality occupations, which are defined as those requiring theoretical and technical expertise in a specific field, such as engineering, mathematics, science, or medicine.
  • H-1B workers must have a bachelor's degree or equivalent in their field, and their employer must obtain a Labor Condition Application (LCA) from the US Department of Labor (DOL).

3. Globalization of STEM Graduates

  • With the proliferation of the Internet and affordable computers in developing nations like India, China, and Pakistan, a surge of STEM graduates emerged.
  • These graduates, facing a scarcity of job opportunities in their home countries, were eager to work in the United States at competitive wages.
  • This symbiotic arrangement benefited both employers and employees, making H-1B work visas highly sought-after.
  • The H-1B visa system has undergone numerous revisions to accommodate or restrict the entry of skilled workers, depending on the U.S. economic climate.
  • However, it has also faced criticism for potentially displacing domestic workers with lower-cost foreign labour.

4. The Old Lottery System

  • Previously, the U.S. administration annually issued 85,000 H-1B work permits, with 65,000 allocated for individuals in speciality occupations and the remainder for foreign workers with advanced U.S. degrees.
  • Employers seeking H-1B hires submitted registration forms with employee details, including job nature, offered wages, and education levels.
  • Due to an overwhelming number of applications, a random lottery determined the selection for the 65,000 speciality occupation visas, followed by the 20,000 advanced degree exemption visas. This lottery system disregarded wage levels, skills, or employer needs.

5. The New Wage-Based H-1B Visa Regime

In the latest development, the H-1B visa selection process has shifted toward a wage-based model that prioritizes certain criteria.

  1. Wage Prioritization: The new regime gives priority to applications from employers offering a "proffered wage" that equals or exceeds the prevailing wage level in the area of employment. The proffered wage is the salary the employer intends to pay the visa beneficiary. This rule applies to both the 65,000 regular visas and the 20,000 advanced degree exemption visas.

  2. Skill Assessment: Additionally, the system considers the skill set of the prospective worker and evaluates whether similar skills are available among U.S. workers at a comparable cost.

The U.S. Citizenship and Immigration Services (USCIS) argues that salaries provide a practical indicator of an applicant's skill level, as employers tend to offer higher wages to the most qualified candidates. This approach is intended to safeguard domestic job opportunities and ensure that U.S. workers are not displaced by foreign labour.

6. H-2B, L1, O1, and E1 visas

 H-2B, L1, O1, and E1 visas are all nonimmigrant visas that allow foreign nationals to work in the United States. Each visa type has its own specific eligibility requirements and purpose.

  1. H-2B visas are for temporary nonagricultural workers who perform jobs that are seasonal or temporary and for which there is a shortage of US workers. H-2B workers are typically employed in industries such as landscaping, hospitality, and construction.
  2. L1 visas are for intracompany transferees, which are employees of a foreign company who are being transferred to a related US company. L1 workers must have a managerial or executive position in a foreign company and must have worked for the company for at least one year in the past three years.
  3. O1 visas are for individuals with extraordinary ability in the arts, sciences, education, business, or athletics. O1 visa holders must have demonstrated extraordinary achievement in their field and must be coming to the US to work in their field of expertise.
  4. E1 visas are for treaty traders, which are nationals of a country with which the US has a treaty of commerce and navigation. E1 visa holders must be coming to the US to trade in goods or services between the US and their home country.

7. The Way Forward

  • The shift from the lottery-based selection system to a wage-based regime marks a significant change in the H-1B work visa program.
  • This adjustment aims to align the visa allocation process with market-driven factors such as wages and skill sets, potentially mitigating concerns about undercutting domestic employment opportunities.
 
For Prelims: H-1B visa, United States, U.S. Citizenship and Immigration Services, STEM fields, lottery system, 
For Mains: 
1. What are the implications of the new H-1B visa regime for US-India relations?
Discuss the measures can the Indian government take to support Indian IT workers affected by the new H-1B visa regime. (250 Words)
 
 
Previous Year Questions
 
1. Consider the following statements: (UPSC 2019)
1. Coal sector was nationalized by the Government of India under Indira Gandhi.
2. Now, coal blocks are allocated on lottery basis.
3. Till recently, India imported coal to meet the shortages of domestic supply, but now India is self-sufficient in coal production.
Which of the statements given above is/are correct?
A. 1 only     B. 2 and 3 only           C. 3 only           D. 1, 2 and 3
 
Answer: A
 
2. Which of the following statements about town planning in British India in early 19th century is/are correct? (UPSC CAPF 2018) 
1. The funds for town improvement were also raised through public lotteries.
2. The threats of epidemics gave an impetus to town planning in the early decades of 19th century.
Select the correct answer using the code given below
A.1 only          B. 2 only          C. Both 1 and 2          D. Neither 1 nor 2
 
