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Daily Current Affairs

: 04-10-2021 : 65 Minutes

SUBJECT : Internal Security

Atrocities by Police in India: Police Reforms

In News

  • The Chief Justice of India (CJI) is in favour of forming special panels to probe ‘atrocities’ by police in India.


  • The CJI said he was in favour of forming standing committees headed by the Chief Justices of the High Courts to investigate complaints received from the common man of “atrocities” committed by the bureaucracy, especially police officers, in the country.
  • The observation came when the court was reserving judgment on petitions filed by the suspended Additional Director General of Police in Chhattisgarh. 
    • He had sought protection from arrest in various criminal cases, including sedition, extortion and criminal intimidation, arraigned against him by the current government.

Police System in India

  • Constitutional provisions:
    • Police is an exclusive subject under the State List (List II, Schedule 7 of the Constitution).
    • However, the centre is also allowed to maintain its own police forces to assist the states with ensuring law and order
    • The present Indian police system is largely based on the Police Act of 1861.
    • After independence, some states came out with their own police acts, for example, Bombay Police Act, 1951, the Kerala police act 1960, Delhi police act 1978.

Image Courtesy: PRS 

  • Duty of Police:
    • Primary Duty:
      • Maintain Law and Order.
      • Keep Internal Security.
      • Criminal Investigation.
    • Secondary Duty:
      • Police involved in the VVIP movement.
    • But it is often seen that the primary duty of police becomes secondary and vice-versa because of police and political connections and interference.


Issues with Police System in India

  • Colonial Law: 
    • Even at present, the police system in India is based on colonial law.
    • Sometimes the British used the police as their instrument to suppress the voice of people and for their personal functions and at present our respected government is doing the same.
  • Huge vacancies:
    • While the sanctioned police strength was 181 police per lakh persons in 2016, the actual strength was 137 police.
    • This is way too low when compared with the United Nations’ recommended standard of 222 police per lakh persons.
    • Further, a high percentage of vacancies within the police forces exacerbates an existing problem of overburdened police personnel.
  • Custodial Death: 
    • There are many cases on custodial death means Death by torture/pressure in police/judicial custody. 
    • During 1996-1997 in D.K.Basu judgement, the Supreme Court (SC) issued a guideline against custodial death in India.
  • Police Infrastructure (weapons, vehicle etc)
    • Modern policing requires strong communication support, state-of-the-art or modern weapons, and a high degree of mobility.
    • Even the fund’s allotted face Underutilisation.
  • Law on Torture: 
    • India has only signed the “United Nation Convention on torture” but yet to pass by the Parliament. 
    • India does not have a specific law for torture.
  • Political Interference: 
    • Police officers are not able to do their work due to the interference of political leaders. 
    • There is no minimum tenure security for officers at the higher post and not even place posting security.
  • Promotions and working conditions: 
    • Qualifications and training of police personnel are not up to the mark, especially for lower levels of officials.
    • The lower ranks of police personnel are often verbally abused by their superiors or they work in inhuman conditions.
    • This non-harmonious work environment ultimately affects their relationship with the public.
  • Structural issue: 
    • Police constables hired in the class 4 category are expected to use modern scientific technology without proper administration of training.


Police Reforms

  • Meaning: 
    • Police reforms aim to transform the values, culture, policies and practices of police organizations so that police can perform their duties with respect for democratic values, human rights and the rule of law.
    • It also aims to improve how the police interact with other parts of the security sector, such as the courts and departments of corrections, or executive, parliamentary or independent authorities with management or oversight responsibilities.
  • History:
    • The police reforms were introduced in the pre-independence era by the British government in 1902-1903. 
    • After independence, in 1977, the Indian government set up a committee “National Police Commission”. This was the first committee at the national level set up by the Indian government to report on policing. 
    • The NPC produced eight reports between 1979 and 1981, suggesting wide-ranging reforms in the existing police setup.
    • One of the most important recommendations is about the Model Police Act but it was not accepted by the government. 
    • In 1996 one former DGP of Uttar Pradesh filed public interest litigation in the Supreme Court and demanded police reforms. 
    • In a landmark judgment, Prakash Singh Case, the Supreme Court in September 2006 had directed all States and Union Territories to bring in police reforms. 
    • In this judgment, the Supreme Court directed States and Union Territories to comply with seven binding directives which would kick-start the reforms.
    • Post-2006: Supreme Court created Justice Thomas Committee to review the seven directives (stated by Supreme Court).
    • In 2012-2013 Justice J.S. Verma committee was constituted to recommend amendments to the criminal law so as to provide for quicker trial and enhanced punishment for criminally accused of committing sexual assault against women – after nirbhaya scandal. 
      • This committee has recommended certain steps to reform the police, which include the establishment of the State Security Commission to ensure that the state government does not influence the state police, which should be headed by the Chief Minister or Home Minister and also stated the seven directives of the Supreme Court.

