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Daily Current Affairs 06.02.2022 (Many seats redrawn in J&K delimitation draft, Sariska wears the stripes of success, U.S. restores sanction waiver to Iran, Crypto riddle: tax first, recognition later?, Why are India’s imports from China rising?, When will new Vande Bharat trains be launched?)

Daily Current Affairs 06.02.2022 (Many seats redrawn in J&K delimitation draft, Sariska wears the stripes of success, U.S. restores sanction waiver to Iran, Crypto riddle: tax first, recognition later?, Why are India’s imports from China rising?, When will new Vande Bharat trains be launched?)

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1. Many seats redrawn in J&K delimitation draft

NC rejects interim report, calls it unconstitutional

The J&K Delimitation Commission has come out with a fresh interim report proposing the redrawing of many Assembly and the lone Lok Sabha constituencies in Kashmir, besides the allocation of one more seat to the division and six more to Jammu. The panel has shared the report with its associate members, including three MPs of the National Conference (NC) and two of the BJP.

According to the NC lawmakers, none of the suggestions made in response to an earlier draft proposal, shared last December with them, have been incorporated in the fresh interim proposal. They rejected the interim report, saying the recommendations were “unconstitutional”.

Srinagar seats recast

The commission has proposed the redrawing of five of the eight Assembly segments in Srinagar. The Habba Kadal seat, which had a sizeable number of Kashmiri Pandit voters, has been split into three. Also proposed are large-scale merger and creation of new constituencies in north Kashmir and Budgam in central Kashmir. The Kunzer area is likely to be a new Assembly segment, while Sangrama will be merged into other constituencies in north Kashmir.

Rajouri and Poonch districts, which have a significant Hindu population, will be a part of the Anantnag Lok Sabha constituency, earlier dominated by Muslims, in south Kashmir. Several Assembly segments of Budgam have been merged with the Baramulla Lok Sabha constituency in north Kashmir. Pulwama, Tral and parts of Shopian in the Anantnag constituency have now been added to the Srinagar Lok Sabha constituency.

Officials said the associate members had been asked to submit their objections by February 14. The commission, headed by retired Supreme Court judge Justice Ranjana Desai, was constituted under the J&K Reorganisation Act and its second term ends on March 6.

The Commission, which added six Assembly segments to Jammu and one to Kashmir, is likely to make the draft public and invite responses from J&K citizens.

The Jammu and Kashmir Reorganisation act,2019

  • The Jammu and Kashmir Reorganisation Bill, 2019 was introduced in Rajya Sabha on August 5, 2019 by the Minister of Home Affairs, Mr. Amit Shah. The Bill provides for reorganisation of the state of Jammu and Kashmir into the Union Territory of Jammu and Kashmir and Union Territory of Ladakh.
     
  • Reorganisation of Jammu and Kashmir: The Bill reorganises the state of Jammu and Kashmir into: (i) the Union Territory of Jammu and Kashmir with a legislature, and (ii) the Union Territory of Ladakh without a legislature.  The Union Territory of Ladakh will comprise Kargil and Leh districts, and the Union Territory of Jammu and Kashmir will comprise the remaining territories of the existing state of Jammu and Kashmir. 
     
  • Lieutenant Governor: The Union Territory of Jammu and Kashmir will be administered by the President, through an administrator appointed by him known as the Lieutenant Governor.  The Union Territory of Ladakh will be administered by the President, through a Lieutenant Governor appointed by him. 
     
  • Legislative Assembly of Jammu and Kashmir: The Bill provides for a Legislative Assembly for the Union Territory of Jammu and Kashmir.  The total number of seats in the Assembly will be 107.  Of these, 24 seats will remain vacant on account of certain areas of Jammu and Kashmir being under the occupation of Pakistan.  Further, seats will be reserved in the Assembly for Scheduled Castes and Scheduled Tribes in proportion to their population in the Union Territory of Jammu and Kashmir.  In addition, the Lieutenant Governor may nominate two members to the Legislative Assembly to give representation to women, if they are not adequately represented.     
     
