News: India’s merchandise exports in August touched $33.14 billion, 45.17% higher than a year ago and 27.5% over the pre-pandemic level of August 2019, but the trade deficit widened to a four-month high, driven by a sharp uptick in gold imports.
Merchandise imports during the month grew 51.47% year-on-year to $47 billion, which is also 18% higher than the August 2019 figure.
The trade deficit widened 69.15% year-on-year to touch $13.87 billion but was just 0.07% higher than the pre-COVID level of 2019.
With merchandise imports continuing to scale up, even as exports receded from their all-time high, the trade deficit came in higher than anticipated.
In August 2020, gold imports stood at $3.7 billion, implying an 82.22% jump in imports of the yellow metal last month. Gold imports surged further to a five-month high of $6.7 billion in August 2021 and were responsible for 88% of the rise in the merchandise trade deficit relative to July 2022.
About Balance of Trade:
The balance of trade, commercial balance, or net exports (sometimes symbolized as NX), is the difference between the monetary value of a nation’s exports and imports over a certain time period.
Sometimes a distinction is made between a balance of trade for goods versus one for services.
The balance of trade measures a flow of exports and imports over a given period of time.
The notion of the balance of trade does not mean that exports and imports are “in balance” with each other.
If a country exports a greater value than it imports, it has a trade surplus or positive trade balance, and conversely, if a country imports a greater value than it exports, it has a trade deficit or negative trade balance.
The balance of trade forms part of the current account, which includes other transactions such as income from the net international investment position as well as international aid. If the current account is in surplus, the country’s net international asset position increases correspondingly. Equally, a deficit decreases the net international asset position.
Factors that can affect the balance of trade include:
The cost of production (land, labor, capital, taxes, incentives, etc.) in the exporting economy vis-à-vis those in the importing economy;
The cost and availability of raw materials, intermediate goods and other inputs;
Currency exchange rate movements;
Multilateral, bilateral and unilateral taxes or restrictions on trade;
Non-tariff barriers such as environmental, health or safety standards;
The availability of adequate foreign exchange with which to pay for imports; and
Prices of goods manufactured at home (influenced by the responsiveness of supply)
2. GOODS AND SERVICES TAX
News: The State GST (Goods and Services Tax) enforcement wing on Thursday arrested two persons on charges of passing on bogus input tax credit (ITC) worth ₹323 crore.
About Goods and Services Tax (GST):
Goods and Services Tax (GST) is an indirect tax (or consumption tax) used in India on the supply of goods and services.
It is a comprehensive, multistage, destination-based tax: comprehensive because it has subsumed almost all the indirect taxes except a few state taxes.
Multi-staged as it is, the GST is imposed at every step in the production process, but is meant to be refunded to all parties in the various stages of production other than the final consumer and as a destination-based tax, it is collected from point of consumption and not point of origin like previous taxes.
Goods and services are divided into five different tax slabs for collection of tax: 0%, 5%, 12%, 18% and 28%. However, petroleum products, alcoholic drinks, and electricity are not taxed under GST and instead are taxed separately by the individual state governments, as per the previous tax system.
There is a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold.
In addition a cess of 22% or other rates on top of 28% GST applies on few items like aerated drinks, luxury cars and tobacco products.
Pre-GST, the statutory tax rate for most goods was about 26.5%, Post-GST, most goods are expected to be in the 18% tax range.
The tax came into effect from 1 July 2017 through the implementation of the One Hundred and First Amendment of the Constitution of India by the Indian government.
The tax rates, rules and regulations are governed by the GST Council which consists of the finance ministers of the central government and all the states.
The GST is meant to replace a slew of indirect taxes with a federated tax and is therefore expected to reshape the country’s $2.4 trillion economy, but its implementation has received criticism.
Positive outcomes of the GST includes the travel time in interstate movement, which dropped by 20%, because of disbanding of interstate check posts.
3. DEPUTY SPEAKER OF THE LOK SABHA
News: With the Delhi High Court asking the Union government on Wednesday to explain its stand on a petition that said keeping the post of Deputy Speaker of the Lok Sabha vacant is a violation of Article 93 of the Constitution, the issue is once again in the spotlight.
About Deputy Speaker of the Lok Sabha:
The Deputy Speaker of the Lok Sabha is not subordinate to the speaker of Lok Sabha, they are responsible for the Lok Sabha and they are the second highest ranking legislative officer of the Lok Sabha, the lower house of the Parliament of India.
They act as the presiding officer in case of leave or absence caused by death or illness of the Speaker of the Lok Sabha.
It is by convention that position of Deputy Speaker is offered to opposition party in India.
The Deputy Speaker is elected in the first meeting of the Lok Sabha after the General elections for a term of 5 years from amongst the members of the Lok Sabha.
They hold office until either they cease to be a member of the Lok Sabha or they resign.
They can be removed from office by a resolution passed in the Lok Sabha by an effective majority of its members.
