1. Now science must strive for knowledge of man READ MORE
2. Nothing is more difficult than being successful READ MORE
3. The pursuit of learning READ MORE
4. Absence of persons with impeccable integrity at the helm is the bane of India’s democracy READ MORE

1. Apply precautionary principle to biotechnologies, scientists & policymakers urge at COP15 Montreal READ MORE
2. How India’s G20 presidency can help move the needle on climate action? READ MORE
3. Clean Energy Promotion Should Strike Balance With Livelihood, Ecology READ MORE

1. Muslim girls’ marriage: Raise their minimum age; it should be same for all READ MORE
2. Expand the food safety net without any more delay READ MORE  

1. Why local bodies are financially starved READ MORE
2. Every problem has a solution: Our attempts to resolve any number of socio-economic and political problems have to focus on behavioural changes and social engineering READ MORE
3. To promote competition, CCI should not appear to punish better use of resources by a dominant enterprise READ MORE

(Newspapers, PIB and other important sources)

Prelim and Main

1. ‘Clean Ganga’ changes course to conservation, tourism, livelihood READ MORE
2. China’s central bank calls for tighter regulation of green finance READ MORE
3. Explained | What does a price cap for Russian oil mean? READ MORE
4. Lending a helping hand to eliminate TB as Ni-kshay Mitra READ MORE
5. Uttarakhand plans genetic enhancement of its indigenous Badri cow READ MORE
6. Arunachal yields a potentially new songbird READ MORE
7. COP15 Montreal: Abalone, dugong, pillar coral threatened with extinction READ MORE
8. Follow ASEAN path on Myanmar, says Indonesian FM, after New Delhi engages military rulers READ MORE

Main Exam

GS Paper- 1

1. Muslim girls’ marriage: Raise their minimum age; it should be same for all READ MORE

GS Paper- 2

POLITY AND GOVERNANCE

1. Why local bodies are financially starved READ MORE
2. Every problem has a solution: Our attempts to resolve any number of socio-economic and political problems have to focus on behavioural changes and social engineering READ MORE
3. To promote competition, CCI should not appear to punish better use of resources by a dominant enterprise READ MORE

SOCIAL ISSUES

1. Expand the food safety net without any more delay READ MORE  

INTERNATIONAL ISSUES

1. The role of the ‘China Test’ in India’s grand strategy READ MORE
2. Tectonic shift in the Gulf: Arab states moving away from the US and towards China READ MORE

GS Paper- 3

ECONOMIC DEVELOPMENT

1. India needs to bring down its fiscal deficit which is highest among G20 countries READ MORE
2. The PM Fasal Bima Yojana needs an urgent revamp READ MORE

ENVIRONMENT AND ECOLOGY

1. Apply precautionary principle to biotechnologies, scientists & policymakers urge at COP15 Montreal READ MORE
2. How India’s G20 presidency can help move the needle on climate action? READ MORE
3. Clean Energy Promotion Should Strike Balance With Livelihood, Ecology READ MORE

GS Paper- 4

ETHICS EXAMPLES AND CASE STUDY

1. Now science must strive for knowledge of man READ MORE
2. Nothing is more difficult than being successful READ MORE
3. The pursuit of learning READ MORE
4. Absence of persons with impeccable integrity at the helm is the bane of India’s democracy READ MORE

Questions for the MAIN exam

1. Social indices such as women’s nutrition, education and maternal mortality and the health of newborn babies are directly related to the age of marriage. In the context of this perspective, analyse the need for increasing in the rise of the minimum weeding age of girl child.
2. Reforms cannot happen from above. They require the transformation of the people’s consciousness. Comment.

QUOTATIONS AND CAPTIONS

• The very essence of the concept depends on leaving no one behind as non – availability of quality healthcare anywhere is a threat to human health everywhere, as seen during the pandemic.
• Our attempts to resolve any number of socio-economic and political problems have to focus on behavioural changes and social engineering.
• Impartiality, effectiveness, sincerity and honesty should be maintained at any cost under strict vigil of Election Commission of India.
• Via the newly initiated Startup-20 Engagement Group, India aspires to help the world develop an inclusive framework to support innovative startups through strategic collaboration across G20 nations.
• The 73rd and 74th Amendments have been ignored. State Finance Commissions in some States are either defunct, or their reports are not acted upon.
• Saudi Arabia is protecting its own interests in a world order in transition by opting for a multifaceted set of relationships. India has a lot to learn from this.
• Social indices such as women’s nutrition, education and maternal mortality and the health of newborn babies are directly related to the age of marriage.
• Fact became fiction and fiction became fact.
• Indian democracy’s weakness is a result of the persistence of feudal consciousness among a majority who easily accept authority.
• A feudal system has its own concept of integrity. The ruler’s interest is broadly the nation’s interest. This congruity breaks in a parliamentary democracy where the consciousness is feudal. In such a case, integrity as defined by national interest is likely to be subverted, as is visible in India.
• Reform requires us to resolve the contradiction between parliamentary democracy and the prevailing feudal consciousness. This cannot happen from above. It requires the transformation of the people’s consciousness – Gandhi’s unfinished agenda.
• It is a rather straightforward one — smart balancing China in Southern Asia and beyond must form a key element in India’s grand strategic planning and decision making.

50-WORD TALK

• The ongoing meeting in Udaipur marks a good start to the 200-meeting agenda set for India’s Presidency of the G20. Policy tracks are clear, diverse, and inclusive. However, while the pomp and splendour can be forgiven since it’s the first meeting, the next 199 should keep substance at the fore.
• The enormous hardships caused to patients by the hacking of the AIIMS hospital-management system is the result of primitive data-security practices and infrastructure. Though computers can be restored, the harm to patient privacy and public confidence can’t. Every citizen of digital India must be served by secure and reliable technology.

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.

[WpProQuiz 382]

THE CONTEXT: India promised to install 100 gigawatts of solar power by 2022. But the country will not be able to deliver on this climate pledge. According to a new report, India will miss this target by 27%. Also, India is likely to miss its solar energy target of 300 GW (gigawatt) for 2030 by around 86 GW, a new report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research. In this context, this article analyzes the present scenario of the Solar energy sector in India.

WHAT DOES THE REPORT SAY?

• As of April, only about 50% of the 100GW target, consisting of 60GW of utility-scale and 40GW of rooftop solar capacity, has been met.
• Nearly 19 GW of solar capacity is expected to be added in 2022 — 15.8GW from utility-scale and 3.5GW from rooftop solar. Even accounting for this capacity would mean about 27% of India’s 100GW solar target would remain unmet.
• A 25GW shortfall in the 40GW rooftop solar target is expected compared to 1.8GW in the utility-scale solar target by December 2022. Thus, it is in rooftop solar that the challenges of India’s solar-adoption policy stick out.

REASONS FOR MISSING INDIA’S SOLAR ENERGY TARGET:

• In its early years, India’s rooftop solar market struggled to grow, held back by lack of consumer awareness, inconsistent policy frameworks of the Centre/ State governments and financing. Recently, however, there has been a sharp rise in rooftop solar installations thanks to falling technology costs, increasing grid tariffs, rising consumer awareness and the growing need for cutting energy costs.
• Other Factors impeding rooftop-solar installation include:
• Pandemic-induced supply chain disruption to policy restrictions.
• Limits to net-metering (or paying users who give back surplus electricity to the grid). Regulatory roadblocks.
• Taxes on imported cells and modules, unsigned power supply agreements (PSAs) and banking restrictions; financing issues plus delays in or rejection of open access approval grants; and the unpredictability of future open access charges.

OVERVIEW OF INDIA’S RENEWABLE ENERGY SECTOR:

• At COP26 in Glasgow, our prime minister announced 500 gigawatts (GW) of non-fossil fuel capacity and 50% of energy from renewable sources by 2030, coupled with a net-zero target by 2070.
• Presently, India has installed 152.90 GW of renewable energy capacity projects (including large hydro) until February. It includes 50.78 GW from solar power, 40.13 GW from wind power, 10.63 GW from Bio-power, 4.84 GW from small hydropower and 46.52 GW from large hydropower.

IMPORTANCE OF SOLAR ENERGY FOR INDIA

• India’s share of global energy demand is predicted to double to 11% in 2040, making it imperative to enhance energy security and self-sufficiency in power generation without increasing environmental costs.
• This increase in power demand is likely to increase India’s reliance on coal, oil and natural gas as a source of energy. However, additional imports of oil and increased domestic production of coal will fall short of energy demand and entail economic and environmental costs.
• These are likely to hit harder than anticipated to an economy ravaged by COVID-19. Expansion of solar power units and increased reliance on solar power allows India to enhance energy security in the face of rising demand.
• India is dealing with an aggressive air pollution problem. In 2020, Delhi’s Air Quality Index (AQI) stood at 328, indicating severe pollution. Solar production does not cause any toxic emissions and can help mitigate the pollution caused by fossil fuel usage.
• India is likely to face increasing water security issues and thus must shift to energy sources that don’t rely extensively on water. The groundwater levels in India declined by 61% between 2007 and 2017, with the majority of this water being used for irrigation. This is a major red flag for coal production which relies heavily on water for steam production and cooling. Solar power is neither dependent on groundwater supplies nor does it strain them.

WHAT IS INDIA’S SOLAR POLICY?

SOLAR ROOFTOP SCHEME

• Under the rooftop scheme executed by SECI (Solar Energy Corporation of India), 200 MW of projects has been allocated. SECI launched a tender that is the largest global one offering 30% subsidy to the residential sector, private not-for-profit educational organizations, social sector, and the health institutions.

