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  • 29 Apr 2023
  • 47 min read
Governance

CGTMSE Scheme

For Prelims: CGTMSE Scheme, MSMEs, SIDBI, Initiatives for MSME Credit

For Mains: MSMEs - Government Policies & Interventions, Initiatives for their promotion

Why in News?

The Union Minister for MSME recently launched the revamped Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) Scheme.

What is the CGTMSE Scheme?

    • About:
    • Scope:
      • Both the existing and the new enterprises are eligible to be covered under the scheme.
    • Funding:
      • The corpus of CGTMSE is contributed by the GoI and SIDBI in the ratio of 4:1 respectively.
      • The Ministry of MSMEs, and Small Industries Development Bank of India (SIDBI) established a trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the CGTMSE Scheme.
    • Financial Inclusion for MSMEs:
      • While launching the revamp of CGTMSE, it was announced that CGTMSE will collaborate with National Institute for MSME, Hyderabad for setting up a Centre of Financial Inclusion.
      • The Centre is expected to provide financial literacy and credit counselling to MSEs, thus helping them to better utilize the benefits of the CGTMSE Scheme.
  • Note: SIDBI was set up in April 1990 under an Act of the Indian Parliament, acts as the Principal Financial Institution for the Promotion, Financing, and Development of the MSME sector as well as for coordination of functions of institutions engaged in similar activities.

What is the Revamped CGTMSE?

  • Major Changes:
    • The revamped version of the CGTMSE Scheme has been provided with an additional corpus support of ₹9,000 crore in the Union Budget for FY 2023-24 to provide a guarantee for an additional ₹2 lakh crore to MSEs.
    • Other major changes made in the revamped version include:
      • Reduction in guaranteed fees for loans up to ₹1 crore by 50%.
      • Raising of ceiling for guarantee from ₹2 crore to ₹5 crore.
      • Raising the bar for claim settlement without taking legal action from the previous limit of Rs. 5 lakhs to Rs. 10 lakhs.
  • Significance:
    • The reduced guaranteed fees will make it easier for MSEs to avail loans.
    • The increased ceiling for guarantee and threshold limit for claim settlement will provide better protection to lenders in case of any default by the borrower.
    • The scheme is expected to boost credit flow to MSEs, thus creating more employment opportunities in the country.
    • These changes have been made to improve the accessibility, affordability and availability of credit to MSEs, especially in the wake of the COVID-19 pandemic and its impact on their businesses.

What are the Other Initiatives Related to MSME Credit?

Source: PIB

Indian Polity

FIR Provisions in Cognizable Offences

For Prelims: FIR provisions, Zero FIR, Cognizable offence, POCSO Act.

For Mains: FIR - Provisions, Supreme Court’s view

Why in News?

Recently, the Supreme Court has issued a notice to Delhi Police on a petition filed by wrestlers seeking an FIR against the President of Wrestling Federation of India (WFI), on allegations of sexual harassment.

  • The Solicitor General submitted to the court that the Delhi Police feels there is a need to conduct a ‘preliminary inquiry’ before registering the FIR.
  • Sections pertaining to sexual harassment and sexual assault of the Indian Penal Code (IPC) fall within the category of cognizable offences.
  • Since the complainants include a minor, the FIR provisions under Protection of Children from Sexual Offences (POCSO) Act 2012 are applicable.

What is a FIR?

  • About:
    • First Information Report (FIR) is a written document prepared by the police when they receive information about the commission of a cognizable offence.
    • The registration of an FIR is the first step towards the probe.
    • It sets into motion the investigation and the police may:
      • Seek custodial interrogation of the accused,
      • File a chargesheet based on the evidence, or
      • File a closure report if the probe reveals no merit in the allegations made in the FIR.
  • Registration of FIR in Cognizable Offences:
    • Section 154 (1), CrPC enables the police to register an FIR after information is received about a cognizable offence.
      • A cognizable offence/case is one in which a police officer may make an arrest without a warrant.
    • The law also has provision for the registration of a ‘Zero FIR’.
      • Where even if the alleged offence has not been committed within the jurisdiction of the police station approached, the police can file an FIR and transfer it to the police station concerned.
  • Failure to Register an FIR:
    • Based on Justice JS Verma committee’s (2013) recommendation, section 166A was inserted to IPC.
    • The section states that if a public servant knowingly disobeys any direction of law including failing to record any information given to him in relation to a cognizable offence, he can be punished with imprisonment for a term of up to two years and fined.

