UPSC Key: Jaishankar in Moscow, Gaming bill and Removing a minister

Preliminary Examination: Current events of national and international importance.

Mains Examination: General Studies-II: Effect of policies and politics of developed and developing countries on India’s interests.

What’s the ongoing story: Underlining that they were meeting in the backdrop of a “complex geopolitical situation”, External Affairs Minister S Jaishankar told Russia’s First Deputy Prime Minister Denis Manturov Wednesday that they should tap into the “full potential of trade and investment ties”.

Key Points to Ponder:

— What is the history of India-Russia bilateral relations?

— What are the areas of cooperation between India and Russia?

— What are the emerging challenges to India-Russia ties?

— What is India’s stand on the Ukraine-Russia War?

— Why has the US imposed curbs on Russian oil?

— What is the status of India’s dependence on Russian crude oil?

— What are the Chennai-Vladivostok (Eastern Maritime) Corridor and the International North-South Transport Corridor?

— What is  Eurasian Economic Union (EAEU)?

Key Takeaways:

— On a two-day visit to Moscow at a time when India faces 50 per cent tariffs from the Trump administration, including 25 per cent for importing Russian oil, Jaishankar said, “We should not get stuck on a beaten track. Doing more and doing differently should be our mantras.”

— He will meet Russian Foreign Minister Sergey Lavrov Thursday. Russian officials have indicated that they will develop a “special mechanism” to deal with the current situation.

— Jaishankar underlined the need for “addressing tariff and non-tariff trade barriers, removing bottlenecks in logistics, promoting connectivity through the International North-South Transport Corridor, the Northern Sea Route and the Chennai-Vladivostok Corridor, effecting payment mechanisms smoothly, timely finalisation and execution of the Programme of Economic Cooperation till 2030, the early conclusion of the India-Eurasian Economic Union FTA, whose terms of reference were finalised today”.

— Modi and Putin are likely to meet on the sidelines of the SCO leaders’ summit in China’s Tianjin on August 31 and September 1.

From the page Govt & Politics “India restarts trade deal talk with Russia-led EAEU bloc amid Trump’s tariffs, ‘dead economies’ jibe”

— India and the Russia-led Eurasian Economic Union (EAEU) on Wednesday kick-started negotiations for a trade deal as talks with the US broke down after US President Donald Trump called India a “dead economy” and raised tariffs on Indian products to 50 per cent, highest globally.

— The restart of trade negotiations with EAEU, which has a combined GDP of $6.5 trillion, comes after New Delhi has ostensibly begun a pivot towards China, Russia and Brazil in the face of US economic coercion. After the fallout with the US over trade deal negotiations, Prime Minister Narendra Modi has had a phone call with Brazilian President Lula da Silva, Russian President Vladimir Putin and is expected to meet Chinese President Xi Jinping later this month.

— The trade deal talks with EAEU were stalled in early 2022 after the Ukraine war. The grouping comprises Armenia, Belarus, Kazakhstan, Kyrgyz Republic, apart from Russia.

Do You Know:

— India-Russia bilateral relations date back seven decades. The bilateral diplomatic relations have gone through several periods since their formal establishment in 1947 but have remained strong and even grown. The recent visit of Prime Minister Modi to Russia demonstrates India’s commitment to its partnership with Russia as it has been a longstanding and reliable partner for India.  The India-Russia relations have been a key pillar of India’s foreign policy. 

Other Important Articles Covering the same topic:

📍Jaishankar in Moscow for talks, Russia envoy: Will resolve any problem

📍UPSC Issue at a Glance | India-Russia Relations: 4 Key Questions You Must Know for Prelims and Mains

Previous year UPSC Prelims Question Covering similar theme:

(1) Recently, India signed a deal known as ‘Action Plan for Prioritization and Implementation of Cooperation Areas in the Nuclear Field’ with which of the following countries? (UPSC CSE 2019)

(a) Japan

(b) Russia

(c) The United Kingdom

(d) The United States of America

Lok Sabha erupts as government brings Bills to sack arrested ministers

Syllabus:

Preliminary Examination: Current events of national and international importance

Mains Examination: General Studies-II: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

What’s the ongoing story: Home Minister Amit Shah on Wednesday introduced in Lok Sabha a significant constitutional amendment that seeks to remove a central or state Minister who is facing allegations of corruption or serious offences and has been detained for at least 30 days consecutively.