SOLAR PARK SCHEME

• parks to facilitate the creation of infrastructure required to set up new solar power projects in terms of land allocation, transmission, access to roads, availability of water, etc. MNRE has come up with a scheme to set up a number of solar parks across several states, each with a capacity of almost 500 MW. The Scheme proposes to offer financial support by the Government of India to establish solar

SOLAR ENERGY SUBSIDY SCHEME

• Under this Scheme, financial assistance and capital subsidy will be provided to the applicant to the extent of 50 per cent, 75 percent and 90 percent of the basis of basic cost of the solar energy plant. The Government Yojana explains that a person is eligible for a subsidy if he has solar panels installed on the rooftop. The subsidy is decided as per the capacity of the solar power plant.

PRADHAN MANTRI- KISAN URJA SURAKSHA EVAM UTTHAAN MAHABHIYAN

• It Aims to provide financial and water security to farmers through harnessing solar energy capacities of 25,750 MW by 2022.
• Solarisation of water pumps is a step in distributed power providing at the consumer’s doorstep.

THE JAWAHARLAL NEHRU NATIONAL SOLAR MISSION (JNNSM)

• The Jawaharlal Nehru National Solar Mission (JNNSM), also known as the National Solar Mission (NSM), which commenced in January 2010, marked the government’s first focus on promoting and developing solar power in India.

GROWTH OF THE SOLAR SECTOR

• Since 2011, India’s solar sector has grown at a compounded annual growth rate (CAGR) of around 59% from 0.5GW in 2011 to 55GW in 2021.

RANKING OF INDIA

• India currently ranks fifth after China, U.S., Japan and Germany in terms of installed solar power capacity.

PRESENT STATUS

• As of December 2021, India’s cumulative solar installed capacity is 55GW, which is roughly half the renewable energy (RE) capacity (excluding large hydro power) and 14% of India’s overall power generation capacity.
• Within the 55GW, grid-connected utility-scale projects contribute 77% and the rest comes from grid-connected rooftop and off-grid projects.

What should be done to achieve the targets?

• The need for focused, collaborative and goals driven R&D to help India attain technology leadership .
• The need for a better financing infrastructure, models and arrangements to spur the PV industry and consumption of PV products.
• Training and development of human resources to drive industry growth and PV adoption.
• With solar panels and solar systems getting more efficient vs their earlier generation, customers are wanting to invest in a technology that is getting them better output per square meter of the space they have.
• So there is a constant need to invest in research & development of more efficient solar ecosystem involving energy storage systems. Like shark bifacial panels generating electricity from both front and back of the solar panel.
• As India is making strides to fulfil its solar dream, Loom Solar and its smart methodologies shall continue to provide the Indian solar industry with much-needed assistance for ‘Mission 2030’.

SCOPE OF INDIA’S SOLAR SECTOR

• The generation of solar energy has tremendous scope in India. India being a tropical country, receives solar radiation throughout the year. With 3,000 hours of sunshine, this is equal to more than 5,000 trillion kWh of solar radiation per square meter.
• India has vast solar potential; it is a lucrative opportunity for entrepreneurs to start a solar business in India. With the growing economy, India’s power consumption is going to rise, so the solar energy business in India is the ideal way to manage the balance between economic growth and sustainable development.
• The government is constantly pushing and supporting the solar business in India through various programs and initiatives by enabling an increase in solar power at a subsidized cost.

THE CONCLUSION: Boosting solar capacity post-pandemic in a struggling economy will pose a whole new challenge. It will require innovative financing techniques and policies to bolster domestic production in the face of increasing environmental concerns.

THE CONTEXT: The present government has focussed on the transport sector with various schemes for improving transportation in India. In this article, we will see how the transport sector can play an important role in a region’s development and what are the lacunae that the Indian transport sector is facing.

COMPONENTS OF INDIAN TRANSPORT SECTOR

The Indian transport system includes different modes such as

• Railways
• Roads
• Air Transport
• Coastal Shipping etc.

HOW TRANSPORT SECTOR INFLUENCES REGIONAL DEVELOPMENT

1. Core: The most fundamental impacts of transportation related to the physical capacity to convey passengers and goods and the associated costs to support this mobility. This involves setting routes that enable new or existing interactions between economic entities.
2. Operational : Improvement in the time performance, notably in terms of reliability and reduced loss or damage. This implies a better utilisation level of existing transportation assets benefiting its users as passengers and freight are conveyed more rapidly and with fewer delays.
3. Geographical: Access to a broader market base where economies of scale in production, distribution, and consumption can be improved. Increases in productivity from the access to a larger and more diverse base of inputs (raw materials, parts, energy, or labor) and broader markets for diverse outputs (intermediate and finished goods).

IMPACTS OF TRANSPORT

1. Direct impacts: The outcome of improved capacity and efficiency where transport provides employment, added value, larger markets, and time and costs improvements. The overall demand of an economy is increasing.
2. Indirect impacts: The outcome of improved accessibility and economies of scale. Indirect value-added and jobs result from local purchases by companies directly dependent upon transport activity. For example – office supply firms, equipment and parts suppliers, maintenance and repair services, insurance companies, consulting, and other business services.
3. Induced impacts: The outcome of the economic multiplier effects where the price of commodities, goods, or services drops and their variety increases. For instance, the steel industry requires the cost-efficient import of iron ore and coal for the blast furnaces and export activities for finished products such as steel booms and coils. Manufacturers, retail outlets, and distribution centers handling imported containerised cargo rely on efficient transport and seaport operations.

IMPACT ON DIFFERENT SECTORS

1. Agriculture Sector: It facilitates the connection between topographical and economic regions and creates new areas to commercial focus. It leads to the creation of a market, promotes the distribution of goods, and creates additional opportunities.
2. Industrial Sector: It helps connect industries to each other and to the world markets. Also, this leads to employment generation and dispersal of wealth.
3. Education Sector: A reliable transport sector ensures that students can reach the school premises. This ensures that the student continues his/her education and thus works for the nation’s development.

PROBLEMS FACED BY INDIAN TRANSPORT SECTOR

1. Quality of Road Infrastructure: The majority of Indian highways have two lanes leading to congestion. Roads are of low quality and road maintenance remains underfunded.
2. Rural Areas have Poor Access: The rural road network is extensive still some 33 percent of Indian villages do not have access to all-weather roads and remain cut off during the monsoon season. The problem is more acute in India’s northern and northeastern states, which are poorly linked to the country’s major economic centers.
3. Railway Capacity Constraint: All the country’s high-density rail corridors face severe capacity constraints. Also, freight transportation costs by rail are much higher than in most countries as freight tariffs in India have been kept high to subsidise passenger traffic.
4. Port Congestion: The capacity utilisation in some major ports remains as low as 58-60% as per World bank.
5. Airport Infrastructure: Air traffic has been growing rapidly leading to severe strain on infrastructure at major airports, especially in the Delhi and Mumbai airports which account for more than 40 percent of nation’s air traffic.

THE WAY FORWARD

1. Capacity Building: Government needs to improve the capacity of the transport system by investing in infrastructure.
2. SIMSystem: A SIMSystem promotes interoperability between modes of transport to avoid potentially uncoordinated or conflicting investments, assets, standards, rules and technologies.

SIMSYSTEM EXPLAINED

A SIMSystem promotes interoperability between modes of transport to avoid potentially uncoordinated or conflicting investments, assets, standards, rules and technologies.

Principles of SimSystem:

1. User-centred: The system is designed and operated to meet the collective and individual needs of all the users it serves.
2. Designed to be adaptable: It will adapt to the capabilities and conditions of the place it is deployed in, to the behaviours and needs of its users, and to improvements in technology.
3. Open standards and protocols: The private sector will need to play a leading role in establishing open standards and protocols for the creation of mobility-related data exchanges and application programming interfaces.
4. Public-private collaboration: Governments should act as conveners to increase collaboration within and between governments and the private sector, which will enable a SIMSystem to operate across transport types, geographies and functionalities.
5. Participation and value: Maintaining the ability for the private sector to derive value from their products, services and intellectual property will encourage broad-based participation and enable the full realization of a SIMsystem.
6. Agile governance: Governments should reduce institutional complexity and create more focused governance models, to facilitate agile coordination with the private sector and other governments.
7. Funding and financing: Governments should create innovative funding instruments and business models that enable private-sector actors to underwrite the cost of a SIMSystem and share in the monetary benefits.
8. Performance measurement: Standardized performance indicators should be established to measure the impact of a SIMSystem on accessibility, affordability, sustainability, safety, efficiency and integration.
9. Learning and improvement: An international public-private coalition should be formed and tasked with the frequent sharing of knowledge and best practices across geographies.
10. Scaling and growth: A public-private working group of leaders should be established to define and address fundamental framing decisions and enable SIMSystem pilots in various geographies.

CASE STUDY SHOWING IMPACT OF TRANSPORT SECTOR

A group of tribal belonging to nine different villages came together to construct a ghat road for connecting their hamlet to Vishakhapatnam’s agency area. These people lacked electricity and medical services due to lack of road connectivity. After working tirelessly for 3 weeks, they created a 7km long kutcha road that provide connectivity to certain Eastern ghat habitations. The road has led to reduced deaths in the region as medical services are possible and the youth can go to town for education and employment. The three tribes of Muka Doras, Konda Doras and Kondus have benefited from this.

THE CONCLUSION: Transportation links together the factors of production in a complex web of relationships between producers and consumers. A nation’s growth moves through its roads and thus the best way to increase growth rate is by improving the infrastructure. India needs to learn from China which have gained immensely by investing in its infrastructure.