  • The Assembly will have a term of five years, and the Lieutenant Governor must summon the Assembly at least once in six months. The Legislative Assembly may make laws for any part of the Union Territory of Jammu and Kashmir related to: (i) any matters specified in the State List of the Constitution, except “Police” and “Public Order”, and (ii) any matter in the Concurrent List applicable to Union Territories.  Further, Parliament will have the power to make laws in relation to any matter for the Union Territory of Jammu and Kashmir.
     
  • Council of Ministers: The Union Territory of Jammu and Kashmir will have a Council of Ministers of not more than ten percent of the total number of members in the Assembly.  The Council will aide and advise the Lieutenant Governor on matters that the Assembly has powers to make laws.  The Chief Minister will communicate all decisions of the Council to the Lieutenant Governor.        
     
  • High Court: The High Court of Jammu and Kashmir will be the common High Court for the Union Territories of Ladakh, and Jammu and Kashmir.  Further, the Union Territory of Jammu and Kashmir will have an Advocate General to provide legal advice to the government of the Union Territory.   
      
  • Legislative Council: The Legislative Council of the state of Jammu and Kashmir will be abolished.  Upon dissolution, all Bills pending in the Council will lapse.  
     
  • Advisory Committees: The central government will appoint Advisory Committees, for various purposes, including: (i) distribution of assets and liabilities of corporations of the state of Jammu and Kashmir between the two Union Territories, (ii) issues related to the generation and supply of electricity and water, and (iii) issues related to the Jammu and Kashmir State Financial Corporation.  These Committees must submit their reports within six months to the Lieutenant Governor of Jammu and Kashmir, who must act on these recommendations within 30 days. 
     
  • Extent of laws: The Schedule lists 106 central laws that will be made applicable to Union Territories of Jammu and Kashmir and Ladakh on a date notified by the central government.  These include the Aadhaar Act, 2016, the Indian Penal Code, 1860, and the Right to Education Act, 2009.  Further, it repeals 153 state laws of Jammu and Kashmir.  In addition, 166 state laws will remain in force, and seven laws will be applicable with amendments.  These amendments include lifting of prohibitions on lease of land to persons who are not permanent residents of Jammu and Kashmir.

2. Sariska wears the stripes of success

Tiger population now 25, years after they became extinct in the reserve

The measures for habitat management for tigers launched about six months ago at the famous Sariska Tiger Reserve in Rajasthan’s Alwar district have started bearing fruit. The tiger population in the wildlife sanctuary has gone up to 25, while the resources are being provided to create water holes and develop grasslands for ungulates as a prey base.

New tourist route

The forest administration has opened a new route in the tiger reserve’s buffer zone, adjacent to Alwar town, for tourists to facilitate better sightings of the big cats. The new Bara-Liwari route, located in the region where a tigress gave birth to two cubs recently, will reduce pressure on the core area and increase livelihood opportunities for the rural population.

A foundation established by a private bank has started delivering goods and resources which the Forest Department could not arrange because of a variety of handicaps. As part of its corporate social responsibility expenditure, the foundation is funding development of grasslands, earthen bunds and water holes for wild animals at 10 different locations and making livelihood intervention for the villagers being relocated from the sanctuary.

The tiger reserve, spread across 1,216 sq. km, witnessed the first-of-its-kind tiger relocation from the Ranthambore National Park by helicopter in 2008 after the felines became extinct in the sanctuary. Since then, the animal has taken some time in multiplying at its own ease, unlike the Panna tiger reserve in Madhya Pradesh, where a similar aerial translocation was carried out in 2009.

Aid for guards

The foundation has distributed 23 motorcycles with helmets to the forest guards in Sariska for monitoring the tiger movement with the pledge that one new motorcycle per new tiger will be given in the future.

