Economy One Year Current Affairs 2020 Set-1

Table of Contents

Topics to discuss

A Task Force on Sustainable Public Procurement (SPP) has been constituted by Department of Expenditure.
Sustainable Public Procurement is a process by which public authorities seek to achieve the appropriate balance between the three pillars of sustainable development – economic, social and environmental, while procuring goods, services or works at all stages of the project.

Reducing adverse environmental and social impacts as a result of procurement decision.
Reducing air & water pollution and waste generation.
Promoting health and safety in communities
Creating employment and business opportunities for disadvantageous group, MSEs and local industries
Encouraging suppliers to foster a commitment to local communities.
Encourage industry to prepare for future clean and green market scenario.

Currently, in India, there is no public procurement law at the national level.
However, some public sector entities and government departments have started internalizing environmental and energy efficiency criteria in their procurement decisions.

Lack of capacity and proper legal framework: Procurement officials are often risk averse and could be hesitant to implement sustainable procurement.
Consumers’ behavior: Implementation of SPP, in practice, requires a change in consumers’ attitude

UJALA programme is successful because consumers understood the benefits of using LED.

Production process-related elements in SPP: Procurers have to draw a distinction between the environmental impact of a product and those linked to the process in which it is produced.

SEZs in India have achieved 100-billion-dollar worth of exports in FY 2019-20
Special Economic Zone (SEZ) is a specifically delineated duty-free enclave and deemed to be foreign territory for the purposes of trade operations, duties and tariffs.
The main objectives of SEZs were, generation of economic activity, promotion of exports and investment, employment generation, infrastructure development

About half of the land notified for SEZs was unutilized (as of August 2017): It was mainly due to lack of flexibility to utilise land in SEZs for different sectors.
Sunset Clause: According to Section 10AA of the Income Tax Act, units in SEZs get a phased tax-holiday for a period of 15 years.
However, the benefit is available to only those units that start operations before March 31 this year.

Minimum Alternate Tax (MAT): Government has cut MAT to 15 per cent from 18.5 per cent. However, industry is demanding a complete removal of MAT.
Lack of a future ready SEZ policy because of which India is not able to emerge as alternate to China and facing competition from countries like Bangladesh and Vietnam.

Domestic sales of SEZs face a disadvantage: as “they have to pay full customs duty”, as compared to the lower rates for countries due to free-trade agreement (FTA).
It is suggested that the “best FTA rates” should be allowed for domestic sales, too.
Existence of multiple models of economic zones such as SEZ, coastal economic zone, Delhi-Mumbai Industrial Corridor, National Investment and Manufacturing Zone, food park and textile park.
This could be addressed by rationalisation of models

World Bank and Government of India recently signed a $750 million Agreement for Emergency Response Programme for Micro, Small, and Medium Enterprises (MSMEs).

Poor access to formal capital: Only about 8 percent of MSMEs are served by formal credit channels. This can be attributed to factors such as
Lack of credit history and reliable financial statements
Lack of hard assets
Apprehension among lenders due to high default rates on MSME loans
Low financial and digital literacy

Recently, Union Cabinet has approved three schemes for electronics sector
- A production-linked incentive manufacturing scheme.
- Scheme for Promotion of manufacturing of Electronic Components and Semiconductors (SPECS).
- Electronics Manufacturing Clusters (EMC) 2.0.

Production-linked incentive manufacturing scheme: It aims to boost domestic production and attract investment in mobile phone manufacturing, specified electronic components, including assembly, testing, marking and packaging (ATMP) units.

Scheme for Promotion of manufacturing of Electronic Components and Semiconductors (SPECS): It offers financial incentive of 25% of capital expenditure for the manufacturing of goods that constitute the supply chain of an electronic product.
Electronics Manufacturing Clusters (EMC) 0: The Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme would support setting up of both Electronics Manufacturing Clusters (EMCs) and Common Facility Centers (CFCs).

Target NET ZERO imports: Electronics goods are one of the top three items imported in India.
Rapidly increasing demand: Demand for electronic goods is increasing with a Compound Annual Growth Rate (CAGR) of 22% and is expected to touch 400 Billion USD by 2020.
Digital security
Complement other schemes like BharatNet, Smart cities, National Knowledge Network (NKN) and also give a fillip to ‘Make in India.’

Unavailability of affordable credit: Schemes like Electronic Development Fund (EDF) have not completely fructified.
Product Standard: There are gaps between global product standards and those manufactured in India.
Ancillary Infrastructure: Outside the factory, infrastructure bottlenecks such as logistics, port capabilities etc. continue to trouble manufacturers.
Productivity Gap: Prevalent skill gap in population translates to productivity gap in production cycle.