Key Points to Ponder:

— What is a constitutional amendment?

— What are the constitutional provisions for the constitutional amendment?

— What do you understand about the criminalisation of politics? What are the reasons for this?

— What are the steps taken by the Election Commission to keep a check on the criminalisation of politics?

— What do you understand by innocent until proven guilty?

— What is a Joint Parliamentary Committee (JPC)?

Key Takeaways:

From Explained: Removing a Minister

— The Constitution (One Hundred And Thirtieth Amendment) Bill, 2025 and two related statutory amendments to reflect the proposed changes for Union Territories have been referred to a joint committee of Parliament for review.

— The Bill proposes amendments to Articles 75, 164, and 239AA of the Constitution, which deal with the Union Council of Ministers, Council of Ministers in the states, and Ministers in Union Territories respectively.

— These provisions will have a new clause: “A Minister, who for any period of thirty consecutive days during holding the office as such, is arrested and detained in custody, on allegation of committing an offence under any law for the time being in force, which is punishable with imprisonment for a term which may extend to five years or more, shall be removed from his office by the President on the advice of the Prime Minister to be tendered by the thirty-first day, after being taken in such custody.”

— The removal can be reversed when the Minister is released from custody. Chief Ministers and the Prime Minister will be in the ambit of the proposed law.

— The constitutional amendment will require a majority of two-thirds of Members present and voting to be passed.

— Under Section 8 of the Representation of the People Act, 1951, (RPA) legislators are disqualified from contesting elections or continuing in office upon conviction for certain criminal offences, and being sentenced to imprisonment for at least two years.

— The proposed amendment deals with the removal of a Minister after having spent a certain time in custody. Ministers do not have qualifications that are distinct from those of legislators (with whom the RPA deals), but they have different responsibilities.

— In the RPA, the yardstick for disqualification is conviction by a court. The disqualification can be stayed if the conviction is stayed by a higher court on appeal.

— In the proposed Bill, the yardstick for removal is 30 consecutive days of being “arrested and detained in custody”. Since arrest and detention are only the  preliminary step in a criminal investigation, such a yardstick raises serious questions of due process.

— Given the serious concerns over the growing criminalisation of politics, a view has gained ground that a legislator must be disqualified even before the stage of conviction.

— It has been argued that the long wait for conviction defeats the purpose of disqualification. Since September 2013, only 27 sitting MPs and MLAs have been disqualified after being convicted of offences.

— In its 170th report in 1999, the Law Commission of India proposed that the framing of a charge for offences punishable by up to five years’ imprisonment should be made an additional ground for disqualification, which should be for five years or until acquittal, whichever was earlier.

— This proposal was reiterated by the Election Commission of India in 2004, and by the Law Commission in its 244th report in 2014.

— The Law Commission’s 2014 report recommended that a legislator could be disqualified when charges were framed against them by a court, since this showed prima facie judicial satisfaction that there existed sufficient material against a person to put them to trial.

— The report rejected suggestions that the filing of a chargesheet by police or of a court taking cognizance of an offence against a legislator were appropriate stages for disqualification.

— Disqualifying a person before the “application of judicial mind” would be “against the principles of natural justice”, and “would mean that a person is penalised without proceedings being initiated against him”, the Commission said.

Do You Know:

— Swapnil Tripathi writes: When K T Shah proposed barring ministers convicted of offences involving bribery, corruption or moral turpitude, B R Ambedkar acknowledged the good intentions but cautioned that the Constitution should not attempt to micromanage such qualifications. Instead, he argued, the “good sense” of the Prime Minister, legislature and people ought to be relied upon.

