AMIGOS IAS Daily Current Affairs (1^st August 2024)

Axis of resistance

GS 2: International Relations: Israel-Iran

Why is it in the news?

• Hours before his assassination in Tehran, Hamas leader Ismail Haniyeh met with Iranian Supreme Leader Ayatollah Ali Khamenei. Although Israel has not claimed responsibility, both Hamas and Iran have blamed Israel for the attack and warned of significant repercussions.
• Experts suggest that Iran may escalate attacks against Israel through its allies, a coalition known as the ‘axis of resistance,’ which includes Hezbollah, Hamas, the Palestinian Islamic Jihad (PIJ), and the Houthis.

More about the news

• The ‘axis of resistance’ traces its origins to the 1979 Iranian Revolution, which led to the rise of radical Shia clerics in Iran.
• To extend its influence in a region predominantly controlled by Sunni-majority countries and to counter perceived threats from Israel and the US, Iran began supporting non-state actors.
• The coalition’s name is inspired by former US President George W. Bush’s term ‘axis of evil,’ referring to Iran, Iraq, and North Korea.

The axis includes several key groups:

1) Hezbollah:

• Established by Iran’s Revolutionary Guards in the early 1980s, is a powerful Shia militant organization formed to oppose Israeli forces in Lebanon.
• With 30,000 to 45,000 members and a significant arsenal, Hezbollah has had multiple confrontations with Israel, including a major war in 2006.

2) Hamas:

• A Sunni militant group controlling Gaza since 2007, emerged during the first Intifada in 1987.
• It opposes Zionism and receives support from Iran in the form of funding, weapons, and expertise.

3) The Palestinian Islamic Jihad (PIJ):

• Also, a Sunni Islamist, seeks to establish an Islamic state in Palestine and is the second-largest militant group in Gaza and the West Bank.
• Founded in 1979 as an offshoot of the Muslim Brotherhood, PIJ has a significant presence in these territories.

4) The Houthis:

• A Zaydi Shia militant group, have been active in Yemen’s civil war for over a decade. They captured Sana’a in 2014 and control much of northern Yemen.
• In response to Israeli actions in Gaza, they have targeted ships in the Red Sea, calling for an end to the invasion of Palestinian territories.

Additional Information:

Causes of the Iran-Israel Tension:

• Historical Context: Iran and Israel’s relationship turned tumultuous after the 1979 Iranian Revolution, shifting from close allies under the Shah to open hostility.
• After the 1979 Iranian Revolution, Iran and Israel’s relationship deteriorated from limited cooperation to hostile rivalry, fueled by Iran’s support for proxy militias across Syria, Iraq, Lebanon, and Yemen, leading to a prolonged shadow conflict.
• Religious and Ideological Differences: Iran is an Islamic republic governed by Shia Islam, contrasting with Israel as a predominantly Jewish state, contributing to mutual suspicion.
• Israeli-Palestinian Conflict: Iran supports Palestinian causes and groups like Hamas and Hezbollah, seen as terrorist organizations by Israel, escalating tensions.
• Geopolitical Rivalry: Iran and Israel vie for influence in the Middle East, conflicting notably in Syria and Yemen, where their support for opposing sides fuels rivalry.
• Nuclear Program: Israel fears Iran’s nuclear ambitions, criticizing the Iran nuclear deal (Joint Comprehensive Plan of Action) and undertaking covert operations (Stuxnet Cyberattack, 2010) against Iran’s nuclear efforts.
• Proxy Conflicts: Iran and Israel engage in proxy conflicts through support for factions like Hezbollah and Shia militias, perceived as threats by each other.
• For example, Iran’s support for Hezbollah in Lebanon and for Shia militias in Iraq has been perceived as a threat by Israel.

