Back on track

(The Hindu)

 

Launch lessons

(The Hindu)

 

How the data sets stack up

(The Hindu)

 

Back on track

(The Hindu)

Synoptic line: It throws light on the issue of e-way bill system.

(GS paper III)

Overview

 

  • As per decision of the GST Council, e-way bill system became mandatory from today i.e. April 1, 2018 for all inter-State movement of goods. No major execution challenges have been reported by businesses so far, and the IT backbone that generates the e-way bills that are now required even before goods are loaded for transport has so far held up without glitches.

 

What is E-way bill?

 

  • The E-way bill, short form for electronic way bill, is a document to be generated online under the GST system, when goods of the value of more than ₹50,000 are shipped inter-State or intra-State. The E-way bill must be raised before the goods are shipped and should include details of the goods, their consignor, recipient and transporter.

 

  • The transporter has to carry the invoice and the copy of E-way bill as support documents for the movement of goods. He can also carry the E-way bill number, mapped to an RFID (radio frequency identification device).

 

  • Though check-posts have been abolished under GST, a consignment can be intercepted at any point for the verification of its E-way bill, for all inter-State and intra-State movement of goods. If a consignment is found without an E-way bill, a penalty of ₹10,000 or tax sought to be evaded, whichever is greater, can be levied.

 

Why is it important?

 

  • One of the key arguments in favour of GST was its ability to unify India as a market and do away with bothersome inter-State check-posts. Data from the Ministry of Road Transport and Highways, tells us that a typical truck in India spends 20 per cent of its time in inter-state check points. This varies from 20-30 minutes in some States such as Rajasthan and Maharashtra, but goes up to to two hours in Bihar or Jharkhand.

 

  • Both the GST levy and the E-way bill were expected to root out such transit delays, while at the same time plugging tax evasion. Every E-way bill generated by a sender or buyer of goods is to be automatically updated in the outward sales return of the supplier, leaving little scope for tax evasions on shipments. In the previous tax regime, tax officials had to manually cross-check the way bill with the tax returns filed, to verify if all the consignments came within the tax net.

 

  • Also, a single electronic way bill for the movement of goods throughout the country was expected to save tons of paperwork and sidestep various inter-state clearances for buyers, sellers and transporters. In the previous tax regime, each State framed its own rules for the movement of goods from and to it.

 

Assessment

 

  • Everyone’s fingers are crossed that the e-way bill portal, which now has over 20,000 registered transporters and 11 lakh taxpayers, will hold up, going forward. It is important to note that since the system for tracking inter-State movement of goods was launched at the beginning of a financial year, the actual load that the portal will have to bear on a normal business day may be much higher than the initial trends.

 

  • This is because many businesses had already moved and stocked up goods by March 31, ahead of the system kicking in, and are still completing usual year-end processes such as recording closing stock. A staggered schedule for rolling out e-way bills for intra-State trade in a few States at a time is expected soon.

 

  • Given that India’s transport sector is still largely unorganised and many vehicle drivers are not fully conversant with the technical nuances, it is important that anti-evasion squads deployed to check e-way bills operate with a light touch to start with, and limit the frequency of inspections for goods moving across States.

 

Question What is E-way bill system? Discuss why e-way bill system is important?

 

Launch lessons

(The Hindu)

Synoptic line: It throws light on the issue of the loss of communication between the ground station and the Indian Space Research Organisation’s latest satellite.

(GS paper III)

Overview

 

  • The Indian Space Research Organization’s (ISRO)’s mission aimed to place the communication satellite, GSAT-6A, in space and the struggle to communicate with the missing satellite enters the fourth day and the scientists involved in the ongoing recovery efforts say, “there is no quick solution to the problem.”

 

  • According to the ISRO official on the condition of anonymity- the space agency has a realistic chance of re-establishing the communication link only twice in day as the satellite’s orbit is currently about 13 hours.

 

About GSAT-6A

 

  • GSLV-F08 is the12th flight of Geosynchronous Satellite Launch Vehicle (GSLV) and Sixth flight with indigenous Cryogenic Stage. The Launch of GSLV-F08 carrying GSAT-6A took place from the Second Launch Pad (SLP) in Satish Dhawan Space Centre SHAR, Sriharikota. GSLV -F08 / GSAT-6A Mission was launched on March 29, 2018.

