About 15th Finance Commission Grants to Local bodies
Why in news:
The Ministry of Jal Shakti has called for the Finance Commission grants for rural and urban local bodies, currently under the administrative control of the Finance Ministry, to be placed with three different ministries.
15th Finance Commission Grants-in-aid:
In 2020-21, the following grants will be provided to states:
revenue deficit grants
grants to local bodies
disaster management grants
The following describes each grants in detail,
Revenue deficit grants: In 2020-21, 14 states are estimated to have an aggregate revenue deficit of Rs 74,340 crore post-devolution.
Special grants: In case of three states, the sum of devolution and revenue deficit grants is estimated to decline in 2020-21 as compared to 2019-20. These states are Karnataka, Mizoram, and Telangana. The Commission has recommended special grants to these states aggregating to Rs 6,764 crore.
Sector-specific grants: The Commission has recommended a grant of Rs 7,375 crore for nutrition in 2020-21. Sector-specific grants for the following sectors will be provided in the final report: (i) nutrition, (ii) health, (iii) pre-primary education, (iv) judiciary, (v) rural connectivity, (vi) railways, (vii) police training, and (viii) housing.
Performance-based grants: Guidelines for performance-based grants include: (i) implementation of agricultural reforms, (ii) development of aspirational districts and blocks, (iii) power sector reforms, (iv) enhancing trade including exports, (v) incentives for education, and (vi) promotion of domestic and international tourism.
Grants to local bodies: The total grants to local bodies for 2020-21 has been fixed at Rs 90,000 crore, of which Rs 60,750 crore is recommended for rural local bodies (67.5%) and Rs 29,250 crore for urban local bodies (32.5%). The grants will be divided between states based on population and area in the ratio 90:10. The grants will be made available to all three tiers of Panchayat- village, block, and district.
Disaster risk management: The Commission recommended setting up National and State Disaster Management Funds (NDMF and SDMF) for the promotion of local-level mitigation activities. The Commission has recommended retaining the existing cost-sharing patterns between the centre and states to fund the SDMF (new) and the SDRF (existing).
The cost-sharing pattern between centre and states is (i) 75:25 for all states, and (ii) 90:10 for north-eastern and Himalayan states.
For 2020-21, State Disaster Risk Management Funds have been allocated Rs 28,983 crore, out of which the share of the union is Rs 22,184 crore. The National Disaster Risk Management Funds has been allocated Rs 12,390 crore.
Memorandum of Understanding has been signed between Ministry of Housing & Urban Affairs and Small Industries Development Bank of India (SIDBI), here today, in order to engage SIDBI as the Implementation Agency.
About PM SVANidhi:
PM SVANidhi was launched by the Ministry of Housing and Urban Affairs on June 01, 2020
Aims for providing affordable Working Capital loan to street vendors to resume their livelihoods that have been adversely affected due to Covid-19 lockdown.
Under the Scheme, the vendors can avail a working capital loan of up to Rs. 10,000, which is repayable in monthly instalments in the tenure of one year.
On timely/ early repayment of the loan, an interest subsidy @ 7% per annum will be credited to the bank accounts of beneficiaries through Direct Benefit Transfer on quarterly basis.
There will be no penalty on early repayment of loan.
MoU with SIDBI:
SIDBI will implement the PM SVANidhi Scheme under the guidance of MoHUA.
It will also manage the credit guarantee to the lending institutions through Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
It will leverage the network of lending Institutions like Scheduled Commercials Banks (SCBs), Non-Bank Finance Companies (NBFCs), Micro Finance Institutions (MFIs), Co-operative Banks, Small Finance Banks (SFBs), Regional Rural Banks (RRBs), etc. for the Scheme implementation.
About Small Industries and Development Bank of India (SIDBI):
SIDBI is a development financial institution and was established on April 2, 1990, through an Act of Parliament in India.
Headquarters – Lucknow
Its purpose is to provide refinance facilities and short term lending to industries, and serves as the principal financial institution in the Micro, Small and Medium Enterprises (MSME) sector.
SIDBI operates under the Department of Financial Services, Government of India.
SIDBI is one of the four All India Financial Institutions regulated and supervised by the Reserve Bank of India; other three are EXIM Bank, NABARD and NHB. But recently NHB is in government control by taking more than 51% stake.
In association with credit rating agency CRISIL and Credit Information Company TransUnion CIBIL it has introduced India’s first sentiment index “CriSidEx” by capturing the sentiment of exporters and importers also offer actionable indicators on foreign trade and a quarterly report on MSME credit activity “MSME Pulse”.
SIDBI has launched the ‘Udyami Mitra’ Portal to improve accessibility of credit and handholding services to MSMEs by applying loans in preferred banks through this portal.
India elected to UNSC
Nation bags 184 of the 192 votes and India became a non-permanent member of the United Nations Security Council (UNSC) for a period of two years.
About United Nations Security Council:
The United Nations Security Council (UNSC) recommends the admission of new UN members to the General Assembly.
Its powers include establishing peacekeeping operations, enacting international sanctions, and authorizing military action.
The UNSC is the only UN body with the authority to issue binding resolutions on member states.
The Security Council has a total 15 member countries. Out of which 10 are non-permanent members in addition to the veto welding Big-five – Britain, China, Russia, France and United States.
India is not the permanent member of UN Security Council.
India has been a member of the UN Security Council for seven terms (a total of 14 years), with the most recent being the 2011–12 term.