Impact of the Iran-Israel Conflict on India:

• Economic Consequences:
• Tensions between Israel and Iran could disrupt oil supplies, causing global oil prices to rise.
• India, which imports approximately 2 million barrels of crude oil daily through the Strait of Hormuz, may face supply shortages and higher energy costs, impacting inflation and economic growth.
• Strategic Impact on India’s Investments:
• India’s strategic investments in major Arab nations, Iran, and Israel, alongside its push for the India-Middle-East-Europe Economic Corridor, face risks from escalating regional conflicts.
• Such conflicts could undermine the consensus and cooperation that India has cultivated in the region, affecting both strategic and economic interests.
• Connectivity Impact:
• India’s strategic interests, including the port of Chabahar in Iran connecting to Afghanistan and Central Asia, could be compromised.
• Disruptions in shipping through the Red Sea could hinder regional trade, leading to delays, higher shipping expenses, and global trade instability.
• Diaspora Concerns:
• The large Indian diaspora in West Asia, especially in the Persian Gulf, faces potential risks due to regional tensions.
• Ensuring their safety is paramount, as India has previously conducted major evacuation operations, notably during crises such as the first Gulf War in Kuwait, and more recently from Libya and Ukraine.
• Diplomatic Dilemma:
• India has nurtured robust ties with Israel, benefiting from their collaboration in defense, technology, and startups.
• However, escalating conflict may compel India to choose sides, posing uncomfortable diplomatic challenges.
• While India has often pursued neutrality, this approach may no longer offer sustainable diplomatic advantages in such situations.

Way Forward:

• Path to Peace: The Two-State Solution:
• For lasting security and stability, Israel should promptly agree to a sustainable ceasefire in Gaza, facilitate international humanitarian aid, and adhere to UN resolutions to establish a two-state solution, creating an independent Palestinian state alongside Israel to ensure peace and maintain Israel’s Jewish majority.
• Dialogue and Diplomacy: Fostering Peaceful Engagement
• Encouraging direct negotiations between Iran and Israel, mediated by neutral parties like the European Union or the United Nations, could help build trust and identify common ground.
• Addressing Nuclear Proliferation: A Balanced Approach
• Iran should adhere to the Joint Comprehensive Plan of Action (JCPOA) and permit international inspections of its nuclear facilities, while Israel should recognize Iran’s right to peaceful nuclear energy and commit to avoiding military actions against Iranian nuclear sites.
• Long-Term Vision: Building a Secure and Peaceful Middle East
• Regional powers should collaborate to create a comprehensive security framework for the Middle East, incorporating confidence-building measures, arms control agreements, and peaceful conflict resolution, while addressing underlying issues like historical grievances, territorial disputes, and religious extremism to foster an environment of peace and reconciliation.
• Regional Cooperation: Strengthening Middle Eastern Stability
• Encouraging Iran and Israel to collaborate within regional organizations like the Arab League or the Gulf Cooperation Council could address mutual security concerns and enhance stability in the Middle East.

UPSC Prelims PYQ:

Q. Consider the following statements: (2023)

Statement-I: Israel has established diplomatic relations with some Arab States.

Statement-II: The ‘Arab Peace Initiative’ Mediated by Saudi Arabia was signed by Israel and Arab League.

Which one of the following is correct in respect of the above statements?

(a) Both Statement-I and Statement-II are correct and Statement II is the correct explanation for Statement-I

(b) Both Statement-I and Statement-II are correct and Statement II is not the correct explanation for Statement-I

(c) Statement-I is correct but Statement II is incorrect

(d) Statement-I is incorrect but Statement-II is correct

Answer: C

Equivalence among School Boards

GS 2: Society: Standardising school education

Why is it in the news?

• PARAKH, a standard-setting body under NCERT, recently submitted an ‘equivalence’ report to the Ministry of Education, recommending how to achieve equivalence across India’s 69 school boards, as mentioned in the National Education Policy (NEP) 2020.
• The NEP provides for the formation of Performance Assessment, Review and Analysis of Knowledge for Holistic Development (PARAKH), aiming to share best practices among school boards and ensure equivalence of academic standards among learners across all boards.

More about the news:

Meaning of Equivalence Across Boards

• Equivalence across boards means standardizing certain aspects of school education, as currently, school boards differ in curriculum, examinations, and their structure and functioning, leading to perceptions of some boards being “better” than others.
• There are 69 school boards, including State boards, Central Board of Secondary Education (CBSE), Indian Certificate of Secondary Education (ICSE), National Institute of Open Schooling (NIOS), and other open school boards, technical and vocational boards, Sanskrit boards, and madrasa boards.
• The report sets standards in administration, curriculum, assessment, inclusiveness, and infrastructure to ensure that every learner receives standardized facilities for performance.