Image Courtesy: PRS 

7 Directives of the SC

  • Limit political control: 
    • Ensure that the state government does not exercise unwarranted influence or pressure on the police.
  • Appoint based on merit: 
    • Ensure that the Director-General of Police is appointed through a merit-based, transparent process, and secures a minimum tenure of 2 years.
  • Fix minimum tenure: 
    • Ensure that other police officers on operational duties (Including Superintendents of Police in charge of a district and Station House Officers in charge of a police station) are also provided with a minimum tenure of 2 years.
  • Separate police functions: 
    • Separate the functions of investigation and maintaining law and order.
  • Set up fair and transparent systems: 
    • Set up a Police Establishment Board to decide and make recommendations on transfers, postings, promotions and other service-related matters of police officers of and below the rank of Deputy Superintendent of Police.
  • Establish a Police Complaints Authority in each state: 
    • At the state level, there should be a Police Complaints Authority to look into public complaints against police officers of and above the rank of Superintendent of Police in cases of serious misconduct, including custodial death, grievous hurt or rape in police custody. 
    • At the district level, the Police Complaints Authority should be set up to inquire into public complaints against the police personnel of and up to the rank of Deputy Superintendent of Police in cases of serious misconduct.
  • Set up a selection commission: 
    • A National Security Commission needs to be set up at the union level to prepare a panel for selection and placement of chiefs of the Central Police Organizations with a minimum tenure of 2 years.

NITI Aayog suggested the following reforms:

  • State-level legislative reforms:
    • States should be encouraged, with fiscal incentives, to introduce ‘The Model Police Act of 2015’ as it modernizes the mandate of the police.
  • Administrative and operational reform:
    • A Task Force must be created under the MHA to identify non-core functions that can be outsourced to save on manpower and help in reducing the workload of the police.
    • Functions such as serving court summons and antecedents and addresses verification for passport applications or job verifications can be outsourced to private agents or government departments.
    • The states should be encouraged to ensure that the representation of women in the police force is increased.
    • India should launch a common nationwide contact for attending to the urgent security needs of the citizens.
    • NITI Aayog also suggests moving police as well as public order to the Concurrent List to tackle increasing inter-state crime and terrorism under a unified framework.

Way Ahead

  • At this time, India needs an act that can make police friendly to the public.
  • The government must introduce such measures which allow the people to raise their voices against the injustice done by the police administration.

Best Practices

  • Janamaithri Suraksha in Kerala: 
    • This project is an initiative of the Kerala Police to facilitate greater accessibility, close interaction and better understanding between the police and local communities. 
    • For example, Beat Constables are required to know at least one family member of every family living in his beat area and allocate some time to meet with people outside the police station every week. 
    • Janamaithri Suraksha Committees are also formed with municipal councillors, representatives of residents’ associations, local media, high schools and colleges, retired police officers, etc. to facilitate the process.
  • Meira Paibi (Torch-bearers) in Assam: 
    • The women of the Manipuri Basti in Guwahati help with improving the law and order problem in their area, by tackling drug abuse among the youth. 
    • They light their torches and go around the basti guarding the entry and exit points, to prevent the youth of the area from going out after sunset.


Source: TH

SUBJECT : Biodiversity and Environment

Polavaram Project

In News 

  • Recently, the Andhra Pradesh government sought reimbursement of Rs 2,033 crore from the Centre for work completed at the Polavaram project, which is at a crucial stage of construction. 
  • Officials said bills have been pending for six months.
    • The bills have to be approved by Polavaram Project Authority (PPA) and Central Water Commission (CWC) before the Union Ministry of Finance (MoF) gives its clearance for payment. 

Rationale behind the move 

  • The reimbursement from the Centre is needed to take up land acquisition, Relief and Rehabilitation (R&R), and complete other project-associated work like irrigation canals.
  • The Centre has so far reimbursed Rs 11,181.36 crore to the Andhra Pradesh government for the Polavaram project, including expenditure towards land acquisition and Relief and Rehabilitation (R&R), after according it the status of a ‘National Project’ from April 2014.

About Polavaram Project

  • It is an under-construction multi-purpose irrigation National project on the Godavari River in Andhra Pradesh.
  • It will facilitate an inter-basin water transfer from the Godavari River to the Krishna river through its Right canal.
  • Its reservoir spreads in parts of Chhattisgarh and Orissa States also.
  • The project is a multipurpose major terminal reservoir project for the development of Irrigation, Hydropower and drinking water facilities.
  • The project was started in 2008, accorded national status in 2014 in the Andhra Pradesh Bifurcation Act.
  • The Andhra Pradesh government extended the completion date to the 2022 Kharif season.

The necessity of the project 

  • Creation of Irrigation potential 
  • Domestic & Industrial Water supply to the cities, towns & villages en route and Steel Plant and other industries in the vicinity.
  • Utilisation of Hydroelectric Power.
  • Development of Pisciculture, Navigation for Mineral & Forest produce and urbanisation besides tourism with new picnic spots.
  • Flood Control: The floods in the Godavari are causing damage to standing crops and loss of property and cattle-worth several crores in the plains, with the help of the Polavaram Irrigation Project flow of the river can be regulated. 
  • Navigation: The Polavaram Project, in view of the formation of the foreshore lake and the Left Canal designed for Navigation, facilitates cheap and quick transport of forest produce and food grains to the marketing centres and various ores and coal to the Industries.


