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Prelims Booster

12th November – Prelims Booster

Production Linked Incentive Scheme

The Union Cabinet has given its approval to introduce the Production-Linked Incentive (PLI) Scheme in the following 10 key sectors for Enhancing India’s Manufacturing Capabilities and Enhancing Exports.

SECTORIMPLEMENTING MINISTRY/DEPARTMENT
Advance Chemistry Cell (ACC) BatteryNITI Aayog and Department of Heavy Industries
Electronic/Technology ProductsMinistry of Electronics and Information Technology
Automobiles & Auto ComponentsDepartment of Heavy Industries
Pharmaceuticals drugsDepartment of Pharmaceuticals
Telecom & Networking ProductsDepartment of Telecom
Textile Products – MMF segment and technical textilesMinistry of Textiles
Food ProductsMinistry of Food Processing Industries
High Efficiency Solar PV ModulesMinistry of New and Renewable Energy
White Goods (ACs & LED)Department for Promotion of Industry and Internal Trade
Speciality SteelMinistry of Steel

Background –

Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing was notified on 1st April, 2020. It extends an incentive of 4% to 6% on incremental sales (over base year) of goods under target segments that are manufactured in India to eligible companies, for a period of five years subsequent to the base year (FY2019-20). Now, the scheme has been extended to 10 other key sectors.

Concerns –

  • The quantum of incentives is to be calculated by a simple formula — that is, net incremental sales x rate of incentive (4-6 per cent). This implies that the incentive is a factor of the incremental production rate, that is, greater the production, the higher the incentives. However, the fine print reveals that the incentives cannot be claimed beyond the financial outlay proposed by the Government, which is ₹40,951 crore.
  • If the total quantum of incentives exceeds the annual financial outlay, the incentives will be disbursed to all companies on the basis of their net incremental sales. Therefore, an over-performing company may not be reap the benefits under the scheme in absolute terms.
  • On the flip-side, if one company under-performs but another company over-performs in terms of its net incremental sales, then any unappropriated incentive amount will be transferred proportionately to the over-performing companies.
  • The scheme also provides that an Empowered Committee (EC) will be constituted which has the power to review and revise rate of incentives, ceilings, eligibility criteria, etc. Considering that companies investing under the scheme will expect that incentives are granted to them at the promised rates, any unfavourable change in the rates by the EC in future is likely to become a bone of contention with the Government.

Does PLI violate WTO subsidy norms?

Subsidies granted by the Indian Government have been a matter of international disputes and are therefore to be examined closely. For instance, in 2019, India lost a case before the World Trade Organisation (WTO) where several incentive schemes such as MEIS, EPCG, and SEZ were challenged on the ground that such export linked schemes violate international trade agreements between member countries. While India’s appeal is pending, it is imperative to note that while the schemes challenged before the WTO were export linked, the present scheme is investment and production linked and may not fall foul of international trade agreements.

Way forward –

  • In addition to the scheme for electronic sector, the Government could also look to implement similar incentive schemes for other sectors such as automobile, pharmaceuticals, FMCG, etc.
  • Further, the government must also not lose sight of the service industry which has historically been India’s strong point, as far as revenue and employment generation is concerned, but which has rarely been privy to any incentive from the Government.

Viability Gap Funding for PPP in Infrastructure Projects

The Cabinet Committee on Economic Affairs has approved the continuation and revamping of the Scheme for Financial Support to Public Private Partnerships (PPPs) in Infrastructure Viability Gap Funding (VGF) Scheme till 2024-25 with an outlay of Rs 8,100 crores.

What are ‘Public-Private Partnerships’?

  • Public-private partnerships involve collaboration between a government agency and a private-sector company that can be used to finance, build, and operate projects, such as public transportation networks, parks, and convention centres.
  • Financing a project through a public-private partnership can allow a project to be completed sooner or make it a possibility in the first place.
  • Public-private partnerships often involve concessions of tax or other operating revenue, protection from liability, or partial ownership rights over nominally public services and property to private sector, for-profit entities.
  • Public-private partnerships are typically found in transport infrastructure such as highways, airports, railroads, bridges, and tunnels. Examples of municipal and environmental infrastructure include water and wastewater facilities. Public service accommodations include school buildings, prisons, student dormitories, and entertainment or sports facilities.

What is ‘Viability Gap Funding’?

