India’s Urban Infrastructure, Capital Gains Tax, Indian Biological Data Centre, Mahanadi Coalfields Ltd

India’s Urban Infrastructure

The Need for investment in Urban infrastructure:

• World Bank in its recent report ‘Financing India’s Urban Infrastructure Needs: Constraints to Commercial Financing and Prospects for Policy Action’ has commented on the need for investment in infrastructure.
• According to the World Bank, India would need to invest $840 billion over the next 15 years, that is, an average of $55 billion each year, to meet the demands of its fast-growing urban population.

Source of these funds:

• Financing on a repayable basis can be done either through debt, private lending or public-private partnership investments.
• This requires a recurrent source of revenue to meet obligations, thus, mandating raising adequate resources.

How funding is done currently:

• Most of the funding for infrastructure development currently comes from the government through various schemes to meet certain objectives sub-nationally.
• Of the finances needed to fund capital expenditures for Indian cities, 48% is derived from State governments, 24% from the Central government and 15% from urban local bodies’ own surplus.
• The rest includes public-private partnership (3%), commercial debt (2%) and loans from Housing and Urban Development Corporation, or HUDCO (8%).
• Only a handful of large cities have accessed institutional banks and/or loans.

The constraints for fundraising:

• The report argues that the overall funding base to raise commercial revenues “appears to be low” owing to weak fiscal performance of cities and low absorptive capacity for execution of projects.
• Low service charges for municipal services undermine financial sustainability and viability.
• Urban bodies are unable to recover operations and maintenance costs, thus, constraining their ability to further execute projects.
• City agencies have been unable to expand their resource and funding base to support private financing for services such as water supply, sewerage networks and bus services, as they are highly subsidised.
• Revenue sharing designs between public-private partnership is not particularly viable for private investors and does not fully account for risk-sharing or risk-transfer mechanisms for project risks.

What can be done:

• The central idea is to increase cities’ fiscal base and creditworthiness.
• Cities must institute a buoyant revenue base and be able to recover the cost of providing its services.
• This could be attained by revising property taxes, user fees and service charges, among other streams, from the current low base.

India Plans Changes to Capital Gains Tax Structure in Next Budget

According to recent updates, India is to make adjustments to its capital gains tax structure in the upcoming budget in an effort to achieve parity between tax rates and holding periods for investments in equity, debt, and real estate.

News in details

• The industry has submitted several proposals to the government that would simplify the capital gains tax structure in India, and adjustments are anticipated in the budget for 2023–2024.
• At present, asset classes are not taxed uniformly and have different holding periods for levying capital gains tax, which are required to be aligned.

Present situation

• India levies an investment gain tax based on a holding period or lock-in. These are:
  • Long Term Capital Gain Tax
  • Short Term capital Gain Tax
• Long-term investments are those held for more than a year in stocks or equity-linked mutual funds, and gains over one million rupees are subject to a 10% tax.
• Equity investments held for less than a year are regarded as short-term and are subject to a 15% tax.

Why is there a need to bring changes in Capital Gains Tax?

• Bringing Uniformity in Tax rate structure: Currently, long term capital gains on shares is taxable at 10 percent while for debt and immovable property, the tax rate is 20 percent.
• Bringing Uniformity in Holding Period of Capital asset: Currently, long term capital gains on shares is taxable when the holding period exceeds 1 year. For debt and immovable property, the holding period is 3 years and 2 years respectively.

What is Capital Gains Tax?

• Capital Gains refers to the taxation of any profit or gain realized throughout the year as a result of the transfer of a capital asset.
• The Income Tax Act states that no capital gains tax is payable if a person inherits property and does not sell it.
• However, if the inheritor decides to sell the property, he or she will be responsible for paying tax on the proceeds.
• Jewelry, equipment, leasehold rights, patents, machinery, real estate, buildings, and land are examples of capital assets.
• For instance, a trader might invest Rs. 1 lakh in stock and sell it for Rs. 11 lakhs after five years.
  • This represents a capital gain of Rs. 10 lakh.
  • Since the equity was kept for 5 years, the gain is regarded as long-term and is subject to a 10% tax.
  • Therefore, a capital gains tax payment of Rs. 1 lakh is to be paid.
• The items listed below are not regarded as capital assets:
  • any supplies, products, or raw materials kept for use in a business or profession.
  • Clothing and furniture held for personal use are examples of personal items.
  • India’s rural areas have agricultural land.
  • Gold bonds issued by the central government in 1977 or 1980 at 612 percent or 7 percent, respectively, or gold bonds issued for national defense (1980).
  • exclusive bearer bonds (1991)
  • the Gold Deposit Scheme (1999) or the Gold Monetisation Scheme, a gold deposit bond or deposit certificate (2015).