What are the FIR Provisions under POCSO Act 2012?

  • Section 19 of the Act states that any person who has an apprehension that an offence under POCSO Act has been committed shall provide such information to the Special Juvenile Police Unit or the local police.
    • The section also requires the registration of an FIR in writing.
  • Section 21 of the Act even states that not reporting or recording an offense can result in up to six months of imprisonment, a fine, or both.
    • The Act, therefore, also makes it mandatory for a report to be filed on receiving a complaint, including from a child.

Can a Preliminary Inquiry be Conducted Before Registration of an FIR?

  • Supreme Court in Lalita Kumari vs Govt of UP and ors (2013) case said that registration of an FIR under section 154 CrPC is mandatory if information of a cognizable offence is received.
  • Other considerations are not relevant at the stage of registration of FIR, such as, whether the information is falsely given, whether the information is genuine, whether the information is credible etc.
  • It also said, “The scope of preliminary inquiry is not to verify the veracity or otherwise of the information received but only to ascertain whether the information reveals any cognizable offence.”
  • It gave an illustrative list of categories of cases where such an inquiry can be made, including family disputes, commercial offences, medical negligence and corruption cases or cases where there is an abnormal delay in reporting the matter.
  • The court said that the inquiry should not exceed seven days.

What are the Remedies if Police Refuse to File an FIR?

  • Section 154 (3), CrPC says that a person who has been aggrieved after a police in-charge refused to file an FIR can send the information to the Superintendent of Police.
  • Section 156, CrPC says if a person is aggrieved by the police’s refusal to file an FIR, a complaint can be made before a magistrate. The magistrate can then order registration of a case at the police station.
  • SC’s View: The supreme court has said that the complaint before the magistrate would be treated as an FIR and the police can initiate its investigation.
    • This also permits the police to investigate a criminal offence without any formal FIR.

Source: IE

Governance

India's Push to Eradicate Drugs

For Prelims: NDPS Act, NCB, Golden Crescent and Golden Triangle, National Fund for Control of Drug Abuse, National Action Plan for Drug Demand Reduction

For Mains: Drug: Extent of usage, Challenges, Initiatives, Problem of drug abuse and related Initiatives.

Why in News?

The Ministry of Home Affairs (MHA) is making an aggressive push to eradicate drugs in the country. In the past three years, over 89,000 football fields of opium and cannabis cultivation have been destroyed across several states in the country.

  • The government aims to make India “drug-free” by 2047.

What is the Extent of Drug Abuse in India?

What are India’s Efforts in Eliminating Opium and Cannabis Cultivation?

  • Opium and cannabis are two of the most commonly cultivated and consumed drugs in India.
    • Opium is derived from the poppy plant and cannabis from the hemp plant. Both have psychoactive effects and can cause addiction and health problems.
    • The government has intensified its crackdown on drugs with various measures such as destroying illegal crops, seizing drugs, arresting traffickers and creating awareness.
  • Some of the achievements of the government in this regard are:
    • According to the Narcotics Control Bureau (NCB), opium and cannabis cultivation in area the size of over 89,000 football fields has been destroyed in the past three years.
    • The NCB said that in the past three years, 35,592 acres of poppy cultivation and 82,691 acres of cannabis cultivation have been destroyed across the country.
      • The States where the crops were destroyed are Arunachal Pradesh, Assam, Manipur, Jharkhand, Madhya Pradesh, Himachal Pradesh, Jammu and Kashmir, Gujarat, Maharashtra, Odisha, Tripura, and Telangana.
    • The NCB also said that it has seized over 6.7 lakh kilograms of drugs worth over Rs. 3,000 crore in the past three years.
      • The seized drugs include heroin, opium, cannabis, cocaine, methamphetamine, MDMA (ecstasy), ketamine, etc.

How is the Government Tackling the Drug Problem?