— The provision rests on the fact of detention rather than conviction. A hallmark of our legal system is that an accused is innocent until proven guilty. Recent history demonstrates how opposition leaders have been arrested and held in custody for extended periods, only to be discharged later for want of evidence.

— The amendment also overlooks two key realities: First, that criminal trials in India often take years to conclude – even for elected officials; and second, that it has become harder to get bail under many recently toughened laws.

— There is a real risk that this rule could be misused to remove political opponents by arresting them and keeping them in custody long enough to trigger disqualification. Yes, the Bill allows a person to return to office after release. But the damage – loss of power, reputation, and political momentum – would already be done.

— Instead of disqualifying ministers just because they are arrested, we should focus instead on fast-tracking serious criminal cases against ministers, ensuring impartial investigations and swifter trials. That would meet the same goal – holding leaders accountable – without weakening democratic safeguards.

— A Joint Parliamentary Committee (JPC) is set up by Parliament for a special purpose, such as for the detailed scrutiny of a subject or Bill. It has members from both Houses, and is dissolved after its term ends or its task has been completed.

— The Constitution (130th amendment) Bill, 2025, for example, has been sent to a joint Parliamentary panel of 31 members to be chosen by the Lok Sabha Speaker and the Rajya Sabha Chairman. Shah requested that the committee present its report before the first day of the next session of Parliament.

Other Important Articles Covering the same topic:

📍Constitution 130th Amendment Bill 2025 sent to Join Committee amid uproar: 5 things you need to know

📍Why the amendment bill to remove ministers detained on graft charges has great scope for misuse

Previous year UPSC Prelims Question Covering similar theme:

(2) Consider the following statements : (UPSC CSE 2022)

1. A bill amending the Constitution requires a prior recommendation of the President of India.

2. When a Constitution Amendment Bill is presented to the President of India, it is obligatory for the President of India to give his/her assent.

3. A Constitution Amendment Bill must be passed by both the Lok Sabha and the Rajya Sabha by a special majority and there is no provision for joint sitting.

Which of the statements given above are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

 

GOVT & POLITICS

Panel backs law for SC, ST, OBC quota in private varsity admissions

Syllabus:

Preliminary Examination: Indian Polity and Governance – Constitution, Political System, Panchayati Raj, Public Policy, Rights Issues

Mains Examination: General Studies-II: Government policies and interventions for development in various sectors and issues arising out of their design and implementation. 

What’s the ongoing story: A parliamentary panel has recommended 27%, 15% and 7.5% reservation for OBC, SC and ST students, respectively, in private higher education institutions, noting the “considerably low” number of OBC students and “abysmally low” number of SC and ST students in select private institutions.

Key Points to Ponder:

— What are the reasons for the low representation of OBC, ST and SC students in private institutions?

— What is the objective of providing reservation to OBC, ST and SC students in government institutes?

— What is the constitutional provision regarding this?

— What is the purpose of Nagamohan Das Commission?

— What is the 6:6:5 formula in the context of Karnataka?

— Education must be a key instrument of attaining social justice in this country. What do you understand by this statement?

Key Takeaways:

— Data provided by three of the four private Institutions of Eminence (IoEs) — BITS-Pilani, OP Jindal Global University, Shiv Nadar University — to the panel showed less than 1% of students belonged to the ST category in each of the institutions.

— “Education must be a key instrument of attaining social justice in this country, and the current absence of reservations in private higher education institutions may be an impediment to the same,” the Parliamentary Standing Committee on Education, Women, Children, Youth and Sports headed by Congress leader Digvijaya Singh noted in its report presented in the House on Wednesday.

— Citing “substantial” annual fees in private universities, the panel underlined the need for the State to take steps through legislation to accommodate students from these categories.

— Article 15(5) of the Constitution empowers the State to include private aided and unaided institutions of higher education in the scheme of reservations, it stated, adding that private institutions are currently not legally obliged to implement reservation policies.

