What to Read in Indian Express Editorial( Topic and Syllabus wise)

Editorial 1: The GST template

Context:

GST council unanimously has restructured the GST tax regime in two slabs rate of 5 and 18 percent. This unanimous decision makes GST council unique example of fiscal federalism. Also this restructuring is considered a step towards making GST tax simpler and create a unified single tax market.

Background of GST implementation:     

• Indian tax system had always been draconian with multiple taxes imposed at higher rates. This resulted in low tax collection and compliance. Direct taxes were reformed after the New Income Tax Code was enacted with simplified procedures and reasonable rates.
• For indirect taxes, the idea of GST was first conceived by VP Singh, when he was finance minster in 1985. Modified Value Added Tax (MODVAT)was introduced in 1986 and it is considered first step towards GST.
• During the 1991 Balance of Payment crisis, India was committed to a broad-based-value-added tax as part of conditionality under World Bank’s structural adjustment loan and the IMF’s credit arrangement.
• Kaka Kelkar committeewas formed in2002 to lay the ground work of GST. But concerns over state autonomy, revenue loss stalled its implementation.
• A Group of Ministers (GoM) was formed in 2014 to convince all the states for the GST implementation. Finally, GST was launched in 2017.

GST law in 2017:

• When GST was first introduced in 2017, it subsumed 17 taxes and 13 cesses into a single system.
• Tax payer base was increased from 66 lakh in 2017 to 1.5 crore in 2025. GST collections rose from Rs. 45 lakh crore to Rs.175 lakh crore with annual growth rate of 14.4percent over the past decade.
• GST council was created with central finance ministers as it head and state finance minister as its members. It pooled sovereignty from Parliament and state legislatures, where they circumscribed their fiscal powers for the common good.

Latest GST reforms:

• GoM was formed again to steer negotiations with the state for the restructuring of GST.
• In 56^thGST council meeting, all the states unanimously approved the latest GST rates.
• It restructured GST from four slabs too two slabs at 5 percent and 18 percent, with a higher 40 percent for luxury and sin good. Life insurance premiums were exempted.
• This two slab rate will reduce the complexity, and increase the compliance. It will reduce the disputes to tax classification and help in smoother administration of tax system.
• Reduction in GST rates will make essential commodities cheaper.
• There is concern that this restructuring is expected to cause Rs.48, 000 crore loss in GST revenues based on data from FY 2023-24. But, simpler tax structure is expected to enhance compliance and buoyancy. As the consumption rises, revenue will recover. The doubling of GST revenues in five years proves that buoyancy will increase the revenue.
• This restructuring may trigger a potential virtuous cycle where India is seen as listening to its stakeholders and acting decisively with uniform rules, transparency and collaborative approaches to the matters such as land, labor etc.
• There are many concerns with latest GST rate cuts. The benefits of reduced GST rates should reach the common citizens, small and medium enterprises, and industry more broadly.
• Funds must be allocated to urban local bodies from the share of GST proceeds. With rapid urbanization, allocating these funds to urban local bodies will strengthen the federal spirit and improve the governance at local levels.

Way forward:

GST implementation will reduce the multiple tax rates into a single unifies tax market, reduce rates, make goods cheaper, increase consumption, revenue collection. GST council may act as the template for the federal cooperation in areas such as land, labor. Earmarking GST funds for urban local bodies will strengthen local governance and foster democracy at the grassroots.

 

Editorial 2: Himachal declared ‘fully literate’: what does this mean?

Context:

Recently Himachal Pradesh was declared a ‘fully literate’ state along with Goa, Ladakh, Mizoram, and Tripura. They have achieved the literacy rate above 95%. Many government schemes such as ULLAS have played a major role in making these states fully literate.

Definition of literacy:

• Ministry of education has defined literacy as the “ability to read, write and compute with comprehension”. It can also be defined as ability to identify, understand, and interpret, along with life skills such as digital literacy, financial literacy.
• Achieving full literacy is one of the Sustainable Development Goals of UN and it is one of the objectives under the New Education Policy, 2020. NEP calls for adult education initiatives to achieve 100% literacy.

ULLAS program:

• It was launched in 2022 with the aim of achieving 100% literacy by 2030for the people over 15 years of age who may not have attended school.
• Ministry of Educationhas considered the similar definition of literacy for the ULLAS scheme (Understanding Lifelong Learning for All).
• Under ULLAS, adult learners are taught basic reading writing, and simple arithmetic like addition, subtraction, multiplication, and division that a child in school would learn up to class 3.
• These adults are also taught to read and measure time, use calendars, currency notes, write cheques and make digital transactions.
• They are trained using mobile phone apps or offline, by students and community volunteers.
• After the training, a 150 marks reading, writing and numeracy test, known us Functional Literacy Numeracy Assessment Test (FLNAT), is administered in person’s chosen language. On passing the test they receive a certificate of foundational literacy and numeracy by National School of Open Schooling (NIOS).

States achieving full literacy:

• For the purpose of achieving full literacy state conduct door-to-door surveys or identifying persons who need training under ULLAS program.
• They are provided necessary training and administered the FLNAT.
• The state achieves full literacy when all the adults they identified as not literate pass the FLNAT.
• In states/UTs where literacy levels are already high as per 2011 census or whose population is relatively smell, the process of identifying illiterate people, imparting them training, and making them clear FLNAT becomes easy.

Measurement of literacy:

• As per census of 2011, literacy rate for women and men were 64.6% and 80.9% respectively. Also the adult literacy, defined for those aged 15 and above, literacy rates was 69.3%.
• For census 2011, government defined literacy as the person of age 7 years or above who can read and write with understanding in any language.
• National Sample survey from Jan-June 2014, showed an adult literacy rate of 71%. It used similar definition o f literacy as the Census.
• The Periodic Labor Force Survey for 2023-24 showed the literacy levels of 77.5%.

Way forward:

Achieving the ‘fully literate’ status should be considered as the first step towards holistic development. The definition of literacy used for giving this status focuses on basic foundational knowledge of numeracy and language learning. As a further step, we must aim for the 100% employment rates by focusing on skill development, vocational courses.  The definition of literacy should be broadened to include skill development and vocational learning.