 

Assessment

 

 

  • The loss of communication between the ground station and the ISRO’s latest satellite is deeply disappointing. ISRO’s mission aimed to place the communication satellite, GSAT-6A, in space. However, shortly after the second orbit-raising operation, the ground station lost track of the satellite on March 31, when it was on course for the final firing.

 

 

 

  • Understanding why this happened is crucial. A launch operation can be simplified into the initial three stages, during which the satellite is boosted to different heights by the launch vehicle and then placed in a geosynchronous transfer orbit. This is an elliptical orbit into which a satellite is placed initially before being transferred into a geosynchronous orbit where it maintains a position above a fixed longitude.

 

 

 

  • During each of these stages, a part of the rocket completes its role and disengages from the bulk. Then the satellite moves towards its final and desired orbit. The GSAT-6A was first raised to the elliptical orbit marked by the following parameters: its perigee, or point of closest approach to Earth, was 5,054 km; and its apogee, or point of farthest approach, was 36,412 km.

 

 

 

  • This was followed up by a second orbit-raising operation on March 31. It was after this and during the third such operation that the ground station lost contact with the satellite. This is why it is being conjectured that the failure occurred because of a flaw outside the launch vehicle, the GSLV, perhaps from a short circuit or power glitch within the satellite itself.

 

 

 

  • In complex scientific feats such as ISRO’s projects, there is no mission so devoid of a learning aspect to it that it is deemed a total failure. The GSLV has had several successes in the past, and this is its 12th flight. For instance, it was used to launch the advanced communication satellite, GSAT-6, in August 2015. GSAT-6A’s predecessor, GSAT-6, provides S-band services for two-way communications as in the case of mobile phones.

 

 

 

  • The present mission, launched on March 29, was endowed with additional features, such as the high-thrust Vikas engine that gave it the capacity to carry a heavier payload. It had been reported that the mission would be a testing ground for ISRO’s next moon mission.

 

 

Question ISRO should be open about the specific learning points from the GSAT-6A launch exercise, analyse.

 

How the data sets stack up

(The Hindu)

Synoptic line: It throws light on the issues inequality and poverty in India.

(GS paper III)

Overview

 

  • A lot of discussion is going around up on increasing inequality within several countries of the world, including India, that the rising inequality has adverse economic and social consequences. The Gini coefficient or other measures of inequality are being used to examine trends in inequality.

 

  • By analyzing the trends in inequality, we can show that the poverty ratio is equally important as the Gini coefficient in analyzing issues relating to growth and distribution.

 

What is Gini Coefficient

 

  • The Gini Coefficient is a popular statistical measure to gauge the rich-poor income or wealth divide. It measures inequality of a distribution-be it of income or wealth within nations or States. Its value varies anywhere from zero to 1; zero indicating perfect equality and one indicating the perfect inequality. Gini Coefficients can be used to compare income distribution of a country over time as well. An increasing trend indicates that income inequality is rising independent of absolute incomes.

 

Why is it important?

 

  • A general rise in Gini Coefficient indicates that government polices are not inclusive and may be benefiting the rich as much as (or even more than) the poor. For instance, a subsidy on passenger train tickets may entail a big budget outlay and may be targeted at the poor.

 

  • But its benefit could actually be derived by the non-poor. A Gini figure below 0.40 is generally considered to be within tolerable limits by economic experts. Chancel and Piketty’s report pegged India’s Gini coefficient at 0.41 to 0.49 for 2010. It is even likely that it crossed 0.5, which is an alarming level of inequality.

 

  • However, it is quite possible that the post-tax Gini Coefficient for India is lower, as government welfare schemes are focussed on the lower income groups. The progressive rates that India uses for income tax slabs could also narrow the disparity. Due to lack of data, we don’t have an inkling on this, though.

 

Assessment of Inequality

 

 

  • Inequality in consumption may be an under-estimate as National Sample Survey (NSS) data may not be capturing the consumption of the rich adequately. The difference between the consumption expenditure according to the National Sample Survey Office (NSSO) and national income could be partly due to this factor. However, there is no strong evidence that underestimation in NSSO is only relating to the upper-income groups.