  • Legislative Measures: The government has enacted various laws such as the Drugs and Cosmetics Act, 1940; the Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985; and the Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act (PITNDPS), 1988
    • To regulate and prohibit the manufacture, distribution, possession, and consumption of drugs.
    • The NDPS Act provides for stringent penalties for drug offenses.
  • Institutional Measures: The government has created institutions such as the NCB, the Directorate of Revenue Intelligence (DRI), the Customs Department, etc.
    • These institutions enforce drug laws and coordinate with other agencies at national and international levels.
    • The NCB is also part of various bilateral and multilateral initiatives such as the SAARC Drug Offences Monitoring Desk (SDOMD).
  • Preventive Measures:
    • The government has launched various schemes and programmes such as National Action Plan for Drug Demand Reduction (NAPDDR), Nasha Mukt Bharat Abhiyan (NMBA), etc. to
      • These schemes prevent drug abuse and provide treatment and rehabilitation services to drug addicts.
      • The NAPDDR aims to reduce drug demand through awareness generation, capacity building, de-addiction and rehabilitation.
      • The NMBA aims to create awareness about harmful effects of drugs among school children.
  • NIDAAN and NCORD Portals:
    • It is a database that contains the photographs, fingerprints, court orders, information and details of all suspects and convicts arrested under the NPDS Act which can be accessed by State and Central law enforcement agencies.
    • On the National Narcotics Coordination portal (NCORD), the source and destination of drugs are highlighted and information up to the district levels is maintained.

What are the Challenges Associated with Drug Controlling in India?

  • Lack of Adequate Infrastructure:
    • There is a shortage of trained personnel, specialized equipment, and proper infrastructure to effectively combat drug trafficking and abuse.
  • Proliferation of New Psychoactive Substances:
    • The use of new psychoactive substances is on the rise in India, and these drugs are often not covered under existing drug control laws, making it difficult for law enforcement agencies to regulate them effectively.
  • Dark Net Easing Drug Trafficking:
    • As per NCB, the use of the ‘dark net’ and cryptocurrency in illegal drugs is increasing, and in 2020, 2021 and 2022, the agency investigated 59 such cases.
  • Poor Awareness and Education:
    • There is a lack of awareness and education about the dangers of drug abuse and addiction, especially in rural areas.
  • High Demand:
    • India has a large population, and there is a high demand for drugs, which fuels the drug trade.
  • Social Stigmatization:
    • Drug addiction is still highly stigmatized in Indian society, which makes it difficult for individuals to seek help and treatment.

What Measures can be Taken to Eradicate Drug-Abuse?

  • Strengthening Law Enforcement:
    • Strengthening the implementation of the NDPS Act and PITNDPS Act by providing adequate resources, training and modern equipment to law enforcement agencies.
    • Creating a more robust surveillance and intelligence gathering system to effectively curb drug trafficking along with improving coordination between agencies.
  • Enhancing Preventive Measures:
    • Increasing the availability of affordable treatment and rehabilitation facilities for drug addicts and scaling up awareness campaigns to educate people about the dangers of drug abuse and the importance of seeking help.
  • Addressing Supply Reduction:
    • Increasing the focus on intercepting drug supply chains by improving border controls, using advanced technology and increasing international cooperation.
    • Reducing drug production through alternative livelihood programs for farmers engaged in illicit cultivation.
      • Jharkhand State has launched an alternate livelihood scheme for farmers growing poppy illegally and provides cash incentives to destroy the illegal crops.
  • Strengthening International Cooperation:
    • Strengthening cooperation with neighboring countries, especially those in the Golden Crescent and the Golden Triangle, to effectively curb drug trafficking.
    • Strengthening partnerships with international organizations such as the UNODC and Interpol to exchange information and best practices.
  • Use of Technology:
    • Big Data and analytics and AI to identify and track drug trafficking networks, monitor drug movements, and identify patterns related to drug abuse and trafficking.
    • Drones and satellites, to monitor and detect illegal drug cultivation and provide high-resolution images of suspected areas.
    • Develop an online reporting system where citizens can report drug abuse and trafficking activities.

