DAILY CURRENT AFFAIRS (SEPTEMBER 28, 2022)

INDIAN POLITY AND GOVERNANCE

1. THE CASE OF NIKAH HALALA IN INDIA, AND A LONG COURT BATTLE

THE CONTEXT: Recently, Public interest litigation (PIL) was filed seeking the annulment of halala marriage and polygamy.
THE EXPLANATION:
• The PIL was regarding the annulment of Section 2 of the Muslim Personal Law (Shariat) Application Act, 1937, to be declared arbitrary and in violation of Articles 14, 15, 21 and 25 of the Constitution.
• The litigant requested the court to ensure that provisions of the Indian Penal Code, 1860, apply to all Indian citizens.
• She contended that nikah halala is rape under IPC Section 375.

What is Nikah halala?
• Nikah halala is a law that requires a woman to marry and sleep with another man in order to return to her first husband.
• In Islam, ‘halala’ is a term that finds its roots in ‘halal’ that translates to something that is permissible, and therefore ‘lawful’.
• In the context of marriage then, it means that a divorced woman can become ‘halal’ (lawful) for her husband again after nikah halala is complete.

What is the procedure?
• Islam dictates that a Muslim man has the liberty to divorce and remarry the same woman twice.
• However, if he decides to dissolve the marriage for the third time, he can only remarry the same woman if she first marries another man, consummates the marriage, and only if the man dies or willingly asks for divorce, can the woman go back to her first husband and remarry him.
• Usually, nikah halala stems from instant triple talaq and ends with it.

Quranic justification:
• Halala, the way the Koran speaks of it, empowers women to take independent decisions.
• It saves women from temperamental husbands who divorce in a fit of anger, then cancel it, then divorce again, unleashing an endless cycle of marriage and divorce.

Global scenario:
• In Saudi Arabia, where divorces are on the rise, no cases of halala have been reported.
• No case has been reported from the UAE, Kuwait and Yemen either.

Indian Law on Nikah Halala:
• In India, the Muslim Women’s Protection of Rights on Marriage, passed after invalidation of triple talaq by the Supreme Court, is silent on nikah halala.
• The Act made instant triple talaq a criminal offence but steered clear of halala which takes place as a consequence of triple talaq.
Issues:

In modern India, nikah halala has been manipulated and misused.
Rapes: There are cases of rapes on women by keens on the name of Halala.
Websites offering halala marriage: In the midst of this, several websites and social media pages have emerged offering halala marriage services to women who’ve been divorced by their first husbands.
Blackmailing and extortion: Many women who approach these services are either blackmailed or taken advantage of. Many are asked to pay large sums of money.

HEALTH ISSUES

2. KHOSTA-2: NEW VARIANT OF CORONAVIRUS

THE CONTEXT: Recently,Khosta-2 variant of coronavirus found in Russian bats in Sochi National Park.
THE EXPLANATION:
• A team of American researchers have found the Khosta-2 in Russian bats.The zoonotic virus is capable of infecting humans.
• This is unlike the Khosta-1, which is also found in Russian bats but cannot easily spread to humans.Khosta-2 has been classified as sarbecovirus, a member of the coronavirus family.
• It is related to SARS-CoV-2, which is causing a worldwide pandemic.Khosta-2 was discovered in bat samples obtained from Sochi National Park between March and October 2020, when the world was struggling to contain the spread of the SARS-CoV-2.
• The pathogen is capable of infecting human cells similar to SARS-CoV-2. It attaches to the ACE-2 entrance enzyme, which is located on the surface of the human cells with a spike-like protein on the surface.
• While its method of infection is similar to SARS-CoV-2, Koshta-2 is not effective.
• Scientists have combined the Khosta-2 with serum obtained from individuals vaccinated against COVID-19. They found that the antibodies in the serum were not able to neutralize the pathogen.
• Similar results were found when the virus was combined with the serum from people who have recently recovered from Omicron infection.It is also found to be completely resistant to all coronavirus vaccines currently available on the market.
• It does not have the genes that can increase the severity of the disease like the Omicron Variant. However, this can eventually change if it mixes with the genes of the SARS-CoV-2.
About sarbecovirus
Severe acute respiratory syndrome–related coronavirus or sarbecovirus is an enveloped positive-sense, single-stranded RNA virus that enters the host cells by latching on to the ACE2 receptor. It is capable of infecting humans, bats and other mammals.