Tourism & Wildlife Society of India (TWSI) honorary secretary Harsh Vardhan, who has been visiting Sariska for the last four decades, told The Hindu that the forest was now depicting an appropriate balance between the prey and predator.

The grassland habitats developed in dry patches of land have helped ungulates to feed better and breed in the areas such as Naya Pani, Dabli and Bhagani, leading to an enhanced feed for tigers.

The forest administration, assisted by the foundation, has created new water sources at 10 diverse habitats within the forest, where solar pump-based tube wells were being sunk. This will facilitate the supply of water to far-off areas, even in the elevated zones without any diesel pump noise as faced in the past.

Sariska Tiger Reserve’s Field Director R.N. Meena said three more zones in the core area would be opened for tourists in the near future. Re-routing has been done for the visitors’ vehicles so as to occasionally remain off-beat and cover inner forest regimes to gain better sightings of tigers.

Amid the efforts being made for relocation of villages, about 1,000 families are still staying in the forest area, with some of them residing within the core area of 881 sq. km, such as in Madhopur, Indala, Kundalka and Haripura.

According to the forest officials, the rehabilitated villagers’ needs, including the khatedari rights on the land allotted to them, have been met on priority to act as a catalyst for the remaining villages to be shifted out of the reserve areas.

‘Immense potential’

Mr. Vardhan affirmed that all issues of the wild species in Sariska would become easier to tackle if the ecology of the forest was understood and action taken accordingly. Being the nearest Project Tiger reserve to the national capital, Sariska holds an immense potential for ecotourism with its rich wildlife and beautiful mountains, streams and lakes, as it is flourishing again with tigers.

3. U.S. restores sanction waiver to Iran

The waiver on the civilian programme is a technical step needed to revive deal

The U.S. State Department is waiving sanctions on Iran’s civilian nuclear programme in a technical step necessary to return to the 2015 nuclear agreement, a senior official said on Friday.

The resumption of the waiver, ended by the Donald Trump administration in 2020, “would be essential to ensuring Iran’s swift compliance” if a new deal on controlling Tehran’s nuclear programme can be reached in talks in Vienna, the State Department official said.

The waiver allows other countries and companies to participate in Iran’s civilian nuclear programme without triggering U.S. sanctions on them, in the name of promoting safety and non-proliferation.

The civilian programme includes Iran’s increasing stockpiles of enriched uranium.

“Absent this sanctions waiver, detailed technical discussions with third parties regarding disposition of stockpiles and other activities of nonproliferation value cannot take place,” the official said, insisting on anonymity.

The Vienna talks, which include Iran, the United States, Britain, China, France, Germany and Russia, are at a key stage where the parties have to make “critical political decisions,” a senior U.S. official said last week.

“The technical discussions facilitated by the waiver are necessary in the final weeks of Joint Comprehensive Plan of Action (JCPOA) talks,” the State Department official said on Friday.

The U.S. official insisted that the move was not “part of a quid pro quo,” as the partners in the JCPOA talks await Iran’s response .

Not a sweeping measure

State Department spokesman Ned Price insisted this U.S. step is a sanctions waiver for the civilian nuclear programme and not broader sanctions relief.

Mr. Price wrote on Twitter: “We did NOT provide sanctions relief for Iran and WILL NOT until/unless Tehran returns to its commitments under the JCPOA. We did precisely what the last Administration did: permit our international partners to address growing nuclear nonproliferation and safety risks in Iran.”

Background

  • The United States and Iran have a long history of tensions, but the latest escalation started when an American drone strike killed top Iranian general Qassem Soleimani recently.
  • The roots of the latest Iran-US crisis go back to 2018, when US President Donald Trump walked away from the Iranian nuclear deal, one of the signature achievements of his predecessor Barack Obama, and reimposed harsh sanctions on the country.

Iran Nuclear Deal:

  • Iran agreed to rein in its nuclear programme in a 2015 deal struck with the US, UK, Russia, China, France and Germany (P5+1 countries).
  • Under the Joint Comprehensive Plan of Action (JCPoA)Tehran agreed to significantly cut its stores of centrifuges, enriched uranium and heavy-water, all key components for nuclear weapons.