UPSC Civil Services Examination, Previous Year Questions (PYQs)

Mains

Q. India’s proximity to the two of the world’s biggest illicit opium-growing states has enhanced her internal security concerns. Explain the linkages between drug trafficking and other illicit activities such as gunrunning, money laundering and human trafficking. What counter-measures should be taken to prevent the same? (2018)

Q. In one of the districts of a frontier state, narcotics menace has been rampant. This has resulted in money laundering, mushrooming of poppy farming, arms smuggling and near stalling of education. The system is on the verge of collapse. The situation has been further worsened by unconfirmed reports that local politicians as well assume senior police officers are providing surreptitious patronage to the drug mafia. At that point of time a woman police officer, known for her skills in handling such situations is appointed as Superintendent of Police to bring the situation to normalcy. If you are the same police officer, identify the various dimensions of the crisis. Based on your understanding, suggest measures to deal with the crisis. (2019)

Source: TH

Internal Security

Dima Hasao Peace Pact: Assam

For Prelims: Dimasa National Liberation Army, NCHAC, Sixth Schedule, Ahom rule.

For Mains: Dima Hasao Peace Pact, Dimasa Tribals and their protection under Schedule six.

Why in News?

Recently, the Dimasa National Liberation Army (DNLA) signed a Peace Agreement with the Assam government and the Union Government.

  • In September 2021, the DNLA had declared a unilateral ceasefire for a period of six months following an appeal by the chief minister. The ceasefire has been extended since then.

What does this Agreement Seek?

  • The Memorandum of Understanding (MoU) has been signed which makes the DNLA lay down its arms and abide by the Constitution of India.
    • The group will disband their armed organisation, vacate all camps occupied by DNLA cadres and join the mainstream.
    • A total of 179 DNLA cadres will surrender their arms and ammunition.
  • The central and state governments will provide Rs 500 crore each for the development of the Dimasa tribal areas.
  • Dimasa Welfare Council will be set up by the Government of Assam to protect, preserve and promote a social, cultural, and linguistic identity to meet political, economic and educational aspirations and will ensure speedy and focused development of the Dimasa people residing outside the jurisdiction of North Cachar Hills Autonomous Council (NCHAC).
    • Dimasa Tribal Region is run by NCHAC.
  • The MoU also provides for the appointment of a Commission under Paragraph 14 of the Sixth Schedule to the Constitution of India to examine the demand for the inclusion of additional villages contiguous to the NCHAC with the Council.
    • The Sixth Schedule under Article 244 provides for the formation of autonomous administrative divisions — Autonomous District Councils (ADCs) — that have some legislative, judicial, and administrative autonomy within a state.

What is DNLA?

  • It is an insurgent group operating in Dima Hasao and Karbi Anglong districts in Assam.
  • The DNLA was established in April 2019 seeking a sovereign territory for the Dimasa tribals and launched an armed insurgency to achieve its goal.
  • The group aims to “develop a sense of brotherhood among the Dimasas and also to rebuild the trust and faith among the Dimasa society for regaining the Dimasa Kingdom”.
  • The group runs on extortion and taxation. “It draws its support and sustenance from the NSCN(IM) of Nagaland.

Who are Dimasas?

  • About:
    • The Dimasas (or Dimasa-Kacharis) are the earliest known rulers and settlers of Assam, and now live in Dima Hasao, Karbi Anglong, Cachar, Hojai and Nagaon districts of central and southern Assam, as well as parts of Nagaland.
      • Some of the historians describe them as “aborigines” or the “earliest known inhabitants of the Brahmaputra Valley”.
    • Prior to Ahom rule, the Dimasa kings — believed to be the descendants of the rulers of the ancient Kamarupa kingdom — ruled large parts of Assam along the south bank of the Brahmaputra between the 13th and 16th centuries.
    • Their earliest historically known capital was Dimapur (now in Nagaland), and later Maibang in North Cachar Hills.
    • It was a powerful kingdom and had almost all of the southern belt of Brahmaputra under its control in the 16th century.
  • Protection:
    • Dima Hasao district and Karbi Anglong both enjoy the Sixth Schedule status granted by the Constitution of India.
    • They are run by the North Cachar Hills Autonomous Council (NCHAC) and the Karbi Anglong Autonomous Council (KAAC) respectively.
      • The Autonomous Council is a powerful body and almost all the departments of government are under its control except the police and Law & Order are under Assam Government.

What is the history of Militancy in Dima Hasao Region?