[WpProQuiz 381]

THE CONTEXT: Prime Minister Narendra Modi announced an economic package totalling Rs 20 lakh crore to tide over the Covid-19 crisis under ‘Atmanirbhar Bharat Abhiyan’. The Rs 20 lakh crore package (10% of GDP) includes the government’s recent announcements on supporting key sectors and measures by Reserve Bank of India. The special economic package would focus on land, labour, liquidity and laws.

PRIME MINISTER’S VISION

• Call for आत्मनिर्भरर्ारतअनर्यािor Self-Reliant India Movement
• Five pillars of Atmanirbhar Bharat – Economy, Infrastructure,
  System, Vibrant Demography and Demand
• Special economic and comprehensive package of Rs 20 lakh
  crores – equivalent to 10% of India’s GDP
• Package to cater to various sections including cottage industry,
  MSMEs, labourers, middle class, industries, among others.
• Bold reforms across sectors will drive the country’s push towards self-reliance
• It is time to become vocal for our local products and make them global.

THE KEY FEATURES OF ATMNIRBHAR BHARAT ABHIYAN (ANBA)

The goal

• To become self-reliant.

Five pillars

1. Economy
2. Infrastructure
3. Technology driven system
4. Vibrant demography
5. Demand

The Five phases

• Phase-I: Businesses including MSMEs
• Phase-II: Poor, including migrants and farmers
• Phase-III: Agriculture
• Phase-IV: New Horizons of Growth
• Phase-V: Government Reforms and Enablers

Explaining Self-reliance

• Self-reliance implies that product and factor markets are made flexible in order to allow the Indian economy to adapt to the problems and opportunities of an emerging post-COVID world.

All inclusive

• India’s self-reliance there is a concern for the whole world’s happiness, cooperation and peace, self-reliance, does not advocate for a self-centred system.
• Active participation in post-COVID global supply chains as well as the need to attract foreign direct investment.

Decentralised localism 

• LOCAL IS VOCAL
• Freeing Indian entrepreneurship and innovation from bureaucratic hurdles.
• Decentralised localism takes pride in local brands, emphasises resilience and flexibility, and encourages local capacity-building and indigenisation.

Commitment to privatisation

• There is an unapologetic commitment to privatisation of non-strategic public sector entities, opening up of new sectors like space to private investment, decriminalisation of most aspects of corporate law, greater flexibility in labour laws, and so on.

ABOUT THE PACKAGE

The first tranche

• ₹3 lakh crore collateral free loan scheme for businesses, especially micro, small and medium enterprises (MSMEs).
• Global tenders will not be allowed for government procurement up to ₹200 crore, as the goal is self-reliant.
• NBFCs, housing finance companies and microfinance institutions will be supported through a ₹30,000 crore investment scheme fully guaranteed by the Centre, and an expanded partial credit guarantee scheme worth ₹45,000 crore, of which the first 20% of losses will be borne by the Centre.
• Power distribution companies, which are facing an unprecedented cash flow crisis, will receive a ₹90,000 crore liquidity injection.
• Employee Provident Fund (EPF) support, provided to low-income organised workers in small units under the PMGKY is being extended for another three months and is expected to provide liquidity relief of ₹2,500 crore.

The second tranche-Migrant workers (₹3,500 crore)

• Free food grains for the next two months to migrant workers who do not have ration cards. This is an extension of the Pradhan Mantri Garib Kalyan Yojana.
• One Nation One Ration card to enable a migrant beneficiary to purchase grains from any ration shop in the country
• Extension of credit facilities for urban housing, street vendors and farmers.
• An interest subvention scheme for small businesses
• Affordable housing for migrants and urban poor via a scheme under PMAY and affordable rental housing complexes (ARHC) under PPP mode.

The third tranche- Agriculture sector (₹1,50,000 Cr)

• A central law to permit barrier-free inter-State trade of farm commodities.
• To ensure a legal framework to facilitate contract farming.
• Deregulating the sale of six types of agricultural produce, including cereals, edible oils, oilseeds, pulses, onions and potatoes, by amending the Essential Commodities Act, 1955,
• Allow private players to invest in inputs and technology in the agricultural sector.
• To build farm-gate infrastructure and support logistics needs for fish workers, livestock farmers, vegetable growers, beekeepers and related activities.

The fourth tranche- industry, aviation and space.

• To enhance self-reliance in defence production,indigenise defence production by banning the import of some weapons and platforms.
• The FDI limit in defence manufacturing under automatic route will be raised from 49% to 74%.
• Introducing commercial mining in the coal sector, liberalise the mineral sector, ease airspace restrictions.
• Encourage private involvement in space and atomic energy projects.
• ₹8,100 crore to be provided as a hiked 30% viability gap funding to boost private investment in social sector infrastructure.
• Power distribution companies in union territories will be privatised.

ANBA- REDESIGNING OF THE INDIAN ECONOMY

• Self-reliance is about resilience, leveraging internal strengths, personal responsibility, and a sense of national mission (or “Man Making” to use the late 19th century expression of Swami Vivekananda).
• Self-reliance also means a commitment to resilience at multiple levels — at a national level, an industry level, and at an individual level. For example, the government has indicated that it would provide various forms of incentives and protection to key industries — for example, inputs for the pharmaceuticals industry.
• From Globalisation to decentralised localism that takes pride in local brands, emphasises resilience and flexibility, and encourages local capacity-building and indigenisation.It’s not shutting off India from the world. It creates new openness to ideas, investment, and trade.
• Farm sector reform includes the scrapping of the ECA-APMC system which enables localised decision-making by farmers even as they can participate in a national common market or export to the global market. Similarly, traders can now invest in supply-chains and agri-businesses without the fear of being arbitrarily labelled a hoarder. The government still has a role but it is as an enabler, providing soft and hard infrastructure
• The incentive structure of defence procurement has been changed to encourage indigenisation even as foreigners are encouraged to manufacture in India.
• Resilience in individuals and vulnerable social groups, calls for the creation of safety nets. The effort to create a health insurance system (Ayushman Bharat), and the direct benefit transfer mechanism based on Jan Dhan-Aadhaar-Mobile (JAM).
• Labour reforms emphasise flexibility on the one hand but on the other hand are also pitching for more stringent norms for safety and working conditions.
  Thus, ANBA is about standing up confidently in the world, and not about isolationism behind “narrow domestic walls”.

THE CHALLENGES OF ANBA

Financial limitations

• At present, there is no sure-shot way of knowing what will be the final level of government spending at the end of this financial year.
• Most calculations suggest that far from the promised level of 10% of the GDP — the actual government expenditure in the Atmanirbhar Bharat Abhiyan is just 1% of GDP.
• And we still don’t know if this 1% (of GDP) expenditure is over and above the Budgeted expenditure or will it be funded by expenditure cuts elsewhere.

Declined GDP

• In this pandemic situation India’s GDP will decline by 12.5% under the Base case scenario.
• To lift growth, the governments would have to spend more and counteract the natural downward spiral of the economy.

Demand Supply Gap

• Many economists have opined that the government stimulus tries to resolve only supply-side issues. There is nothing to generate demand. This could only be done by putting money in the hands of people.

Threat to trade liberalisation

• “Self-reliance” may reorient the economic structure towards ensuring “self-sufficiency” by falling back on the decades-old failed policy of import substitution.
• The shift towards protectionism, threatening to undo decades of trade liberalisation may be underway.

Mixing of RBI and Government

• The actions of RBI were included as part of the government’s fiscal package whereas government expenditure and RBI’s actions cannot be clubbed together.

Resource crunch

• India’s welfare state does not lack intentions but lacks resources. No amount of CSR, philanthropy, or government borrowing can provide the resources for the care of our weak, vulnerable, and unlucky that will flow from more productive cities, firms, and citizens.

AN OLD WINE IN NEW BOTTLE OR A NEW AGE OF SELF-RELIANCE

India has tried self-reliant policy since independence. Even during the Freedom Struggle Movement, there was Swadeshi Movement.

The past experiences have not been very encouraging especially since independence
1. The socialist pattern is seen as among the main cause of backwardness of the Indian economy
2. The phase of liberalisation is seen as Indian economy awakening
3. The recent initiative like ‘MAKE IN INDIA’ has not been very effective

Therefore, again talking about self-reliant seems to be an old wine in new bottle.

THE WAY FORWARD

It is not that if something has failed in past so it will fail again. Rather it should be taken more as a resolve by the people of India to work for a resilient India by making it more self-reliant rather than dependent. No country has grown without role of its citizen to make the country self-reliant. After the imitative of the ATMANIRBHAR BHARAT, now India has today created a capacity of producing 2 lakh PPE kits daily, which is also growing steadily from zero production of Personal Protection Equipment (PPE) before March 2020,
Additionally, India has demonstrated how it rises up to challenges and uncovers opportunities therein, as manifested in the re-purposing of various automobile sector industries to collaborate in the making of life-saving ventilators. The clarion call given by the Hon’ble PM to use these trying times to become Atmanirbhar (self-reliant) has been very well received to enable the resurgence of the Indian economy.
At the same time there should be continuity of the policy and the resolve. It should not be a crisis-ridden policy initiative rather it should be taken as a necessity if India wants to become a globally competitive economy, reduce its reliance on other economies and have its own innovation and technology especially for defence sector.

[WpProQuiz 380]

THE CONTEXT: The Fifteenth Finance Commission, headed by Mr NK Singh has submitted its main report for the period of 2021-2026 on March 2021 to the President. Earlier the commission has also presented an interim report for the period 2020-2021. This writes up discusses the various recommendations of the commission in the main report and examines whether it was able to perform the role of the balancing wheel of fiscal federalism.

