TOPIC-1:Government cuts
its losses on EPF.
Facing mounting criticism, the
Narendra Modi government at the Centre has decided to drop its Budget proposal
to tax a portion of the EPF (Employees’ Provident Fund) corpus upon withdrawal.
An ill-conceived move both context- and content-wise, it has deservedly been given a burial. “In view of the
representations received, the government would like to do a comprehensive
review of this proposal, and, therefore, withdraw the proposal in paragraph 138
and 139 of my Budget speech,’’ Finance Minister Arun Jaitley said in a
statement in the Lok Sabha. The government has also withdrawn the proposal to
limit tax-free contributions by the employer to the provident fund account of
an employee to Rs.1.5 lakh a year. This did not gel
with the Budget speech rationale for
taxing EPF savings — to bring parity in tax treatment between the EPF and the
National Pension System (or NPS, where employers can pay up to 10 per cent of
salary as contribution without any such cap). By putting the EPF back into an
EEE tax regime (where contributions,
income as well as the accumulated corpus are
all exempt from tax), the government’s volte-face
would help retain the EPF’s popularity among the salaried class, most of
whom are part of it not out of choice but by statutory default. The Finance
Minister had himself called them hostages to the EPF in his last Budget, but
instead of setting them free, he thought it better to tax them citing fair taxation principles. It is still not
clear whether the government had initially thought it could pull the taxation
proposal past its middle-class constituency. In the event, the tax on EPF
withdrawal gave additional ammunition to
an aggressive Opposition, including the Congress party. Differences within the
National Democratic Alliance and the
Cabinet finally ensured the climbdown by the Finance Ministry.
While announcing a return to status quo on the EPF, the Finance Minister has rightly
retained the Budget provision allowing NPS subscribers to withdraw 40 per cent
of the corpus without any tax liability. The
remainder 60 per cent will attract a combination of withdrawal tax and deferred tax on the annuity
products one buys. In a way, partial tax relief for the NPS will narrow the
existing tax-induced gap between the EPF and the NPS. The strident opposition to EPF tax must be read in the
context of the virtual absence of a social security net of any worth in India.
There are no two views on the need to move towards a ‘pensioned society’.
However, this cannot happen abruptly or in a coercive
manner — people need to be nudged over
time to gear up for such transitions. Whatever the intention, it was the
‘out-of-the-blue’ approach of the government that triggered an uproar. A sheepish rollback is a smart move, ahead of a
round of Assembly elections. It is to be hoped that this U-turn will trigger a
larger debate on ushering in a holistic social security ecosystem
in the country.
VOCABULARY:
1.deservedly : in the way that is deserved; rightfully.
2.gel : a jelly-like substance, especially one used in
cosmetic or medicinal products.
3.rationale : a set of reasons or a logical basis for a
course of action or belief.
4.regime : a government, especially an authoritarian
one.
5.corpus :a collection of written texts, especially the
entire works of a particular author or a body of writing on a particular
subject.
6.volte-face :an act of turning round so as to face in
the opposite direction.
7.citing :refer to (a passage, book, or author) as
evidence for or justification of an argument or statement, especially in a
scholarly work.
8.ammunition :a supply or quantity of bullets and
shells.
9.Alliance :a union or association formed for mutual
benefit, especially between countries or organizations.
10.quo :the existing state of affairs, particularly with
regards to social or political issues.
11.liability :the state of being legally responsible for
something.
12.deferred :put off (an action or event) to a later
time; postpone.
13.annuity : a fixed sum of money paid to someone each year, typically for the
rest of their life.
14.strident : (of a sound) loud and harsh; grating.
15.coercive : relating to or using force or threats.
16.nudged : prod (someone) gently with one's elbow in
order to attract attention.
17.sheepish :showing or feeling embarrassment from shame
or a lack of self-confidence.
18.ushering : show or guide (someone) somewhere.
19.holistic : characterized by the belief that the parts
of something are intimately interconnected and explicable only by reference to
the whole.
TOPIC-2: Don’t
compromise on privacy.
The Aadhaar Bill, which the
government introduced in the Lok Sabha last week, has not come a day too soon.
More than six years have passed since the first attempt was made to give legal
validity to Aadhaar, an ambitious project
that seeks to provide unique identification numbers to each individual in a
country of over a billion people, collecting demographic and biometric
information in the process. And through these years, amid many legal and political challenges and a change in
government, over 98 crore numbers have been issued. The stated idea of the
Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and
Services) Bill, 2016, is to provide for “efficient, transparent, and targeted
delivery of subsidies, benefits and services”. This, along with a clause that says the unique numbers will not be
considered as proof of citizenship, is welcome. And yet, the process of
legislating for Aadhaar has not been wholly reassuring. The Bill has attracted
immediate criticism for being introduced as a money bill, by virtue of which it
does not require approval of the Rajya Sabha, where the BJP-led government does
not have the numbers to ensure its passage. Bypassing the Upper House’s vote
does give the Bill an easy route to becoming law. The question is, given that
Aadhaar was a signature project of the Congress-led UPA, could not the
government have made the effort to reach out to lawmakers across the board on
such a crucial, bipartisan issue?
Wider political consensus and scrutiny are vital. Section 7 of the Bill, for
instance, makes proof of Aadhaar necessary for “receipt of certain subsidies,
benefits and services”. This must be read in the backdrop of a Supreme Court
ruling that said Aadhaar cannot be made mandatory. A key concern over the
collection of personal information on this scale is data protection. There are
provisions in this Bill that seem to address the concern, including one that
prohibits any official from revealing information in the data repository to anyone. But the exceptions cause
unease. Two provisions are particularly troubling. The first is Section 29(4),
by which no Aadhaar number or biometric information will be made public “except
for the purposes as may be specified by regulations”. The second, which experts
have already flagged, is Section(33), under which the inbuilt confidentiality
clauses will not stand when it concerns national security. The only reassurance
could be that in such cases the direction has to come from an official who is
not below the rank of a Joint Secretary to the government. Nonetheless, without
robust laws to protect their data, citizens would be rendered vulnerable. It
is not about just snooping. It is also
being said that in order to be useful and effective, Aadhaar data might have to
be used alongside other databases. That could trigger further privacy
questions. There is little doubt that India needs to streamline the way it
delivers benefits, and to empower citizens with a basic identification
document. But this cannot be done without ensuring the strictest protection of privacy.
VOCABULARY:
1.ambitious :having or showing a strong desire and
determination to succeed.
2.amid : surrounded by; in the middle of.
3.clause : a particular and separate article,
stipulation, or proviso in a treaty, bill, or contract.
4.bipartisan :of or involving the agreement or
cooperation of two political parties that usually oppose each other's policies.
5.scrutiny : critical observation or examination.
6.repository : a place where or receptacle in which
things are or may be stored.
7.rendered : provide or give (a service, help, etc.).
8.vulnerable : exposed to the possibility of being
attacked or harmed, either physically or emotionally.
9.snooping : nvestigate or look around furtively in an
attempt to find out something, especially information about someone's private
affairs.
10.strictest : demanding that rules concerning behaviour
are obeyed and observed.