Answer: C
 
Source: The Indian Express
 
 

AIR POLLUTION

 
 
 
1. Context
If there is one health hazard that has crept up unacknowledged on Indian cities, it is noise. Legally, it is already recognised as an air pollutant under the Air (Prevention and Control of Pollution) Act, 1981. Medically, it is among the leading contributors to hypertension, sleep disruption, stress disorders, and cognitive decline — conditions that together shorten lives and push people toward premature death
 
2. Air Pollution and its severity
 
According to the International Energy Associates, road transport accounts for 12% of India’s CO2 emissions, with heavy vehicles being the primary source of Particulate Matter (PM) 2.5 emissions. PM2.5 consists of tiny particles that can penetrate deeply into the lungs and enter the bloodstream, leading to various respiratory and cardiovascular issues. Heavy vehicles also play a major role in emitting Nitrogen Oxide (NOx), which has similar health effects. NOx contributes to the formation of ground-level ozone, which degrades air quality and increases heat, exacerbating air pollution in urban areas. Research shows that heavy vehicles are responsible for approximately 60-70% of vehicular PM emissions and about 40-50% of NOx emissions in cities
 
3. Measures to Control Air Pollution
 
  • With the transport sector expanding at a rate of 9.1% annually, the Bureau of Energy Efficiency’s (BEE) effort to develop draft Corporate Average Fuel Economy (CAFE) standards for cars in India is both timely and commendable.
  • The planned implementation timelines for CAFE III (2027-2032) and CAFE IV (2032-2037) are practical. Transitioning from the Modified India Driving Cycle (MIDC) to the World Light Duty Vehicle Testing Procedure (WLTP) starting March 31, 2027, is a positive move, as the WLTP provides a more accurate and globally standardized assessment of a vehicle's fuel consumption and CO2 emissions.
  • The proposed emissions targets under CAFE III at 91.7g CO2/km and CAFE IV at 70g CO2/km are achievable. These stringent CO2 targets are crucial for fostering innovation and promoting the adoption of cleaner technologies.
  • For the benefit of both the environment and public health, these targets should remain firm.
  • However, it is important to note that the CAFE norms do not cover emissions from heavy vehicles such as trucks and lorries
4. Government Initiatives to Control air pollution
 
  • In 2022, the government launched a vehicle scrappage policy aimed at retiring old and polluting vehicles, including heavy-duty ones. The policy requires passenger vehicles older than 20 years and commercial vehicles older than 15 years to pass a “fitness and emissions test.”
  • Vehicles that fail these tests are deemed end-of-life, lose their registration certificates, and are recommended for scrapping.
  • However, the policy has not yet been effectively implemented in Karnataka due to the limited number of scrapyards (only two in the entire state) and its voluntary nature.
  • In Bangalore, many older vehicles are not four-wheelers but include older BMTC buses, private vans, and heavy vehicles.
  • Maharashtra, among 21 states, has introduced incentives like road tax discounts or new vehicle purchase reductions to promote scrapping, but these measures have yet to significantly impact air pollution. It is crucial for policymakers to ensure that these guidelines are not just theoretically sound but practically enforced.
  • Current government measures to address air pollution—such as regular vehicle emissions testing, banning open garbage burning, and monitoring industrial emissions—must be strictly enforced.
  • While the government's efforts to reduce air pollution are commendable, it is important to emphasize that expanding mass transit is essential for a sustainable approach to tackling air pollution in India

For Prelims: National Clean Air Programme, Air Pollution, Particulate Matter, Clean Air Action Plans

For Mains: 
1. What are the challenges and opportunities presented by the National Clean Air Programme (NCAP) for improving air quality in Indian cities? Discuss the measures required to overcome implementation hurdles and ensure the effective management of air pollution. (250 Words)
 
 
Previous Year Questions
 
1. In the cities of our country, which among the following atmospheric gases are normally considered in calculating the value of Air Quality Index? (UPSC 2016)
  1. Carbon dioxide
  2. Carbon monoxide
  3. Nitrogen dioxide
  4. Sulfur dioxide
  5. Methane

Select the correct answer using the code given below:

A. 1, 2 and 3 only      B. 2, 3 and 4 only   C. 1, 4 and 5 only     D. 1, 2, 3, 4 and 5

2. Which of the following are the reasons/factors for exposure to benzene pollution? (UPSC 2020)

  1. Automobile exhaust
  2. Tobacco smoke
  3. Wood burning
  4. Using varnished wooden furniture
  5. Using products made of polyurethane