VALUE ADDITION:
About Sochi National Park
Sochi National Park is UNESCO world heritage site in Russia. Established in 1983, it is the oldest national park in Russia. It is situated in Western Caucasus, close to the city of Sochi. It is bounded by rivers Shepsi and Magri in the northwest, Abkhazia in the southeast, Black sea coast and Main Caucasian ridge in the north and south.

INTERNATIONAL RELATIONS

3. ADB TO PROVIDE 14 BILLION USD AID FOR FOOD SECURITY IN ASIA PACIFIC

THE CONTEXT: The Asian Development Bank announced a $14 billion assistance to fight food insecurity in Asia Pacific.
THE EXPLANATION:
• The funding to address food insecurity in Asia Pacific was announced as part of the 55th ADB annual meeting.
• It will be used to combat food crisis caused by climate change and Russian war in Ukraine.
• The financial aid will be provided for the period of 2022-2025.
• While 3.3 billion USD will be spent in 2022, 10.7 billion USD will be used from 2023 to 2025.
• In 2022, USD 2.5 billion of this assistance will be used to repurpose and strengthen the existing projects and launch new projects in agriculture, natural resources and rural development.
• 800 million USD will be used by private sector for finance operations of trade and supply chain, direct agribusiness lending, micro financing programmes and lending to financial institutions.
• This comprehensive initiative will ensure long-term food security in Asia and Pacific by strengthening food systems and making them resilient to climate crisis and biodiversity degradation.
• The latest funding would complement the existing aids targeting food security in the region.
Food security situation in Asia Pacific
• The food insecurity in the region is being exacerbated by floods, droughts, global warming, diseases and other factors that are adversely impacting the food production. Currently, around 1.1 billion people do not have access to healthy diets because of scarcity and food inflation in the region.
• Some countries in Asia Pacific are vulnerable to food shocks because of their high dependence on imported staples and fertilizers. This makes nutritious food unaffordable in several of low-income countries in the region. The Russian invasion of Ukraine has disrupted the supply of these vAital goods and worsened the situation.

About Asian Development Bank
Asian Development Bank is a Manila-based regional development bank established in 1966. Its aim is to promote the social and economic development of Asia and the Pacific. It is owned by 68 members, of which 49 are from Asia Pacific region.

SCIENCE AND TECHNOLOGY

4. NASA’S DOUBLE ASTEROID REDIRECTION TEST (DART)

THE CONTEXT: Recently, NASA’s Double Asteroid Redirection Test (DART) successfully crashed into Dimorphous.
THE EXPLANATION:
The Humanity’s first planetary defence test:
• With the collision, the test has been completed successfully in a mission that went exactly as planned without any hitches.
Reason for test:
• The impact should have nudged the asteroid slightly and subtly changed its orbit around Didymos, the larger asteroid.
• Telescopes on Earth and in space are going to take measurements of this change to see how the change measures up to computer-generated simulations.

Why Dimorphos?
• Didymos is a perfect system for the test mission because it is an eclipsing binary which means it has a moonlet that regularly orbits the asteroid and it can be seen when it passes in front of the main asteroid.
• The Didymos system is not an Earth-crossing asteroid, and there is no possibility that the deflection experiment could create an impact hazard.
• Earth-based telescopes can study this variation in brightness to understand how long it takes Dimorphos to orbit Didymos.
About the DART Mission
It is a planetary defence-driven test of technologies for preventing an impact on Earth by a hazardous asteroid.
Objectives:
• DART is the first technology demonstration of the kinetic impactor technique that could be used to mitigate the threat of an asteroid hitting Earth.
• The kinetic impactor mitigation technique is the impulsive deflection of the asteroid through the sudden addition of momentum. In simpler terms, DART is being sent to collide with an asteroid to change its orbital period.