— The committee called for implementing Article 15(5) in full across the country through legislation by Parliament, to match the reservation with the Central Educational Institutions (Reservation in Admission) Act of 2006 applicable on centrally-funded institutions like IITs, IIMs, and central universities.

— The panel recommended that the governments should allocate dedicated funds for private HEIs to increase seats, build infrastructure, and hire faculty in institutions implementing reservations, ensuring that there is no reduction in general category seats.

Do You Know:

— After a marathon special Cabinet meeting on Tuesday night, the Congress government in Karnataka arrived at a new formula to provide internal reservations for the Scheduled Caste (SC) community in jobs and education within the 17 per cent quota available to the 101 castes that fall under the category in the state.

— The Cabinet meeting headed by Chief Minister Siddaramaiah decided to uphold the recommendation of the Justice (retired) H N Nagamohan Das Commission to provide six per cent reservation to the most backward SCs categorised as the Dalit Left and comprising groups considered ‘untouchables’, like the Madigas.

— The 6:6:5 formula for the 17 per cent reservation is expected to be formally announced by Siddaramaiah on Wednesday during the ongoing Monsoon Session of the state legislature. The Chief Minister’s Office (CMO) confirmed the new formula for internal quotas for SCs.

— The report on the social, economic, and educational situation of the SCs, prepared by a Commission headed by retired high court judge Justice H N Nagamohan Das, was presented to Siddaramaiah on August 4 and it was accepted by the government during a Cabinet meeting on August 7.

— When the makers of modern India sat to pen down the constitution of an independent India, they realised the need to give visibility to the diversity within its social landscape while at the same time levelling them out in an equal socio-economic strata. 

— Caste, in this regard was a very important factor to be taken care of. While this unique social category had existed in the Indian subcontinent for centuries, the decennial census started by the British in the late 19th century had institutionalised it as the foremost social division characterising India.

— Recognition of caste discrimination and the need to rectify the same was noted even before the Constitution of the country was framed. B R Ambedkar was the foremost pioneer of separate political representation for the lower castes. 

— Keeping in mind the needs of the lower castes, Article 46 of the constitution states that:

“The State shall promote with special care the educational and economic interests of the weaker sections of the people, and in particular, the Scheduled Castes and Scheduled Tribes, and shall protect them from social injustice and all forms of exploitation.”

— Further, Article 15 of the Constitution prohibited “discrimination on grounds of religion, race, caste, sex or place of birth”.

— While the Constitution abolished the practise of any kind of injustice against the lower castes, it also gave special benefits to them in the form of reserved seats in public employment and privileged access to higher education. 

— Article 15 (4) stated that “nothing thing in this article or in clause ( 2 ) of Article 29 shall prevent the State from making any special provision for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and the Scheduled Tribes”.

Other Important Articles Covering the same topic:

📍Karnataka govt clears 6:6:5 formula for Dalits’ internal reservation after special Cabinet meeting

📍Why caste, not class, has determined quotas in India

Previous year UPSC Prelims Question Covering similar theme:

(3) Regarding the Article 15 of the Constitution of India, find the wrong answer. (APPSC 2018)

(a) Article 15 is limited to citizens only.

(b) Article 15 clause (1) and clause (2) both are limited to discrimination on grounds of religion, place of birth, etc.

(c) Article 15 permits the State to make special provision for women and Children.

(d) Article 15 also permits the State to make any special provisions for SC, ST and socially and economically backward classes of citizens.

 

EXPLAINED

After Wang Yi’s visit, taking stock of India-China bilateral ties

Syllabus:

Preliminary Examination: Current events of national and international importance.

Mains Examination: General Studies-II: India and its neighbourhood- relations, Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

What’s the ongoing story: Chinese Foreign Minister Wang Yi’s visit to India was the first ministerial visit from China since the two countries decided last October to disengage at the border. 