 

 

 

  • In fact, the Rangarajan Committee examined the issue of differences in consumption between NSSO and NSS. According to the committee, these two estimates of consumption (National Accounts Statistics, or NAS, and household survey based) do not match in any country, and India is no exception.

 

 

 

  • What is alarming in India is that the difference between NAS and NSS is widening over time. For example, the difference was less than 10% in the late 1970s; it rose to almost 50% in 2009-10. Some adjustments made in the report reduced the difference from 45.8% to 32.5%. But still the differences are high.

 

 

 

  • Income and wealth inequalities are much higher than consumption inequality. According to some estimates, consumption Gini coefficient was 0.36 in 2011-12 in India. On the other hand, inequality in income was high with a Gini coefficient of 0.55 while wealth Gini coefficient was 0.74 in 2011-12.

 

 

 

  • Thus, income Gini was about 20 points higher than consumption Gini while wealth Gini was nearly almost 40 points higher than consumption Gini. Thus, inequality in income and wealth is much higher than that of consumption.

 

 

Poverty measurement

 

 

  • There are many approaches for poverty measurement. Human beings need a certain minimum consumption of food and non-food items to survive. However, the perception regarding what constitutes poverty varies over time and across countries. Generally the approach is to look at it in terms of certain minimum consumption expenditure on food and non-food items. Any household failing to meet this level of consumption expenditure can be treated as a poor household.

 

 

 

  • By examine the trends in poverty based on NSS Consumer Expenditure data for the period 1983 to 2011-12. In the pre-reform period, overall poverty declined marginally during 1983 to 1993-94. The rate of decline in poverty was 0.8 percentage points per annum.

 

 

  • In fact, the number of persons below the poverty line stayed almost the same at 320 million during this period. The number of persons below poverty declined by 5 percentage points during 1983 to 1987-88 but rose by 4 percentage points during 1987-88 to 1993-94.

 

  • Poverty declined faster in the post-reform period, particularly in the 2004-2012 period as compared to 1993-2005. In the post-reform period, overall poverty as defined by the Tendulkar Committee declined faster from 45.3% in 1993-94 to 21.9% in 2011-12 – an annual decline of 1.3 percentage points.

 

  • Within the post-reform period, the first sub-period 1993-94 to 2004-05 recorded a decline of 0.75 percentage points per annum. But, poverty declined by 2.2 percentage points per annum during the period 2004-05 to 2011-12. This was the period of highest economic growth since Independence. It is the fastest decline of poverty compared to earlier periods.

 

 

  • There are two conclusions on the trends in poverty, firstly, as the World Bank Study (2016) mentioned above shows, poverty declined by 1.36 percentage points per annum post-1991 compared to 0.44 percentage points per annum prior to 1991. This study shows that among other things, urban growth is the most important contributor to the rapid reduction in poverty even in rural areas in the post-1991 period.

 

 

  • The second conclusion is that within the post-reform period, poverty declined faster in the 2000s than in the 1990s. The official estimates based on Tendulkar poverty lines show that poverty declined much faster during 2004-05 to 2011-12 as compared to the period 1993-94 to 2004-05. Around 135 million people were lifted above the poverty line in the post-reform period.

 

  • On the cut-off line for determining poverty ratio, there are controversies. Some people think that the Tendulkar poverty level is low and needs to be raised. As far as reduction in the poverty ratio is concerned, it holds good even if we raise the poverty cut-off to 1.5 times the Tendulkar cut-off. The annexure to Chapter 2 of the Twelfth Five Year Plan gives details of reduction in the poverty ratio for different levels of poverty cut-off.

 

Way ahead

 

  • The impact of higher growth on poverty reduction can also be seen from the decile-wise growth in per capita consumption expenditure. There has been lot of discussion in recent years on inequality. There is no doubt that inequality in itself has several undesirable consequences.

 

  • Measuring inequality is not the same as measuring the changes in level of poverty. Even if the Gini coefficient remains the same or picks up, the poverty ratio can be declining. This has been true of India. The decline in poverty is much higher particularly in the period 2004-05 to 2011-12 in spite of rise in inequality. Thus the changes of the poverty ratio is an equally important indicator to monitor.

 

Question Why measuring inequality is not the same as measuring changes in the level of poverty in India?