THE TERMS OF REFERENCE OF THE XVth FINANCE COMMISSION

• The Fifteenth Finance Commission was constituted on 27 November 2017 against the backdrop of the abolition of Planning Commission, removal of the distinction between plan and non-plan expenditure and the introduction of GST.
• These developments have redefined the federal fiscal relations and the terms of reference (ToRs) of the commission reflect these realities.
• Apart from the mandatory ToRs provided under Art 280 of the constitution, the commission was given additional ToRs by the union government. These are outlined below.

TRADITIONAL TERMS OF REFERENCE

• The distribution of net proceeds of taxes in the divisible pool between the Union and the states and the states inter se.
• The principles governing the Grants in Aid to the revenue of the states.
• The measures needed to augment the resources of the local bodies of the states on the basis of the recommendation of the State Finance Commission

ADDITIONAL TERMS OF REFERENCE

• Review the current status of the finances of the union and states and suggest a fiscal consolidation roadmap.
• Examine if revenue deficit grants should be provided to the states by the Union government.
• While making recommendations the commission needs to keep in mind the demand on the resources of the union due to defence, internal security, climate change, and National Development Programme-New India 2022.
• The conditions that the Union required to impose on the borrowing programme of the states under Art 293(3).
• Performance-based incentives to states on factors like tax net under GST, population management, progress in implementation of centre’s flagship programmes, quality of capital expenditure, ease of doing business etc.
• The population data of the 2011 census will be used by the commission in arriving at its recommendations
• Review the pattern of financial contribution by the Union and states under the Disaster Management Act 2005.

THE RECOMMENDATIONS OF THE 15TH FINANCE COMMISSION

SHARE OF STATES IN CENTRAL TAXES

• The share of states in the central taxes also known as vertical devolution, for the 2021-26 period is recommended as 41%.

CRITERIA FOR DEVOLUTION

• The commission has chosen Income distance, area, population, demographic performance, forest and ecology, tax and fiscal efforts as criteria for horizontal devolution.

RECOMMENDATION FOR VARIOUS GRANTS

• Revenue deficit grants: 17 states will receive grants worth Rs 2.9 lakh crore to eliminate the revenue deficit.
• Sector-specific grants: Sector-specific grants of Rs 1.3 lakh crore will be given to states for eight sectors: (i) health, (ii) school education, (iii) higher education, (iv) implementation of agricultural reforms, (v) maintenance of PMGSY roads, (vi) judiciary, (vii) statistics, and (viii) aspirational districts and blocks. A portion of these grants will be performance-linked.
• State-specific grants: The Commission recommended state-specific grants of Rs 49,599 crore. These will be given in the areas of: (i) social needs, (ii) administrative governance and infrastructure, (iii) water and sanitation, (iv) preservation of cultural and historical monuments, (v) high-cost physical infrastructure, and (vi) tourism.
• Grants to local bodies: The total grants to local bodies will be Rs 4.36 lakh crore (a portion of grants to be performance-linked) including:
   Rs 2.4 lakh crore for rural local bodies, (ii) Rs 1.2 lakh crore for urban local bodies, and (iii) Rs 70,051 crore for health grants through local governments.
   The grants to local bodies will be made available to all three tiers of Panchayat- village, block, and district.
   Grants to local bodies (other than health grants) will be distributed among states based on population and area, with 90% and 10% weightage, respectively.
   The Commission has prescribed certain conditions for availing these grants except health grants.
• Disaster risk management: It recommended retaining the existing cost-sharing patterns between the centre and states for disaster management funds. The cost-sharing pattern between centre and states is: (i) 90:10 for north-eastern and Himalayan states, and (ii) 75:25 for all other states.

FISCAL ROADMAP

• For the centre, the commission recommended a fiscal deficit of 4% of GDP by 2025-26. For states, it recommended the fiscal deficit of: (i) 4% in 2021-22, (ii) 3.5% in 2022-23, and (iii) 3% during 2023-26.
• If a state is unable to fully utilise the sanctioned borrowing limit, the unutilised borrowing amount can be availed in subsequent years.
• Following this fiscal deficit path will reduce the total liabilities of the centre and states from 62.9% of GDP in 2020-21 to 56.6% in 2025-26, and the states on aggregate from 33.1% of GDP in 2020-21 to 32.5% by 2025-26 respectively.
• Extra annual borrowing of 0.5% to states which fulfil power sector reforms like reducing operational losses and DBT mode of transfer of subsidy etc.
• It recommended forming a high-powered inter-governmental group to review the Fiscal Responsibility and Budget Management Act and recommend a new FRBM framework for the centre as well as states and oversee its implementation.
• The inverted duty structure between intermediate inputs and final outputs present in GST needs to be resolved. . Rate structure should be rationalised by merging the rates of 12% and 18%. States need to step up field efforts for expanding the GST base and for ensuring compliance.

MANAGEMENT OF PUBLIC FINANCES

• A comprehensive framework for public financial management should be developed. An independent Fiscal Council should be established with powers to access records from the centre as well as states. Governments can adopt accrual-based accounting and they must desist from off-budget financing.

HEALTH

• States should increase spending on health to more than 8% of their budget by 2022. Primary healthcare expenditure should be two-thirds of the total health expenditure by 2022. All India Medical and Health Service should be established.

FUNDING OF DEFENCE AND INTERNAL SECURITY:

• A dedicated non-lapsable fund called the Modernisation Fund for Defence and Internal Security (MFDIS) will be constituted. It will have a contribution from the consolidated fund of India and disinvestment proceeds from defence undertakings etc.

CENTRALLY-SPONSORED SCHEMES (CSS)

• Develop mechanisms to phase out CSS that has outlived its utility or has insignificant outlays. Third-party audit of CSS should be done in a time-bound manner.

ANALYSIS OF THE RECOMMENDATIONS

CONTINUITY IN FISCAL FEDERALISM

• The commission has continued the enhanced devolution of taxes to states as started by the XIVth FC (42%). The 1% reduction is due to J and K becoming a UT which enhanced the fiscal load of the union government.

BALANCING NORTH-SOUTH DIVIDE

• Along with the use of population data of 2011 which catered to the resource needs of northern states, the commission also assuaged the concerns of southern states by incentivising demographic performance.

REVENUE DEFICIT GRANTS TO STATES

• One of the terms of reference of the commission was whether revenue deficit grants be provided to the states. But the commission has not made these grants conditional on any factors. It has also recommended that 70% of these grants are to be disbursed during the current and next financial year owing to the management of the pandemic.

PROVISION OF ADDITIONAL GRANTS

• Sector and state-specific grants in areas like administration, education, water etc can not only improve the resource position of the states but also encourage them to implement vital reforms.

FISCAL CONSOLIDATION

• The commission has advocated an overhauling of the FRBM acts both at the central and state level. The emphasis on a Fiscal Council could bring fiscal accountability to public finances. Also, the extended timelines for meeting Fiscal Deficit and public debt targets can provide fiscal space to the governments in Covid times.

REFORMS IN THE TAX FRONT

• Rationalizations of GST slabs, measures to boost stamp duty, computerization of property registration along the criteria of tax and fiscal efforts can improve tax revenues.

LOCAL BODY FINANCES

• The commission has recommended grants for all the tiers of PRIs and made them conditional (except health) on executing various reforms in their functioning. For instance, the timely constitution of the state finance commission and adopting a streamlined accounting system etc will improve their functioning.

ADDRESSING FISCAL CONCERNS OF SECURITY

• The non-lapsable fund for defence and internal security will address the resource needs of these sectors on a sustainable basis. The commission has allayed the concerns of states as there is no mandatory contribution from the states to this fund.

CRITICISM OF THE RECOMMENDATIONS

DECLINE IN STATES’ KITTY

• Share of 10 states has declined relative to that of the 14th finance commission. The total tax devolution to the states for the period 2021 2022 will be lower than what they got during 2017-2018.

DOMINANCE OF CONDITIONAL GRANTS

• The government has not yet accepted the recommendation pertaining to sector and state-specific grants. Moreover, the FC has increased the share of conditional grants sharply. As a result, 57% of the grants accepted by the govt are conditional relative to 17% by the previous commission

IMPACT ON DEMOCRATIC AND FISCAL DECENTRALISATION.

• 84% of the grants to the local bodies are conditional. These conditions include setting up and implementing the recommendations of SFCs failing which the local bodies will be deprived of the grants. Secondly,60% of the grants are tied to water and sanitation which are the pet schemes of the centre that affects local priorities and needs.

VIOLATION OF CONSTITUTIONAL SPIRIT

• Internal security and defence are the centre’s responsibilities. The setting up of a fund for this purpose means the revenue share of the states will be reduced. The constitution does not envisage a situation where the FC earmark funds for the centre’s obligation.

PARTISAN FEDERALISM

• States’ devolution is linked to its tax performance while the centre’s tendency to forego tax revenues through a sharp reduction in corporate tax and others is left untouched. This shows a bias towards the centre on the part of the commission.

OUTDATED CRITERIA FOR DEVOLUTION

• The criteria used by the commission has been evolved during a production centred tax system. But post GST the system has changed into a consumption centred tax regime. The failure of the commission to look into this aspect has significant implications for fiscal positions of the states.

BORROWING CAPACITY OF STATES

• The states have demanded more borrowing space especially in the context of a depleted fiscal base due to Covid 19. But the commission has recommended only .5% additional borrowing subject to reforms taken by states. This is less than a 1% additional borrowing window provided after the covid crisis.