Why did Iran Agreed to the deal?

  • It had been hit with devastating economic sanctions by the United Nations, United States and the European Union.
  • Billions in overseas assets had also been frozen.

Why has US pulled out of the Deal?

  • Trump and opponents to the deal say it is flawed because it gives Iran access to billions of dollars but does not address Iran’s support for groups like Hamas and Hezbollah which the U.S. considers as terrorists.
  • It also doesn’t curb Iran’s development of ballistic missiles and that the deal phases out by 2030.

What are the Implications of US sanctions on Iran?

  • Other countries have promised to uphold it, but their ability to do so will depend on how their companies can be firewalled from U.S. sanctions if they continue their engagement with Iran.
  • The sanctions often referred to as “secondary sanctions”, which primarily target non-US companies engaging in business in or with Iran entirely outside US jurisdiction.

4. Crypto riddle: tax first, recognition later?

What is the debate around the legality of cryptocurrencies after the announcement of a 30% tax?

The story so far: In her Budget speech, Finance Minister Nirmala Sitharaman introduced a 30% tax on income earned from transfer of virtual digital assets. The Government is yet to recognise cryptocurrencies, including Bitcoin and Ethereum, but this ambiguity has not stopped people from trading in digital assets in large numbers, which apparently forced the Government’s hand in announcing a tax on such transactions. At a press conference after presenting the Budget, Ms. Sitharaman said consultation is underway with stakeholders on digital assets, adding that there is no clarity yet on how the Government of India will regulate cryptocurrencies.

What would be the tax component for income from virtual digital assets?

The Budget has proposed a 30% tax on income from the “transfer of any virtual digital asset.” Secondly, except for the cost of acquisition, no deduction will be allowed. Thirdly, losses from such transfers cannot be set off against any income. Fourthly, tax will be deducted at source at the rate of 1%, so as to capture transaction details, thus initiating a tax deducted at source (TDS) mechanism.

What has been India’s approach to cryptocurrencies?

The Government and the Reserve Bank of India have in the past cautioned people against considering cryptocurrencies as legal tender. The fact that transactions using such currencies can easily bypass the tax net, and therefore be used for illicit transactions, have been bothering governments across the world.

The Reserve Bank of India, in 2018, directed banks not to provide services to the cryptocurrency ecosystem. The Supreme Court set this aside, calling the move disproportionate, given that such currencies were not banned in the country. A law on cryptocurrencies, which was supposed to have been brought in last year, is yet to see the light of day. The broad expectation about the Government’s approach to this was set by a 2019 report by an inter-ministerial committee which recommended a ban on all cryptocurrencies.

Yet, through all this, cryptocurrency trading has grown in India. In fact, Ms. Sitharaman noted in her Budget speech that “there has been a phenomenal increase in transactions in virtual digital assets. The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime.”

How has the cryptocurrency ecosystem read this move?

All major players have welcomed it. They have understood it as a move that provides clarity and “mainstreams” their industry. Nischal Shetty, the CEO of cryptocurrency exchange WazirX, tweeted that the Government has legitimised the industry. He wrote: “This doubles down on the fact that virtual digital assets are legal in India.”

The industry is now ready to lobby with the Government to bring down the tax on par with other asset classes.

Does this mean that cryptocurrencies are legal?

Statements by ministers and bureaucrats after the Budget seem to suggest that the legality of cryptocurrencies in the country is still a grey area, never mind the tax.

In an interview with Bloomberg TV, Finance Secretary T.V. Somanathan said: “They are in a grey area. It’s not illegal to buy and sell crypto.”

He further said, “We have now put in a taxation framework that treats crypto assets the same way we treat winnings from horse races, or from bets and other speculative transactions.”

Union Minister Rajeev Chandrasekhar told NDTV a day after the Budget, “Yesterday’s Budget has given a direct answer —crypto won’t be banned.”