What are the types of Capital Gain Tax?

Depending upon the Holding period of capital asset,There are two types of capital gain taxes mentioned below:

• LongTerm Capital Gain Tax: If the capital assets are holded for more than 1 year in the case of equity , 2 years for Immovable property and 3 years for debt, then tax payable due to the capital gain on the asset are known as Long Term Capital Gain Tax.
• Short Term Capital Gain Tax: If the capital assets are holded for up to 1 year in the case of equity, Immovable property and debt, then tax payable due to the capital gain on the asset are known as Short Term Capital Gain Tax.

Benefits of Capital Gains Tax

• Businesses frequently invest their cash in low-tax assets rather than using it to innovate. Capital gains tax is a barrier.
• They behave fairly because passive income ought to be taxed just as heavily as earned income.
• The tax burden is shifted to working people as a result of low stock gain taxes.

Drawbacks of Capital gains Tax

• The investor ends up with less money, which they could have used to save or invest in stocks and bonds.
• This increased investment might promote economic growth.
• It is more challenging to create new jobs when businesses have less money to invest in growth and innovation.
• The money used to purchase stocks or bonds has already been subject to ordinary income tax; therefore, imposing a capital gains tax would be double taxation.

Indian Biological Data Centre’ (IBDC)

Union Minister of state for Science and Technology recently dedicated Indian Biological Data Centre (IBDC) to the nation.

About Indian Biological Data Centre:

• The Indian Biological Data Centre is India’s first national repository for life science data.
• It will store all life science data generated from publicly funded research in the country.
• It operates with the assistance from the Department of Biotechnology (DBT).
• In long-term, IBDC seeks to become a major data repository for all life science data originating from India.
• It was established at the Regional Centre of Biotechnology (RCB) in Faridabad, Haryana.
• It has a data “disaster recovery” site in National Informatics Centre (NIC) in Bhubaneshwar.
• It has a data storage capacity of around 4 petabytes.
• It hosts the ‘Brahm’ High Performance Computing (HPC) facility.

The objectives of IBDC:

• Provide IT platform for archiving of biological data originating from India.
• Develop standard operating procedures for storing and sharing of life sciences data based on FAIR (Findable, Accessible, Interoperable and Reusable) principle.
• Perform quality control and curation of data, maintain data backup and manage data life cycle.
• Develop web-based tools/APIs for data sharing or retrieval
• Organize training programme for analysing of large data and create awareness about the benefits of data sharing.

Significance:

• At present, most Indian researchers depend on the European Molecular Biology Laboratory (EMBL) and National Centre for Biotechnology Information databases for storing biological data. ‘Indian Biological Data Bank’ will reduce our dependency on them.
• TB Bacteria sequences will help not only in understanding the spread of multi-drug and extremely drug resistant TB in the country, but also aid the search for targets for new therapies and vaccines.
• With genomes of humans, animals, and microbes present in the same database, it will also help researchers in studying zoonotic diseases, that is, diseases that jump from animals to humans.

World @8bn, India Set To Be Most Populous

• According to a United Nations Population Division report, the global population is expected to reach 8 billion.
• By 2023, India is expected to overtake China as the world’s most populous country.

 

Estimation of Growth

• While India’s population growth is slowing, it is still “growing at 0.7% per year” and is on track to overtake China as the world’s most populous country in 2023.
• China’s population is no longer growing and “may begin to decline as early as 2023.
• It was noted that India’s fertility rate has reached 2.1 births per woman — replacement-level fertility — and is declining.
• The world’s population is expected to reach 8 billion by 2050. This unprecedented increase is the result of gradual increases in human lifespan due to advancements in public health, nutrition, personal hygiene, and medicine. It is also the result of high and persistent fertility rates in some countries.
• According to the UN, while it took 12 years for the global population to grow from 7 billion to 8 billion, it will take approximately 15 years, until 2037 to reach 9 billion — a sign that the overall growth rate of the global population is slowing.