  • Rehabilitation: It can affect the social, cultural and economical structure of the region considerably. Especially forcing people, whose settlement areas and lands remain underwater to migrate, affect their psychology negatively.
  • It could result in the submergence of a considerable amount of its territory, including protected tribal areas. 
  • Destruction of Nature: The water regime may change as a result of the destruction of nature, unexpected floods may occur and consequently vegetation and natural structures in the riverbanks can be damaged.
  • Affects Fauna: Normal passing ways of territorial animals can be hindered.

Way Forward 

  • The steps need to be taken to fulfil environmental compliances and proper environmental impact assessment.
  • The funds need to be released on time for the completion of the project.
  • At the same time, the tenets of Cooperative federalism need to be preserved by preventing the possibility of any inter-state disputes.

The Godavari River

  • The Godavari is the largest Peninsular river system. It is also called the Dakshin Ganga. 
  • It rises in the Nasik district of Maharashtra and discharges its water into the Bay of Bengal. 
  • The Godavari basin extends over states of Andhra Pradesh, Chhattisgarh, Maharashtra, Telangana, Madhya Pradesh, Odisha, Karnataka, Puducherry.
  • The Pravara, Manjira and Maner are right bank tributaries and the Purna, Pranhita, Indravathi and Sabari are important left-bank tributaries.


SUBJECT : Art and Culture

Chola Inscriptions on Civic Officials’ Eligibility

In Context 

  • Some Chola-era inscriptions bear testimony to the qualifications required for members of the village administrative council (‘perumkuri sabai’)  in Tamil Nadu.


  • Chola-era inscriptions talk about the qualifications required for members of the village administrative council.
  • However, very little is known about the Thenneri inscriptions laying down qualifications for candidates to village administrative committees known as ‘perumkuri sabai’.
  • It also sheds light on how farm produce was taxed.
  • Inscriptions at Thenneri village in Kancheepuram district: These inscriptions which dwell upon ‘Kudavolai’ that is a system to elect members to the annual committee, garden committee, tank committee and other committees for 30 wards — are well-known.
    • The annual committee is known as ‘variyam’.
    • The inscriptions are on the walls of the Kanthaleeswarar temple.

Chola Inscriptions

  • The inscriptions issued by the Chola kings are found from various parts of the old Madras state. They give evidence for the Cholas' attack on Kerala.
  • Attacks on south Kerala regions are mentioned in the inscriptions discovered from the temples at Cholapuram, Kanyakumari, Darsanam Koppu, Thirunanthikarai and Sucheendram.
  • The Thirallaisthanam inscription reveals the friendship between Aditya Cholan and Sthanu Ravi. 
  • Rajendra Chola's (AD 1012-1044) Thiruvalangad inscription has mentioned the Chola attack on Vizhinjam. The Cholapuram inscription is about the retreat of Kulothunga Cholan to Kottattu.

About Chola Dynasty

  • The Cholas are remembered as one of the longest-ruling dynasties in the southern regions of India.
  • The earliest record of their rule comes from the inscriptions left by Ashoka, of the Maurya Empire around 3rd century BC.
  • Rajaraja Chola I and his successors Rajendra Chola I, Rajadhiraja Chola, Virarajendra Chola and Kulothunga Chola I made South Asia and South-East India into a military, economic and cultural power.

Origin of the Chola Dynasty:

  • The reign of the Cholas began in the 9th century when they defeated the Pallavas to come into power. This rule stretched over for over five long centuries until the 13th century.
  • The Early periods of the Chola rule saw the onset of the Sangam literature. Kantaman was one of the prominent rulers of this era.
  • The medieval period was the era of absolute power and development for the Cholas. This is when kings like Aditya I and Parantaka I.

Prominent Pillars of the Chola Empire:

  • Vijayalaya: The Chola Empire was founded by Vijayalaya. He took over the Tanjore kingdom in the 8th century and led to the rise of the mighty Cholas by defeating the Pallavas. Tanjore was hence made the first capital of the eminent Chola Empire.
  • Aditya I: Aditya I succeeded Vijayalaya to become the ruler of the empire. He defeated king Aparajita and the empire gained massive power under his reign. He conquered the Pandya Kings along with the Vadumbas and established control over the Pallavas' power in the region.
  • Rajendra Chola: He succeeded the mighty Rajaraja Chola. Rajendra I was the first to venture to the banks of Ganges. He was popularly called the Victor of the Ganges.
    • His new empire capital was called the Gangaikondacholapuram where he received the title of ‘Gangaikonda’. This period is referred to as the golden age of the Cholas. After his rule, the kingdom witnessed a widespread downfall.
  • Culture and Roots:
    • In this era, the temple was the main centre for all social and religious meetings.
    • The surroundings of this region became a school for the folks where Holy Scriptures and the ancient Vedas were taught to students.
    • The societal structure at this time was divided amongst Brahmins and Non-Brahmins. 
      • Several gods and goddesses were worshipped with Shiva being a popular source of strength for the faithful.
    • Art, religion and literature benefited greatly during this period.
      •  Several Shiva temples were built across the banks of the Kaveri river. Thanjavur still stands to be the biggest and tallest amongst all the temples in India of its time. The Tanjore Brihadeeswara temple is adorned with natural colour paintings that are a feast for the eyes even today.
      • Several of these sites have been classified as World Heritage Sites by UNESCO. These include the Brihadeshavara temple, the Gangaikondacholisvaram and the Airavatesvara temples.
  • Administration and Governance:
    • The Cholas ruled in a sustained Monarchy. The king remained the central authority who would make the major decisions and carry out the governance.
    • The Chola Empire consisted of the current day territories of Tiruchirapalli, Tiruvarur, Perambalur, Ariyalur, Nagapattinam, Pudukkottai, Vridhachalam, Pichvaram and Thanjavur districts of Tamil Nadu.
    • The massive kingdom was divided into provinces which were known as mandalams.
    •  Separate governors were held in charge of each mandalam. These were further divided into districts called nadus which consisted of tehsils. The system of rule was such that each village acted as a self-governing unit during the era of the Cholas.
    • The Cholas were ardent patrons of art, poetry, literature and drama; the administration was seen investing in the construction of several temples and complexes with sculptures and paintings.