However, Ms. Sitharaman, in an interview with Times Now, seemed to suggest that the question on the ban hasn’t been decided one way or another. She also seemed to divorce the taxability issue from the legitimacy issue.

She said, “There is no way anything can stop a sovereign Government from taxing an activity. Banning or not banning will come subsequently when the consultations give me inputs. But would you say till then I do not even tax the huge profits being transacted? I will. Legitimate or not legitimate is a different question, taxing is completely my prerogative.”

In recent days, experts have pointed out that the legal position is in sync with this thought process.

For instance, the verdict in the Commissioner of Income Tax v. Piara Singh in 1980 quoted from the judgment in the Commissioner of Income Tax, Gujarat v. SC Kothari, in which the court had observed that “if the business is illegal, neither the profits earned nor the losses incurred would be enforceable in law. But, that does not take the profits out of the taxing statute.”

5. Why are India’s imports from China rising?

If trade is booming, what is the state of other aspects of economic relations, including investments?

The story so far: While many countries, including India, have spoken of the need to reduce reliance on China particularly in the wake of COVID-19 and disruption to supply chains, trade figures released last month showed imports have only continued to surge in 2021, rebounding after a fall in trade in 2020 because of the pandemic. The rising trade comes amid continuing tensions with China along the Line of Actual Control (LAC), where disengagement negotiations have been slow moving. The rising trade does not, however, suggest a return to normalcy in relations. Other areas, such as investment, remain in a deep freeze amid the continuing chill in bilateral relations.

What did India import from China in 2021?

India’s trade with China in 2021 reached $125.6 billion, according to figures released in January by China’s General Administration of Customs (GAC). This was the first time that trade crossed the $100 billion mark. India’s imports from China accounted for $97.5 billion, while exports reached $28.1 billion, both records. Compared to 2019 —trade declined substantially in 2020 because of the pandemic, which exaggerates the year-on-year increase —imports are up 30%. Exports to China, meanwhile, are up by as much as 56%. The trade deficit, a long-term source of concern for India, is up by 22% since 2019, having declined last year.

What is driving India’s imports?

India’s biggest imports are electrical and mechanical machinery, a range of chemicals that are intermediate imports used by industries, active pharmaceutical ingredients (APIs), auto components, and since 2020, a large amount of medical supplies. According to figures available with India’s Ministry of Commerce, all those key imports continued to rise in 2021. The total value of the top 100 import categories —each of which accounts for more than $100 million in imports —was up by $16 billion in the last year, reaching $45 billion. The top items included both finished goods such as integrated circuits (up 147%), laptops and computers (up 77%) and oxygen concentrators (up four-fold) and intermediate products such as chemicals (of these, acetic acid imports were up eight-fold).

What does the recent trend of trade figures suggest?

Experts say India’s dependence on China for finished goods has shown no signs of easing, which is a cause for concern. The rise in intermediate imports is, however, less of a concern as it is a sign of industrial recovery and greater demand for inputs. While Indian exports to China have also grown, up by more than 50% in the last two years, these are mostly raw materials such as ores, as well as cotton and seafood, and not finished products. The five-year trend shows the trade deficit continues to widen. The deficit has grown from $51.8 billion in 2017 to $69.4 billion in 2021.

What are the implications for India-China relations?

While trade continues to boom, other aspects of economic relations have dramatically changed in the past two years. In the wake of the LAC crisis starting April 2020, the message from New Delhi was that it cannot be business as usual while there are tensions along the border. Investments from China in the past year have plunged amid tighter curbs. In the tech and telecom space, the once rapidly increasing Chinese investments in start-ups including from tech giants such as Alibaba and Tencent, has come to an abrupt halt, more than 200 apps remain banned, and Chinese firms have been kept out of 5G trials so far. India has also tightened scrutiny on Chinese firms in India, recently conducting tax investigations into companies including smartphone manufacturer Xiaomi. Those moves last month prompted a statement from China’s Ministry of Commerce calling on India to “provide a fair, transparent and non-discriminatory environment for Chinese businesses”. While the trade pattern is unlikely to dramatically change in the near future, even as New Delhi considers a long-term plan to reduce some of these import dependencies by either accelerating long-discussed but slow-moving plans to manufacture some of these critical goods in India or source elsewhere, the rest of the India-China economic relationship still remains somewhat in a state of freeze as talks continue to resolve the tensions along the border.