Select the correct answer using the code given below:

A. 1, 2 and 3 only  B. 2 and 4 only   C. 1, 3 and 4 only     D. 1, 2, 3, 4 and 5

 

3. What is the ‘Greenhouse Gas Protocol’? (UPSC 2016)

(a) It is an international accounting tool for government and business leaders to understand, quantify and manage greenhouse gas emissions
(b) It is an initiative of the United Nations to offer financial incentives to developing countries to reduce greenhouse gas emissions and to adopt eco-friendly technologies.
(c) It is an inter-governmental agreement ratified by all the member countries of the United Nations to reduce greenhouse gas emissions to specified levels by the year 2022
(d) It is one of the multilateral REDD+ initiatives hosted by the World Bank

4. Photochemical smog is a resultant of the reaction among (UPSC 2013)

(a) NO2, O3 and peroxyacetyl nitrate in the presence of sunlight
(b) CO, O2 and peroxyacetyl nitrate in the presence of sunlight
(c) CO, CO2 and NO2 at low temperature
(d) high concentration of NO2 O3 and CO in the evening
 

5. Acid rain is caused by the pollution of the environment (UPSC 2013, 2022)

(a) Carbon Dioxide and Nitrogen
(b) Carbon Monoxide and Carbon Dioxide
(c) Ozone and Carbon Dioxide
(d) Nitrous Oxide and Sulphur Dioxide

6. Biological Oxygen Demand (BOD) is a standard criterion for (UPSC 2017)

(a) Measuring oxygen level in blood
(b) Computing oxygen levels in forest ecosystems
(c) Pollution assay in aquatic ecosystem
(d) Assessing oxygen levels in high-altitude regions
 
7. The Ministry of Environment, Forest and Climate Change recently published the draft Environment Impact Assessment (EIA) Notification, in 2020. Which of the following statements is correct about EIA? (Punjab Civil Service 2020)
1. It predicts the effect of a proposed industrial/infrastructural project on the environment.
2. It prevents the proposed activity/project from being approved without proper oversight or taking adverse consequences into account.
3. It compares various alternatives for a project and seeks to identify the one which represents the best combination of economic and environmental costs and benefits.
4. As per the new notification, Coal and non-Coal mineral prospecting and solar photovoltaic projects do not need prior environmental clearance.
Select the correct answer using the code given below:
A. Only 1 and 2
B. Only 2, 3 and 4
C. Only 1, 2 and 3
D. Only 1, 2 and 4
 
 
8.  Headquarters of the World Meteorological Organization is located in (NDA 2017)
A. Washington        B. Geneva         C. Moscow         D.  London
 
9. With reference to the 'Global Climate Change Alliance', which of the following statements is/are correct? (UPSC 2017)
1. It is an initiative of the European Union.
2. It provides technical and financial support to targeted developing countries to integrate climate change into their development policies and budgets.
3. It is coordinated by World Resources Institute (WRI) and World Business Council for Sustainable Development (WBCSD)
Select the correct answer using the code given below:
A. 1 and 2 only            B. 3 only           C. 2 and 3 only              D. 1, 2 and 3
 
 
10. The IPCC is the United Nations body for assessing the science related to climate change. IPCC stands for: (RRB NTPC CBT 2 2022)
A. Intergovernmental Provision on Climate Change
B. International Panel on Climate Change
C. International Provision on Climate Change
D. Intergovernmental Panel on Climate Change
 
11. Comprehension (SSC CHSL 2020)
 
Direction: In the following passage some words have been deleted. Fill in the blanks with the help of the alternatives given. Select the most appropriate option for each blank.
Forest fire always (1) ______ by one of two reasons-naturally caused or human-caused. Natural fire is generally (2) ______ by lightning, with a very small percentage (3) ______ by spontaneous combustion of dry fuel such as sawdust and leaves. (4) ______, human-caused fire can happen (5) ______ any number of reasons.
Select the most appropriate option for blank No. 1.
A. takes up    B. happens    C. causes    D. creates
 
12. Which of the following statements best describes the term 'Social Cost of Carbon'? It is a measure, in monetary value, of the (UPSC 2020) 
A. long-term damage done by a tonne of CO2 emission in a given year.
B. requirement of fossil fuels for a country to provide goods and services to its citizens, based on the burning of those fuels.
C. efforts put in by a climate refugee to adapt to live in a new place.
D. contribution of an individual person to the carbon footprint on the planet Earth.
 