Source: TH

SUBJECT : Modern History

Mahabahu Brahmaputra River Heritage Centre

In News

  • Recently, the Vice-President inaugurated the Mahabahu Brahmaputra River Heritage Centre on Guwahati’s Barphukanar Tila, meaning Barphukan’s Hillock. 
    • The Brahmaputra River Heritage Centre has been set up in a nearly 150-year-old bungalow in Guwahati, Assam.

Key Points

  • The hillock by the Brahmaputra, mentioned in ancient scriptures as Mandrachal, was from where Ahom General Lachit Barpukhan launched the Battle of Saraighat in March 1671 to inflict the most crushing defeat on the Mughals.
  • The bungalow used to be the 17th-century military office of the Ahom rulers.
  • Barpukhan was a post equivalent to Governor-General created by Ahom king Pratap Simha or Susengpha (1603-1641).
  • Saraighat is regarded as the “greatest naval battle ever fought in a river”.

Ahom Kingdom 


  • The Ahom Kingdom was a late medieval kingdom established in 1228 in the Brahmaputra Valley in Assam. 
  • Sukapha was a leader of the Ahoms. He founded the Ahom kingdom.
  • They created a new state by suppressing the older political system of the bhuiyans (landlords).
  • It is famous for its multi-ethnic makeup and for retaining its sovereignty for 600 years fighting at one point fighting the Mughal Empire to successfully preserve its independence.
  • Ahom society was divided into clans or khels. A Khel often controlled several villages.
  • Ahoms worshipped their own tribal Gods but instead of imposing their own language, religion and rituals on communities living in Assam, they accepted the Hindu religion and the Assamese language.

Contemporary time Ahom:

  • The founders of the Ahom kingdom had their own language and followed their own religion. Over the centuries, the Ahoms accepted the Hindu religion and the Assamese language.
  • King Sukhpa, founder of Ahom has successful taken efforts towards the assimilation of different communities and tribes. He is widely referred to as the architect of “Bor Asom” or “greater Assam”.
  • The Ahoms managed to group a diverse mix of people in such a politically sensitive region crisscrossing South Asia and South-East Asia. 

Source: TH

SUBJECT : Biodiversity and Environment

Plastic Biodegradation Through Algae Species

In Context

  • Researchers from the University of Madras and Presidency College, Chennai, have discovered an alga species that shows promise as an agent of biodegradation of plastic sheets. 

Key Points

  • About:
    • The alga identified is microalga Uronema africanum Borge. This is a species of microalgae that is commonly found in Africa, Asia and Europe.
    • The isolated algae Uronema africanum produced enzymes, hormones, and some polysaccharides which slowly degraded (the sheets), and the structural integrity of the polymer (breaks down) and disintegrates into monomers.
    • Abrasions were seen on the surface of the polyethylene sheet at different magnifications.
      • Low-density polyethylene is highly resistant to degradation.
    • The study concluded that the microalga has initiated degradation of the polyethylene sheet within 30 days of incubation.
  • Significance:
    • The identified algae could be used as an agent of biodegradation of plastic sheets and thus it offers a solution to Plastic pollution in India.

Plastic pollution in India

  • About:
    • According to the Central Pollution Control Board’s annual report for the year 2011-12, the plastic waste generated in a year amounted to 5.6 million metric tonnes. 
    • Only 60% of the plastic used in India was collected and recycled.
    • The metros alone contributed some 21.2% of the total waste, led by Delhi, followed by Chennai, Kolkata and Mumbai.
  • Disposal of Plastic Waste in India:
    • The usual means of disposal of plastic waste involves incineration, land-filling and recycling. 
    • Many conventional methods of polyethylene degradation include:
      • UV photooxidation, 
      • thermal oxidation, incineration,
      • chemical oxidation and 
      • landfill is being practised
    • These methods have limitations and also sometimes produce side effects that are hazardous to the environment.  
    • Hence there has been an emphasis on biodegradation methods that are safe and environment friendly.