A COMPARISON BETWEEN 14TH AND 15TH FINANCE COMMISSION

Item – 14th Fc – 15th Fc
Criteria
Devolution – 42% – 41%
Sector Specific Grants – Discontinued – Recommended
Defence Funds – Not Part Of To Rs. – Provided
Share Of Conditional Grants – 17% – 57%
Grants To Local Bodies – Only To Gram Panchayat – All Tiers Of PRIs
Fiscal Council – Recommended – Recommended
FRBM – Amend FRBM, or replace it with Debt Ceiling and Fiscal Responsibility legislation. – A New FRBM Framework Recommended
Fiscal road map for the Union – Fiscal deficit target 3% from 2016-17 through the entire award period. – Fiscal deficit target of 4% in 2025-2026.

CRITERIA – 14th FC 2015-20 – 15th FC 2020-21 – 15th FC 2021-26
Income Distance – 50.0 – 45.0 – 45.0
Area – 15.0 – 15.0 – 15.0
Population (1971) – 17.5 –  –
Population (2011) – 10.0 – 15.0 – 15.0
Demographic Performance – 12.5 – 12.5
Forest Cover – 7.5 – –
Forest and Ecology – 10.0 – 10.0
Tax and fiscal efforts – 2.5 – 2.5
Total – 100 – 100 – 100

FOR A NEW NORMAL IN FISCAL FEDERALISM IN INDIA: FINANCE COMMISSION AND BEYOND

COLLABORATIVE FEDERALISM

• The Finance commission’s terms of reference should be finalised after effective consultation with the states so that the commission is seen to be “Union Finance Commission” rather than “Central Finance Commission”.

MONITORING THE IMPLEMENTATION OF THE AWARD

• States often complain that timely release of funds as per the recommendations of the commission are not followed. Thus a mechanism, like a midterm review by an independent body must be put in place to ensure that the accepted recommendations are adhered to by the centre in letter and spirit.

FAIR VERTICAL DEVOLUTION

• The union’s decision to cut the corporate taxes in 19-20 led to a reduction of around 150000 crores of tax revenue. This has resulted in the states losing 65000 crores as their share of devolution. While the centre has options to generate revenues from many other sources, states do not have such luxury. Thus, due to the union’s tax policies states fair share should not suffer.

BALANCING THE USE OF CESSES AND SURCHARGES

• The share of cesses and surcharges as part of the Gross tax revenue of the Union has reached about 20% by 2021. The revenue realized from them does not form a part of a divisible pool thereby need not be shared with states. The progressive increase in their share and the reduction in the share of taxes in the divisible pool result in subversion of the Finance commission’s recommendations.

RESOURCE SHARING WITH STATES

• The centre can share a portion of proceeds from disinvestment, spectrum sales etc with states in the spirit of cooperative federalism. This is also suggested by MM Puncchi Commission on centre-state relations in 2011.

STATES’ ROLE IN RESOURCE AUGMENTATION

• The constitutional mandate of “Equalisation levy (revenue deficit) to the states in a way made the states complacent in fiscal management. The states must take effective measures to reduce wasteful expenditure and improve their public financial management.

FEDERALISM WITHIN STATES

• The states must treat their Local Bodies in a similar way they are treated by the centre. It means the federal division of financial resources must be extended to local governments. For this, state finance commissions must be set up and their recommendations need to be accepted in a time-bound manner.

THE CONCLUSION: The finance commission is the most significant instrument in transforming political federalism into fiscal federalism. The resource requirements of the Union has risen in the context of its enhanced responsibilities and a depleting treasury in the midst of a pandemic while the mismatch between states’ demands and revenue has worsened. In such a challenging scenario, the commission has done a commendable job in addressing most of the concerns of the constituent parts of Indian polity although it has missed an opportunity in revamping the devolution ecosystem in the backdrop of a GST regime.

[WpProQuiz 379]

THE CONTEXT: The impact of COVID-19 on the economy is devastating and the government is forced to opt to borrow for spending more in order to support vulnerable households and engineer economic recovery. In this article, we’ll discuss Former RBI Governor D. Subbarao’s opinion on whether Fiscal Council is needed in India or not.

CURRENT SCENARIO:

• COVID 19 pandemic has resulted in weakening of fiscal situation of centre and states. Tax revenues have reduced due to subdued economic activities. Whereas, expenditure has risen due to spending on healthcare, social security and economic revival, to tackle the fallout of the pandemic.
• As a result, the fiscal deficit of the centre is estimated to double from budgeted 3.5% of GDP to around 7% as per the IMF. This steep rise in fiscal deficit will impact medium term growth prospects due to interest burden.
• In addition, ratings agencies consider fiscal deficit as a parameter in ratings which impact capital flows into the country. These concerns impose restrictions on expansionary fiscal policy strategy to tackle pandemic.
• In such a situation, many economists have pointed out that fiscal deficit limits should not constrain spending to stimulate the economy. They suggest expansionary fiscal policy during pandemic combined with fiscal consolidation plan post pandemic will help retain market confidence. Yet such a strategy may still lead to ratings downgrade and resultant capital outflows.
• To increase the confidence in fiscal consolidation, a fiscal council which enforces fiscal discipline is suggested. This can signal intent to maintain discipline in medium to long term which can reassure markets and credit agencies.

WHAT IS A FISCAL COUNCIL?

Fiscal councils are independent public institutions aimed at strengthening commitments to sustainable public finances through various functions, including public assessments of fiscal plans and performance, and the evaluation or provision of macroeconomic and budgetary forecasts.

Recommendations for Fiscal council in India:

• 13th and 14th Finance commission advocated the establishment of independent fiscal agencies to review the government’s adherence to fiscal rules and to provide independent assessments of budget proposals.
• In 2017, the N.K. Singh committee on the review of fiscal rules set up by the finance ministry suggested the creation of an independent fiscal council that would provide forecasts and advise the government on whether conditions exist for deviation from the mandated fiscal rules.
• In 2018, the D.K. Srivastava committee on fiscal statistics established by the National Statistical Commission (NSC) also suggested the establishment of a fiscal council that could co-ordinate with all levels of government to provide harmonized fiscal statistics across governmental levels and provide an annual assessment of overall public sector borrowing requirements.

Current global scenario:

• According to the International Monetary Fund (IMF), about 50 countries around the world have established fiscal councils with varying degrees of success.
• Fiscal Council in these countries is a permanent agency with a mandate to independently assess the government’s fiscal plans.
• It also gives projections against parameters of macroeconomic sustainability and put out its findings in the public domain.

India’s need for a fiscal council:

• There is a need for coordination between the finance commission as well as the GST Council.
• There is a lack of demand for accountability, and instruments such as a fiscal council may help address this issue.
• It needs an alternative institutional mechanism like the Fiscal Council to enforce fiscal rules and keep a check on Centre’s fiscal consolidation and check over borrowings of the centre.
• The economic slowdown due to the COVID-19 has made it the dire need of the hour to have a fiscal council for a healthy, future foreseeing economic revival.
• A fiscal council will give an independent and expert assessment of the government’s fiscal stance, and thereby aid an informed debate in Parliament.
• To fix these problems of overestimates and underestimates in budgets is to institute an independent and statutory watchdog to oversee the state of public finances and to come up with its own assessments, if not its own projections, of government revenues and expenditures. (Explained below)
• An International Monetary Fund (IMF) working paper published in 2018 showed that the presence of an independent fiscal council tends to boost accuracy of fiscal projections even as it helps countries stick to fiscal rules better.

Issue of overestimates and underestimates in budgets

• One standout feature in much of the discussion around the Union budget every year—both before and after the budget—has been the concern with the credibility of the budget numbers.
• Historically, interim budgets in India have consistently overestimated revenue growth and underestimated expenditure growth.
• An analysis of the projected, revised, and actual budget figures since 1991 by EPW Research Foundation showed that deviations from budget estimates tend to be extraordinarily high for budget estimates presented in interim budgets .
• Usually, these estimates undergo sharp revisions in the next budget (when revised estimates are presented) and the deviation from budget estimates persists in the actual (and final) figures.
• While interim budgets are a special case of budgetary mismanagement, the finance ministry’s overall record in forecasting projections has been consistently poor under successive finance ministers.
• The over-ambitious revenue targets combined with the lack of transparency in tax administration lead overzealous taxmen to exceed their brief in a quest to fulfil unrealistic targets.
• Unsurprisingly, a 2017 CAG report found that the tax department had resorted to ‘irregular’ and ‘unwarranted’ methods to meet targets.

Council’s mandate:
As per that, the fiscal council’s mandate will include, but not be restricted to,

• making multi-year fiscal projections
• Preparing fiscal sustainability analysis.
• Providing an independent assessment of the Central government’s fiscal performance and compliance with fiscal rules.
• Recommending suitable changes to fiscal strategy to ensure consistency of the annual financial statement and taking steps to improve the quality of fiscal data.
• Producing an annual fiscal strategy report which will be released publicly.

Composition and How should they function? (Recommendations by 14th FC)

The 14th Finance Commission recommended that an independent Fiscal Council should be established through an amendment to the FRBM Act, by inserting a new Section mandating the establishment of an independent Fiscal Council to undertake ex ante assessment of budget proposals and to ensure their consistency with fiscal policy and Rules.
1. The council is supposed to be appointed by, and report to, Parliament and should have its own budget.
2. The functions of the council include ex ante evaluation of the fiscal implications of the budget proposals which includes evaluation of how real the forecasts are and their consistency with the fiscal rules and estimating the cost of various proposals made in the budget.
3. The ex post evaluation and monitoring of the budget was left to the CAG.

