Smt. Nirmala Sitharaman, Union Minister of Finance & Corporate Affairs, Government of India, participated in the G20 Finance Ministers and Central Bank Governors meeting and associated events during June 8-9, 2019 at Fukuoka, Japan. She was accompanied by Shri Subhash C. Garg, Finance Secretary & Secretary Economic Affairs, Dr. Viral Acharya, Deputy Governor of RBI and other officers.

Smt. Sitharaman noted the urgency to fix the issue of determining right nexus and profit allocation solution for taxing the profits made by digital economy companies. Appreciating the significant progress made under the taxation agenda including the Base Erosion and Profit Shifitng (BEPS), tax challenges from digital economy and exchange of information under the aegis of G20, Smt. Sitharaman congratulated the Japanese Presidency for successfully carrying these tasks forward.

The Union Ministerof Finance & Corporate Affairs noted that the work on tax challenges arising from the digitalisation of economy is entering a critical phase with an update to the G20, due next year. In this respect, Smt. Sitharaman strongly supported the potential solution based on the concept of ‘significant economic presence’ of businesses taking into account the evidence of their purposeful and sustained interaction with the economy of a country. This concept has been piloted by India and supported by large number of countries including the G-24. She expressed confidence that a consensus-based global solution, which should also be equitable and simple, would be reached by 2020.

Smt. Sitharaman welcomed the commencement of automatic exchange of financial account information (AEOI) on a global basis with almost 90 jurisdictions successfully exchanging information in 2018. This would ensure that tax evaders could no more hide their offshore financial accounts from the tax administration. She urged the G20/Global Forum to further expand the network of automatic exchanges by identifying jurisdictions including developing countries and financial centers that are relevant but have not yet committed to any timeline. Appropriate action needs to be taken against non-compliant jurisdictions. In this respect she called upon the international community to agree on a toolkit of defensive measures, which can be taken against such non-compliant jurisdictions.

Earlier, the Union Minister for Finance & Corporate Affairs participated in the Ministerial Symposium on International Taxation and spoke in the session on the ongoing global efforts to counter tax avoidance and evasion. During the session, she also spoke on the tax challenges for addressing digitalisation of the economy and emphasised that nexus was important.

Smt. Sitharaman also raised the need for international cooperation on dealing with fugitive economic offenders who flee their countries to escape from the consequences of law. She informed about the fugitive economic offenders law passed by India which provides for denial of access to courts until the fugitive returns to the country. This law also provides for confiscation of their properties and selling them off. She drew attention to the practice permitted by many jurisdictions, which allow economic offenders to use investment-based schemes to obtain residence or citizenship to escape from legal consequences and underlined the need to deal with such practices. She urged that closer collaboration and coordinated action were required to bring such economic offenders to face law.

Smt. Sitharaman highlighted the need for the G20 to keep a close watch on global current account imbalances to ensure that they do not result in excessive global volatility and tensions. The global imbalances left a detrimental impact on the growth of emerging markets. Unilateral actions taken by some advanced economies adversely affect the exports and the inward flow of investments in these economies. She wondered if the accumulation of cash reserves by large companies indicated the reluctance of these companies to increase investments. This reluctance could have adverse implications on growth and investments and possibly leading to concentration of market power. She also urged the G20 to remain cognizant of fluctuations in international oil market and study measures that can bring benefits to both the oil exporting and importing countries.

In another session on infrastructure investment, Smt. Sitharaman emphasised on the importance of making investments in cost-effective and disaster resilient infrastructure for growth and development. She suggested the G20 focus on identifying constraints to flow of resources into infrastructure sector in the developing world and solutions for overcoming them. She also took note of the close collaboration of India, Japan and other like-minded countries, aligned with the Sendai Framework, in developing a roadmap to create a global Coalition on Disaster Resilient Infrastructure.

The Japanese Presidency’s priority issue of aging was also discussed. Smt. Sitharaman highlighted that closer collaboration between countries with high old age dependency ratio and those with low old age dependency ratio was necessary for dealing with the policy challenges posed by ageing. She suggested that if ageing countries with shrinking labour force allow calibrated mobility of labour with portable social security benefits, the recipient countries can not only take care of the aged but also have positive effect on global growth. Smt. Sitharaman said that India’s demography presented a dual policy challenge since India’s old age dependency ratio is lesser than Japan while at the same time India’s aged population in absolute numbers exceeds that of Japan. She detailed the policy measures that Government of India is taking to address these challenges.

While speaking on the priority of Japanese Presidency on financing of universal health coverage (UHC) she emphasised the importance of a holistic approach which encompasses plurality of pathways to achieve UHC, including through traditional and complementary systems of medicine.

Smt. Sitharaman also held bilateral meeting with Mr Phillip Hammod, Chancellor of United Kingdom on the sidelines of the FMCBG meeting at Fukuoka and discussed efforts undertaken by both sides for closer collaboration between India and United Kingdom in several areas and enhance cooperation between the two countries in tax matters

Aims: To make UAE a world leader in quality of life by undertaking various strategic objectives and initiatives. To promote an integrated concept of wellbeing, thereby supporting vision of UAE Vision 2021 and UAE Centennial 2071.