Key Recommendations by PARAKH

Comprehensive Assessment and Evaluation Framework:

• A key recommendation is that a student’s performance in Class 9, 10, and 11 should count towards the final assessment for Class 12, with a cumulative report card assigning 15% weight to Class 9, 20% to Class 10, 25% to Class 11, and 40% to Class 12 results.
• Assessments should be in terms of credits for each subject, online courses, and activities, contributing to a holistic progress card that includes self-evaluation, teacher assessment, and peer feedback.
• PARAKH suggests developing a cadre of ‘professional paper setters’ to ensure standardization in assessments and recommends creating a question bank and blueprint for classes 9 and 11. For classes 10 and 12, standardized question paper blueprints are also recommended.

Other recommendations

Administration:

• PARAKH recommends boards finalize school affiliation guidelines and conduct periodic reviews of affiliated schools, granting affiliations for a maximum of three years.
• Boards should be empowered to recognize and affiliate schools, identify unrecognized institutions, and take action against them.
• Boards should also develop mechanisms to prevent cheating, handle exam papers, and conduct digital assessments where applicable.

Curriculum:

• Boards should incorporate digital literacy, including training in coding and cybersecurity, and adhere to the National Curriculum Framework for School Education.

Infrastructure:

• Recommendations include ensuring basic facilities such as toilets, internet, library, strongroom for question papers, labs, ramps, or elevators.

Additional Information:

About PARAKH:

• Launched under the National Education Policy (NEP)-2020, serves as a standard-setting body to guide school boards on new assessment patterns and recent research while fostering collaboration between them.
• It will operate as a component of the NCERT.
• National Council of Educational Research and Training (NCERT) is an autonomous body, established in 1961 by the Government of India to support and advise the Central and State Governments on enhancing the quality of school education.
• It will also conduct periodic learning outcome assessments, including the National Achievement Survey (NAS) and State Achievement Surveys.
• It will focus on three key assessment areas: large-scale assessments, school-based evaluations, and examination reforms.
• Objective:
• Standardized Assessment Guidelines: PARAKH will establish uniform norms, standards, and guidelines for student assessment and evaluation across all recognized school boards in India.
• Modernizing Assessment Patterns: PARAKH will support and guide school boards in evolving their assessment methods to align with the skill requirements of the 21st century.
• Reducing Evaluation Disparities: PARAKH will work to standardize evaluation practices across state and central boards, addressing the current inconsistencies that lead to significant disparities in student scores.
• Benchmarking Assessment Framework: The benchmark assessment framework will aim to shift away from rote learning, in line with the goals of the National Education Policy (NEP) 2020.

About National Education Policy, 2020:

• Crafted by a committee led by Dr. K. Kasturirangan, is India’s first 21st-century education policy, replacing the 1986 National Policy on Education which introduced reforms across school, higher, and technical education to meet contemporary needs.
• The NEP 2020 is built on five foundational pillars—Access, Equity, Quality, Affordability, and Accountability—and aligns with the 2030 Agenda for Sustainable Development.
• Targets:
• Universalization of education from Early Childhood Care and Education (ECCE) to Secondary Education by 2030, aligning with SDG 4.
• Attaining Foundational Learning & Numeracy Skills through National Mission by 2025.
• 100% GER in Pre-School to Secondary Level by 2030.
• 50% GER in Higher Education by 2035.
• Teachers to be prepared for assessment reforms by 2023
• Inclusive & Equitable Education System by 2030.
• Key Provisions:
• Revised Curriculum Structure: With emphasis on emphasizes Early Childhood Care and Education by replacing the 10+2 school curriculum structure with a new 5+3+3+4 framework.
• Revamped Teacher Training and Management: Current B.Ed. program will be replaced with a four-year integrated course featuring enhanced content, pedagogy, and practical training, while the National Council for Teacher Education (NCTE), in collaboration with NCERT, will develop a new national curriculum framework for teacher education.
• Holistic multidisciplinary education: The policy envisions a broad, multi-disciplinary undergraduate education with flexible curricula, creative subject combinations, integrated vocational training, and multiple entry and exit points with corresponding certifications.