Arguments in favour:

• An independent fiscal council can bring about much needed transparency and accountability in fiscal processes across the federal polity.
• In its role as a watchdog, it will prevent the government from gaming the fiscal rules through creative accounting.
• The committee should have the limited mandate of scrutinising the budget after it is presented to Parliament for its fiscal stance and the integrity of the numbers and give out a public report.
• The committee will be wound up after submitting its report leaving no scope for any mission creep.
• India needs better macroeconomic management and it cannot be left entirely to monetary policy, as regular monetary policy statements themselves testify, with their articulation of how contingent their decisions are on what the government does.
• A fiscal council could do the same for fiscal policy, what MPC doing it for Monetary Policy with regular meetings that produce assessments.
• Further, the working of a fiscal council would help harmonise fiscal policy with monetary policy.
• International experience suggests that a fiscal council improves the quality of debate on public finance, and that, in turn, helps build public opinion favourable to fiscal discipline.
• Although most fiscal councils don’t have the powers to stall the budgetary process, but they are able to discipline lawmakers through ‘comply or explain’ obligations—which entail governments to at least explain why they diverge from the fiscal council’s views.
• Also, it is supposed to report to the parliament regarding the practicability of government forecasts in the budget. This will make executive more responsible in budget preparation.
• Fiscal Council would also boost confidence of global credit rating agencies about government’s fiscal commitment.

CHALLENGES TO FISCAL COUNCIL OR ARGUMENTS AGAINST

Lack of Political will leading to Chronic fiscal irresponsibility

• Back in 2003 when FRBM was enshrined into law, it was thought of as the magic cure for fiscal ills.
• The FRBM enjoins the government to conform to pre-set fiscal targets, and in the event of failure to do so, to explain the reasons for deviation
• The government is also required to submit to Parliament a ‘Fiscal Policy Strategy Statement’ (FPSS) to demonstrate the credibility of its fiscal stance
• However, there is lack of in-depth discussion in Parliament on fiscal stance and the submission of the FPSS often passes off without even much notice.

Its working may create confusion

• Fiscal council will give macroeconomic forecasts which the Finance Ministry is expected to use for the budget, and if the Ministry decides to differ from those estimates, it is required to explain why it has differed.
• Besides, forcing the Finance Ministry to use someone else’s estimates will dilute its accountability.
• If the estimates go wrong, Finance Ministry will simply shift the blame to the fiscal council.

Duplication of Work

• As of now, both the Central Statistics Office (CSO) and RBI give forecasts of growth and other macroeconomic variables, questions will be raised about need for Fiscal Council’s projections
• Another argument made in support of a fiscal council is that it will act as watchdog & prevent the government from gaming the fiscal rules through creative accounting.
• However, there is already an institutional mechanism in form of CAG to do the job of auditing & fiscal watchdog of government spending.

WAY FORWARD: Starting with small steps

• A week before the scheduled budget presentation, let the CAG, a constitutional authority, appoint a three-member committee for a five-week duration with a limited mandate of scrutinising the budget after it is presented to Parliament
• The committee will scrutinise government’s fiscal stance and the integrity of the numbers, and give out a public report
• The CAG’s office will provide the secretarial and logistic support to the committee from within its resources.
• The Finance Ministry, the RBI, the CSO and the Niti Aayog will each depute an officer to serve in the secretariat.
• The committee will be wound up after submitting its report

CONCLUSION: Given the growing demand for accurate and transparent fiscal statistics, the incoming government would do well to establish such a council, so that budget numbers meet with less scepticism than they do today.

1. Bhagwad Gita offers a roadmap for success READ MORE
2. The pursuit of learning READ MORE
3. The elegance of silence READ MORE

1. Mauna Loa & Mount Semeru volcanoes erupted within a week. Will they impact global climate? READ MORE
2. Step to accountability? Revised draft of standards for firms to self-report environmental impact approved READ MORE
3. UN Summit Aims for Global Pact To Protect Nature and Wildlife READ MORE

1. The COVID-19 pandemic, food and socialising READ MORE
2. Counting India’s poor: Numbers suggest the need for a welfare state READ MORE  
3. Why Human Rights Norms Need to Enter Higher Education and Pedagogy READ MORE

1. Faith and freedom: On combating forcible religious conversion READ MORE
2. EWS quota: beyond the smokescreen READ MORE
3. Judiciary vs Executive READ MORE
4. Why are the Supreme Court and Modi government in a war of words over judicial appointments? READ MORE
5. To promote competition, CCI should not appear to punish better use of resources by a dominant enterprise READ MORE

(Newspapers, PIB and other important sources)

Prelim and Main

1. OBC sub-categorisation panel’s report in ‘final stages’ READ MORE
2. Jaishankar-Baerbock talks: India buys one-sixth of Europe’s consumption of Russian oil, says Jaishankar defending India policy READ MORE
3. India November services PMI hits three-month high of 56.4 on strong demand READ MORE
4. The 3 things to watch out for as RBI’s Monetary Policy Committee meets READ MORE
5. In first, Ajit Doval to host NSAs of Central Asian nations; meet to focus on Kabul situation READ MORE
6. Protecting 30% of Earth’s surface for nature means thinking about connections near and far READ MORE
7. UK: Six children die of Strep A, a common bacterial infection READ MORE
8. Number of people forcibly displaced crossed 100 million in 2022: UNDP READ MORE

Main Exam

GS Paper- 1

1. The COVID-19 pandemic, food and socialising READ MORE

GS Paper- 2

POLITY AND GOVERNANCE

1. Faith and freedom: On combating forcible religious conversion READ MORE
2. EWS quota: beyond the smokescreen READ MORE
3. Judiciary vs Executive READ MORE
4. Why are the Supreme Court and Modi government in a war of words over judicial appointments? READ MORE
5. To promote competition, CCI should not appear to punish better use of resources by a dominant enterprise READ MORE

SOCIAL ISSUES

1. Counting India’s poor: Numbers suggest the need for a welfare state READ MORE  
2. Why Human Rights Norms Need to Enter Higher Education and Pedagogy READ MORE

INTERNATIONAL ISSUES

1. India’s G20 Presidency: Championing the Global South READ MORE
2. Atlantic ambitions READ MORE
3. G20 is India’s time under the sun. But only grand imagination, not realism, can transform it READ MORE

GS Paper- 3

ECONOMIC DEVELOPMENT

1. Nothing so great about free trade with Great Britain: India-UK FTA will increase our exports modestly but severely impact digital and climate sectors READ MORE
2. Is the time right for RBI to moderate rate hikes? READ MORE
3. Gas price holds key to slicing fertiliser subsidy READ MORE

ENVIRONMENT AND ECOLOGY

1. Mauna Loa & Mount Semeru volcanoes erupted within a week. Will they impact global climate? READ MORE
2. Step to accountability? Revised draft of standards for firms to self-report environmental impact approved READ MORE
3. UN Summit Aims for Global Pact To Protect Nature and Wildlife READ MORE

INTERNAL SECURITY

1. Securing cyberspace: Safety audits, priority investment need of the hour READ MORE

GS Paper- 4

ETHICS EXAMPLES AND CASE STUDY

1. Bhagwad Gita offers a roadmap for success READ MORE
2. The pursuit of learning READ MORE
3. The elegance of silence READ MORE

Questions for the MAIN exam

1. ‘Society is constantly evolving and therefore, there is a constant need to transform the constitutional idealism into reality by promoting inclusion of pluralism and abandoning the idea of alienation’. In light of the statement, discuss whether same-sex marriage should be included in the special marriage Act?
2. ‘India’s leadership of G20 can catapult the country to prominence but more importantly, give it a chance to work for lasting world peace’. Comment.

QUOTATIONS AND CAPTIONS

• The road to the sacred leads through the secular.
• The Competition Commission of India (CCI) must develop standards, tests and clear criteria to guide its analysis in abuse of dominance cases, as is practiced in many jurisdictions globally.
• Price competition is one of the pillars of a competitive market and an important feature of competition in markets that benefit from network effects.
• Article 14 of the Constitution provides that every person is equal before the law and is entitled to equal protection by law. According to Article 14, everyone has the right to receive equal treatment under the law.
• Freedom of religion is protected only when state keeps away from matters of faith, marriage.
• The impact of the pandemic has been varied, as a study shows by determining the incidence of COVID-19 and the shares of food expenditure and socialising across urban and rural India.
• India now has the material power and political will to lead the Global South. However, a tailored Indian policy is needed to address concerns of different regions and the messy regional politics within the developing world.
• Those who entered politics preaching alternative politics and eradicating corruption had to adopt populist measures, and, as a result, election after election, actual issues are pushed further behind.
• Considering the tightening nationwide hold of cybercrime, much higher budgets need to be allocated to strengthen cyber cells across all districts of the country.
• The India’s leadership of G20 can catapult the country to prominence but more importantly give it a chance to work for lasting world peace
• The areas identified for closer coordination included sustainable development, climate change, maritime governance, and security.

ESSAY TOPIC

• The best social reform in the world is a job.

50-WORD TALK

• The ongoing meeting in Udaipur marks a good start to the 200-meeting agenda set for India’s Presidency of the G20. Policy tracks are clear, diverse, and inclusive. However, while the pomp and splendour can be forgiven since it’s the first meeting, the next 199 should keep substance at the fore.
• The enormous hardships caused to patients by the hacking of the AIIMS hospital-management system is the result of primitive data-security practices and infrastructure. Though computers can be restored, the harm to patient privacy and public confidence can’t. Every citizen of digital India must be served by secure and reliable technology.

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.