Key Points to Ponder:

— Know in detail the history of India-China relations.

— India-China Border Dispute: Know the background.

— Areas of cooperation and conflict between India and China.

— What is the Yarlung Tsangpo project? Why does China want this megaproject?

— What are the specific concerns for India?

— Read about the origin and flow of the Brahmaputra (Yarlung Tsangpo or Zangbo) river.

— What steps have been taken by both the countries to improve bilateral relations?

Key Takeaways:

— At his meeting with Prime Minister Narendra Modi on Tuesday, Wang said bilateral relations had experienced “ups and downs, and the lessons learned are worth remembering”, according to China’s Foreign Ministry readout.

— In October 2019, President Xi Jinping and Prime Minister Modi met in Mahabalipuram for their second informal summit. As the leaders famously posed in front of the ‘Krishna’s Butterball’ rock, there was a sense of euphoria around India-China ties.

— Just eight months later, the situation had changed dramatically. Indian and Chinese troops clashed violently in Galwan in eastern Ladakh, and 20 Indian Army personnel including a Colonel-rank officer and at least four Chinese soldiers were killed.

— Over the years that followed, the two armies remained eyeball-to-eyeball at multiple places, and there were reports of confrontations and pictures and reports of infrastructure-building on both sides.

— After several rounds of negotiations between diplomats and military leaders, there were troop withdrawals at some places. By mid-2024, the needle began to move in a significant manner.

On October 21, the two sides agreed to complete the disengagement process in the last two remaining locations in Depsang and Demchok. President Xi and PM Modi met in Kazan on October 23 and decided to mend ties.

— Since then, External Affairs Minister S Jaishankar, Defence Minister Rajnath Singh, National Security Advisor Ajit Doval, and Foreign Secretary Vikram Misri have all travelled to China.

— The two sides have agreed to move forward on two fronts — border issues and bilateral ties — without allowing one to impact the other. The parallel engagement was agreed upon after the 1988 visit of then PM Rajiv Gandhi to China, and had been followed until 2020.

— In the dual-track strategy adopted now, India and China have agreed to form at least three new border-related mechanisms.

— The two sides also agreed to use the border management mechanisms at the diplomatic and military levels to carry forward the process of “border management, and discuss de-escalation”, beginning with the principles and modalities.

— On the bilateral front, the two sides have agreed to resume direct flight connectivity” at the earliest; facilitate visas to tourists, businesses, media and other visitors; re-open border trade through the designated trading points at Lipulekh Pass, Shipki La Pass, and Nathu La Pass; and facilitate trade and investment flows through concrete measures.

— On trans-border rivers cooperation, the Chinese side agreed to “share hydrological information during emergency situations based on humanitarian considerations”.

Do You Know:

— China has formally started the construction of the USD 167.8 billion dam over the Brahmaputra river in Tibet, closer to the Indian border in Arunachal Pradesh.

— Chinese Premier Li Qiang announced the start of the construction of the dam at a ground-breaking ceremony in the lower reaches of the Brahmaputra river, locally known as Yarlung Zangbo, at Nyingchi City, official media reported.

— The hydropower project, regarded as the biggest infrastructure project in the world, raised concerns in the lower riparian countries, India and Bangladesh.

Other Important Articles Covering the same topic:

📍Look forward to meeting Xi, says PM as India, China move to rebuild ties – border, trade, flights

📍Why China is building the world’s largest dam on the Tsangpo, how India may be impacted

Previous year UPSC Prelims Question Covering similar theme:

(4) “Belt and Road Initiative” is sometimes mentioned in the news in the context of the affairs of : (UPSC CSE 2016)

(a) African Union

(b) Brazil

(c) European Union

(d) China

Previous year UPSC Mains Question Covering similar theme:

📍‘China is using its economic relations and positive trade surplus as tools to develop potential military power status in Asia’, In the light of this statement, discuss its impact on India as her neighbour. (UPSC CSE 2017)

 

ECONOMY

Gaming bill proposes ban on real money games, penalties for endorsements

Syllabus:

Preliminary Examination: Current events of national and international importance

Mains Examination: General Studies-II: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

What’s the ongoing story: The Lok Sabha Wednesday passed the Promotion and Regulation of Online Gaming Bill, 2025 minutes after it was introduced in the House, offering a legal framework to regulate online gaming companies in India. 