The Assembly annually elects five non-permanent members of the Security Council for two year terms.
Each new Security Council member needs to win two-thirds of votes cast, meaning 128 votes if all the 193 nations vote.
FSDC panel discusses fintech regulatory body, status of IBC
Why in news:
The sub-committee discussed the proposal of setting up an Inter Regulatory Technical Group on Fintech and the National Strategy on Financial Education 2020-2025. The panel also deliberated on the status and developments under the Insolvency and Bankruptcy Code 2016 and the working of credit rating agencies.
About Financial Stability and Development Council:
FSDC is an apex-level body constituted in 2010 by the government of India based on Raghuram Rajan Committee.
An apex-level FSDC is not a statutory body.
No funds are separately allocated to the council for undertaking its activities.
Chairperson and Members:
Chairperson: The Union Finance Minister of India
Governor Reserve Bank of India (RBl),
Finance Secretary and/ or Secretary, Department of Economic Affairs (DEA),
Secretary, Department of Financial Services (DFS),
Secretary, Ministry of Corporate Affairs,
Secretary, Ministry of Electronics and Information Technology,
Chief Economic Advisor, Ministry of Finance,
Chairman, Securities and Exchange Board of India (SEBI),
Chairman, Insurance Regulatory and Development Authority (IRDA),
Chairman, Pension Fund Regulatory and Development Authority (PFRDA),
Chairman, Insolvency and Bankruptcy Board of India (IBBI)
Additional Secretary, Ministry of Finance, DEA, will be the Secretary of the Council
The Chairperson may invite any person whose presence is deemed necessary for any of its meeting.
To Entrust it with the tasks of existing regulators i.e. RBI,IRDA,SEBI,PFRDA.
The Council shall have a Sub-committee headed by the Governor, RBl. The Sub-committee will replace the existing High Level Coordination Committee on Financial Markets
Financial Sector Development
Macro prudential supervision of the economy including the functioning of large financial conglomerates
Coordinating India’s international interface with financial sector bodies like the Financial Action Task Force (FATF), Financial Stability Board (FSB)and any such body as may be decided by the Finance Minister from time to time.
Authority for Advance ruling states that Gold purchased and sold overseas are liable to GST in India
Why in news?
The ruling by the Gujarat-Bench of the AAR states that GST will be levied on Merchant Trade Transactions.
A domestic company buying goods from abroad and selling to another country will have to pay GST on such transactions even if the said products are not entering the Indian territory.
Opposition for this ruling:
Ruling by Gujarat AAR is contradictory to the provisions under schedule — III of the CGST act.
Schedule-III states that transactions where “supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India” shall be treated neither as supply of goods or services and hence not liable to GST.
What is Advance ruling?
An advance tax ruling is a tool for multinational corporations and for individual tax filers for clarifying and confirming particular taxation arrangements. A written interpretation of tax laws is issued by tax authorities to corporations and individuals who request clarification of taxation arrangements.
The scheme of Advance Rulings has been introduced under the Income-tax Act, 1961. It was reinforced by the Finance Act, 1993.
An authority to issue advance ruling has been also set up.
About Authority for Advance ruling:
A high level body consists of Retired judge of the Supreme Court as Chairman.
Two other members of the rank of Additional Secretary to the Government of India, one each from the Indian Revenue Service and the Indian Legal Service
This is empowered to issue Advance Rulings (Central Excise, Customs & Service Tax) which are binding both on the Income Tax Department and the applicant (an investment venture) in India.
The advance ruling is required to be pronounced by the Authority within six months of the receipt of a valid application.
This practice helps to facilitate foreign investment into the country.
Who can seek advance rulings?
Any non-resident person whether individual, company, firm, association of persons or other body of corporate can make an application for seeking an advance ruling in regard to his/its tax liability. Similarly, certain categories of residents can also seek advance rulings.
Is it binding on tax authorities?
An advance tax ruling binds tax authorities to comply with the tax arrangements set out in the ruling.
Where an advance ruling cannot be sought ?
is already pending in the case of the Non-resident applicant before any income-tax authority, the Appellate Tribunal or any court;
involves determination of fair market value of any property; or relates to a transaction which is designed prima facie for avoidance of income-tax.
Rule of Law Index
Why in news:
The Supreme Court asked the government to treat a writ petition filed by lawyer Ashwini Upadhyay, for setting up expert panels to boost India’s prospects in the Rule of Law Index, as a “representation” and decide on the issue within six months.
Because India has never been ranked even among the top 50 in the Index.
Mr. Upadhyay sought a direction to the government to constitute expert committees to examine the practices of the top 20 countries in the Rule of Law Index-2020.
What is the Rule of Law Index?
The Rule of Law Index is a quantitative assessment tool by the World Justice Project (WJP) designed to offer a detailed and comprehensive picture of the extent to which countries adhere to the rule of law in practice.
It measures countries’ rule of law performance across eight factors:
Limited Government Powers
Absence of Corruption
Order and Security
Definition for Rule of Law by WJP:
The World Justice Project defines the rule of law system as one in which the following four universal principles are upheld:
The government and its officials and agents are accountable under the law.
The laws are clear, publicized, stable and fair, and protect fundamental rights, including the security of persons and property.
The process by which the laws are enacted, administered, and enforced is accessible, efficient, and fair.
Justice is delivered by competent, ethical, and independent representatives and neutrals who are of sufficient number, have adequate resources, and reflect the makeup of the communities they serve