Some Initiatives in tackling Plastic Pollution

  • Swachh Bharat Mission
  • India Plastics Pact
  • Project REPLAN
  • Un-Plastic Collective
  • GoLitter Partnerships Project
  • India has won global acclaim for its “Beat Plastic Pollution” resolution

declared on World Environment Day 2018(in which India was the global host), under which it pledged to eliminate single-use plastic by 2022

  • At the fourth United Nations Environment Assembly in 2019, India piloted a resolution on addressing pollution caused by single-use plastic products.

Central Pollution Control Board

  • is a statutory organisation under the Ministry of Environment, Forests and Climate Change. 
  • Established in 1974, under the Water (Prevention and Control of Pollution) Act and later entrusted with functions and responsibilities under the Air (Prevention and Control of Pollution) Act, 1981.
  • Functions:
    • To promote cleanliness of streams and wells in different areas of the States by prevention, control and abatement of water pollution.
    • To improve the quality of air and to prevent, control or abate air pollution in the country.
    • It coordinates the activities of the State Pollution Control Boards by providing technical assistance and guidance and also resolves disputes among them.

Source: TH

SUBJECT : Indian Economy

Pandora Papers and Role of Trusts in Tax Evasion

In News

  • The latest leak of offshore financial records has shown that the elites are finding ingenious new ways to ring-fence (protect) their assets from scrutiny at home.
    • It is reshaping the secrecy industry in international finance after regulators worldwide have begun cracking down on global money flows.

Pandora Papers

  • Pandora papers are 11.9 million leaked files from 14 global corporate services firms.
    • These firms set up about 29,000 off-the-shelf companies and private trusts for worldwide clients base in both 
      • Obscure tax jurisdictions (also known as tax havens) such as Samoa, Belize, Panama, and the British Virgin Islands and
      • Countries that offer relative tax advantages such as Singapore, New Zealand, and the United States.
  • Pandora Documents hint at the ultimate ownership of assets ‘settled’ (or placed) in private offshore trusts and the investments held by the offshore entities.
    • There are at least 380 Indian citizens in the Pandora Papers.

Pandora’s Box

  • Pandora's box is an artefact in Greek mythology connected with the myth of Pandora in Hesiod's Works and Days.
  • It represents two things:
    • the evils of the world and 
    • temptations that we can't resist because of curiosity.
  • The present-day usage of the phrase means ‘a process that once begun generates many complicated problems.

Revelation by the Pandora Papers

  • The Pandora Papers reveal how the rich, the famous and the notorious set up complex multi-layered trust structures for estate planning in jurisdictions that offer
    • loosely regulated tax structure and
    • air-tight secrecy laws.
  • The purposes for which trusts are set up are many, and some are genuine too.
  • But a scrutiny of the papers also shows how the objective of many is two-fold: 
    • To hide their real identities and distance themselves from the offshore entities. 
      • This ensures that the tax authorities can not reach them.
    • To safeguard investments like cash, shareholdings, real estate, art, aircraft, and yachts, from creditors and law enforcers.

Pandora Papers v/s Panama Papers and Paradise Papers

Panama Papers and Paradise Papers

Pandora Papers

  • These papers dealt largely with offshore entities set up by individuals and corporations.
  • It had a narrow approach regarding modus operandi and underlying reasons.
  • It shows how businesses have created a new normal after the tightened regulatory framework with rising concerns of money laundering, terrorism funding, and tax evasion.
  • It pierces the corporate veil and reveals how trusts are prolifically used as a vehicle in conjunction with offshore companies set up for the sole purpose of holding investments and other assets by business families and ultra-rich individuals.


Trust and Related Legal Provisions

  • A trust can be described as a fiduciary arrangement where a third party, referred to as the trustee, holds assets on behalf of individuals or organisations that are to benefit from it. 
    • It is generally used for estate planning purposes and succession planning. 
    • It helps large business families to consolidate their assets like financial investments, shareholding, and real estate property.
  • A trust comprises three key parties: 
    • ‘Settlor’: one who sets up, creates, or authors a trust; 
    • ‘Trustee’: one who holds the assets for the benefit of a set of people named by the ‘settlor’; and 
    • ‘Beneficiaries’: to whom the benefits of the assets are bequeathed.
  • A trust is not a separate legal entity, but its legal nature comes from the ‘trustee’
  • At times, the ‘settlor’ appoints a ‘protector’, who has the powers to supervise the trustee, and even remove the trustee and appoint a new one.
  • The Indian Trusts Act, 1882
    • It gives legal basis to the concept of trusts. 
    • While Indian laws do not see trusts as a legal person/ entity.
      • But they do recognise the trust as an obligation of the trustee to manage and use the assets settled in the trust for the benefit of ‘beneficiaries’.
    • India also recognises offshore trusts i.e., trusts set up in other tax jurisdictions.

Why are Trusts Set up?

Legitimate Reasons

  • Genuine Estate Planning: A businessperson can set conditions for ‘beneficiaries’ to draw income being distributed by the trustee or inherit assets after her/ his demise.
    • E.g., while allotting shares in the company to say, 4 siblings,
      •  the father promoter set conditions that a sibling can get the dividend from the shares and claim ownership of the shares, 
      • but not sell it without offering the first right of refusal to the other three siblings.
    • This could be to ensure ownership of the enterprise within the family.