  • Militancy:
    • The hill districts of Assam, Karbi Anglong and Dima Hasao, have had a long history of insurgency by Karbi and Dimasa groups which peaked in the mid-1990s, and was rooted in a core demand of statehood.
    • In Dima Hasao, the demand for statehood began in the 1960s, along with other tribal sections of undivided Assam.
    • While new states such as Meghalaya were carved out, Karbi Anglong and North Cachar remained with Assam on a promise of more power by the government, including implementation of Article 244 (A), which allows for an ‘autonomous state’ within Assam in certain tribal areas. This was never implemented.
  • Dimasa National Security Force:
    • A demand for a full-fledged state, ‘Dimaraji’, gathered steam, and led to the formation of the militant Dimasa National Security Force (DNSF) in 1991.
      • The group surrendered in 1995, but its commander-in-chief (Jewel Gorlosa) broke away and formed the Dima Halam Daogah (DHD).
    • In 2003, the DHD began negotiations with the government, but its commander-in-chief broke and formed the DHD-J (Jewel) with an armed group called Black Widow.
      • These groups were violent and had popular support. They signed a ceasefire in 2012.

What are the other Peace Developments in North East India?

UPSC Civil Services Examination, Previous Year Questions (PYQs)

Mains:

Q. The North – East region of India has been infested with insurgency for a very long time. Analyse the major reasons for the survival of armed insurgency in this region. (2017)

Source: TH

Governance

Regulating Virtual Digital Asset

For Prelims: PMLA, VDA, Cryptocurrency, Fiat Currency.

For Mains: Regulating Virtual Digital Asset.

Why in News?

Recently, the Ministry of Finance has extended the Anti-money Laundering provisions to Virtual Digital Assets (VDA) businesses and service providers.

  • The Ministry has extended the scope of Prevention of Money Laundering Act (PMLA) Act of 2002 by adding the activities related to VDA and Crypto currency under the Act.

How will be VDAs covered under PMLA 2002?

  • Extended Activities:
    • Exchange between VDA and Fiat Currencies (Legal Tender by the Central Government).
    • Exchange between one or more forms of VDAs
    • Transfer of VDAs
    • Safekeeping or administration of VDAs or instruments enabling control over VDAs
    • Participation in and provision of financial services related to an issuer’s offer and sale of a VDA
  • Now the VDA will have to register as a reporting entity with the Financial Intelligence Unit-India (FIU-IND).
    • The FIU-IND performs the same functions as FinCEN in the USA. Under the Finance Ministry, this was set up in 2004 as the nodal agency for receiving, analyzing and disseminating information relating to suspect financial transactions.
    • For instance, Reporting entity platforms such as CoinSwitch are now mandated to know your customer, record and monitor all transactions, and report to the FIU-IND as and when any suspicious activity is detected.
  • In Line with Global Guidelines: This risk-mitigation measures is in line with global guidelines put forward by the International Monetary Fund (IMF) and the Financial Action Task Force (FATF).
    • FATF has a comprehensive definition of Virtual Asset Service Providers (VASPs), an extensive list covering intermediaries, brokers, exchanges, custodians, hedge funds, and even mining pools.
    • Such guidelines acknowledge the role VASPs play in regulating and monitoring the virtual digital assets ecosystem.

What is the Significance of the Move and What are the Concerns?

  • Significance:
    • Such rules are already applicable to banks, financial institutions and certain intermediaries in the securities and real estate markets.
    • Extending them to virtual digital assets provides virtual digital assets platforms with a framework to diligently monitor and take actions against malpractices.
    • A standardization of such norms will go a long way in making the Indian virtual digital assets sector transparent.
    • It will also build confidence and assurance in the ecosystem and give the government more oversight on virtual digital asset transactions, which will be a win-win for all.
  • Concerns:
    • There is a concern that without a central regulator, VDA entities could end up dealing directly with enforcement agencies, like ED (Enforcement Director).
    • Owing to current tax regime, many Indian VDA users have already switched from domestic exchanges to foreign counterparts, causing a decrease in tax revenues and transaction traceability. This could also discourage international investors and result in capital outflow.

What are Virtual Digital Assets?