  • For the successful completion of PPP projects, the government has designed Viability Gap Funding (VGF). Viability Gap Finance means a grant to support projects that are economically justified but not financially viable.
  • The scheme is designed as a Plan Scheme to be administered by the Ministry of Finance and amount in the budget are made on a year-to- year basis.
  • Such a grant under VGF is provided as a capital subsidy to attract the private sector players to participate in PPP projects that are otherwise financially unviable. Projects may not be commercially viable because of long gestation period and small revenue flows in future.
  • The VGF scheme was launched in 2004 to support projects that comes under Public Private Partnerships.
  • VGF grants will be available only for infrastructure projects where private sector sponsors are selected through a process of competitive bidding. The VGF grant will be disbursed at the construction stage itself but only after the private sector developer makes the equity contribution required for the project.

Sub-schemes under VGF –

  • Sub scheme – 1 – This would cater to Social Sectors such as Waste Water Treatment, Water Supply, Solid Waste Management, Health and Education sectors etc. These projects face bankability issues and poor revenue streams to cater fully to capital costs. The projects eligible under this category should have at least 100% Operational Cost recovery. The Central Government will provide maximum of 30% of Total Project Cost (TPC) of the project as VGF and State Government/Sponsoring Central Ministry/Statutory Entity may provide additional support up to 30% of TPC.
  • Sub scheme – 2 – This Sub scheme will support demonstration/pilot social sectors projects. The projects may be from Health and Education sectors where there is at least 50% Operational Cost recovery. In such projects, the Central Government and the State Governments together will provide up to 80% of capital expenditure and upto 50% of Operation & Maintenance (O&M) costs for the first five years. The Central Government will provide a maximum of 40% of the TPC of the Project. In addition, it may provide a maximum of 25% of Operational Costs of the project in first five years of commercial operations.

Benefits –

The aim of the scheme is to promote PPPs in social and Economic Infrastructure leading to efficient creation of assets and ensuring their proper Operation and Maintenance and make the economically/socially essential projects commercially viable. The scheme would be beneficial to public at large as it would help in creation of the Infrastructure for the country.

Obscenity under Section 294

Recently, a model-actor was booked for ‘obscenity’ for running nude on a beach in Goa. An FIR was filed against him under Section 294 (obscenity) of the Indian Penal Code.

Background of Section 294 –

  • The law is one from colonial times, with roots in the Victorian era. Section 294 of the IPC deals with obscenity, along with Section 292 and 293. The expression ‘obscenity’, or what is ‘obscene’ is not clearly defined in the IPC.
  • In fact, Section 292 in its current form didn’t exist in 1860, when the code was framed. It was inserted in 1925, so that makes it colonial, but yes with roots in the Victorian sense of puritanical existence, where the British were all suited and booted, and hence were not very comfortable with showing skin. There were fixed notions of what was ‘moral’ and ‘acceptable’.

Does the Section define obscenity?

  • It’s not defined in Section 294, but in 292, which provides for “Sale, etc of obscene books, etc”. The form in which we find the provision was the result of amendments to the IPC in 1925. This was a time when substantial print publication was being circulated in Europe, also much of this had started to find its way into India. In fact, there is good authority to suggest that by the 1880s India was one of the largest markets for British books.
  • There was also the issue of French novels such as those by M. Zola, which were being translated into English and vernacular languages. The British were somewhat concerned about such ‘immoral’ and ‘filthy’ material being readily available to the native youth. So, the government introduced a new Obscene Publications Bill in 1924, which led to the insertion of Section 292 in the IPC.
  • The provision says “a book, a pamphlet, paper, writing, drawing, painting, representation figure or other object shall be deemed to be obscene if it is lascivious or appeals to the prurient interest.”
  • Additionally, all material which tends “to deprave and corrupt person” falls within the vice of the provision. It essentially outlaws selling, distributing and letting to hire, importing or exporting material, making a profit out of it commercially, or advertising it or making it known by any means at large. Section 294 (Obscene acts and songs in a public place) is of earlier origin, which has been on the statute book since 1895.

How ‘obscenity’ is defined then?

  • The courts have adopted tests to determine whether a certain material is obscene or not. It started with the Hicklin test (adopted from the 1868 English case – Regina v. Hicklin), which allows for scenes to be looked at sans context. In other words, the test permits one to look at the allegedly obscene material in a vacuum, which isn’t ideal. For example, if a rape scene in a cinematograph film has the tendency to deprave and corrupt those whose minds are open to ‘immoral’ influences – the material would qualify as obscene, i.e. regardless of context or artistic or literary merit.
  • Publications that are proved to be justified as being for public good or in the interest of science, literature, art or learning are excepted from Section 292. So is material kept or used for religious purposes. The latter exception was a consequence of the realisation that was mandated on account of the Hindu mythological depictions of gods, goddesses and figures, often in the nude.