Illegitimate Reasons

  • Secret vehicles to park ill-gotten money, 
  • Hide incomes to evade taxes, 
  • Protect wealth from law enforcers, 
  • Insulate it from creditors to whom huge money is due, and 
  • To use it for criminal activities.

Key tacit reasons behind setting up of trusts highlighted from the media investigation

  • Maintain a degree of separation: 
    • To insulate the assets from creditors, businesspersons set up private offshore trusts from their personal assets. 
    • A ‘settlor’ of trust no longer owns the assets he places or ‘settles’ in the trust.
  • Hunt for enhanced secrecy from Offshore Trusts: 
    • The Income-Tax Department in India can get to the ultimate beneficial owners only by requesting information from the financial investigation agency or international tax authority in offshore jurisdictions.
    • The exchange of information can take months.
  • Avoid tax in the guise of planning: 
    • Businesspersons avoid their NRI children being taxed on income from their assets by transferring all the assets to a trust.
    • The ownership of the assets rests with the trust.
      • Thus, the son/ daughter is only a ‘beneficiary’, is not liable to any tax on income from the trust.
  • Prepare for estate duty eventuality:
    • There is a pervasive fear that estate duty, which was abolished back in 1985 will likely be re-introduced soon.
    • Setting up trusts in advance will protect the next generation from paying the death/ inheritance tax.
      • It was as high as 85 per cent in the more than three decades after its enactment (The Estate Duty Act, 1953).
    • Although India does not have a wealth tax now, most developed countries including the US, UK, France, Canada, and Japan have such an inheritance tax.
  • Flexibility in a capital-controlled economy like India: 
    • Individuals can invest only $250,000 a year under the Reserve Bank of India’s Liberalised Remittance Scheme (LRS).
    • To get over this, businesspersons have turned to NRIs. 
      • Under FEMA, NRIs can remit $1 million a year in addition to their current annual income, outside India.
    • Further, the tax rates in overseas jurisdictions are much lower than the 30% personal IT rate in India plus surcharges.
  • The NRI angle: 
    • Offshore trusts are recognised under Indian laws, but legally, it is the trustees who are the owners of the properties and income of the trust.
    • An NRI trustee or offshore trustee taking instructions from another overseas ‘protector’ ensures they are taxed in India only on their total income from India.
    • Of late, NRIs are under greater scrutiny of the IT Department to prove their non-resident status of past years.

Offshore Trusts to be seen as resident Indian for tax purposes: A Grey Area

  • There are certain grey areas of taxation where the Income-Tax Department is in the contest with offshore trusts.
    • After The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, came into existence, resident Indians have to report their foreign financial interests and assets.
    • NRIs are not required to do so- even though, as mentioned above, the I-T Department has been sending notices to NRIs in certain cases.
  • The IT Department may consider an offshore trust to be a resident of India for taxation purposes if the trustee is an Indian resident. 
    • In cases where the trustee is an offshore entity or an NRI, if the tax department establishes the trustee is taking instructions from a resident Indian,
      • then too the trust may be considered a resident of India for taxation purposes.

Conclusion and Way ahead

  • No Retrospective Taxation
    • India learning from Vodafone and Cairn India cases should not impose retrospective taxation.
  • Thorough Investigation and amendment of Rules
    • Investigations must be thoroughly undertaken and modus operandi must be understood.
    • New rules for plugging leakages must be rolled out.

Source: IE

SUBJECT : Indian Economy

Global Financial Stability Report 2021

In News

  • Recently, the International Monetary Fund (IMF) released its Global Financial Stability Report 2021.

Key Findings

  • Global
    • Prevalence:
      • As per Global Consumer Survey in 2020, 99 per cent of its respondents responded that they did trade in cryptocurrencies. 
      • Nigeria, Vietnam and the Philippines topped the mentioned survey. 
    • Tempting Option:
      • It pointed out that for emerging markets and developing economies, adoption of cryptocurrency might be luring but they also come with a set of potential macro-financial risks, especially with respect to asset and currency substitution.
  • India:
    • India has seen a massive spurt in crypto users of late. 
    • The number of blockchain start-ups surpassed 300 in 2021, with the daily crypto trading volume peaking between $300 -$500 million.
    • India ranks higher than China, United States, Germany and Japan in crypto adoption. 
  • Miscellaneous:
    • Market Value of Crypto:
      • After recurrent fluctuations, the market value of crypto assets has increased again to more than $2 trillion at the time of publishing the report. 
      • This amounts to a year-to-date 170 per cent increase.
    • Dominant and interest shift:
      • As per the report, Bitcoin remains the dominant Crypto asset. However, its market share fell sharply in 2021 from 70 per cent to less than 45 per cent. 
      • The interest has shifted towards newer blockchains that use smart contracts that replace the earlier ones by enhancing scalability, interoperability, and sustainability.
    • Stable Coins:
      • Stablecoin trading volumes have outpaced all other crypto assets. 
      • This is primarily because of their high usability for on-spot settlements and derivatives trades on exchanges. 
      • The relative price stability has shielded users from the volatility of other crypto assets. 