Findings of the Report

• Countries with the highest fertility rates tend to be those with lowest per capita income.
• As of 2022, Asia will have more than half of the world’s population, with China and India having more than 1.4 billion people each.
• According to the World Population Prospects 2022 report, India’s population is estimated to be 1.412 billion this year, compared to China’s 1.426 billion.
• According to the United Nations, falling mortality rates first resulted in “spectacular population growth,” with annual growth rates peaking at 2.1% between 1962 and 1965.
• The world population doubled from 2.5 billion to 5 billion between 1950 and 1987. Growth began to slow as fewer children were born from generation to generation.
• According to the UNFPA, the world population will reach 10.4 billion in the 2080s and remain there until the end of the century.
• 60% of the world’s population now lives in a region where fertility rates are below replacement level, up from 40% in 1990, and international migration is now a driver of growth in many countries, with 281 million people living outside their country of birth in 2020.
• In recent years, all South Asian countries — India, Pakistan, Nepal, Bangladesh, and Sri Lanka — have experienced high levels of emigration.
• It was stated that “we should now focus on eliminating unmet need for contraception, so that women can decide if they want to have children, and if yes, when, how many, and at what intervals.”
• According to the Institute for Health Metrics and Evaluation at the University of Washington, the world population will peak at 9.7 billion in 2054 and then begin to decline, reaching 8.7 billion in 2100.
• Similarly, India’s population is expected to peak at 1.7 billion in 2048 before declining to 1.1 billion by the end of the century.

What is the World Population Prospects? Since 1951, the UN Population Division has published the World Population Prospects on a biannual basis.Each revision of the WPP provides a historical time series of population indicators beginning in 1950.It does so by revising estimates of past trends in fertility, mortality, and international migration using newly released national data.

How is India positioned?

• India is expected to overtake China as the world’s most populous country in 2023, “with prospects to reap the demographic dividend as the median age of an Indian this year was 28.7 years, compared to 38.4 for China and 48.6 for Japan against a global value of 30.3 years.”
• According to the population prospects report, India’s population in 2022 will be 1.412 billion, compared to China’s 1.426 billion.
• By the middle of the century, India’s population is expected to be 1.668 billion, well ahead of China’s 1.317 billion.
• According to UNFPA estimates, 68 percent of India’s population will be between the ages of 15 and 64 in 2022, with people aged 65 and older accounting for 7% of the population.
• It was estimated, more than 27% of the country’s population is between the ages of 15 and 29.
• With a population of 253 million, India also has the world’s largest adolescent population (10-19 years). India has the largest adolescent and youth population in its history.
• According to UNFPA projections, India will continue to have one of the world’s youngest populations until 2030 and is currently experiencing a demographic window of opportunity, referred to as a “youth bulge,” that will last until 2025.

Mahanadi Coalfields Ltd (MCL)

The Supreme Court of India has ruled in favour of residents of four Odisha villages (Tumulia, Jhupuranga, Ratansara and Kirpsara) whose land had been acquired by Mahanadi Coalfields Ltd (MCL) in 1988.

• The landowners will be given compensation per the Rehabilitation and Resettlement Act, 2013 (which replaced the old Land Acquisition Act, 1894)
• This is the first time the State has been obligated to ensure that resettlement and rehabilitation were provided in addition to compensation.
• Compensation by MCL includes developing housing plots, one-time cash settlements of Rs 25 lakh and to provide employment to two members of the displaced families with other monetary and tangible benefits.

About Mahanadi:

• It is a major river in East Central India.
• It arises from Raipur district of Chhatisgarh and flows for about 851 km through the states of Chhattisgarh and Odisha and finally merged with Bay of Bengal.
• Its tributaries include Seonath, the Jonk, the Hasdeo, the Mand, the ib, the Ong and the Tel.
• Hirakud Dam is located on the river.

About Coal reserves in India:

• India ranks 5th in terms of coal reserves in the world.
• A total of 326.49 Billion tonnes of reserves estimated as in 2019 by Geological Survey of India.

• India has 50 Gondwana coalfields (250 mn years old) and 18 Tertiary coalfields (15-60 mn years old).
• Gondwana coal fields make up 98% of the total coal reserves and 99% of total coal production in India.
• Talcher coalfield, Odisha, is having the pride of highest geological reserve of 51.220 BT in the country.
• Distribution of coal in India is as follows:

Jharkhand coal fields are as follows:

About Mahanadi Coalfields Limited (MCL):

• It is one of the eight subsidiaries of Coal India Limited.
• It was carved out of South Eastern Coalfields Limited in 1992 with its headquarters at Sambalpur.
• In 2019, it got Miniratna status.
• Joint Ventures of MCL include Mahanadi Basin Power Limited (SPV), MJSJ Coal Limited, MNH Shakti Limited, Mahanadi Coal Railway Limited.