01 May ,2021 - Daily Current Affairs Analysis & MCQs - The Daily News Simplified from The Hindu

  • Regulation of Drug Prices - (Economy)
  • Critical Analysis of GST regime: Benefits and Challenges - (Economy)
  • Kyrgyzstan, Tajikistan seek to ease cross-border tensions - (Geography)
  • The rising sun in India-Japan relations - (International Relations)
  • March core sector sees rebound on base effect - (Economy)
  • QOD

Prelims Quiz

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    UPSC Current Affairs:  Regulation of Drug Prices

    1. Pharmaceutical Pricing Regime in India
    2. Exceptions to Patents under TRIPS | Page 05

    UPSC Syllabus: Mains – GS Paper II, III – Science and tech., public policy and international trade

    Sub Theme:  Drug pricing I Patents | UPSC

    We all know that presently there is acute shortage of Remdesivir. A large number of people have died because of black marketing and hoarding of Remdesivir injections. The prices of Remdesivir injections in the black market have skyrocketed.

    Hence, to bring down the prices of Remdesivir, recently a PIL was filed before the Bombay High Court. The PIL has argued for the Government's intervention to fix the maximum price for the Remdesivir injections.

    In this context, the Bombay HC has asked the Centre to include Remdesivir in the list of Scheduled Drugs and regulate its price. So, far the Centre has not taken any decision in this regard.

    Drug Pricing

    • Drug Price Control Orders (DPCO) are issued by the Government in exercise of the powers conferred under the Essential Commodities Act, 1955, for enabling the Government to declare a ceiling price for lifesaving medicines to ensure that these medicines are available at a reasonable price to the general public.
    • Price controls are applicable to “Scheduled drugs” or “Scheduled formulations” i.e. those medicines which are listed out in the Schedule I of DPCO, also referred to as National List of Essential Medicines (NLEM).
    • The National Pharmaceutical Pricing Authority (NPPA) fixes the prices of controlled drugs and formulations and enforces prices and availability of the medicines in the country. It is to be noted that the NPPA not only fixes the prices of Essential Medicines, but it also ensures that the prices of
    • the non-scheduled drugs do not increase by more than 10% every year

    HOW ARE THE PRICES OF THE ESSENTIAL MEDICINES FIXED?

    • The prices of the medicines are fixed based on Market pricing model. The ceiling price of the Essential drugs is the fixed by calculating the simple average price of all the brands having at least 1% of the market share.
    • Further, under Paragraph 19 of DPCO, the NPPA has been given the following exceptional powers:
    • Fix the prices of even those drugs that are not listed under NLEM. Example: In pursuance of these powers, the NPPA has fixed the ceiling prices of Cardiac Stents and Knee implants.
    • Increase or decrease the prices of the drugs listed under NLEM. In pursuance of these powers, the NPPA has recently increased the prices of the 21 essential medicines by almost 50%.

    Exceptions under the TRIPS Agreement:

    Compulsory licensing: It is issued when the government allows someone else to produce the patented drug without the consent of the patent owner. It can only be done under a number of conditions aimed at protecting the legitimate interests of the patent holder. For example: Normally, the person or company applying for a licence must have first attempted, unsuccessfully, to obtain a voluntary licence from the right holder on reasonable commercial terms. If a compulsory licence is issued, adequate remuneration must still be paid to the patent holder.

    India has exercised the Compulsory licensing option in 2013 for Bayer’s Nexavar, a patented kidney cancer drug. It authorized Natco Pharma to manufacture and sell Nexavar in India. Subsequently, the price of the Nexavar drug got reduced to 4% of its original price.

    Parallel or Grey Imports: These are products marketed by the patent owner in one country and imported into another country without the approval of the patent owner. For example, suppose company A has a drug patented in the Country 'X'  and Country 'Y'. In Country 'Y', the drug may be sold at lower prices. In this case, the Country 'X' may decide to import the drug from Country 'Y'. It is referred to parallel or grey import.

    Bolar Exception: Usually, the marketing approval for new drugs takes substantial amount of time. Hence, upon the expiry of patented drugs, the entry of cheaper Generic medicines into market may get delayed.