Key highlights of the proposed strategy: National Wellbeing Observatory: It proposes to establish a National Wellbeing Observatory, which will support policymaking process. Functions of the observatory: monitoring a number of indicators of wellbeing in UAE, submitting regular reports to UAE Cabinet, proposing training programmes for government employees and will launch Academy of Wellbeing future generations. In addition to this observatory is also charged with formation of a National Wellbeing Councilto manage and coordinate national strategy.

National Wellbeing Strategy is based on a national framework of three main levels- Individuals, Society and the Country. It includes 14 key areas and 9 strategic objectives, which includes enhancing people’s wellbeing by promoting healthy & active lifestyles and good mental health and adopting positive thinking.

Under the strategy 90 new projects will be launched that will target more than 40 priority areas and will improve physical, psychological and digital health of future generations.

Where is it located? in Sumatra Island, western Indonesia. It had erupted in 2010 for the first time in past 400 years.

Background: Indonesia sit along the Ring of Fire region, an area where most of the world’s volcanic eruptions occur. The Ring of Fire has seen a large amount of activity in recent days, but Indonesia has been hit hard due to its position on a large grid of tectonic plates.

Vulnerability: Indonesia is at the meeting point of three major continental plates – the Pacific, the Eurasian and the Indo-Australian plates – and the much smaller Philippine plate. As a result, several volcanoes on the Indonesian islands are prone to erupting. Indonesia is home to roughly 400 volcanoes, out of which 127 are currently active, accounting for about a third of the world’s active volcanoes.

What is the Ring of Fire? The Ring of Fire is a Pacific region home to over 450 volcanoes, including three of the world’s four most active volcanoes – Mount St. Helens in the USA, Mount Fuji in Japan and Mount Pinatubo in the Philippines. It is also sometimes called the circum-Pacific belt. Around 90% of the world’s earthquakes occur in the Ring of Fire, and 80% of the world’s largest earthquakes.

Location: It stretches along the Pacific Ocean coastlines, where the Pacific Plate grinds against other, smaller tectonic plates that form the Earth’s crust – such as the Philippine Sea plate and the Cocos and Nazca Plates that line the edge of the Pacific Ocean. The 40,0000 kilometre horse-shoe-shaped ring loops from New Zealand to Chile, passing through the coasts of Asia and the Americas on the way.

Risk: The people most at risk from activity in the Ring of Fire are in the US west coast, Chile, Japan and island nations including the Solomon Islands. These areas are most at risk because they lie on so-called subduction zones – which are boundaries that mark the collision between two of the planet’s tectonic plates.

How was the Ring of Fire formed? The Ring of Fire is the result from subduction of oceanic tectonic plates beneath lighter continental plates. The area where these tectonic plates meet is called a subduction zone.

Why does the Ring of Fire trigger earthquakes? The world’s deepest earthquakes happen in subduction zone areas as tectonic plates scrape against each other – and the Ring of Fire has the world’s biggest concentration of subduction zones.

As energy is released from the earth’s molten core, it forces tectonic plates to move and they crash up against each other, causing friction. The friction causes a build-up of energy and when this energy is finally released it causes an earthquake. If this happens at sea it can cause devastating tsunamis. Tectonic plates usually only move on average a few centimetres each year, but when an earthquake strikes, they speed up massively and can move at several metres per second.

Background: Any party that has 55 members can get the post as recognised as such by the speaker/chairman.

Who is the Leader of Opposition? The LOP is leader of the largest party that has not less than one-tenth of the total strength of the house. It is a statutory post defined in the Salaries and Allowances of Leaders of Opposition in Parliament Act, 1977.

Significance of the office: LoP is referred to as the ‘shadow Prime Minister’. She/he is expected to be ready to take over if the government falls. The LoP also plays an important role in bringing cohesiveness and effectiveness to the opposition’s functioning in policy and legislative work. LoP plays a crucial role in bringing bipartisanship and neutrality to the appointments in institutions of accountability and transparency – CVC, CBI, CIC, Lokpal etc.

What reforms are needed? There arises a problem when no party in opposition secures 55 or more seats. In such situations, the numerically largest party in the opposition should have the right to have a leader recognised as leader of the opposition by the speaker.

Besides, the 10% formulation is inconsistent with the law ‘the salary and allowances of leaders of opposition in Parliament Act, 1977’ which only says that the largest opposition party should get the post.

Highlights of the draft: It proposes expansion of the RTE Act. It aims to cover the three years of preschool before Class 1.

It wants early childhood education to be overseen and regulated by the Ministry of HRD as part of the school system. This will be in addition to the private pre-schools and anganwadis that currently cater to the 3-to-6 years age group.

It suggests a new integrated curricular framework for 3 to 8-year olds with a flexible system based on play, activity and discovery, and beginning exposure to three languages from age 3 onwards. The NEP could result in an upheaval in the anganwadi system which has been overseen by the Ministry of WCD for more than four decades.

