Daily Current Affairs for UPSC Civil Services Exam – 29 November 2021

1. Cross-border law for corporate debtors

The government is preparing to come out with a cross-border insolvency resolution framework based on the UNCITRAL model law and is proposed to be made applicable for both corporate debtors as well as personal guarantors to such debtors.

The Corporate Affairs Ministry, which is implementing the Insolvency and Bankruptcy Code (IBC), has sought comments on the draft framework till December 15.


  1. Broadly, the cross-border insolvency process pertains to those debtors having assets and creditors overseas.
  2. The need for having robust institutional arrangements to deal with cross-border insolvency issues has gained momentum in various jurisdictions, particularly under the aegis of UNCITRAL Model Law.
  3. The UNCITRAL Model Law on Cross-Border Insolvency, 1997, is the most widely accepted legal framework to deal with cross-border insolvency issues.
  4. The law provides a legislative framework that can be adopted by countries with modifications to suit the domestic context of the enacting jurisdiction.
  5. It has been adopted by nearly 50 countries, including Singapore, the U.K., the U.S., and South Africa.
  6. The Ministry has proposed the immediate application of the cross-border law for corporate debtors and personal guarantors to corporate debtors.
  7. The jurisprudence and practice under the pre-pack mechanism are at a nascent stage. Given this, applying cross-border insolvency provisions to the pre-pack process may not be suitable at this stage,” it noted.
  8. The pre-pack process is a simpler resolution process for MSME (Micro, Small and Medium Enterprises).
  9. Another proposal is to exclude financial service providers from the applicability of cross-border insolvency provisions.
  10. Such exclusion is in line with the design of the Code as financial service providers are subject to a special insolvency process that has been notified under Section 227.
  11. Section 227 of the Code enables the Central government to notify, in consultation with the financial sector regulators, Financial Service Providers (FSPs) or categories of FSPs for the purpose of insolvency and liquidation proceedings.

2. GST Rate Structure

The Government can rationalize the GST rate structure without losing revenues by rejigging the four major rates of 5%, 12%, 18%, and 28% with a three-rate framework of 8%, 15%, and 30%, as per a National Institute of Public Finance and Policy (NIPFP) study.

The findings of the NIPFP, an autonomous think tank backed by the Finance Ministry, assume significance as the GST Council has tasked a Group of Ministers, headed by Karnataka CM Basavaraj S. Bommai, to propose a rationalization of tax rates and a possible merger of different tax slabs by December to shore up revenues.


  1. Multiple rate changes since the introduction of the GST regime in July 2017 have brought the effective GST rate to 11.6% from the original revenue-neutral rate of 15.5%
  2. Merging the 12% and 18% GST rates into any tax rate lower than 18% may result in revenue loss.
  3. The study proposes that the GST Council may consider a three-rate structure by adopting 8%, 15%, and 30% for revenue neutrality.
  4. The nature of rate changes has also meant that over 40% of taxable turnover value now falls in the 18% tax slab, thus any move to dovetail that slab with a lower rate will trigger losses to the tax kitty that need to be offset by marginal hikes in other remaining major rates — 5% and 28%
  5. The 28% rate is levied on demerit goods such as tobacco products, automobiles, and aerated drinks, along with an additional GST compensation cess.
  6. If the revenue loss from merging the 12% and 18% slabs were to be met by just hiking the rate on demerit or sin goods, the highest GST rate would have to be raised to almost 38%.
  7. Alternatively, the lowest standard rate will have to be raised from 5% to about