    Hence, Bolar Exception allows potential competitors to use a patented invention during the patent term without the consent of the patent owner for the purpose of obtaining marketing approval for a prospective generic product.

     

    UPSC Current Affairs: Critical Analysis of GST regime: Benefits and Challenges | Page 14

    UPSC Syllabus: Prelims economy, Mains – GS Paper III – Indian Economy

    Sub Theme:  GST| UPSC

    The new GST system was implemented on 1st of July 2017 to replace a number of central and state taxes on the same base with a country-wide common framework. As each State levied its own VAT, the tax system was fragmented with different rates being applied for similar sales of goods.

    Brief Outline of the GST system

    Legal Framework: The legal regime of GST includes four Central laws (the Central Goods and Services Tax (CGST) Act, Integrated Goods and Services Tax (IGST) Act, the Union Territories Goods and Services Tax (UTGST) Act and the Goods and Services (Compensation to States) Act along with twenty-four state laws, the relevant State Goods and Services Tax (SGST) Act

    Policy Framework: The GST system is based on a system of multiple rates to various categories of sales (0%, 5%, 12%, 18%, 28% and additionally 0.25% for precious stones and 3% for gold). 

    Tax Administrative Framework: The administration of the GST is done in parallel by the Central and the State GST administrations with the powers to audit and administer shared. To support the administration of the taxpayers, a common nation-wide IT backbone called the GST Network (GSTN) has been put in place through which all tax returns are required to be filed.

    Positives:

    Three years after the introduction of the Goods and Services Tax (GST), the number of registered taxpayers have increased from 1.08 crore to 1.23 crore. The number of returns filed has increased steeply, and there is a significant presence of ‘informal’ entities.

    Issues in GST Implementation and functioning -

    The 15th Finance Commission has highlighted some challenges with the implementation of the Goods and Services Tax (GST).  These include: (i) large shortfall in collections as compared to original forecast, (ii) high volatility in collections, (iii) accumulation of large integrated GST credit, (iv) glitches in invoice and input tax matching, and (v) delay in refunds.  The Commission observed that the continuing dependence of states on compensation from the central government (21 states out of 29 states in 2018-19) for making up for the shortfall in revenue is a concern.

    Stagnation in GST Tax Collection: As Chart 1 shows, the total monthly collections from State (SGST), Central (CGST), and integrated (IGST) goods and services taxes and the compensation cess first crossed Rs 1 lakh crore in April 2018. But after that, there has been stagnation in GST revenue growth.

     Complexity: The GST was introduced in order to simplify the tax structure and improve the tax compliance. However, the existing GST regime has multiple rates: 0, 0.25, 1, 3, 5, 12,

    18 and 28%; Need to reduce the number of tax slabs.

    Coverage: Some of the products such as petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel etc are outside the purview of GST and hence should be brought under the GST to boost the manufacturing sector.

    Issues in collecting taxes on sales: Issues arise due the multiple rates and classification. For example, it has been reported just in the case of the business of selling paper, pamphlets are taxed at 5%, letterheads at 12%, files at 18% and hardbound registers at 28%. This multiple layering of taxes defeats the basic idea of “One nation One tax”.

    Basics about GST Council

    Composition:

    • Composition of GST Council is as per the 101st Constitutional Amendment Act.
    • The Union finance minister is the chairman of GST council. Other members include Minister in charge of Finance or Taxation of State as members.
    • The members of the GST Council choose one amongst themselves to be the Vice-chairman of the council for such period as they decide.
    • One half of the total number of members of GST council shall constitute the quorum at its meetings.

    Decision Making:

    • Every decision of the GST Council shall be taken at a meeting, by a majority of not less than three-fourth of the weighted votes of the members present and voting of Central Government has a weightage of one-third of the total votes.
    • Votes of State Governments taken together have a weightage of two-thirds of the total votes. Thus, Central Government has an effective veto on all decisions of the GST Council.