In effective majority, the majority should be 50% or more than 50% of total strength of the house after removing the vacancies. Since the Deputy Speaker is accountable for the Lok Sabha, the elimination is done by the effective majority in Lok Sabha only.
There is no need to resign from their original party though as a Deputy Speaker, they have to remain impartial.
In case of the absence of the Speaker, the Deputy Speaker presides over the sessions of the Lok Sabha and conducts the business in the house. He decides whether a bill is a money bill or a non-money bill.
They maintains discipline and decorum in the house and can punish a member for unruly behaviour by suspending him/her.
They permit the moving of various kinds of motions and resolutions like the motion of no confidence, motion of adjournment, motion of censure and calling attention notice.
4. ORANG NATIONAL PARK
News: The decision to restore the original name of Orang National Park was taken following requests from the Adivasi groups in the State.
About Orang National Park:
Orang National Park is a national park in India located on the northern bank of the Brahmaputra River in the Darrang and Sonitpur districts of Assam.
It covers an area of 79.28 km2 (30.61 sq mi). It was established as a sanctuary in 1985 and declared a national park on 13 April 1999. It has a rich flora and fauna, including great Indian rhinoceros, pygmy hog, Asian elephant, wild water buffalo and Bengal tiger.
It is the only stronghold of rhinoceros on the north bank of the Brahmaputra river.
Pachnoi river, Belsiri river and Dhanshiri River border the park and join the Brahmaputra river.
Orang park contains significant breeding populations of several mammalian species.
Apart from the great Indian one-horned rhinoceros (68 at the last count), which is the dominant species of the national park, the other key species sharing the habitat are the royal Bengal tiger (Panthera tigris), Asiatic elephant, pygmy hog, hog deer and wild boar.
The pygmy hog, a small wild pig, is critically endangered, and is limited to about 75 animals in captivity, confined to a very few locations in and around north-western Assam, including the Orang National Park where it has been introduced.
5. ANTI – TRUST REGIME
News: Apple Inc. is facing an antitrust challenge in India for allegedly abusing its dominant position in the apps market by forcing developers to use its proprietary in-app purchase system, according to a source and documents seen by Reuters.
About Anti – Trust laws in India:
The antitrust law in India that is the Competition Act, 2002, (“Act”) and rules and regulations made thereunder regulates businesses in India to ensure a level playing field and effective competition in the market.
The intent of the Act is to promote competition, protect the interest of consumers, ensure freedom of trade and prevent practices having an appreciable adverse effect on competition (“AAEC”).
The statutory body of the Government of India responsible for enforcing the Act and promoting competition throughout India and to prevent activities that have an AAEC on competition is the Competition Commission of India (“CCI”).
The Act contains specific provisions for anti-competitive agreements (whether vertical or horizontal agreements), abuse of dominant position and combinations (which include acquisition, merger, amalgamation and joint venture).
Being termed as “anti-competitive” in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an AAEC within India. The following agreements shall be presumed to have an AAEC, which –
directly or indirectly determine purchase or sale prices;
limits or controls production, supply, markets, technical development, investment or provision of services;
shares the market or source of production or provision of services by way of allocation of geographical area of market, or type of goods or services, or number of customers in the market or any other similar way;
directly or indirectly results in bid rigging or collusive bidding
Abuses its dominant position in the relevant market –
by directly or indirectly imposing unfair or discriminatory conditions in the (i) purchase or sale of goods or (ii) price in purchase or sale of goods or service, or
limits or restricts or (i) production of goods or provision of services or market or (ii) technical or scientific development relating to goods or services to the prejudice of consumers, or
indulges in practice or practices resulting in denial of market access in any manner, or
makes conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts, or
uses its dominant position in one relevant market to enter into, or protect, other relevant market, or
About Competition Commission of India:
Competition Commission of India is the competition regulator in India.
It is a statutory body of the Government of India responsible for enforcing The Competition Act, 2002 and promoting competition throughout India and to prevent activities that have an appreciable adverse effect on competition in India. It was established on 14 October 2003.
It became fully functional in May 2009 with Dhanendra Kumar as its first Chairman
To achieve its objectives, the Competition Commission of India endeavours to do the following:
Make the markets work for the benefit and welfare of consumers.
Ensure fair and healthy competition in economic activities in the country for faster and inclusive growth and development of the economy.
Implement competition policies with an aim to effectuate the most efficient utilization of economic resources.
Develop and nurture effective relations and interactions with sectoral regulators to ensure smooth alignment of sectoral regulatory laws in tandem with the competition law.
Effectively carry out competition advocacy and spread the information on benefits of competition among all stakeholders to establish and nurture competition culture in Indian economy.
The Commission comprises a Chairperson and not less than 2 and not more than 6 other members appointed by the Central Government. Ashok Kumar Gupta is the current Chairperson of the CCI.