OTT Platforms

The government has brought video streaming over-the-top (OTT) platforms such as Netflix, Amazon’s Prime Video, Hotstar, and others under the ambit of the Ministry of Information and Broadcasting. These platforms were so far under the purview of the Ministry of Electronics and Information Technology.

With a market size of nearly Rs 500 crore at the end of March 2019, the online video streaming platforms may become a Rs 4000-crore revenue market by the end of 2025, according to reports. At the end of 2019, India had as many as 17 crore OTT platform users.

What are OTT platforms?

  • OTT, or over-the-top platforms, are audio and video hosting and streaming services which started out as content hosting platforms, but soon branched out into the production and release of short movies, feature films, documentaries and web-series themselves.
  • These platforms offer a range of content and use artificial intelligence to suggest users the content they are likely to view based on their past viewership on the platform. Most OTT platforms generally offer some content for free and charge a monthly subscription fee for premium content which is generally unavailable elsewhere.
  • The premium content is usually produced and marketed by the OTT platform themselves, in association with established production houses which historically have made feature films.

Laws regulating OTT platforms –

  • So far in India, there are no laws or rules regulating OTT platforms as it is a relatively new medium of entertainment. Unlike television, print or radio, which follow guidelines released by governments, OTT platforms, classified as digital media or social media, had little to no regulation on the choice of content they offered, the subscription rates, certification for adult movies and others.
  • Following pressure to regulate the content being made available on these streaming platforms, the Internet and Mobile Association of India (IAMAI), a representative body of the OTT platforms had proposed a self-regulatory model.
  • The Online Curated Content Providers or OCCPs had also proposed a Digital Curated Content Complaints Council along with the self-regulatory mechanism as a part of its proposed two-tier structure. The proposal, however, was shot down by the Ministry of Information and Broadcasting, which will now oversee these platforms.

Impact –

  • With the government deciding to bring films and audio-visual programmes made available by online content providers” as well as “news and current affairs content on online platforms”, the first challenge before the OTT platforms would be keeping a check on their content.
  • The central government’s move to bring the OTT platforms under the I&B Ministry could also mean that these platforms would have to apply for certification and approval of the content they wish to stream. This in itself could give rise to many conflicts as most OTT platforms have content that could otherwise be censored by the certification boards in India.
  • OTT platforms are likely to resist any plans to censor the content being provided and streamed by them as these platforms have often chosen to produce movies and documentaries on politically sensitive but relevant topics. It will also have to be seen as to what guidelines, if any, does the I&B ministry put in place for regulating these OTT platforms.

Mary Wollstonecraft – ‘Mother of Feminism’

After a decade-long campaign, Mary Wollstonecraft, the 18th century British feminist writer and philosopher often regarded as the ‘mother of feminism’ was honoured with a memorial statue at Newington Green in north London, where she spent a considerable part of her life.

About ‘Mary Wollstonecraft’ –

  • Mary Wollstonecraft is best known as the writer of the pathbreaking ‘A Vindication of the Rights of Women’ (1792), an early treatise on gender equality. But in her brief, unconventional life, Wollstonecraft’s road to acclaim was far from smooth.
  • Born in April 1759 in a prosperous household, Wollstonecraft was the second of seven children. As a child, the first place Wollstonecraft would face discrimination was at home — while her older brother received extensive formal education, her sisters and she were only afforded day schools for a few years. Nonetheless, she continued to read and write on her own, spurred by her curiosity and the necessity of economic independence, following the slump in her family’s fortunes.

Impact of French Revolution –

The egalitarian principles of the French Revolution, which began in May 1789, found favour with Wollstonecraft. When British politician Edmund Burke wrote a critique of the revolution in his ‘Reflections on the Revolution in France’ (1790), Wollstonecraft was quick to come to the revolution’s defence with her ‘A Vindication of the Rights of Men’ (1790), in which she argued that tradition alone cannot guarantee rights; it has to be based on notions of rationality and equality. Paine would join this parley, which came to be known as the Revolution Controversy, with his ‘The Rights of Man’ (1791), in which he backed Wollstonecraft’s contentions.

MCQs

1. Which of the following statement(s) is/are correct about the ‘Production Linked Incentive Scheme’?

  1. The scheme originally intended to promote the large scale manufacturing of electronics with 4% to 6% incentives on incremental sales (over base year).
  2. The scheme is being implemented by the Ministry of Commerce and Industry.

Select the correct codes from below –

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Answer – A

ExplanationProduction Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing was notified on 1st April, 2020. It extends an incentive of 4% to 6% on incremental sales (over base year) of goods under target segments that are manufactured in India to eligible companies, for a period of five years subsequent to the base year (FY2019-20). Now, the scheme has been extended to 10 other key sectors. The scheme is being implemented by the relevant ministries/departments under which the key sector falls, for example, in the case of food products, the Ministry of Food Processing Industries will implement the scheme.