Significance of Crypto

  • No intermediaries:
    • The crypto-ecosystem is free of intermediaries and match credit platforms match borrowers and lenders without any credit-risk evaluation. 
  • Anonymity promoted:
    • They operate directly on blockchains without any customer identification requirements. 
  • Deregulated finance:
    • Deregulated finance made possible by the crypto ecosystem has particularly helped its popularity and intake. 
  • More options to invest in:
    • Lot of cryptocurrencies and other stable coins are available for the customers to invest in.

Challenges associated with Crypto

  • Operational Risks:
    • Operational risks may potentially result in significant downtime when failures and disruptions would prevent the use of services. 
    • High periods of transaction activity and poorly designed systems and controls make it particularly vulnerable to such risks. 
  • Cyber risks:
    • Cyber risks occur because such systems are prone to cyber-attacks.
  • Asset and currency substitution:
    • It will be a major problem for emerging economies.
  • Huge price volatility:
    • Price fluctuation is extremely high but so is the return on such investments.
    • This could potentially lead to huge losses for the customers. 
  • Governance Risks:
    • These platforms lack transparency pertaining to how cryptos are issued and distributed. This could again pave the way for huge losses.
  • Lacking oversight mechanism:
    • Lacking an oversight mechanism, the ecosystem is vulnerable to consumer fraud and market integrity risk.
  • No monitoring mechanism:
    • The IMF stated that there is no reliable method to estimate the stock or flow of crypto assets based on country residency. 
    • It added that a commonly used proxy is residency estimates based on internet visits to websites of crypto asset providers.

Way Ahead

  • There is a need to enact de-dollarization policies including-
    • enhancing monetary policy credibility; 
    • a sound fiscal position; 
    • effective legal and regulatory measures; and 
    • the implementation of central bank digital currencies.

Global Financial Stability Report (GFSR)

  • It is a semiannual report by the International Monetary Fund (IMF).
  • It assesses the stability of global financial markets and emerging-market financing with a primary focus on current conditions, especially financial and structural imbalances, that could risk an upset in global financial stability and access to financing by emerging-market countries.
  • It is released twice per year, in April and October.
  • GFSR replaced two previous reports by the IMF, the annual International Capital Markets Report and the quarterly Emerging Market Financing Report.

Source: Outlook

SUBJECT : Facts in News

Shyamji Krishna Varma

In News

  • Recently, the Prime Minister of India paid tributes to Shyamji Krishna Varma on his Jayanti. 
    • The Prime Minister also recalled bringing the ashes of Shyamji Krishna Varma back to India from Switzerland in 2003 and getting his reinstatement certificate from the UK in 2015.

About Shyamji Krishna Varma

  • He was one of the greatest revolutionaries that the Indian independence movement witnessed. 
  • He was a lawyer, a journalist professionally and he was also an expert in the Sanskrit language. 

                                                           Image Courtesy: IE

  • Early Life: 
  • He was born on October 4, 1857, in the city of Mandvi, located in the Kutch province of Gujarat. 
  • In 1883 He became a member of the Royal Asiatic Society
  • Inspired by: 
    • Swami Dayananda Saraswati and Herbert Spencer were his chief inspirations on the path to revolution.
  • Contribution: 
    • In 1877 toured India to propagate the philosophy of Vedas and earned the title of “Pandit” from the pundits of Kashi.
    • In 1905 Published the first issue of "The Indian Sociologist" and founded "The Indian Home Rule Society". 
    • Officially declared open "India House" at 65, Cromwell Avenue, Highgate as living accommodation for Indian students in England.

Source: PIB

SUBJECT : Facts in News

Solar Conjunction

In Context 

  • The solar conjunction will halt communication with Mars missions for 2 weeks.
    • It is between October 2 and October. 14, 2021, when Mars is within 2 degrees of the Sun.

What is Solar Conjunction? 

  • It is the period when Earth and Mars, in their eternal march around the Sun, are obscured from each other by the fiery orb of the Sun itself. 
  • The two planets are temporarily invisible to each other like dancers on either side of a huge bonfire.
  • Solar conjunction occurs every two years.
  • Before solar conjunction, the mission team sends up any necessary commands.


  • Mission controllers at NASA's Jet Propulsion Laboratory respond in a variety of ways.
    • They turn off some instruments. They collect data from others and store it.
    • In some cases, they continue sending data to Earth, knowing that some data will be lost
    • No one attempts to send new instructions to Mars during solar conjunction. 
    • It's impossible to predict what information might be lost due to interference from charged particles from the Sun, and that lost information could potentially endanger the spacecraft. 

Source: CNN

SUBJECT : Facts in News

Mudumalai Tiger Reserve (MTR)

In News 

  • Two kumki elephants were brought again from the Theppakadu Elephant Camp for the operation to locate tiger T23 in the Mudumalai Tiger Reserve (MTR). 