Key Points to Ponder:

— What is the need for regulating the online gaming industry in India?

— What are the national security concerns related to online gaming platforms?

— What is online gaming?

— What is the percentage of GST applicable to online gaming?

— How is recognising esports as a legitimate sport in India an important step?

— What is money laundering?

— The need for such a law arises from the “deleterious and negative impact of online money games on the individuals, families, society and the nation. What do you understand about this?

Key Takeaways:

— With the Bill, the government is preparing to take aim at the lucrative yet controversial world of real-money online gaming, and is proposing sweeping bans and harsh penalties for both platforms and their celebrity promoters. 

— At the heart of the proposed law are blanket prohibitions on online money games, multi-crore fines and potential jail sentences, as officials attempt to rein in an industry increasingly accused of fuelling money laundering, addiction and law evasion, even as it hurtles towards a projected $9 billion market by 2029.

— The Bill, in its current version, is a sharp departure from just about two years ago, when in April 2023, the IT Ministry had introduced rules for online gaming, which were largely seen as pro-industry.

— If the Bill is implemented in its current form, it will be a death blow to the online real money gaming industry, which is projected to be a $9 billion market by 2029. The industry also faces a 28 per cent Goods and Services Tax (GST), with proposals to increase the rate to as high as 40 per cent. 

— The online gaming industry is a sunrise sector in the country, with a collective enterprise valuation of over Rs 2 lakh crore.

— According to a report by FICCI and EY from March 2025, online gaming companies in India collectively earned a revenue of close to $2.7 billion in 2024. These companies typically make money by taking a cut from a user’s winnings.

— The need for such a law arises from the “deleterious and negative impact of online money games on the individuals, families, society and the nation and given the technical aspects including the very nature of the electronic medium used for online money games, the algorithms applied and the national and transnational networks,” it added.

Highlight of the Bill:

— As per the current version of the draft law, the government will prohibit any person from offering online games in India, failing which they could be imprisoned for up to three years, and penalised Rs 1 crore. 

— Those promoting such platforms, such as social media influencers, will also face jail time of two years, and a penalty of Rs 50 lakh. The government will also prohibit banks and financial institutions from facilitating financial transactions on such platforms.

— The Bill applies to all online money gaming platforms irrespective of whether they are games of skill or chance, a distinction the industry had lobbied hard for in the past.

— The Bill has envisioned the creation of a central authority to promote competitive e-sports, while ensuring overall compliance with the law. 

Do You Know:

— According to the United Nations, money laundering is the processing of criminal proceeds to disguise their illegal origin. This money is generated by a criminal activity but may appear to come from a legitimate source.

— Generally, money laundering is a three-stage process :

1) Placement: The crime money is injected into the formal financial system.

2) Layering: Money injected into the system is layered and spread over various transactions and book-keeping tricks to hide the source of origin.

3) Integration: Laundered money is withdrawn from the legitimate account to be used for criminal purposes. Now, money enters the financial system in such a way that the original association with the crime is disassociated. The money now can be used by the offender as legitimate money.

Note: All three sources may not be involved in money laundering. Some stages could be combined or repeated many times.

Other Important Articles Covering the same topic:

📍How real is gaming disorder, and what should we keep in mind?

📍Knowledge nugget of the day: Money Laundering

Previous year UPSC Mains Question Covering similar theme:

Discuss how emerging technologies and globalisation contribute to money laundering. Elaborate measures to tackle the problem of money laundering both at national and international levels. (UPSC CSE 2021)

 

THE IDEAS PAGE

India must not miss the bus

Syllabus:

Preliminary Examination: Economic and Social Development – Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc

Mains Examination: General Studies-III: Indian Economy and issues relating to planning, mobilisation of resources, growth, development and employment.

