Daily Mains Practice Questions 30-01-2023

KEY POINTS

·        In India, tobacco taxes have not increased significantly since the implementation of the Goods and Services Taxation (GST) over five years ago, making these products increasingly affordable, as recent studies show.

·        Tobacco use is also the cause for nearly 3,500 deaths in India every day, which impacts human capital and GDP growth in a negative way.

·        The current GST system for tobacco taxation in India has features that are hindering efforts in regulating consumption.

·        One issue is the overuse of ad valorem taxes, which are not effective in reducing consumption.

·        There is a large discrepancy in taxation between tobacco products. Despite cigarettes accounting for only 15% of tobacco users, they generate 80% or more of tobacco taxes.

·        Bidis and smokeless tobacco have low taxes, encouraging consumption. Taxes should be made more consistent across all tobacco products, as none is more or less harmful than the others.

·        The GST rates on certain smokeless tobacco ingredients such as tobacco leaves, tendu leaves, betel leaves, areca nuts, etc. have either zero or 5%-18% GST.

·        It is important that all products that are exclusively used for tobacco making are brought under the uniform 28% GST slab.

·        This will generate the right public health message — that all tobacco products are bad and their consumption needs to be discouraged.

KEY POINTS

·        The proposed amendments are a response to some basic infirmities in the IBC, whose merits as a creditor-in-control debt resolution model cannot, however, be disputed.

·        The salient features of the proposal are: speeding up the admission of cases; a clear framework for out-of-court approaches in order to fast-track resolution; and a new waterfall mechanism where operational creditors could get a better due.

·        With respect to speeding up admissions, the latest proposal seeks to remove the discretionary power of the adjudicating authority (AA) once default has been established by information utility.

·        To ensure fast track resolution, an “informal” out-of-court settlement may be initiated by “unrelated” financial creditors with the AA overseeing the process.

·        The pre-pack insolvency resolution process, introduced for the benefit of MSMEs in the wake of Covid, where the financial creditors cobble a plan and get the court’s nod, is sought to be extended to all entities.

·        However, in pursuing these fast track options, it must be kept in mind that the moratorium on assets may not hold, posing a risk to the going concern. In the case of pre-pack, the debtor remains in possession.

·        With liquidation value acquiring significance, it will be important to arrive at it credibly. These changes will help IBC deliver on its promise better.

KEY POINTS

·        During the initial months of the Covid-19, India announced the Aatmanirbhar Bharat scheme to reduce its import reliance, mostly on China.

·        This import dependency certainly remains alarming despite India’s best efforts to reduce its imports from China.

·        The government launched the Production Linked Incentive (PLI) scheme, covering strategically significant sectors, towards developing manufacturing capabilities in India.

·        A lot of hope has been placed on this scheme which pans over a five-year period. As on date, there are 14 such industries which are under the PLI scheme.

·        A harmonised code analysis of 10 of the 14 industries identified under PLI shows increasing dependency on imports from the world by India.

·        However, the fact remains that in the global scheme of things, completely disregarding China is next to impossible, neither is it possible to produce all alone.

·        For example, India is increasingly looking at sustainable development while supporting industries like automobile and solar under PLI.

·        FDI will be a key factor in ensuring India reduces its import dependency. It could bring in global best practices and latest technologies, while India can offer the foreign investors a huge domestic market.

·        However, it is important for policymakers to take continued stock of the progress made towards minimising import dependency through its various measures.

Q. 2) IBC Code

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