Current Affairs for UPSC IAS Exam – 2 September 2020

Contents

1. Supreme Court’s Judgement on AGR Dues
2. New guidelines for Standing Committees in the making
3. India, 3 nations call for UNSC reform
4. India, Russia to hold Naval drills in Andaman Sea
5. GST revenue falls 12%, Manufacturing sector comeback

SUPREME COURT’S JUDGEMENT ON AGR DUES

Focus: GS-II Governance

Why in news?

• The Supreme Court allowed telecom companies 10 years’ time to pay their adjusted gross revenue (AGR) dues to the government.
• The government had proposed in court a 20-year “formula” for telcos to make staggered payments of the dues, however the Supreme Court considered that the period of 20 years fixed for payment was excessive.

Series of directions

• In a series of directions to the telcos, the court said they shall raise no dispute nor will they be any reassessment of the dues.
• Telecom majors like Vodafone had said they were in no position to give fresh bank guarantees for repayment of the AGR dues.
• In the event of any default in making payment of annual instalments, interest would become payable as per the agreement along with penalty and interest on penalty automatically without reference to court.
• Besides, the court has referred to the National Company Law Tribunal (NCLT) a series of questions on whether “deferred/default payment instalments of spectrum acquisition cost can be termed to be operational dues besides AGR dues”.
• The court wants the tribunal to decide whether a scarce natural resource like spectrum can be used without pay of requisite dues.

The AGR Issue – Timeline

• The telecom sector was liberalised under the National Telecom Policy, 1994 after which licenses were issued to companies in return for a fixed license fee.
• To provide relief from the steep fixed license fee, the government in 1999 gave an option to the licensees to migrate to the revenue sharing fee model.
• Under this, mobile telephone operators were required to share a percentage of their AGR with the government as annual license fee (LF) and spectrum usage charges (SUC).
• License agreements between the Department of Telecommunications (DoT) and the telecom companies define the gross revenues of the telecom companies.

The Contention on Definition of AGR – 14 years on

• In 2005, Cellular Operators Association of India (COAI) challenged the government’s definition for AGR calculation.
• However, DoT argued that AGR includes all revenues from both telecom and non-telecom services.
• The companies claimed that AGR should comprise just the revenue accrued from core services and not dividend, interest income or profit on the sale of any investment or fixed assets.
• In 2015, the TDSAT (Telecom Disputes Settlement and Appellate Tribunal) stayed the case in favour of telecom companies and held that AGR includes all receipts except capital receipts and revenue from non-core sources such as rent, profit on the sale of fixed assets, dividend, interest and miscellaneous income.
• However, setting aside the TDSAT’s order, in 2019, the Supreme Court of India upheld the Department of Telecom (DoT)’s interpretation of Adjusted Gross revenue (AGR), due to which telecom service providers had to pay an estimated Rs. 1.4 lakh crore to the government.

Impact of the Current Definition

Impact on Telecom Sector:

• 10 of the 15 telecos that existed in 2005 have either closed operations or are undergoing insolvency proceedings in the last 14 years.
• AGR due will seriously hurt financial stability of telecom companies that are doing business in the Indian market.
• Telecom equipment suppliers may also go down as their dues will not be paid.

Impact on Banking Sector and Economy:

• Banks will face the consequences of the dues as companies will be going bankrupt (non-performing assets will rise).
• The collapse of the telecom sector may increase unemployment, and reduce investment, adding to our economic and social problems.

Effect on consumers:

• The failure of a few large players could lead to one or two players emerging near-monopolies.
• This leaves the Indian consumer vulnerable to high pricing, sub-standard products and lack of options.

Government will be the only winner:

If companies are ready to pay AGR dues, it will lead to a higher contribution to the public exchequer – Meaning the Government revenue will get a huge boost and help bridge gap in the fiscal deficit and help the government finance the recovery of the economy in the current pandemic affected situation. (Note: This scenario is only possible if the companies are ready to pay the dues)

Way Forward

• If the AGR Dues can be broken in instalments to be paid over the period, then the telecos would be in a better position to pay the dues back, rather than filing for bankruptcy.
• Since the Supreme Court recognises that there was no willful defiance of the law that is an essential ingredient to attract the levy of penalty, the government can waive off the penalty or at least interest on penalty to reduce the burden on telecos.
• Alternative dispute resolution (ADR) mechanisms (a variety of processes that help parties resolve disputes without a trial) van be explored by the government.
• Facilitating shared infrastructure by the government with policies and legislation will be able to help out the telecos.

-Source: The Hindu

NEW GUIDELINES FOR STANDING COMMITTEES IN THE MAKING

Focus: GS-II Governance

Why in news?

Parliament is preparing new guidelines for its standing committees that may include a minimum 15 days’ notice and confirmation by one-third of the members before holding a panel meeting; nomination of members based on their qualifications, interests and occupations; and at least 50% attendance while collecting evidence and adopting reports.