With this the current Cabinet Secretary Pradeep Kumar Sinha, has become the longest-serving bureaucrat in the post in the country’s history.

Key concept- changes made: A cabinet secretary is appointed for a fixed tenure of two years. According to All India Services (Death-Cum-Retirement-Benefits) Rules, 1958, the government can give extension in service to a cabinet secretary provided the total tenure does not exceed four years. As per the modified rules, the central government may give an extension in service for a further period not exceeding three months, beyond the period of four years to a cabinet secretary.

Role of the cabinet secretary: The cabinet secretariat is under the direct charge of the prime minister. The administrative head of the secretariat is the cabinet secretary who is also the ex-officio chairman of the civil services board.

Functions: The cabinet secretariat assists in decision-making in government by ensuring inter-ministerial coordination, ironing out differences amongst ministries or departments and evolving consensus through the instrumentality of the standing or ad hoc committees of secretaries.

Management of major crisis situations in the country and coordinating activities of various ministries in such a situation is also one of the functions of the cabinet secretariat. Cabinet Secretariat is responsible for the administration of the Government of India (Transaction of Business) Rules, 1961 and the Government of India (Allocation of Business) Rules 1961, facilitating smooth transaction of business in Ministries/ Departments of the Government.

What is it? It is a new award instituted recent life by the Ministry of Information and Broadcasting(I&B).

Objective: to recognise contribution made by media in spreading awareness about Yoga and for promotion and commemoration of International Yoga Day, held every year on 21 June.

Context: G20 Ministerial meeting on Trade and Digital Economy was recently held in Japanese city of Tsukuba.

About G20: Formed in 1999, the G20 is an international forum of the governments and central bank governors from 20 major economies. Collectively, the G20 economies account for around 85 percent of the Gross World Product (GWP), 80 percent of world trade. The G20 has no permanent staff of its own and its chairmanship rotates annually between nations divided into regional groupings.

Objectives: The Group was formed with an aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability. The forum aims to pre-empt balance of payments problems and turmoil on financial markets by improved coordination of monetary, fiscal, and financial policies. The forum seeks to address issues that go beyond the responsibilities of any one organisation.

Member Countries: The members of the G20 consist of 19 individual countries plus the European Union (EU). The 19 member countries of the forum are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom and the United States. The European Union is represented by the European Commission and by the European Central Bank.

State Food Safety Index (SFSI): The Food Safety and Standards Authority of India (FSSAI), under Ministry of Health & Family Welfare, has developed first State Food Safety Index (SFSI) to measure performance of States on five parameters of food safety. This is an effort of ministry to motivate states to work towards ensuring safe food for citizens.

Chandigarh topped the 2018-19 food safety index. The first State Food Safety Index (SFSI) was to measure the performance of States on five parameters of food safety. The categories included human resources and institutional arrangements, compliance, food testing – infrastructure and surveillance, training and capacity building and consumer empowerment.

Raman 1.0: It is hand-held battery operated equipment that performs rapid detection, in less than a minute of economically driven adulteration in fats, ghee and edible oils.

Food Safety Magic Box: It is do-it-yourself food testing kit comprising of a manual and equipment to check for food adulterants. This can serve as innovative solution to take food safety to schools.

Eat Right Awards: instituted by FSSAI, with aim to recognize contributions made by food companies and individuals to empower citizens to choose safe and healthy food options so as to improve their health and well-being.

Context: Indian Air Force (IAF) has signed a deal with Israel’s Rafael Advanced Defense Systems, an Israeli defence firm to procure a batch of SPICE 2000 guided bombs.

The SPICE stands for Smart, Precise Impact and Cost-Effective. It is guidance and maneuvering kit manufactured by Israel’s Rafael Advanced Defense Systems. SPICE can overcome errors in locating target, GPS jamming and also reduces collateral damage.

Why review the composition and working of NITI Aayog? The country’s economy has not performed to the expectations of the citizens since it was created.

Need of the hour: Review what NITI Aayog has achieved so far to adopt the new role described in its charter — that of a catalyst of change in a complex, federal, socioeconomic system. Assess whether it has transformed its capabilities sufficiently to become an effective systems reformer and persuader of stakeholders, rather than merely an announcer of lofty multi-year goals and manager of projects, which many suspect it is.

Current concerns over it’s functioning: There is deep concern that NITI Aayog has lost its integrity as an independent institution to guide the government; that it has become a mouthpiece of the government and an implementer of the government’s projects.

What needs to be done? NITI Aayog must have the ability to independently evaluate the government’s programmes at the Centre and in the States. The transformational approach to planning and implementation that 21st century India needs, which is alluded to in NITI’s charter, requires evaluations and course-corrections in the midst of action.

It requires new methods to speed up ‘organisational learning’ amongst stakeholders in the system who must make plans together and implement them together. There is a need for new methods of cooperative learning and cooperative implementation by stakeholders, who are not controlled by any central body of technical experts with political and/or budgetary authority over them.

Way ahead: There must be a review of what the think tank has achieved to adopt the new role described in its charter. Note: The topics on Foreigners tribunal and Traffic index will be covered tomorrow.