About Mudumalai Tiger Reserve

  • It is located in the Nilgiris District of Tamil Nadu state, at the tri-junction of three states, viz, Karnataka, Kerala and Tamil Nadu.
  • It has a common boundary with Wayanad Wildlife Sanctuary (Kerala) on the West, Bandipur Tiger Reserve (Karnataka) on the North, and the Nilgiris North Division on the South and East and Gudalur Forest Division on the South West, together forming a large conservation landscape for flagship species such as Tiger and Asian Elephant. The Reception Centre is located at Theppakadu. 
  • Climate: 
    • The climate of Mudumalai is moderate. It experiences cold weather during the month of December or the beginning of January and hot weather is experienced during the months of March and April.
  • Important flora and fauna:
    • It has tall grasses, commonly referred to as “Elephant Grass”, Bamboo of the giant variety, valuable timber species like Teak, Rosewood, etc. 
    • There are several species of endemic flora. Such a varied habitat is inhabited by a variety of animals which include tigers, elephants, Indian Gaur, Panther, Sambar, Spotted Deer, Barking Deer, Mouse Deer, Common Langur, Malabar Giant Squirrel, Wild Dog, Mongoose, Jungle Cat, Hyena, among others.
  • This reserve has a wide variety of more than 260 species of birds
    • Eight per cent of bird species found in India are recorded in Mudumalai. 


Image Courtesy : Mudumalaitigerreserve.com

Source: TH

SUBJECT : Facts in News


In Context

  • Recently, the Langa-Manganiyar artists are in the news as efforts are made by the government to document and digitize their folk art performances.
    • The project is aimed at saving the rapidly disappearing narrative traditions of these communities.


  • Langa-Manganiyar community:
    • The Langas and Manganiyars are communities of Muslim folk musicians residing mostly in western Rajasthan’s Jaisalmer and Barmer districts.
    • While the Manganiars are patronised by the Bhati Rajputs, the Langas have the Sindhi Sipahis as yajman.
    • They still sing for their Hindu yajmans on Holi, Diwali and other auspicious occasions like weddings.
  • Folk art:
    • The folk art practised by these two communities includes ballads, folklore and songs.
    • The major theme includes heroic ballads, romantic epic tales and the Sufi spiritual stories.
    • The performances are in multiple languages and dialects including Marwari, Sindhi, Saraiki, Dhatti and Thareli.
    • The romantic tales revolving around legendary lovers such as Umar-Marvi, Heer-Ranjha, Sohni-Mahiwal, Moomal-Rana and Sorath-Rao Khangar have traditionally captivated audiences.
    • Folk art forms a vital part of the Thar desert’s cultural landscape.

Source: TH

SUBJECT : Facts in News

IAO Hanle

In Context

  • According to a recent study, the Indian Astronomical Observatory (IAO) is becoming one of the promising observatory sites globally.

               Image Courtesy: TH


  • According to the Department of Science and Technology, this is due to its advantages of: 
  • Clear nights
  • Minimal light pollution
  • Background aerosol concentration
  • Extremely dry atmospheric condition 
  • Uninterrupted monsoon
  • The research analysed Eight observatories
    • Indian Astronomical Observatory (IAO) in Hanle, Merak (Ladakh) and Devasthal (Nainital) in India, 
    • Ali Observatory in the Tibet Autonomous Region in China
    • South African Large Telescope in South Africa
    • University of Tokyo Atacama Observatory 
    • Paranal in Chile
    • National Astronomical Observatory in Mexico.

About Indian Astronomical Observatory (IAO)

  • It is located in Hanle near Leh in Ladakh and has one of the world's highest located sites for optical, infrared and gamma-ray telescopes.
  • It is operated by the Indian Institute of Astrophysics, Bangalore.
  • It is currently the ninth highest optical telescope in the world, situated at an elevation of 4,500 meters (14,764 ft).
  • The Indian Astronomical Observatory stands on Mt. Saraswati, Hanle in south-eastern Ladakh union territory.
  • The Observatory has two active telescopes.
    • These are the 2.01 meter optical-infrared Himalayan Chandra Telescope (HCT) and,
    • a High Altitude Gamma Ray Telescope (HAGAR).
  • It is becoming one of the globally promising observatory sites, reveals a recent study.

Source: TH

SUBJECT : Facts in News

American Bumblebee

In Context

  • According to US Fish and Wildlife Services, the American bumblebee population has decreased by 89% in the past 20 years, and it could be declared as an “endangered species”.

Reasons for Decline

  • According to CBD, the population of American bumblebees has declined due to habitat destruction, climate change, exposure to disease & pesticides, loss of genetic diversity along competition with non-native bees.
  • As per CBD, the American bumblebee has completely vanished across eight states namely Rhode Island, Maine, New Hampshire, Idaho, Vermont, North Dakota, Wyoming and Oregon in North America. 
  • Its population has also declined by 99% in New York. 

Image Courtesy:Time.com

About American Bumblebee

  • This species is scientifically called Bombus pensylvanicus.
  • The species live and nest in open farmland & fields.
  • It feeds on food plants like sunflowers & clovers.
  • It is a threatened species of bumblebee and is native to North America. It is also found in eastern Canada, eastern United States, and Mexico.

Source: Livescience