Details

• The Rajya Sabha secretariat has already prepared draft guidelines after chairman reviewed the functioning of the eight standing committees under its purview.
• The Lok Sabha secretariat, however, is yet to draft their version.
• Once that exercise is over, common guidelines will be inked by Rajya Sabha chairman and Lok Sabha Speaker.

The Need

• To be sure, a whole set of dos and don’ts is already available in the rule books of the two Houses.
• But officials involved in the discussions pointed to an urgent need to bring functional guidelines to address vital issues related to the composition, performance, and work of the panels, given how the issues under their consideration are getting increasingly complex and specialised.

Highlights

• The draft guidelines add that “quorum of 1/3 of the total membership of the Committees shall be ensured in all the meetings of the Committees” and “efforts shall be made to ensure attendance of 50% of the total strength of the Committees while taking evidence and adoption of reports by the Committees”.
• While every MP is entitled to be a member of a Standing Committee, the draft guidelines say that “level of comfort of members with the issues to be discussed by the Committees and the domain knowledge of subject matter of the Committees is an enabling factor regarding attendance”.
• “All efforts shall be made to nominate members of parliament on various DRSCs based on their academic qualifications, interests and occupations being pursued,” the draft guidelines add, and “all political parties may be advised to consider the above” while recommending names of their MPs on various committees.

Standing committees of the Indian Parliament

• In the Indian Parliament, a Standing committee is a committee consisting of Members of Parliament or MPs.
• It is a permanent and regular committee which is constituted from time to time according to the provisions of an Act of Parliament or Rules of Procedure and Conduct of Business.
• The work done by the Indian Parliament is not only voluminous but also of a complex nature, hence a great deal of its work is carried out in these Parliamentary committees.
• Both Houses of Parliament, Rajya Sabha and Lok Sabha, have similar committee structures with a few exceptions.
• Their appointment, terms of office, functions and procedures of conducting business are broadly similar.
• These standing committees are elected or appointed every year, or periodically by the Chairman of the Rajya Sabha or the Speaker of the Lok Sabha, or as a result of consultation between them.

2 Types of Parliamentary Committees

There are two types of Parliamentary committee, the Standing committee and the Ad hoc committee.

1. The Standing committees are constituted every year or frequently and they work on continuous basis.
2. Ad hoc committees are temporary and created for specific task. Once that task is completed, the ad hoc committees cease to exist.

-Source: Hindustan Times

INDIA, 3 NATIONS CALL FOR UNSC REFORM

Focus: GS-II International Relations

Why in news?

India has joined hands with Brazil, Germany and Japan to call for expediting the process for reforming the UN Security Council, with the four countries saying that inter-governmental negotiations on the issue have dragged on for more than a decade without substantial progress.

Details

• The four countries, also known as G4, outlined their position in a common letter submitted to the President of the UN General Assembly.
• They demanded action for transforming the UN Security Council in line with “Common African Position”, and said negotiations shouldn’t be held “hostage, procedurally and substantially, by those who do not wish to bring about reform”.
• India’s letter referred to the draft decision regarding roll-over of the inter-governmental negotiations on equitable representation and increase in the membership of the Security Council, and said this process “must capture clearly the tangible progress”.
• The letter said clear progress was made in the negotiations this year with member states backing the “Common African Position” as laid down in the Ezulwini Consensus and Sirte Declaration, and the “urgent need for transparency and application of the General Assembly’s rules of procedure to the inter-governmental negotiations”.
• The Ezulwini Consensus and Sirte Declaration, containing the common African position on reform of the UN Security Council, were developed by a committee on UN reform established by the African Union Summit in 2005.
• The letter also emphasised the need to redress the “historical injustice against Africa” and to “ensure better African representation in a reformed Security Council in line with the Common African Position”.
• India and the three other countries also expressed their concerns about the inter-governmental negotiations since 2009, saying “there has been practically no progress in the discussions”.

United Nations Security Council

• The Security Council is one of the six main organs of the United Nations.
• Its primary responsibility is the maintenance of international peace and security.
• While other organs of the United Nations make recommendations to member states, only the Security Council has the power to make decisions that member states are then obligated to implement under the Charter- Hence, it is the only body of the UN with the authority to issue binding resolutions to member states.
• Resolutions of the Security Council are typically enforced by UN peacekeepers, military forces voluntarily provided by member states and funded independently of the main UN budget.
• It has 15 Members (5 as Permanent Members and 10 as Non- Permanent Members), and each Member has one vote.
• Five permanent members: China, France, Russian Federation, the United Kingdom, and the United States. Each of the Permanent Members has Veto Power over every decision of UNSC.
• The Permanent Residence of UNSC in the UN Headquarters New York City, USA.
• The presidency of the Council rotates monthly, going alphabetically among member states.