 
13. The increasing amount of carbon dioxide in the air is slowly raising the temperature of the atmosphere, because it absorbs (UPSC 2012)
A. the water vapour of the air and retains its heat
B. the ultraviolet part of the solar radiation
C. all the solar radiations
D. the infrared part of the solar radiation
 
14. As per the World Health Organisation (WHO) recommendation of a balanced diet, to avoid unhealthy weight gain, total fat should NOT exceed _______ of total energy intake. (UPSSSC Mandi Inspector 2019)
A. 20%         B.  30%        C. 10%          D. 40%
 
 
15. What is the role of ultraviolet (UV) radiation in the water purification systems? (UPSC 2012)
1. It inactivates/kills the harmful microorganisms in water.
2. It removes all the undesirable odours from the water.
3. It quickens the sedimentation of solid particles, removes turbidity and improves the clarity of water.
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
 
 
16. Which of the following ultraviolet rays is more dangerous? (UPTET 2017)
A. UV-A        B. UV-B          C.  UV-C          D.  None of the above
 
 
17. Consider the following statements: (UPSC 2019) 
1. Agricultural soils release nitrogen oxides into environment.
2. Cattle release ammonia into environment.
3. Poultry industry releases reactive nitrogen compounds into environment.
Which of the statements given above is/are correct?
A. 1 and 3 only         B. 2 and 3 only          C. 2 only          D.  1, 2 and 3
 
18. Which of the following is a VOC? (MP Vyapam 2022) 
A. Toulene          B. Water            C. Carbon dioxide          D. Carbon monoxide
 
 
19. Volatile Organic Compounds (VOCs) are of great concern because (UGC NET  Environmental Science  2020)
A. Once such compounds are in the vapour state, they are difficult to control in the environment.
B. Most of them are ozone-depleting substances
C. They contribute to a general increase in reactive hydrocarbons in the atmosphere.
D. They are less soluble in water.
 
Answers: 1-B, 2-A, 3-A, 4-A, 5-D, 6-C, 7-D, 8-B, 9-A, 10-D, 11-B, 12-A, 13-D, 14-B, 15-A, 16-C, 17-D, 18-A, 19-C
 
Source: The Hindu
 
 

GOODS AND SERVICE TAX (GST)

 
 
1. Context
 
An exemption for Indian bread by any name — roti, paratha, khakhra — or for health and life insurance for individuals, to sharp tax rate cuts for beauty and well-being services to 5 per cent from 18 per cent or aspirational goods such as air conditioners, refrigerators and big TV screens to 18 per cent from 28 per cent, a wide range of goods and services of a person’s consumption basket have been touched as part of the reforms under GST 2.0.
 
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
 

SMALL NUCLEAR MODULAR REACTORS

 

1. Context

The Centre is open to exploring the use of nuclear energy to power the data centre boom in India, a trend which is already playing out in countries such as the US, since such centres grow exponentially owing to the rise of artificial intelligence (AI). 

2. Small Modular Reactors (SMR)

Small Modular Reactors (SMRs) are a type of nuclear reactor design that offers a more compact and scalable alternative to traditional large-scale nuclear power plants. These reactors are characterized by their smaller size, enhanced safety features, and potential for more flexible deployment. Here are some key features and aspects of Small Modular Reactors:

  • Size and Scalability: SMRs are designed to be much smaller in size compared to conventional nuclear reactors. Their compact nature allows for easier manufacturing, transport, and installation. Additionally, SMRs can be built in a modular fashion, with multiple units deployed together, which offers flexibility in capacity planning and expansion.
  • Enhanced Safety: Many SMR designs incorporate advanced safety features that reduce the likelihood of accidents and mitigate potential consequences. Passive safety systems and inherent design characteristics can make SMRs more resilient in the face of unexpected events.
  • Reduced Environmental Footprint: The smaller size and modular construction of SMRs can lead to a reduced environmental impact in terms of land use, resource consumption, and waste generation. This can be particularly advantageous in regions with limited space or where environmental concerns are paramount.
  • Flexible Deployment: SMRs can be deployed in a wider range of locations compared to traditional large reactors. They can serve diverse purposes, including providing power to remote communities, supporting industrial processes, and complementing renewable energy sources.
  • Standardization and Mass Production: SMR designs often emphasize standardization and simplified manufacturing processes, which could potentially lead to cost savings through mass production and economies of scale.
Image Source: The Hindu