UPSC Mains PYQ:

Q. Education is not an injunction, it is an effective and pervasive tool for all-round development of an individual and social transformation”. Examine the New Education Policy, 2020 (NEP, 2020) in light of the above statement. (2020)

On discarding indexation for LTCG

GS 3: Economy: LTCG

Why is it in the news?

• Finance Minister Nirmala Sitharaman announced in the Union Budget the removal of indexation for computing long-term capital gains (LTCG) tax. This change means long-term gains on all financial and non-financial assets will now be taxed at a flat rate of 12.5%, replacing the previous tiered structure.
• The Finance Bill (2024) memorandum explained that this move aims to simplify the computation of capital gains for taxpayers and tax administration. However, this announcement has not been well-received.

More about the news

• Indexation adjusts the purchase price of an asset for inflation, ensuring taxpayers are taxed on real gains rather than nominal gains. For example, if a house bought for ₹10 lakh in 2001 is sold for ₹75 lakh in 2021, the taxable gain without indexation is ₹65 lakh.
• However, using the Cost Inflation Index (CII), the indexed cost becomes ₹31.7 lakh, reducing the taxable gain to ₹43.3 lakh. Previously, the LTCG tax would be ₹8.7 lakh at a 20% rate. Under the new system, the full ₹65 lakh gain is taxed at 12.5%, resulting in a tax liability of ₹8.13 lakh.
• According to economist Abhijit Mukhopadhyay, the indexation is beneficial in less lucrative markets. For instance, if the same house is sold for ₹40 lakh, the tax liability with indexation is ₹1.66 lakh compared to ₹3.75 lakh without it.
• A BankBazaar study, using RBI’s House Price Index, found that LTCG tax increased threefold on properties bought after 2010 without indexation, especially from 2016-17. The study noted a “severe loss of tax savings” during these years.
• However, the Income Tax department argues that real estate returns (12-16% per annum) outpace inflation indexation (4-5%), predicting substantial tax savings for most taxpayers.
• Further, Mukhopadhyay notes that selling assets quickly benefits more under the new provisions, whereas real-estate investment trusts (REITs) and infrastructure funds, with lower returns, will suffer.
• Experts explain that while the removal of indexation dampens sentiment, the reduced tax rate provides some balance. The impact varies based on the asset type and purchase timing. Mukhopadhyay suggests that investors may avoid buying a second house for investment unless they sell quickly to benefit from the new provisions. However, those buying a house to live in are less affected.
• Further, the Income Tax department clarified that for assets acquired before April 1, 2001, taxpayers can choose between the fair market value on that date or the actual acquisition cost for computing capital gains, allowing an indexation cushion for pre-2001 acquisitions.
• Also, the AAP MP Raghav Chadha raised concerns in the Rajya Sabha about potential undervaluation of properties to reduce capital gains tax and increase black money transactions in the real estate sector. He warned that properties might be sold at circle rates (the minimum price at which real estate is sold) to lower capital gains and thus tax liabilities. This practice could further exacerbate black money transactions in the sector.

How Indexation Aids in Tax Savings?

• Adjusts the Purchase Price for Inflation: Indexation updates the original purchase price of an asset to reflect inflation from the time of purchase to sale, leading to a lower taxable capital gain.
• Reduces Taxable Capital Gains: By increasing the purchase price using the Cost Inflation Index, indexation narrows the gap between the sale price and purchase price, thus reducing the taxable capital gains.
• Leads to Lower Tax Liability: A reduced taxable capital gain results in a lower tax payable. For instance, indexation can decrease the taxable gain from ₹48 lakh to ₹28.6 lakh on a house sale, saving ₹4,264 in tax at a 20% LTCG rate.
• Impact on Property Prices: Sellers might offset the increased tax burden by raising property prices, thereby passing the cost to buyers.

Additional Information:

What is indexation?

• Indexation is a mechanism used to adjust the original purchase price of an asset to account for inflation.
• It helps in calculating the real gains and prevents inflation from inflating the tax liability. The adjusted purchase price is called the indexed cost of acquisition.
• Formulae: Indexed cost = Purchase Amount * (CII in year of sale / CII in year of purchase).

What is Capital Gains Tax (CGT)?