Functions and Powers of UNSC:

Under the United Nations Charter, the functions and powers of the Security Council are:

1. to maintain international peace and security in accordance with the principles and purposes of the United Nations;
2. to investigate any dispute or situation which might lead to international friction;
3. to recommend methods of adjusting such disputes or the terms of settlement;
4. to formulate plans for the establishment of a system to regulate armaments;
5. to determine the existence of a threat to the peace or act of aggression and to recommend what action should be taken;
6. to call on Members to apply economic sanctions and other measures not involving the use of force to prevent or stop aggression;
7. to take military action against an aggressor;
8. to recommend the admission of new Members;
9. to exercise the trusteeship functions of the United Nations in “strategic areas”;
10. to recommend to the General Assembly the appointment of the Secretary-General and, together with the Assembly, to elect the Judges of the International Court of Justice.

-Source: Hindustan Times

INDIA, RUSSIA TO HOLD NAVAL DRILLS IN ANDAMAN SEA

Focus: GS-III Internal Security Challenges, GS-II International Relations

Why in news?

Amid high operational alert by the Indian Navy in the Indian Ocean Region (IOR) due to the ongoing standoff with China in Ladakh, India and Russia are scheduled to hold the bilateral naval exercise, Indra 2020, in the Andaman Sea, close to the strategic Strait of Malacca.

Details

• This is the first bilateral naval exercise since all such engagements were suspended due to COVID-19.
• The timing of the exercise coincides with Indian Defence Minister’s visit to Russia for the Shanghai Cooperation organisation (SCO) defence ministers meet and also comes just after India withdrew from the Kavkaz-2020 multinational exercise in Russia.
• While the stated reason for the withdrawal was the COVID-19 pandemic, defence sources had said that it due to the participation of Chinese troops.

Exercise “Indra”

• It is a joint, tri-services exercise between India and Russia
• This series of exercise began in 2003 and the First joint Tri-Services Exercise was conducted in 2017.
• Company sized mechanized contingents, fighter and transport aircraft, as well as ships of respective Army, Air Force and Navy, participate in this exercise of ten days duration.

Recently in news: Exercise with USS Nimitz

• In July, frontline warships of the Indian Navy conducted a Passage Exercise (PASSEX) with the U.S. aircraft carrier with USS Nimitz strike group in the same area near the Andaman and Nicobar (A&N) islands as it was transiting the Indian Ocean.
• The USS Nimitz was returning from the South China Sea through the Malacca Strait where it undertook freedom of navigation operations.
• With ongoing tensions, Indian Navy is keeping a close watch on movement in the IOR of Chinese Naval ships whose presence has gone up considerably over the years in the name of Anti-Piracy patrols.

Recently in news: Major Infrastructure plans in Andaman and Nicobar

• In 2017, China opened its first overseas military base in Djibouti in the Horn of Africa.
• Given their strategic location, India has embarked on a major infrastructure expansion plan on the A&N island chain.

-Source: The Hindu

GST REVENUE FALLS 12%, MANUFACTURING SECTOR COMEBACK

Focus: GS-III Indian Economy

Why in news?

• Goods and Services Tax revenue in August stood at just over 1% lower than the amount collected in July.
• On a year-on-year basis, GST collections dropped 12% from August 2019, according to data released by the Finance Ministry.
• India’s manufacturing sector activity re-entered the growth territory in August, driven by a rebound in production volumes and new work, amid an improvement in customer demand following the resumption of business operations.

GST Revenues

• Overall, revenues from import of goods dropped 23% from the previous year, while revenues from domestic transactions dropped 8%.
• Small businesses with a turnover less than Rs. 5 crore have till September to file returns.
• Coming after the disappointing GDP data for the first quarter – these figures indicate that collections are on the recovery path in the first month of the second quarter.
• The collections on domestic transactions are just 8% lower than the same month last year, indicating a revival of economic activities post lockdown.

Manufacturing Sector rebound

• August data highlighted positive developments in the health of the Indian manufacturing sector, signalling moves towards a recovery from the second quarter downturn.
• The pick-up in demand from domestic markets gave rise to upturns in production and input buying.
• Despite an expansion in new orders, job shedding continued in the Indian manufacturing sector.
• The relocation of employees following COVID-19 pandemic was often linked to the reduction in staffing numbers.
• However, not all was positive in August, delivery times lengthened to another marked rate amid ongoing COVID-19 disruption.
• Meanwhile, employment continued to fall despite signs of capacity pressures, as firms struggled to find suitable workers.
• The survey noted that the decline in foreign exports weighed slightly on overall new orders as firms cited subdued demand conditions from abroad.
• However, new business received by Indian manufacturers expanded at the fastest pace since February.

-Source: The Hindu