VALUE ADDITION:
ABOUT ASTEROIDS
• Asteroids, sometimes called minor planets, are rocky, airless remnants left over from the early formation of the solar system about 4.6 billion years ago.
• Most of this ancient space rubble can be found orbiting the Sun between Mars and Jupiter within the main asteroid belt.
o Some asteroids go in front of and behind Jupiter, which are called Trojans.
o Asteroids that come close to Earth are called Near-Earth Objects (NEOs) for short. NASA keeps close watch on these asteroids.
• Asteroids range in size from Vesta (the largest at about 329 miles in diameter) to bodies that are less than 33 feet across. The total mass of all the asteroids combined is less than that of Earth’s Moon.
• Asteroids are not all round like planets. They have jagged and irregular shapes.

5. HONEYBEES CAPABLE OF PARITY CATEGORIZATION

THE CONTEXT: A new study has shown that honeybees can learn odd and even number categorisation — also called parity classification.
THE EXPLANATION:
• Parity classification is the categorization of numbers as either odd or even.
• It is used when dealing with real-world objects that can be paired. If an element cannot be paired in a group, then the number of objects are odd.
• Previous studies have shown that honeybees are capable of learning the order of quantities, performing simple addition and subtraction, matching symbols with quantities and relate size and number concepts.
• A new research has found that they were also capable of parity classification.
• Till date, only humans were found to be capable of this task.
• Honeybees were successfully trained to undertake this task as part of an experiment.
• The scientists separated honeybees into two groups.
• One group trained to associate even numbers with sugar water and odd numbers with quinine (bitter-tasting liquid).
• Another group was trained to associate odd numbers with sugar water and even number with quinine.
• The training was given using comparisons of odd versus even numbers with cards presenting 1 to 10 printed shapes.
• The group that associated odd number with sugar water learned more quickly than the other group.
• This shows that honeybees’ learning bias is different from humans, who categorize even numbers more quickly.
• The bees were then tested with new numbers that were not shown during the training.
• They were able to categorize the new numbers of 11 or 12 elements as odd or even with 70 per cent accuracy.
• They may have been able to achieve this feat either by finding unpaired element, performing division calculations or counted each element and applied odd or even categorization rule to the total number of elements.
• This novel experiment, if used in other animal species, would help improve the understanding on how mathematics and abstract thoughts emerged in humans.

PRELIMS PERSPECTIVE

6. BATHUKAMMA: STATE FESTIVAL OF TELANGANA

THE CONTEXT: Bathukamma is being celebrated in Telangana from September 25 to October 3 this year.
THE EXPLANATION:
• Bathukamma is observed as the state festival of Telangana since the state’s inception in 2014.It is a flower festival celebrated mainly in Telangana and several parts of Andhra Pradesh.
• This 9-day festival is celebrated based on Sathavahana calendar and it usually falls on September or October, during the latter half of monsoon, before the onset of winter.
• This festival begins with Mahalaya Amavasya, also known as Engili Poola Bathukamma.
• Bathukamma means ‘Goddess of Life’. It is a collection of flowers stacked one layer at a time and rising in a series of concentric circles like the gopuram in South Indian temples.
• It is made using locally grown flowers like Gunugu puvvu (Celosia), Thangedu puvvulu (Cassia auriculata), Gummadi puvvulu (Cucurbita), Vaama puvvulu (Ajwain), Banthi puvvu (Marigold), Chamanthi puvvulu (Chrysanthemum) etc.
• During the first seven days of this festival, women make symbolic images of Bodemma (Goddess Gauri) using clay and small Bathukamma.
• The final day of this festival, called Saddula Bathukamma, involves the preparation of huge Bathukamma on a special plate and womenfolk singing and dancing around it.
• Bathukamma are then taken out in a procession to be immersed a river or any nearby waterbody.
• The flowers used in Bathukamma are capable of purifying water in ponds and tanks.
• The festival concludes a day before the Dasara Festival.
• The Union Ministry of Culture has announced that this festival would be celebrated at the India Gate for the first time.
• The celebrations will be in line with the Telangana/Hyderabad Liberation Day celebrations that were organized earlier this month, when the national flag was hoisted in Hyderabad by Home Minister.
• Meanwhile, the Telangana government has started the distribution of 1 crore Bathukamma sarees for this festive occasion.The initiative was started by the Telangana government in 2017 to support weavers in the state.