[WpProQuiz 378]

“GST has been a milestone in the economic landscape of India. It has decreased the number of taxes, compliance burden and overall tax burden on the common man while significantly increasing transparency, compliance and overall collection.”#4yearsofGST.

                                                                                                                            ———-PM Narendra Modi

THE CONTEXT: On 1st July 2021, India marked the fourth anniversary of the Goods and Services Tax (GST). The date 1st July has been designated by the Central Government as ‘GST Day’, which is celebrated every year to mark the roll-out of the historic tax reform. This article will look into achievements, challenges, and expectations related to the GST regime.

MORE ON THE NEWS:

On May 28th, 2021, at the 43rd meeting of the GST Council, finance ministers of many states raised various concerns like delay in payment of GST compensation to states, unilateral decisions, and the overall distrust between central and state governments.Four years after giving up their freedom to tax goods and services in favor of the GST Council, states are of the view that they have been short-changed and their voices muzzled.

ACHIEVEMENTS OF GST

COOPERATIVE FEDERALISM

• One of the biggest triumphs associated with GST is cooperative federalism, which has demonstrated successful collective decision-making through the GST Council.
• India has served as an example to the world by successfully implementing one of the most complex tax transformation projects for the country.

FUNCTIONING OF GST COUNCIL

• The GST Council made corrections to law, issued clarifications on complex issues, rationalized GST rates, and introduced relaxations for dealing with the Covid-19 pandemic, which establishes that the GST Council structure has been very functional and agile.

WIDENED TAX BASE

• India’s tax base has almost doubled from 66.25 lakhs to 1.28 crores in the last four years.
• GST revenue collection in India has been over the Rs 100,000 crore mark for eight consecutive months.

EASE OF DOING BUSINESS

• India’s ease of doing business ranking has improved significantly in the last four years. Before GST was implemented, India’s Ease of Doing Business ranking was 130 in 2016. In 2020, India was ranked 63rd on the list.

RATE RATIONALISATION

• Over four years GST rates have been reduced on 400 goods & 80 services.
• According to GOI combined Centre & States rates were above 31% on most items in the pre-GST regime.
• An RBI report of 2019 estimated that the effective weighted average GST rate declined from 14.4 percent at the time of the introduction of the GST to 11.6 percent.

LOGISTICAL EFFICIENCY, PRODUCTION COST CUT

• Over 50% of logistics effort and time is saved since GST has ensured the removal of multiple checkpoints and permits at state border checkpoints. As a result, more road hours and faster delivery have been added which has enhanced the business efficiency in the country.
• GST has almost ended the era of the multiplicity of taxes and its cascading effect which has sufficiently reduced production costs, leading to better margins for the industry, which were passed on to the consumers in the form of better products or lower prices.

E-WAY BILL

• The introduction of the E-way bill resulted in the national unification of permit bill systems, allowing logistics to experience fewer interruptions en route making delivery quick and hassle-free.

COMPETITIVENESS AND COMPLIANCE

• GST has improved the competitiveness of domestic industries in the international market by removing hidden and embedded taxes.
• GST helped in achieving better tax compliance by subsuming multiple taxation and reduction in taxation burden in the last four years.

E-INVOICE

• The E-invoicing system helped reduce fake invoicing. The use of technology with online bill generation has resulted in smoother consignment movement and much fewer disputes with officials.
• After the introduction of E-invoice, GST collections have risen steadily since November 2020, surpassing the Rs. 1 lakh crore mark on several occasions.

REDUCED  TRANSACTION COSTS

• After the introduction of GST, there has been a significant reduction in transaction costs. While earlier, all the interstate transactions were loaded with an additional cost of 2% (Central Sales Tax), this has now been reduced to 0%.
• This reduction has been a huge breakthrough in the interstate movement of products, allowing the country to boast of a single national unified market for businesses.

CHALLENGES/PROBLEMS OF GST

CONCERNS  HIGHLIGHTED BY THE 15^TH FINANCE COMMISSION REPORT

• The multiplicity of tax rates
• The shortfall in GST collections vis-à-vis the forecast
• High volatility in GST collections
• Inconsistency in the filing of returns
• Dependence of States on the compensation from Centre

CONCERNS RAISED BY STATE FINANCE MINISTERS

• Delay in payment of GST compensation to states.
• The issue of reduction in GST on Covid vaccines and essentials.
• Unilateral decisions such as the imposition of cesses (whose proceeds go to only the Centre)
• Vertical split on party lines on key issues.
• Veto powers of the centre on GST Council decisions.

COMPENSATION CONUNDRUM

• The biggest reason states agreed to give up their autonomy to tax goods and services was an assurance by the central government that it would compensate them for any revenue loss from subsuming indirect taxes such as sales tax/VAT into GST.
• The GST (Compensation to States) Act, enacted in 2017, guarantees states 14 percent annual growth in GST revenue over base year FY16 for five years between July 2017 and June 2022.
• While this worked well till FY19, problems cropped up in FY20 when the Centre started finding it tough to pay states as economic slowdown affected its revenues. The Covid-19 outbreak aggravated the problem by putting huge pressure on both Centre and states.

TAX UNILATERALISM

• Cess revenue is not shared with states.
• Close to 18 percent of central government revenue is being raised from cess and not distributed (among states). Total control of finances is with the central government.
• It needs to be discussed and reviewed.

EXPERTS CONCERNED OVER GST GROWTH

• Experts believe the government has been unable to widen the tax net, which is why GST collections have not increased beyond a certain limit.
• Some experts suggest that the GST net may not widen further as many small businesses have not enrolled under the tax regime due to complex paperwork.

CONSTANT AMENDMENTS

• Over the last few years, the GST law has seen many amendments. Till date, more than 1,000 notifications/circulars/instructions/orders have been issued by the government machinery.
• All these revisions often confused the taxpayer and as well the tax administrators which created misunderstandings and misconceptions.

TECHNICAL GLITCHES

• Continuous system failures and unexpected glitches faced by the industry have forced Government to extend due dates, waiver of late fees and interest liabilities. Late announcements of waiver in late fee have come out as dissatisfaction amongst the honest taxpayers also.
• Small and medium businesses are still grappling to adapt to the tech-enabled regime. The fundamental principles on which the GST law was built viz. seamless flow of input credits and ease of compliance has been impaired by IT glitches.

IMPLEMENTATION DELAYS

• The late implementation of E-invoicing, QR code and E-way Bill blemished the original idea behind this which was contemplated as a revolutionary change in the tax system to curb tax evasion.

NON-IMPLEMENTATION OF GSTR-2

• GSTR which was the only control for systemic reconciliation was never implemented. To prevent any bogus claim of ITC, reconciliations are required to be controlled by the system. However, since it was never implemented now taxpayers are asked to provide self-attested offline reconciliations maintained in annual return GSTR 9 or GSTR 9C.

REFUND DELAY ISSUES

• Automatic processing of export refunds has always been an area of major concern under GST. Since there are manual approvals involved in the existing process, there are chances of a discrepancy, human error, and delay in refund processing which goes against the expectations of the exporters from the system.

LOW REVENUE

• Widespread non-compliance and non-filing of GST returns were considerable in the first three years of GST which led to low revenue collections.

WAY FORWARD

• The GST structure needs an overhaul for the revenue-enhancing promise to be met. The union can at minimum do three things.

1. Reaffirm its commitment to cooperative, consultative principles of federalism by reforming the functioning of the GST Council.
2. Offer the FY21 compensation cess as a transfer, not a back-to-back loan with the caveat that the compensation rate will be re-negotiated.
3. Be transparent about the current macro-economic scenario through an honest appraisal that revisits revenue projections.

• Pandemic has had severe impacts on GST also and led to economic contraction. Certain structural level changes to the law may help boost the business and economy.
• The policymakers need to contemplate the inclusion of petroleum and related products within the GST
• The GST Appellate Tribunal should be constituted as all taxpayers do not have the finances or means to approach the High Court for every practical difficulty faced.
• Streamlining of anti-profiteering measures and simplification of compliance procedures also needs to be revisited to ensure that the cost efficiency and reduction in prices envisaged under GST law finally reach the common man.

THE CONCLUSION: Although the shortcomings must be swiftly resolved, it needs to be understood that it takes time to reap the benefits of such a mammoth structural change. The law is still a ‘work-in-progress’ and the process of evolution. The union government must act now to deliver on its promise of a ‘Good & Simple Tax’ in the times to come.

THE CONTEXT: In this article, we’ll discuss the issue of GST compensation cess and why after three years of the transition to the goods and services tax (GST), there is a strong case to strengthen the GST Council for the constitutional body to take informed decisions to reform the tax structure, rates and broaden the tax base.

THE BODY: A policy paper by the Pune International Centre, The GST Compensation Cess: Problems & Solution, by V Bhaskar and Vijay Kelkar recommends the creation of an independent GST Council Secretariat to offer professional advice on tax matters.

It also essentially calls upon the Centre to borrow more to deliver on its promise to compensate the states for five years from 2017-18 for any shortfall in GST collections in relation to the past trend, notwithstanding the fiscal pressures faced by it due to the corona pandemic. Both suggestions make eminent sense.

What is a GST Council?

• Goods & Services Tax Council is a constitutional body for making recommendations to the Union and State Government on issues related to Goods and Service Tax.
• Article 279A says that President shall by order constitute a Council to be called the Goods and Services Tax Council.

Composition of GST Council:

GST Council which will be a joint forum of the Centre and the States, shall consist of the following members: –

• The Union Finance Minister – Chairperson;
• The Union Minister of State in charge of Revenue or Finance – Member;
• The minister in charge of finance or taxation or any other minister nominated by each state government – members.
• One-half of the total number of members of GSTC form quorum in meetings of GSTC.
• Decision in GSTC are taken by a majority of not less than three-fourth of weighted votes cast.
• The council is devised in such a way that the centre will have 1/3^rd voting power and the states have 2/3^rd.