6. When will new Vande Bharat trains be launched?

Who is designing the 400 trains? Where will they be manufactured? What is distinct about them?

The story so far: Finance Minister Nirmala Sitharaman has in the Union Budget for 2022-2023 proposed the development and manufacture of 400 new Vande Bharat trains in the next three years. In her speech, Ms. Sitharaman said these would be “new generation” trains with better energy efficiency and passenger riding experience.

What is it?

The Vande Bharat train is an indigenously designed and manufactured semi high speed, self-propelled train that is touted as the next major leap for the Indian Railways in terms of speed and passenger convenience since the introduction of Rajdhani trains. These trains, dubbed as Train 18 during the development phase, operate without a locomotive and are based on a propulsion system called distributed traction power technology, by which each car of the train set is powered. The Vande Bharat coaches incorporate passenger amenities including on-board WiFi entertainment, GPS-based passenger information system, CCTVs, automatic doors in all coaches, rotating chairs and bio-vacuum type toilets like in aircraft.

The first Vande Bharat was manufactured by the Integral Coach Factory (ICF), Chennai, in about 18 months as part of the ‘Make in India’ programme, at a cost of about ₹100 crore. The current version of the train has 16 coaches with 14 ordinary chair cars and two executive class chair cars. The train has a passenger carrying capacity of more than 1,100 people. It can achieve a maximum speed of 160 kmph due to faster acceleration and deceleration, reducing journey time by 25% to 45%. It also has an intelligent braking system with power regeneration for better energy efficiency thereby making it cost, energy and environment efficient. The Vande Bharat was India’s first attempt at adaptation of the train set technology compared with conventional systems of passenger coaches hauled by separate locomotives. The train set configuration though complex is faster, easier to maintain, consumes less energy, and has greater flexibility in train operation, according to the Indian Railways.

How many Vande Bharat trains do the Railways currently operate?

Currently, two Vande Bharat Expresses are operational —one between New Delhi and Varanasi and the other from New Delhi to Katra. Following this, the Railways had issued a more than ₹2,000 crore contract for making 44 more such trains. However, the first tender was cancelled and reissued to align it with the ‘Make in India’ policy. For the first time, the tender required a minimum 75% local content requirement of the total value of the tender. In August 2020, Hyderabad-based Medha Servo Drives Ltd. won the contract for designing and manufacturing the propulsion, control and other equipment needed to make the 44 train sets. The rakes or train sets, the Railways had announced, would be manufactured at three of its production units— 24 rakes at ICF, Chennai and 10 rakes each at the RCF Kapurthala and at the Modern Coach Factory, Raebareli. On the delivery schedule of these rakes, the Railways had said that the first two prototype rakes would be delivered in 20 months (or by March-April 2022), thereafter on successful commissioning, the firm would be delivering an average of six rakes per quarter.

What is the current status of the programme?

Speaking to reporters after the Budget announcement, Railways Minister Ashwini Vaishnaw said that designing for version 2.0 of these trains had been completed and that testing was expected to commence from April onwards, while serial production for these rakes was likely to begin by September. On the 400 new trains, Mr. Vaishnaw said the announcement had given the Railways a target of coming out with an even better version. The design updates in the upcoming trains would focus on safety and comfort of the passengers, including reduced noise and vibration levels. The Railways is also said to be considering the use of aluminium instead of steel in the construction of the coaches as this would help make the trains much lighter thereby improving energy efficiency, and also making the trains faster.

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