Ethics Through Current Development (28-09-2022)

  1. Nine nights to transcend the interplay of gunas READ MORE
  2. Meditation as medication READ MORE
  3. Facts, factoids and their interpretation READ MORE



Today’s Important Articles for Geography (28-09-2022)

  1. Bengaluru, Lucknow flooding: What do we mean by water-sensitive cities? READ MORE  
  2. Nigeria’s sacred Osun River supports millions of people — but pollution is making it unsafe READ MORE
  3. What is the solution to India’s garbage disposal problem? READ MORE



Today’s Important Articles for Sociology (28-09-2022)

  1. The future of old times READ MORE
  2. SPOTLIGHT – ON THE HIJAB READ MORE
  3. The lack of quality engineering education READ MORE



Today’s Important Articles for Pub Ad (28-09-2022)

  1. Power imbalance: The governance shift in the power sector needs centre-state cooperation READ MORE
  2. Supreme Court goes live: Thousands watch proceedings of Constitution Benches READ MORE
  3. The National Logistics Policy can help India achieve its economic growth vision READ MORE



WSDP Bulletin (28-09-2022)

(Newspapers, PIB and other important sources)

Prelim and Main

  1. Carl-Gustaf M4 weapon system may be produced in India, says Sweden’s SAAB READ MORE
  2. Dadasaheb Phalke award for Asha Parekh READ MORE
  3. NASA is about to crash a spacecraft into an asteroid. Here’s why the mission could one day save humanity. READ MORE
  4. EWS quota will not cut into existing quotas, Govt tells Supreme Court READ MORE
  5. Multiple threats cause huge decline in migratory waterbirds in Africa, Eurasia READ MORE
  6. Nigeria’s sacred Osun River supports millions of people — but pollution is making it unsafe READ MORE
  7. Union Culture Ministry organizes Bathukamma festival in New Delhi READ MORE
  8. Honeybees can tell difference between odd & even numbers READ MORE

Main Exam

GS Paper- 1

  1. Bengaluru, Lucknow flooding: What do we mean by water-sensitive cities? READ MORE  
  2. The future of old times READ MORE
  3. SPOTLIGHT – ON THE HIJAB READ MORE

GS Paper- 2

POLITY AND GOVERNANCE

  1. Power imbalance: The governance shift in the power sector needs centre-state cooperation READ MORE
  2. Supreme Court goes live: Thousands watch proceedings of Constitution Benches READ MORE

SOCIAL ISSUES

  1. The lack of quality engineering education READ MORE

INTERNATIONAL ISSUES

  1. Energising India-Nepal ties, the hydropower way READ MORE
  2. Permanent membership of the UNSC is another story READ MORE
  3. India-US relations are stable and thriving READ MORE

GS Paper- 3

ECONOMIC DEVELOPMENT

  1. Paving the way to sustainable energy generation with microgrids READ MORE
  2. Currency manipulation: Note for the future READ MORE
  3. Money matters RBI has a grip on inflation READ MORE
  4. The National Logistics Policy can help India achieve its economic growth vision READ MORE
  5. Why India’s Growing Current Account Deficit Could Prove to Be the Achilles’ Heel for RBI READ MORE
  6. Free fertiliser industry by removing controls READ MORE

ENVIRONMENT

  1. What is the solution to India’s garbage disposal problem? READ MORE
  2. How the wildlife bill is a step backwards for elephants and will enable greater exploitation READ MORE