  • The government in the Union Budget for 2022-23 introduced new provisions aimed at taxing and tracking Virtual Digital Assets. Along with the framework for taxation, the Budget for the first time defined virtual digital assets.
  • It has defined virtual digital assets in the newly inserted clause (47A) under Section 2 of the Income Tax Act, 1961.
  • VDA has been defined to mean any information or code or number or token (not being Indian currency or any foreign currency), generated through cryptographic means, with the promise or representation of having inherent value.
  • VDAs mean cryptocurrencies, DeFi (decentralised finance) and non-fungible tokens (NFTs).
  • From April 2022, India introduced a 30% income tax on gains made from cryptocurrencies.
  • In July 2022, rules regarding 1% tax deducted at source on cryptocurrency came into effect.

Way Forward

  • India should reconsider its high tax rates on virtual digital assets, which are currently higher than other asset classes.
  • With the new PMLA notification reducing the risks of money laundering and terror financing, there is an opportunity to align virtual digital assets taxes with other asset classes.
  • Doing so would reduce tax arbitrage, which would help retain capital, consumers, investments, and talent within the country and reduce the size of the grey economy for virtual digital assets.
  • In Asia, Japan and South Korea have established a framework to licence VASPs, while in Europe, the Markets in Crypto-Assets (MiCA) regulation has been passed by the European Parliament. Going forward, a progressive regulatory framework will instill the animal spirit in India’s innovation economy and establish India’s virtual digital assets leadership.
  • Crypto assets are by definition borderless and require international collaboration to prevent regulatory arbitrage. Therefore, any legislation for regulation or for banning can be effective only with significant international collaboration on the evaluation of the risks and benefits and evolution of common taxonomy and standards.

Source: TH

International Relations

NET Zero Innovation Virtual Centre

For Prelims: NET Zero Innovation Virtual Centre, India-UK Science & Technology Cooperation, India’s Net Zero Targets

For Mains: India-UK relations, India’s net-zero emissions target

Why in News?

In the recent India-UK Science & Innovation Council meeting, India and the United Kingdom announced the establishment of a 'NET Zero' Innovation Virtual Centre aimed at addressing climate change and environmental targets.

What is the NET Zero Innovation Virtual Centre?

  • It is a joint initiative of India and the UK to enhance their cooperation on science and technology, especially on climate change and environmental issues.
  • It will provide a platform to bring stakeholders from both countries together to work on some of the focus areas such as the decarbonization of manufacturing process and transport systems, and green hydrogen as a renewable source.
  • It will support the goal of achieving net zero emissions balancing the amount of greenhouse gases emitted and removed from the atmosphere.
  • It will also facilitate knowledge exchange, innovation, research and development, capacity building, and policy dialogue between the two countries.

What are the Key Highlights from the Meeting?

  • India-UK Science and Technology Cooperation:
    • The UK has emerged as India’s 2nd largest international research and innovation partner.
    • The joint research program between India and the UK has grown from almost zero to close to £300-400 million.
  • India's Economic and Technological Capabilities:
    • India is fast moving to become an economic powerhouse driven by its extraordinary technological and innovative capabilities, especially after the Covid vaccine success story.
    • Energy efficiency and renewable energy are central pillars where India has already taken the lead through various initiatives like the India Solar Alliance and Clean Energy Mission.
    • India is committed to achieving ambitious net-zero targets through consistent efforts towards developing mitigation and monitoring solutions for environmental pollution and techno-based pathways for reducing carbon emissions.
  • Industry-Academia Collaboration:
    • The cooperation will provide an opportunity for Indian and UK academia and industry to develop newer products/processes together for the economic growth of both nations.

UPSC Civil Services Examination, Previous Year Questions (PYQs)

Mains:

Q. Describe the major outcomes of the 26th session of the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC). What are the commitments made by India in this conference? (2021)

Source: PIB

Economy

Common Reporting Standard: OECD

For Prelims: Common Reporting Standard, OECD, AEIO, G20, Tax Evasion, BEPS.

For Mains: Need for Increasing Scope of Common Reporting Standard.

Why in News?

India is pushing to widen the scope of the Common Reporting Standard (CRS) at the G20 grouping to include Non-Financial Assets like real estate properties under the Automatic Exchange of Information (AEOI) among OECD (Organisation for Economic Cooperation and Development) countries.

  • India currently has AEOI with 108 jurisdictions for receiving financial information and with 79 jurisdictions for sending information automatically.
  • AEOI provides for the exchange of non-resident financial account information with the tax authorities in the account holder's country of residence. It reduces the possibility of tax evasion.

What is the Common Reporting Standard (CRS)?

