Daily Current Affairs for UPSC CSE
Topics Covered
- Centre’s advisory for urban mobility
- GST Compensation
- Fuel Pricing
- Facts for Prelims
1 . Centre’s advisory for Urban Mobility
Context : Non-motorised transport should be encouraged and touchless and cashless technologies should be adopted to curb COVID-19 transmission on public transit networks, according to a Ministry of Housing and Urban Affairs (MoHUA) advisory on public transport for States, cities and Metro rail companies.
Details of the Advisory
- Ministry issued an advisory suggesting a “three-pronged strategy” for public transport — with short (six months), medium (one year) and long-term (one to three years) measures.
- Non-motorised transport (NMT) should be encouraged and revived. NMT offers perfect opportunity to implement in this COVID-19 crisis as it requires low cost, less human resource, is easy and quick to implement, scalable and environment-friendly
- To reduce human interface, cashless systems like BHIM, PhonePe, Google Pay and PayTM should be used as well as the National Common Mobility Card, the advisory stated.
2 . GST Council
Context : 40th GST Council met under the Chairmanship of Union Finance & Corporate Affairs Minister Smt Nirmala Sitharaman through video conferencing.
Tax Compliance Measures
- The council approved a slew of measures to ease tax compliance, including reduction in late fees for past returns, and COVID-19 related relief for small tax payers for the period between February and July 2020 provided returns are filed by September.
Compensation Cess and Due to states
- Given the shortfall in revenue, the council will meet again in July to discuss the issue of compensation cess and dues to States, and the possibility of borrowing money from the market to meet these dues.
- In July, on the request of all ministers, there shall be a meeting to discuss exclusively one agenda point, and that is compensation cess which has to be given to the State
Inversion Duties
- The GST Council also agreed that there is a need to correct the inversion of duties, but postponed a decision on when to do so.
- The term ‘Inverted Tax Structure’ refers to a situation where the rate of tax on inputs purchased (i.e.GST Rate paid on inputs received) is more than the rate of tax (i.e. GST Rate Payable on outward supplies) on outward supplies.
3 . Fuel Pricing
Context : Auto fuel prices were hiked for the sixth day in a row Friday since oil companies restarted revising prices starting Sunday, after an 82-day hiatus. In the last six days, the petrol price has gone up by Rs 3.31 per litre and diesel by Rs 3.42.
Background
- In theory, retail prices of petrol and diesel in India are linked to the global crude prices. There is supposed to be complete decontrol of consumer-end prices of auto fuels and others such as the aviation turbine fuel or ATF.
- Which means that if crude prices fall, as has largely been the trend since February, retails prices should come down too, and vice versa.
So, why the divergence in the trends?
- One main reason: Oil price decontrol is a one-way street in India — when global prices go up, this is passed on to the consumer, who has to cough up more for every litre of fuel consumed.
- But when the reverse happens and prices go down, the government — almost by default — slaps fresh taxes and levies to ensure that it rakes in extra revenues, even as the consumer, who should have ideally benefited by way of lower pump prices, is short changed and forced to either pay what she’s already paying, or even more.
- The key beneficiary in this subversion of price decontrol is the government. The consumer is a clear loser, alongside fuel retailing companies as well.
Price decontrol
- Price decontrol essentially offers fuel retailers such as Indian Oil, HPCL or BPCL the freedom to fix prices of petrol or diesel based on calculations of their own cost and profits — essentially a factor of the price at which the source their inputs from upstream oil companies such as ONGC Ltd or OIL India Ltd, for whom the price benchmark is derived from global crude prices.
- Fuel price decontrol has been a step-by-step exercise, with the government freeing up prices of ATF in 2002, petrol in the year 2010 and diesel in October 2014.
- Prior to that, the Government used to intervene in fixing the price at which the fuel retailers used to sell diesel or petrol.
- While fuels such as domestic LPG and kerosene still are under price control, for other fuels such as petrol, diesel or ATF, the price is supposed to be reflective of the price movements of the so-called Indian basket of crude oil (which represents a derived basket comprising a variety — ‘sour grade’ (Oman and Dubai average) and ‘sweet grade’ (Brent) — of crude oil processed in Indian refineries).
Why haven’t consumers benefited now despite the sharp fall in crude prices since February?
- Crude prices nosedived from an average of about $55 per barrel in February to $35 in early March, and then falling to $20 by end March as demand slumped because of the pandemic. From that point, the prices have recovered to around $37 now.
- On the other hand, in India, retail prices of fuel were frozen for a record 82-days that covered much of this period, even as the excise duty on fuels was hiked by the Centre twice.
- While the government claimed that the impact of the hike was not passed on to consumers, the latter, however, did not benefit from this fall in crude oil prices to record low levels. Apart from the Centre, a number of states too hiked the levies on auto fuels during this period.
- The decision to raise the duties, Finance Ministry officials said, was taken in view of the tight fiscal situation and that retail prices were unchanged. So, effectively, the excise duty hikes by the centre was to be adjusted by the OMCs against the fall in oil prices. But now, the retail prices are being progressively hiked.
Are India’s taxes on fuels high?
- Centre announced one of the steepest ever hikes in excise duty by Rs 13 per litre on diesel and Rs 10 per litre on petrol, following up on another round of sharp hikes in the first week of March.
- All of this effectively cements India’s position as the country with among the highest taxes on fuel.
- Prior to the increase in excise duty (in February 2020), the government, centre plus states was collecting around 107 per cent taxes, (Excise Duty and VAT) on the base price of petrol and 69 per cent in the case of diesel. Post the first revision the government was able to collect around 134 per cent taxes, (Excise Duty and VAT) on the base price of petrol and 88 per cent in the case of diesel (as on March 16, 2020).
- With the second revision in excise duty in May, the government is collecting around 260 per cent taxes, (Excise Duty and VAT) on the base price of petrol and 256 per cent in the case of diesel (as on 6th May 2020), according to estimates by CARE Ratings.
- In comparison, taxes on fuels as a percentage of pump prices was around 65 per cent of the retail price in Germany and Italy, 62 per cent in the UK, 45 per cent in Japan and under 20 per cent in the US.
- Now, as countries get their economies back on track, oil prices have been moving upwards from the lows seen in April. So, as OMCs pass these hikes on, consumers are forced to bear the increase in global crude prices and face up to the harsh reality — that every time the crude price drops sharply, the government uses the opportunity to fill up its coffers while pump prices for the consumer barely change. But when the reverse happens, consumers are forced to pay up more. So the government gets to encash the upside while the consumers have to make good the downside.
4 . Facts for Prelims
Lonar Lake
- Lonar Lake is located in Buldhana district of Maharashtra
- The lake was formed 52000 years ago when a meteor crashed into earth
- It is earths largest and only hypervelocity impact crater in basaltic rock
- The water of the lake is both saline and alkaline in nature, which makes it one of its kind not only in India but also in the world
- Lonar is named after the demon, Lonasura, and is ringed by fascinating temples, including one with erotic sculptures reminiscent of Khajuraho.
Doppler radars
- A Doppler radar is a specialized radar that uses the Doppler effect to produce velocity data about objects at a distance. It does this by bouncing a microwave signal off a desired target and analyzing how the object’s motion has altered the frequency of the returned signal.
Leptospirosis
- Leptospirosis is a relatively rare bacterial infection that affects people and animals.
- It can pass from animals to humans when an unhealed break in the skin comes in contact with water or soil where animal urine is present.
- Several species of the Leptospira genus of bacteria cause leptospirosis
- It’s most common in warm climates.
- Without treatment, leptospirosis can lead to kidney and liver damage and even death. Antibiotics clear the infection.