DISASTER MANAGEMENT

  1. How this cyclone intensity estimation technique saved millions of lives across continents READ MORE

GS Paper- 4

ETHICS EXAMPLES AND CASE STUDY

  1. Nine nights to transcend the interplay of gunas READ MORE
  2. Meditation as medication READ MORE
  3. Facts, factoids and their interpretation READ MORE

Questions for the MAIN exam

  1. ‘The governance shift in the power sector needs centre-state cooperation’. Comment on the statement in the light of recent electricity bill introduces by the government.
  2. By correcting the multi-modal connectivity mix and digitisation, the National Logistics Policy will help India achieve its environmental, social and governance (ESG) goals. Analyse.

QUOTATIONS AND CAPTIONS

  • An efficient telecommunication network is the foundation upon which an information society is built.
  • Given the growing energy demand, the West Seti Hydroelectric Project can provide an added alternative and viable way to address power deficits.
  • There should be no illusion about how states view membership in the United Nations Security Council — India must realise that it is all about national interest.
  • A consumption tax based on concrete aspects of sustainability, and its local devolution, would create the right incentives for a scientific analysis of garbage and the logistics of its disposal.
  • By focusing on correcting the multi-modal connectivity mix and digitisation, the National Logistics Policy will help reduce costs in the logistics sector, power the country’s economic growth, and help it achieve its environmental, social and governance (ESG) goals.
  • Live-streaming of key Supreme Court cases is welcome; safeguards may be needed for it to expand.
  • Controlling CAD is important as it has an implication on growth because of its close ties to national investment and saving. It also affects exchange rates and thus influences the export competitiveness of an economy.

50-WORD TALK

  • The Supreme Court has finally opened its proceedings to the public by implementing the four-year-old judgement on live-streaming. It will improve legal literacy among citizens, help them differentiate between oral remarks and written orders, and bring discipline to courtroom proceedings. If only judges don’t use it for grandstanding and pontification.
  • Like much good advice, Antony Blinken’s call for Pakistan to build “a responsible relationship with India” will be ignored. Prime Minister Shehbaz Sharif knows trade with India will help Pakistan, but Kashmir ranting won’t. Imran Khan’s anti-India posturing has seduced economically-battered Pakistanis. So PM Sharif can’t do the sane thing.

Things to Remember:

  • For prelims-related news try to understand the context of the news and relate with its concepts so that it will be easier for you to answer (or eliminate) from given options.
  • Whenever any international place will be in news, you should do map work (marking those areas in maps and exploring other geographical locations nearby including mountains, rivers, etc. same applies to the national places.)
  • For economy-related news (banking, agriculture, etc.) you should focus on terms and how these are related to various economic aspects, for example, if inflation has been mentioned, try to relate with prevailing price rises, shortage of essential supplies, banking rates, etc.
  • For main exam-related topics, you should focus on the various dimensions of the given topic, the most important topics which occur frequently and are important from the mains point of view will be covered in ED.
  • Try to use the given content in your answer. Regular use of this content will bring more enrichment to your writing.



DAILY MCQ Day-297 | Daily MCQs | UPSC Prelims | HISTORY OF MODERN INDIA

[WpProQuiz 342]




TOPIC : STATES’ BORROWING SPREE A RECIPE FOR DISASTER

THE CONTEXT: Recently, RBI released the report titled ‘State Finances: A Risk Analysis,’ in which the public finances of the 10 most heavily indebted states of India were analysed. This article intends to analyse the key findings of the report and further discuss the implications of unregulated state finances.

STATE BORROWINGS: THE CONSTITUTIONAL PROVISIONS

  • Chapter II of Part XII of the Constitution of India deals with borrowing by the Central Government and State Governments.
  • It comprises two provisions:
    • Article 292 covers borrowing by the Central Government, and Article 293, covers borrowing by State Governments.
    • Article 293 (3) requires State Governments that are indebted to the Central Government to seek the consent of the Central Government before raising further borrowings.