     

    UPSC Current Affairs: Kyrgyzstan, Tajikistan seek to ease cross-border tensions| Page 13

    UPSC Syllabus: Mains – GS Paper II- International Trade

    Sub Theme: Border issues I Maps | UPSC

    Kyrgyzstan, Tajikistan seeks to ease cross-border tensions

    Context: a ceasefire has been announced at the Kyrgyzstan and Tajikistan border after a day of intense border conflict fight between two nations’ forces. Current conflict started when Tajik officials started installing cameras to monitor the water supply and people of Kyrgyzstan protested it.

    Background: both nations have made claim over an area of Kok-Tash (currently located in the western Kyrgyzstan) and water resources situated there. The claim is as old as these nations were part of the erstwhile Soviet Union. A large part of the Tajik-Kyrgyz border remains unmarked, fuelling fierce disputes over water, land, and pastures

    Relevant information:

    Following the collapse of the Soviet Union, the independent Central Asian states, among them Kyrgyzstan and Tajikistan, were established and have retained the borders demarcated in the 1920s under Josef Stalin’s rule. The breakup of the Soviet Union in early 1991 resulted in significant political and socio-economic changes for both the independent Kyrgyzstan and Tajikistan. During border delineation some difficulties were encountered because the borders between the member republics drawn in Soviet times had a symbolic character. Kyrgyz and Tajik communities had common property rights to access and use natural resources under the system of land tenure based on property rights backed up by Soviet state authorities. Today, and as a result of vague border lines, disputes over border demarcation are the main issue between Kyrgyzstan and Tajikistan. The disputes are causing multiple conflicts over access and use of natural resources as water for irrigation purposes and pasture grounds for grazing animals.

    Resource access and use clashes between Kyrgyz and Tajik border communities took place in 2004, 2005, 2008, 2011, 2014 and 2015. During these years more than 70 incidents in the border areas were reported by local media. Some incidents were even awarded titles as “Apricot war”1 (2004) when several apricot trees were planted on the disputed area by Tajik farmers, where then Kyrgyz inhabitants disputed and removed all those trees. Another incident was called “Ketmen war”2 (2014) when the border communities were fighting using garden tools, stones and burned animal shelters. Often Kyrgyz and Tajik border communities block each other’s roads or block water during the irrigation period, which raises the potential for violent conflicts between the communities. In a conflict that took place in 2014, about 1000 local civilians were involved, including many young people. These conflicts are usually regulated by regular army units from both countries and heavy weapons might be used at any time.

    Despite a wide range of activities held by NGOs, donors and other organisations in the border areas aimed at preventing conflicts, tensions on the Kyrgyz-Tajik border have not been mitigated or resolved so far.

     

    UPSC Current Affairs: The rising sun in India-Japan relations| Page 06

    UPSC Syllabus: Mains – GS Paper II- International Relations.

    Sub Theme: Indo-Japan | UPSC

    The universal values of freedom, humanism, democracy, tolerance and non-violence shared between India and Japan as elucidated in SAMVAD dialogue constitute the basis for the India-Japan bilateral relationship.

    There are several engagements between the two-country evident from initiatives like:

    1. Partnership for Peace
    1. Confluence between Act East Policy (India) and Free and Open Indo-Pacific strategy (Japan)
    2. QUAD to secure Indo-Pacific region
    3. Enhanced security cooperation with Malabar Exercise, MINEX etc.
    1. Partnership for Prosperity
    1. Synergizing strengths through’s Innovative Asia’s East-West Economic Corridor and Asia-Africa Growth Corridor
    2. Connectivity through North East Road Network
    1. Partnership for Global Action
    1. UNSC Reforms in shape of G4
    2. Shared commitment in total elimination of nuclear weapons
    3. Growing collaboration in achieving SDGs
    4. Concerted global action to combat climate change in line with the Paris Agreement

    India-Japan Special Strategic and Global Partnership holds immense promise for the future of the two countries as they jointly endeavour to build a more secure, peaceful and prosperous region and the world.

    Comments

    Saurav Vats 6 days ago

    Sir,
     
    @30:23, you said that IGST has the highest share but in ES snapshot it is shown that CGST has the highest collection. Could you please clear my doubt?