3. Decarbonisation Challenges

  • Transition Challenges: Moving from coal-fired power to clean energy has hurdles. Policymakers agree solar/wind alone won't suffice for affordable energy.
  • Role of Firm Power: Clean energy grids benefit from a stable power source. Adding one firm power tech cuts costs and boosts reliability.
  • Critical Minerals Demand: Clean energy tech needs minerals like lithium, cobalt, etc. Demand might rise 3.5x by 2030, per IEA.
  • Global Challenges: Meeting mineral demand means new mines, especially in China, Indonesia, Africa, and South America. The rapid expansion raises environmental and social concerns.
  • Concentrated Production: Few nations control most mineral production/processing. Geopolitical risks and supply control emerge.
Image Source: The Hindu

4. Nuclear Power's Role in Net-Zero Goals:

  • NPPs contribute 10% of global electricity, curbing 180 billion cubic meters of natural gas demand and 1.5 billion tonnes of CO2 emissions annually.
  • Ensuring Net-Zero Transition: Reduced nuclear power may hinder cost-effective progress towards net-zero emissions.

5. Advantages of Nuclear Power:

  • Reliable Power Generation: NPPs provide constant power, outperforming variable renewable sources like solar and wind.
  • Efficient Land Use: NPPs need less land and offer lower grid integration costs compared to renewables.
  • Co-Benefits: Nuclear power creates high-skill jobs in technology, manufacturing, and operations.

6. Advantages of Small Modular Reactors (SMRs):

  • Enhanced Safety: SMRs have lower core damage frequency and radioactive contamination risk compared to conventional NPPs. Passive safety features reduce the potential for uncontrolled radioactive releases.
  • Seismic Isolation: SMRs incorporate improved seismic isolation for heightened safety during accidents.
  • Spent Fuel Management: SMRs generate less spent nuclear fuel, reducing storage needs.
  • Brownfield Sites: SMRs can be safely placed on brownfield sites with less stringent zoning requirements.
  • Community Engagement: Power-plant organizations can engage communities, as seen in Kudankulam, Tamil Nadu.
  • Coal-to-Nuclear Transition: Deploying SMRs at existing thermal plant sites advances net-zero goals and energy security.

7. Supply and Manufacturing:

  • Low-Enriched Uranium: SMRs typically use low-enriched uranium, available from countries with uranium mines and enrichment facilities adhering to international standards.
  • Factory Manufacturing: SMRs are factory-built and assembled on-site, lowering risks of time and cost overruns.
  • Cost Efficiency: Serial manufacturing reduces costs, streamlines regulatory approvals, and fosters experiential learning.

8. Economic Viability:

  • Long-Term Operation: SMRs operate for over 40 years, offering cost-effective electricity. Costs are projected to decrease significantly after 2035.
  • U.S.-India Collaboration: SMRs included in the U.S.-India statement for potential benefits, with cost reduction anticipated through reputed manufacturers.

9. Efficient Regulatory Regime:

  • Regulaorty Efficiency Needed: Like civil aviation, stringent and efficient regulations are vital for SMR's role in decarbonization.
  • Global Cooperation: Countries embracing nuclear energy should collaborate with regulators and the IAEA to harmonize and expedite approvals for standard SMR designs.

10. Integration with National Grid:

  • Energy Capacity Targets: India's projection: Coal-based power 259,000 MW, VRE 486,000 MW by 2032.
  • Energy Storage Needs: Integrating VRE requires 47,000 MW/236 GWh from batteries and 27,000 MW from hydro facilities.
  • Nuclear Expansion: Nuclear power pivotal for India's net-zero by 2070; private sector investment essential.

11. Legal and Regulatory Changes:

  • Amending Atomic Energy Act: Allow private sector SMR setup while ensuring nuclear fuel and waste control by the government.
  • Establish an Independent Regulatory Board: Law required for a capable regulatory body overseeing nuclear power stages.
  • Security and Ownership: Government control over SMR security; private operation under government oversight.
  • Public Perception: Department of Atomic Energy should enhance public awareness through transparent environmental and health data dissemination.
For Prelims: Nuclear Energy, Small Modular Reactors (SMR), Decarbonisation, International Energy Agency (IEA), lithium, cobalt, National Grid, International Atomic Energy Agency (IAEA), and Co2 emissions.
For Mains: 1. Discuss the potential of Small Modular Reactors (SMRs) in India's journey towards decarbonizing its energy sector. Examine their advantages over conventional nuclear power plants and other renewable sources. (250 Words).
 

Previous year Question

1. In India, why are some nuclear reactors kept under "IAEA Safeguards" while others are not? (UPSC 2020)
A. Some use uranium and others use thorium
B. Some use imported uranium and others use domestic supplies
C. Some are operated by foreign enterprises and others are operated by domestic enterprises
D. Some are State-owned and others are privately-owned
Answer: B
Source: The Hindu
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