2. Which of the following statement(s) is/are correct about the ‘Viability Gap Funding’ scheme for PPP in India?

  1. It aims to grant support to projects which are economically justified but financially unviable.
  2. The scheme is administered by the Ministry of Road Transports and Highways.
  3. A grant under VGF is provided as a capital subsidy to attract the private sector players to participate in PPP projects.

Select the correct codes from below –

  1. 1 and 2 only
  2. 2 and 3 only
  3. 1 and 3 only
  4. All of the above

Answer – C

Explanation – For the successful completion of PPP projects, the government has designed Viability Gap Funding (VGF). Viability Gap Finance means a grant to support projects that are economically justified but not financially viable. The scheme is designed as a Plan Scheme to be administered by the Ministry of Finance and amount in the budget are made on a year-to- year basis. Such a grant under VGF is provided as a capital subsidy to attract the private sector players to participate in PPP projects that are otherwise financially unviable. Projects may not be commercially viable because of long gestation period and small revenue flows in future. The VGF scheme was launched in 2004 to support projects that comes under Public Private Partnerships. VGF grants will be available only for infrastructure projects where private sector sponsors are selected through a process of competitive bidding. The VGF grant will be disbursed at the construction stage itself but only after the private sector developer makes the equity contribution required for the project.

3. Which of the following statement(s) is/are correct?

  1. Section 294 of the IPC lays down the punishment for obscene acts or words in public. 
  2. The term ‘obscenity’ is not defined in Section 294 of the IPC.
  3. There is no objective mechanism to define ‘obscenity’, hence, a subjective test is used to look at the cases related to obscenity.

Select the correct codes from below –

  1. 1 and 2 only
  2. 2 and 3 only
  3. 1 and 3 only
  4. All of the above

Answer – D

Explanation – Section 294 of the IPC deals with obscenity, along with Section 292 and 293. The expression ‘obscenity’, or what is ‘obscene’ is not clearly defined in the IPC. It’s not defined in Section 294, but in 292, which provides for “Sale, etc of obscene books, etc”. The form in which we find the provision was the result of amendments to the IPC in 1925. This was a time when substantial print publication was being circulated in Europe, also much of this had started to find its way into India. In fact, there is good authority to suggest that by the 1880s India was one of the largest markets for British books. The courts have adopted tests to determine whether a certain material is obscene or not. It started with the Hicklin test (adopted from the 1868 English case – Regina v. Hicklin), which allows for scenes to be looked at sans context. In other words, the test permits one to look at the allegedly obscene material in a vacuum, which isn’t ideal. For example, if a rape scene in a cinematograph film has the tendency to deprave and corrupt those whose minds are open to ‘immoral’ influences – the material would qualify as obscene, i.e. regardless of context or artistic or literary merit.

4. Recently, a lady, also is known as the ‘mother of feminism’?

  1. Kate Millett
  2. Simone de Beauvoir
  3. Mary Wollstonecraft
  4. None of the above

Answer – C

Explanation – After a decade-long campaign, Mary Wollstonecraft, the 18th century British feminist writer and philosopher often regarded as the ‘mother of feminism’ was honoured with a memorial statue at Newington Green in north London, where she spent a considerable part of her life. Mary Wollstonecraft is best known as the writer of the pathbreaking ‘A Vindication of the Rights of Women’ (1792), an early treatise on gender equality.

5. Which of the following statement(s) is/are correct about the ‘OTT Platforms in India’?

  1. OTT platforms are audio and video hosting and streaming services which started out as content hosting platforms but later ventured into production and release of short movies, feature films, documentaries and web-series themselves.
  2. These OTT platforms were not regulated by any government body until the recent announcement of their regulation by the Union Ministry of Information and Broadcasting.

Select the correct codes from below –

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Answer – A

Explanation – OTT, or over-the-top platforms, are audio and video hosting and streaming services which started out as content hosting platforms, but soon branched out into the production and release of short movies, feature films, documentaries and web-series themselves. These platforms offer a range of content and use artificial intelligence to suggest users the content they are likely to view based on their past viewership on the platform. Most OTT platforms generally offer some content for free and charge a monthly subscription fee for premium content which is generally unavailable elsewhere. The government has brought video streaming over-the-top (OTT) platforms such as Netflix, Amazon’s Prime Video, Hotstar, and others under the ambit of the Ministry of Information and Broadcasting. These platforms were so far under the purview of the Ministry of Electronics and Information Technology.

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