• Capital gains refer to the profits earned from selling a capital asset. Examples of capital assets include land, buildings, house property, vehicles, patents, trademarks, leasehold rights, machinery, and jewelry.
• Depending on the duration, capital gains can either be divided into Short-term CGT and Long-term CGT.
• LTCG refers to the profit realized from the sale of an asset that has been held for more than one year. This includes various types of assets such as stocks, bonds, real estate, and mutual funds.
• If an asset is sold before this holding period, the gains are classified as short-term capital gains (STCG) and are taxed at different rates.

About Cost Inflation Index (CII):

• The Cost Inflation Index (CII) is used to estimate the increase in the prices of goods and assets year-by-year due to inflation.
• The Cost Inflation Index (CII) for the financial year 2024-25 is 363.
• The CII number, updated annually under the Income-tax Act of 1961, helps an individual to ascertain the inflation-adjusted current value of an asset
• This helps in calculating capital gains from a transfer or sale of capital assets after taking inflation into account.

UPSC Mains PYQ:

Q. Comment on the important changes introduced in respect of the Long-term Capital Gains Tax (LCGT) and Dividend Distribution Tax (DDT) in the Union Budget for 2018-2019. (UPSC 2018)

SC allows sub-categorisation in Scheduled Caste reservation

GS 2: Polity and Governance: Sub-Categorization in SC Reservations

Why is it in the news?

• On August 1, 2024, the Supreme Court delivered a landmark verdict allowing the sub-categorization of Scheduled Castes (SCs) for reservation purposes.
• This decision, made by a seven-judge Constitution bench headed by Chief Justice DY Chandrachud, overturns the court’s 2004 judgment which had ruled that SCs must be treated as a single, homogeneous group.
• The bench determined that sub-classification is permissible to provide more targeted protection to underrepresented groups within the SC category.

More about the news

• The ruling revisits the 2004 EV Chinnaiah case, in which the court had invalidated Andhra Pradesh’s attempt to sub-categorize SCs, arguing that such classification violated the right to equality.
• The 2004 judgment had maintained that the list of SCs should be uniformly applied as per the Presidential list under Article 341 of the Constitution.
• However, the new ruling reflects a change in perspective, recognizing that SCs are not a monolithic group and that some sub-groups face greater disadvantage despite existing reservations.
• The origins of the case trace back to 1975 when the Punjab government issued a notification dividing its SC reservation into two categories, favouring the Balmiki and Mazhabi Sikh communities. This notification was challenged and ultimately struck down by the Punjab & Haryana High Court in 2004.
• The Supreme Court’s 2024 decision marks a significant shift, acknowledging that sub-classification can address disparities among SCs, a concept previously applied to Other Backward Classes (OBCs) through the “creamy layer” principle.
• The ruling also considers recent constitutional provisions that support the states’ ability to address under-representation within SCs.
• Arguments from the Advocate General of Punjab and former Attorney General KK Venugopal emphasized that states should have the flexibility to manage reservations based on actual disparities.
• In contrast, Senior Advocate Sanjay Hegde argued that all communities on the Presidential list should be treated equally due to their shared historical disadvantages.

Additional Information:

Who are Scheduled Castes?

• Scheduled castes are sub-communities within the framework of the Hindu caste system who have historically faced deprivation, oppression, and extreme social isolation in India on account of their perceived ‘low status’.
• Only marginalised Hindu communities can be deemed Scheduled Castes in India, according to The Constitution (Scheduled Castes) Order, 1950 and these communities were notified as Scheduled Castes as per provisions of Article 341 of the Constitution.
• The 2011 Census places the number of scheduled castes in India at 16.6 percent of the total population.

Constitutional Provisions:

• Article 341 of the Indian Constitution vests the power with President to designate specific castes and classes as Scheduled Castes within states or union territories.
• Article 342 allows Parliament to include or exclude castes or tribes from this list. It elaborates on the term “Scheduled Castes,” encompassing castes, races, or tribes, or their subsets, as specified under Article 341. Thus, any change in the SC list necessitates an amendment to the Constitution.

UPSC Mains PYQ:

Q. Has caste lost its relevance in understanding the multi-cultural Indian Society? Elaborate your answer with illustrations. (2020)

Q. “Caste system is assuming new identities and associational forms. Hence caste system cannot be eradicated in India.” Comment. (2018)

Q. Debate the issue of whether and how contemporary movements for assertion of Dalit identity work towards annihilation of caste. (2015)