What’s the ongoing story: Arvind P. Datar writes- “In this year’s Independence Day address, Prime Minister Narendra Modi has rightly called for sweeping reforms of the Indian tax and regulatory landscape. Notwithstanding the periodic flattering reports of how India will be the third-largest economy, and of how the world looks up to India, the brutal truth is that it is not an attractive investment destination for multinationals.”

Key Points to Ponder:

— What is the Ease of Doing Business (EoDB)?

— What is the role of deregulation in economic growth?

— What are the main constraints in the Ease of Doing Business?

— Regulatory prohibitions exclude women from high-paying jobs on the factory floor. Elaborate.

— Read about the Goods and Services Tax.

Key Takeaways:

— “For Indian companies, it is easier to import almost all products than make them in India. And we have no one to blame but ourselves. At the start of this century, the recurrent theme was that the 21st century belonged to India and China. Sadly, we missed the bus.”

— “In 2001, the GDP figures for China and India were $1.3 trillion and $476 billion. China’s economy was double the size of the Indian economy. A quarter century later, at the end of 2024, China’s GDP stood at $18.74 trillion as against India’s $3.91 trillion; China’s economy is now 4.8 times the size of India. In 2001, China had 11 companies in Fortune Global 500, and India had one-IOC Ltd. In 2024, China had 135 and India had nine. These are statistics that indicate the urgent need to make “Make in India” the nation’s top priority.”

— “The three critical components of ease of doing business (EB) are: (i) Ease of starting a business (ES); (ii) Ease of running a business (EB), and (iii) Ease of closing a business (EC) and can be represented by an equation: EB = ES + ER + EC.”

— “The first component is the time and trouble involved in starting an industry, particularly in the small and medium sectors. At this stage, the bulk of the responsibility is on the states and their regulatory laws. The off-quoted single-window clearance is often a mirage. Even getting a GST registration is problematic, with rent-seeking at every stage. No one has done an actual study of the number of steps involved in setting up different categories of industries, what are the hurdles and actual costs involved, and the time taken. Equally important is to compare the steps, time and costs involved in setting up an industrial unit in China, Vietnam, Malaysia and Thailand with India.”

— “The second stage requires a careful study of the state and central regulations applicable to running firms and companies on the regulatory front. There are multiple and often meaningless compliances that serve no purpose and only add to paperwork. For a single MSME, there are a mind boggling 57 recurring compliances and 17 approvals/licenses from 18 different authorities only in the area of environment, health and safety.”

— “But, the biggest fear of any Indian or foreign business entity is the highly complex and unpredictable direct and indirect tax system. GST continues to be as complex as ever, with vast powers of abruptly freezing accounts, cancelling registration, reopening assessments, and myriad provisions that can bring businesses to a grinding halt.Merely reducing the number of rates or re-enacting the same law in simple language is not the answer.”

— “We are at a fork in the road: Either we choose a completely new path that encourages enterprise or continue with our old methods that have hobbled India’s growth. Peter Drucker famously remarked that there are no underdeveloped countries, there are only badly managed ones. The three components of ease of doing business must be re-examined not by the bureaucracy alone, but through intensive consultations and participation with representatives from industry. A clear plan followed by time-bound execution is the key. India cannot afford to miss the bus again and again.”

Other Important Articles Covering the same topic:

📍Imperative to wipe out trust deficit, ‘get out of the way’ & deregulate, says CEA

Previous year UPSC Prelims Question Covering similar theme:

(5) India’s ranking in the ‘Ease of Doing Business Index’ is sometimes seen in the news. Which of the following has declared that ranking? (UPSC CSE 2018)

(a) Organization for Economic Cooperation and Development (OECD)

(b) World Economic Forum

(c) World Bank

(d) World Trade Organization (WTO)

 

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