  • About:
    • The CRS was developed in response to the G20 request and approved by the OECD Council on 15th July 2014.
    • It calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis.
    • It sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.
  • Current Framework:
    • Presently, the OECD's Automatic Exchange of Information (AEOI) framework provides for sharing of financial account details among signatory countries with an aim to check tax evasion.
      • In August 2022, the OECD also approved the Crypto-Asset Reporting Framework (CARF) which provides for the reporting of tax information on transactions in Crypto-Assets in a standardized manner, with a view to automatically exchanging such information.

What is the Need for Broadening the Scope of AEIO?

  • There is a need to broaden the scope of AEOI so that the information could be used not only to check tax evasion, but also for other non-tax law enforcing purposes.
  • The risks are not only in the Financial Assets, but also there is a risk of tax evasion in Non-Financial Assets such as real Estate and properties, therefore expansion of CRS from financial to other non-financial accounts is important.
    • As per the OECD’s Tax Transparency report, amid the current geopolitical and debt crisis, there is a need to check tax evasion and illicit financial flows, especially by Asian nations which are estimated to have lost Euro 25 billion in revenue in 2016.
    • Quoting a study, the OECD report said 4 % of Asia’s financial wealth amounting to Euro 1.2 trillion was held offshore, leading to a potential annual revenue loss of Euro 25 billion for the region in 2016.

What are the Efforts to Manage Tax Evasion?

Way Forward

  • Expanding the exchange of financial and non-financial information can have significant benefits for tax collection and non-tax law enforcement efforts.
  • The G20's commitment to prioritizing these initiatives can lead to increased transparency and accountability in global financial systems, which will ultimately benefit everyone.
  • It is essential to continue working collaboratively across borders to improve information sharing mechanisms and ensure their effectiveness while also addressing any potential privacy concerns. By doing so, we can build a fairer and more sustainable global economy that benefits all individuals and nations.

Source: TH

Rapid Fire

Rapid Fire Current Affairs

SUPREME Initiative

Recently, the Ministry of Science and Technology launched the Support for Up-gradation Preventive Repair and Maintenance of Equipment (SUPREME) initiative.

It is a first-of-its-kind programme by the government, that extends financial support for repair, upgradation, maintenance, retrofitting, or acquiring additional attachments to increase the functional capabilities of existing Analytical Instrumentation Facilities (AIFs). Such facilities at institutions recognised by the University Grants Commission (UGC) are eligible to apply for grants under SUPREME.

AIFs are to provide facilities of sophisticated analytical instruments to scientists and other users from academic institutes, R&D laboratories and industries to enable them to carry out measurements for R&D work.

Makkalai Thedi Mayor

Chennai's Mayor has announced that she will begin a new initiative called ‘Makkalai Thedi Mayor’. The scheme is designed to address civic issues across the 15 zones in Chennai in a more streamlined and efficient manner, with the mayor visiting each zone every 15 days to receive petitions from residents. The first meeting will take place in Royapuram, and residents of all the wards in the area are encouraged to submit their concerns, such as issues relating to roads, stormwater drains, streetlights, toilets, birth and death certificates, property tax, professional tax, garbage clearance, removal of encroachments, parks, and playgrounds.

The Inaugural Session Y20 Pre-Summit

The inaugural session of the Y20 Pre-Summit was held in Leh and was inaugurated by the Lieutenant Governor of Leh-Ladakh. The session discussed various topics such as health and wellbeing, climate change and disaster risk reduction, and youth in democracy and governance. The theme of the session was ‘Youth-led Resilient Recovery’ and the event had participants from G20 countries. The session emphasized the role of youth in bringing about sustainable development and in tackling global issues such as climate change. The event also showcased the rich culture, traditions, and scenic beauty of Ladakh. Handicrafts and handlooms by SHGs comprised of Ladakhi women highlighted pashmina wool, wood carving, and apricots as a part of the horticulture heritage of Ladakh.

Y20 is the official youth engagement group for the G20, which brings together young leaders worldwide to discuss and recommend policy solutions to global challenges. India is hosting the Y20 summit for the first time, with a focus on global youth leadership and partnership. In the lead-up to the final summit, there will be pre-summits and discussions at universities across the country.

Read more: India to host G20 Summit in 2023

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