KEY HIGHLIGHTS OF THE REPORT

  • According to the report, ten states have a significantly high debt burden. These include Punjab, Rajasthan, Kerala, West Bengal, Bihar, Andhra Pradesh, Jharkhand, Madhya Pradesh, Uttar Pradesh and Haryana. These ten states account for around half of the total expenditure by all State governments in India.
  • According to the report, Punjab is anticipated to stay in the worst situation because of continuing worsening in its fiscal situation and a predicted debt-to-GSDP ratio that would reach 45% in 2026–2027. By 2026–2027, it is anticipated that Rajasthan, Kerala, and West Bengal will have debt-to-GSDP ratios higher than 35%. To stabilize their debt levels, these states will need to take major remedial action.
  • The benchmarks for fiscal deficit and debt for the ten states established by the 15th Finance Commission were exceeded by Andhra Pradesh, Bihar, Rajasthan, and Punjab.
  • According to the RBI analysis, Rajasthan, Kerala, and West Bengal are expected to exceed the 15th Finance Commission targets for debt and fiscal deficit in 2022–2023 (BE).

DEBT-TO-GSDP RATIO

The measure used to compare a state’s public debt to its gross state domestic product is called the debt-to-GSDP ratio (GSDP). The debt-to-GSDP ratio accurately predicts a state’s capacity to repay its debts by contrasting what it owes with what it generates.

REASONS FOR EXCEEDING BORROWING LIMITS

IMPACTS OF THE PANDEMIC

  • The pandemic dried up the revenue streams of all states due to the protracted lockdown and other containment measures, while expenditure went up due to the subsidies that had to be provided to the poor and the vulnerable to survive.
  • As a result, almost all states ended up beaching the FRBM limit, with Bihar’s GFD: GSDP ratio reaching as much as 11.3 per cent, and those of Punjab, Rajasthan and Uttar Pradesh reaching 4.6, 5.2 and 4.3 per cent, respectively. This led to higher borrowing by states and a swelling of their debt ratios (debt as a percentage of GSDP) much above the safe limits.

ATTENUATING TAX BUOYANCY

  • The own tax revenue of some of these states like Madhya Pradesh, Punjab and Kerala has been declining over time, making them fiscally more vulnerable.
  • The Goods and Services tax implementation has been one of the prime causes for this mismatch of funds. For example, the revenue might fall sharply if the GST compensation is stopped from July 2022, primarily as a significant part of guaranteed revenue of states like Punjab was met using compensation (37% in 2018-19, 47% in 2019-20, and 56% in 2020-21).

OVERBURDENED DISCOMS

  • The power sector accounts for much of the financial burden of state governments in India, both in terms of subsidies and contingent liabilities.
  • Illustratively, many state governments provide subsidies, artificially depressing the cost of electricity for the farm sector and a section of the household sector.
  • Despite various financial restructuring measures 17, the performance of the DISCOMs has remained weak, with their losses surpassing the pre-UDAY level of 0.4 percent of GDP.

POLITICS OF ‘FREEBIES’

  • Political parties are outdoing each other promising free electricity and water, laptops, cycles etc.
  • The freebies put a significant strain on the fiscal position of State governments and can’t be easily taken back by succeeding governments.
  • Freebies for Andhra Pradesh and Punjab exceeded two per cent of the GSDP, while for Jharkhand, Madhya Pradesh and West Bengal, it was between one and two per cent of GSDP.

LEGAL LOOPHOLES

  • The current FRBM provisions mandate that the Governments disclose their contingent liabilities, but that disclosure is restricted to liabilities for which they have extended an explicit guarantee.
  • In reality, the State governments resort to extra-budgetary borrowings to finance their populist measures. This debt is concealed to circumvent the FRBM targets. Further, there is no comprehensive information in the public domain to assess the size of this off-budget debt.

THE BORROWING SPREE: LOOMING CONCERNS

MENACE OF ‘ESCROW ACCOUNTS

  • The report points out that, unable and unwilling to control expenditure, these states have been borrowing from banks against the collateral of future revenues by creating escrow accounts which is clearly unconstitutional, and by also pledging government assets.
  • An escrow account is one that is kept outside government accounts and managed by the bank till the liability is cleared, and into which future revenues will go directly, instead of going into the consolidated fund of the states as mandated by the constitution.
  • At least five states have escrowed their future revenues in this manner to raise loans.

