News & Events
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- Mark Time on Equalization Levy
The government’s move to expand the scope of the equalisation levy is ill-advised. A global consensus on taxing the growing digital economy, much of it without any physical presence where they generate revenue and profit, is expected this year, with the US, under the new administration, being ready to engage on the subject. Till then, India would do well to persist with the levy as it stands. A global agreement would benefit India, and possibly obviate the need for the equalisation levy charged on online ad payments to foreign entities and on non-resident ecommerce operators without a permanent establishment here.
The government has retroactively amended the law to cover activities under ecommerce supply or service, attracting the 2% equalisation levy. These include acceptance of an offer for sale, placing of a purchase order, acceptance of a purchase order and supply of goods or provision of services partly or wholly. This means even physical supplies of goods and services may attract the levy if any of these activities has taken place online. However, royalty payments for software transactions or fees for technical services will not attract the levy. This is logical as these payments attract tax under the Income-Tax Act. Retroactive amendments, though, are wholly avoidable.
The Organisation for Economic Cooperation and Development’s (OECD) proposed new framework to tax the digital economy estimates a hefty over $100 billion a year of additional corporate profits being available for taxation in jurisdictions such as Europe and India. India, an active participant in the global venture to end base erosion and profit shifting by multinationals, should focus on getting a larger share of the pie when the new deal is struck.
2.A Welcome End to Tata Instability
The Supreme Court’s verdict in favour of the Tatas and overruling the order of the National Company Law Appellate Tribunal (NCLAT) reinstating Cyrus Mistry as Tata Sons chairman is welcome, on two counts. It puts an end to the possibility of disruption and dysfunction in one of the country’s largest companies. Two, it upholds the right of a shareholder majority to make appointments to key managerial and leadership positions.
Since the detailed judgment is not available yet, it is not clear whether the judgment would also bring clarity as to the conditions that would justify a charge of oppression of minority shareholders, a key ground for NCLAT’s order in favour of Mistry.
Whether the Shapoorji Pallonji group would like to stay invested in the Tatas or exit on mutually agreed terms is for these parties to decide. The court has refrained from entering into how to value the shares. And that was the right thing to do. However, the sums involved — estimates range from ₹80,000 crore to more than double that amount — are large.
At this juncture, when the economy desperately needs investment to revive growth, such large amounts should go to building new infrastructure or production capacity, rather than to rejigging corporate ownership. The Pallonji group needs liquidity and seeks to pledge their Tata stake to raise money to settle their debts, a move objected to by the Tatas on the ground that the Mistrys are barred from transferring their Tata stake. It might make sense for the Tatas and the Mistrys to bury the hatchet and work out a solution that benefits both. The Tatas can afford to be generous in victory and avoid frittering away corporate energies in an avoidable conflict.
What happens to the grass when elephants fight is well-known. India Inc’s global credibility got dented when the Tatas, under Mistry, reneged, on some technicality, their obligation to make good Japanese major DoCoMo’s losses in their telecom joint venture with the Tatas. Honouring that commitment has been one notable act of the Tatas, post Mistry’s ouster.
3.Incumbents on alert: Potboiler polls begin in Assam, Bengal
The first phase of assembly elections spanning 47 seats in Assam and 30 in Bengal commences today amid projections of considerable anti-incumbency in both states. While TMC has felt the pressure ever since BJP’s strong showing in 2019’s Lok Sabha polls, a surprise has been the grand alliance in Assam which is attempting to prevent the splintering of anti-BJP votes. The first phase in Bengal kicks off predominantly from constituencies in the Jangalmahal region, where BJP had fared exceedingly well in 2019.
The Naxalite resurgence here had exemplified three decades of CPM failures, and TMC’s developmental works during its first term bolstered CM Banerjee’s popularity in the region. So BJP’s success in 2019, attributed to voter antipathy towards local TMC netas, would’ve come as a shock to her. Much could depend then on course correction, if any, by TMC since 2019. With BJP too making a strong developmental pitch, the choice between a national and regional party will play heavily on the voter’s mind. PM Modi’s ongoing visit to Dhaka, replete with crossborder signalling, adds spice to the Bengal potboiler.
In Assam, despite the eight-party opposition grand alliance, the first phase is riding almost entirely on Congress’s shoulders. A majority of the seats going to polls today are in north and upper Assam, a Congress stronghold until the BJP-AGP partnership won 35 of the 47 seats here in 2016. Congress is betting on a strong anti-CAA pitch in this phase, but the strains of this positioning are being felt by its Bengali Hindu leadership in the Barak Valley. Amid leveraging of Assam’s complex tapestry of identities and ambitious growth promises on all sides, voters have an intriguing choice to make. With both Assam and Bengal having multi-phased polls, parties will look to capture early momentum today.
4.Equal, not identical: Women in the army win their case in court
More than a year after the Supreme Court said that the army’s short service commission women officers are all entitled to permanent commission, it has again affirmed equality by pointing out that women can’t be judged, and found wanting, solely by the settings of a man-made world. 86 senior women officers had petitioned the court about arbitrary evaluation standards, pegged to the fitness levels of a 35-year-old man.
Discussing ACRs and medical criteria, the court rightly pointed to the structural discrimination against women in a society “created by males and for males”. Norms and standards, after all, reveal who runs the world. Women will always be found wanting if they’re seen as departures from the male norm; the norm itself must expand. It’s not about diluting standards, but making space for human variety instead of imagining that strength can be force-fitted into one size. Military equipment must accommodate female bodies – aircraft, helmets, armour, boots and goggles will have to come with options. This is patently not a favour, it’s a matter of rights, as the court noted.
Women have fought a long battle for inclusion in the military, against various forms of patriarchal disregard, protectiveness and hostility. Every excuse has been trotted out to block their rise, but women have persevered. As they continue to press for more parity in the defence forces, the court’s reminder about implicit gender biases and structural justice will serve as a guide to the institution – and for the rest of us.
5.Deepening ties with Dhaka | HT Editorial
For India, each neighbour is important — for political, cultural, economic and security reasons. If there is an open border and special relationship with Nepal, there is a deep friendship and strategic trust with Bhutan. If Sri Lanka is crucial to India’s maritime interests in the Indian Ocean as well as stability in south India, Pakistan is important, largely because of its track record of hostility and terrorism. But if there is one neighbour where all of India’s interests converge, it is Bangladesh. The future of India’s Act East policy, stability and development in the Northeast, economic integration in the larger region, climate crisis, cross-border flow of people, and peace and security are contingent on ties with Dhaka.
Over the past decade, if there is one success of India’s neighbourhood policy, it is this relationship. And this is primarily due to Bangladesh Prime Minister Sheikh Hasina’s clear strategic outlook — she has respected India’s security needs, and in turn, Delhi has backed her, both politically, even at the cost of turning a blind eye to Bangladesh’s democratic backsliding, and economically. And in this, there has been continuity from Manmohan Singh to Narendra Modi, who is visiting Bangladesh to commemorate the 50th anniversary of the Liberation War and 100th birth anniversary of Sheikh Mujib ur Rehman, Ms Hasina’s late father. There remain issues, of course, from India’s inability to seal a Teesta water-sharing deal to Beijing’s enhanced push in Bangladesh. But the big picture remains of enhanced cordiality and connectivity.