BY PASSING CONSTITUTIONAL PROVISIONS

  • Between 2019-20 and 2021-22, Andhra Pradesh raised Rs 23,899 crore, UP Rs 17,750 crore, Punjab Rs 2,879 crore, MP Rs 2,698 crore, and Himachal Rs 90 crore.
  • By doing so, they were trying to bypass article 293 of the Constitution, which requires the states to take permission from the Centre to raise loans from the market if they are indebted to the Centre, which they are.

AGGRAVATING BANKING SECTOR STRESS

  • Most of these loans have been given by the public sector banks, including the SBI.This could have serious implications for the already significant NPA crisis.
  • RBI has now issued a directive to them to stop this practice forthwith and report compliance within three months.

REPLICATING THE SRI LANKAN CRISIS

  • Taking a cue from what is happening in Sri Lanka as a result of its unsustainable debt and the precarious finances of states, the RBI report has cautioned that the tendency towards handing out cash subsidies, in normal times, provision of free utility services, the revival of the old pension scheme by some states and extension of implicit and explicit guarantees by various state governments in India is a perfect recipe for an economic disaster.

THE BORROWING SPREE: NEED FOR CAREFUL CONTEMPLATION

Considering all possible causes and concerns of unregulated borrowing by states in India, one can opine that while some expenses are inevitable, some can be addressed with more prudence and probity. For instance, one can certainly be in favour of expanding, for example, the MGNREGA type of spending and subsidy in the form of food ration schemes. These go a long way in increasing the productive capacity of the population. So, they’re not just freebies. However, what should be regulated is announcing freebies merely in the name of vote bank politics. For instance, when it comes to simply giving away loan waivers, one cannot go in favour of these because they have undesired consequences such as destroying the whole credit culture.

THE WAY FORWARD

  • RBI has proposed a “triple E framework” to assess expenditure quality, which has constituents of expenditure adequacy, effectiveness and efficiency:
    • Expenditure adequacy is terms of focusing on the government’s primary role;
    • Effectiveness is about assessing performance;
    • Efficiency involves an assessment of the output-input ratio.
  • Other recommendations are given by RBI:
    • Fiscal discipline: The state governments must restrict their revenue expenses by cutting down expenditure on non-merit goods in the near term. In the medium term, these states need to put efforts toward stabilizing debt levels.
    • Power sector reforms: Further, large-scale reforms in the power distribution sector would enable the DISCOMs to reduce losses and make them financially sustainable and operationally efficient.
    • Focus on capital creation: In the long term, increasing the share of capital outlays in the total expenditure will help create long-term assets, generate revenue and boost operational efficiency.
    • Risk testing analysis: State governments need to conduct fiscal risk analyses, and stress test their debt profiles regularly to be able to put in place provisioning to manage fiscal risks efficiently
  • Legal measures: The FRBM Acts need to be amended. Its provisions should be expanded to cover all liabilities of the Government, whether budget borrowing or off-budget borrowing, regardless of any guarantee.

THE CONCLUSION: Given that the Constitution of India provides clear provisions regarding the borrowing by the Central Government and State Governments, both must diligently abide by the constitutional values and limits. State borrowings must be more transparent and prudent. Also, there must be a behavioural change within political parties to participate in elections on their working capabilities rather than hampering state finances in the name of vote bank.

QUESTIONS TO PONDER

  • “Taking a cue from what is happening in Sri Lanka as a result of its unsustainable debt and the precarious finances of states, the given status of significant indebtedness of India’s federal units act like swords of Damocles”. Analyse critically in the light of the recent RBI report on State Finances.
  • Discuss the various causes for exceeding off-budget borrowings by state governments in India. Do you think unregulated off-budget borrowings will have economic implications? Justify your views.