Vision:

To establish highest standards of co-operative federalism in the functioning of GST Council, which is the first constitutional federal body vested with powers to take all major decision relating to GST.

Mission:

Evolving by a process of wider consultation, a Goods and Services Tax structure, which is information technology driven and user friendly.

Mandate of GST Council:

• The Goods and Services Tax Council shall make recommendations to the Union and the States on.
• The taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax.
• The goods and services that may be subjected to, or exempted from the goods and services tax.
• Model Goods and Services Tax Laws, principles of levy, apportionment of Goods and Services Tax levied on supplies in the course of inter-State trade or commerce under article 269A and the principles that govern the place of supply.
• The threshold limit of turnover below which goods and services may be exempted from goods and services tax.
• The rates including floor rates with bands of goods and services tax.
• Any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster.
• Special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and any other matter relating to the goods and services tax, as the Council may decide.
• The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel.

What is the purpose of GST act?

• As per the GST Act, states are guaranteed compensation for any revenue shortfall below 14% growth for the first 5 years ending 2022.
• The compensation is calculated keeping the base year as 2015-16.
• GST compensation is paid every 2 months by the Centre to states.

Compensation cess fund

• A compensation cess fund was created from which States would be paid for any shortfall.
• An additional cess would be imposed on certain items and this cess would be used to pay compensation.
• The Act states that the cess collected and “such other amounts as may be recommended by the [GST] Council” would be credited to the fund.
• In the first two years of this scheme, the cess collected exceeded the shortfall of States.
• In the third year, 2019-20, the fund fell significantly short of the requirement.

The problem and its source

•  A key source of the problem is that the 2017 Act guaranteed a tax growth rate of 14%, which is unachievable this year.
• The 14% target was too ambitious to start with.
• Given the government’s inflation target at 4%, this implied a real GDP growth plus tax buoyancy of 9%.
• But the Central government is constitutionally bound to compensate States for loss of revenue for five years.

What are the issues related to compensation?

• The impact of the pandemic on the revenue receipts of the Central and state governments has been devastating.
• The total average collection of GST revenue in April and May is only Rs 94,323 crore, just 46 per cent of the previous year’s average bimonthly receipts.
• The states have been guaranteed 14 per cent annual growth in GST revenue over the base year of 2015-16. Any shortfall has to be compensated from the receipts of Compensation Cess imposed on selected commodities that attract a GST of 28 per cent .
• The Compensation Cess Fund had already been under severe stress as the GST revenues have been far from buoyant.
• The increase in revenue in 2019-20 has been a meagre 3.8 per cent compared to the previous year. The result is that even after paying Rs 1.2 lakh crore as compensation, the payments were three months in arrears at the end of the financial year.
• And now with the pandemic, the fund requirement for compensation has dramatically increased. The payments are in arrears by more than Rs 1 lakh crore already.
• If fund requirements have been ballooning on the one hand, fund availability has been shrinking on the other. This raises a fundamental question: How can the gap between fund availability and fund requirement be bridged?

Possible solutions

Revise the compensation formula

• It was after much deliberation that the 14 per cent growth was guaranteed to the states. But the optimistic mood regarding the buoyancy of GST prevailing then has not been borne out by the actual outcome even after three years.
• The implementation has been lacklustre, with the IT backbone yet to be completed and tax administration handicapped by too many impediments.
• Further, the pre-election sharp reductions in tax rates without serious examination of the revenue implications have also contributed to the fall in revenue. The current rates are not revenue neutral.
• It is in this context that the 15th Finance Commission Chairman formally proposed in the GST Council that it should revisit the formula.
• The Council refused to even consider the proposal and was unanimous in rejecting it. The response would not be different even now.

Increase the Compensation Cess rate or bring additional commodities in its net

• However, there is very little chance for any proposal to increase tax rates to be approved during the pandemic slump period.
• Even the proposal for resolving the inverted duty structure of cloth, footwear and fertiliser, which is creating serious problems for the manufacturing sector, was rejected by the Council because it involved an upward shift of the final products to a higher tax bracket.

GST Council or the Compensation Fund must be empowered to borrow funds from the market

• The period of the Compensation Cess can be extended for a year or an additional period long enough for repayment of the funds borrowed.
• The advantage of the this option is that it would not affect the Centre’s finances.
• Since the loans are not taken by the Centre, it has no fiscal deficit implications. And the liabilities would be liquidated automatically from the collection of the Cess during the extended period.

Constitution could be amended

• The Constitution could be amended to reduce the period of guarantee to three years thus ending June 2020.
• But most States would be reluctant to agree to this proposal.
• It could also be seen as going back on the promise made to States.

Centre could fund shortfalls

• The Central government could fund this shortfall from its own revenue.
• The Centre’s finances are stretched due to shortfall in its own tax collection combined with extra expenditure to manage the health and economic crisis.

Agree that 14% growth target is unrealistic

• The Centre could convince States that the 14% growth target was always unrealistic.
• If the Centre can negotiate with States through the GST Council to reset the assured tax level, it could then bring in a Bill in Parliament to amend the 2017 Act.

WAY FORWARD: To strengthen the GST Council?

• The council needs neutral, unbiased advice from top-notch professionals in the field.
• The finance ministry’s budget-making wing on indirect taxes, called the Tax Research Unit, should be brought under the GST Council.
• Rightly, roping in competent tax-research officers from states, and having a taxation expert of national stature as the Secretary General (currently steered by the Revenue Secretary) will help strengthen the council’s secretariat.
• GST subsumed 17 central and state taxes and 23 cesses. It creates multiple audit trails on the income and production chain — throwing up voluminous data. Big-data analytics must be deployed to follow these trails to tax potential.
• The transaction chain of key raw materials such as metals and petrochemicals must be followed up to unearth the value added escaping tax at the moment.
• The council should move towards the overall direction to lower and converge rates and prune exemptions that break the GST chain and clutter the tax system. This will minimise classification disputes and make compliance easy.
• Rate changes should be based on rigorous data analysis. The council must not delay the inclusion of petroleum products, real estate and electricity duty in the GST framework, to widen the tax base, and probably double its current size.

CONCLUSION: The Constitution makes it obligatory for the Centre to make up for shortfall by the States. The cess collected will not be sufficient for this purpose. The GST Council, which is a constitutional body with representation of the Centre and all the States, should find a practical solution to this. Simultaneously, there is a need to strengthen the GST Council.

INDIAN POLITY AND CONSTITUTION

1. THIS PHRASE MEANS: ‘ARC OF THE MORAL UNIVERSE IS LONG, BUT IT BENDS TOWARD JUSTICE’

THE CONTEXT: On 26th November 2022- Constitution Day celebrations at the Supreme Court), Chief Justice of India DY Chandrachud used the famous phrase about “the arc of the moral universe bending towards justice”.

THE EXPLANATION:

Talking about the accessibility of the justice system, the CJI said, “The Indian judiciary has been adopting several measures of institutional reform with the single objective — and I borrow the celebrated phrase of American civil rights activist Dr Martin Luther King Junior to describe it — to bend the arc of the moral universe towards justice.”

What is the full quote?

• Martin Luther King had used the phrase several times in different contexts. One of its recorded uses, according to the US’s National Public Radio (NPR), is during the march from Selma in 1965, which had been taken out over the issue of African-American people’s right to vote. Asked how long it would take to see social justice, Dr King said, “How long? Not long. Because the arc of the moral universe is long, but it bends toward justice. How long? Not long.”
• The phrase means that though justice may take long, the universe moves towards it.
• However, many have pointed out that the version popular today — “the arc of the moral universe is long, but it bends toward justice” — makes it sound like justice is a foregone conclusion, and will eventually come about on its own because that is how the arc of the universe bends. What is often missed is that the arc won’t automatically bend towards justice, but has to be made to bend in that direction through human efforts.

CJI Chandrachud, in his speech, made the need for effort clear when he said the judiciary is “adopting several measures” to attain the objective of bending “the arc of the moral universe towards justice.”

Another criticism of the phrase — and one acutely relevant to the Indian context — is that it seems to assume everyone is agreed upon what is “justice”. Often, competing interest groups in a diverse population, like in India, can have very different ideas of what is “justice”, and critics claim that before trotting the phrase around like a happy platitude, a robust debate is needed to arrive at an informed and fair definition of justice.

ENVIRONMENT, ECOLOGY AND CLIMATE CHANGE

2. GREAT BARRIER REEF IS IN DANGER: UN

THE CONTEXT: Recently, a joint report by the International Union for Conservation of Nature (IUCN) and UNESCO’s World Heritage Centre (WHC) expressed concern about the status of the Great Barrier Reef (GBR) in Australia, recommending that it “be inscribed on the List of World Heritage in Danger.”

THE EXPLANATION:

• According to report, “major threats that could have deleterious effects on its inherent characteristics,” the panel of two scientists made 10 priority and 12 additional recommendations to preserve the “Outstanding Universal Value” (OUV) of the coral reef system.
• Despite Australia’s sustained and scientific efforts to manage the property, currently, the GBR is adversely and significantly impacted by climate change factors, affecting its resilience to sustain and regenerate itself. Frequent bleaching events have made many reefs sterile. Degraded water quality poses a particular threat.
• The report says that currently, the management of the property lacks clear climate change goals.
• Further, the implementation of existing plans to conserve the GBR has been falling short, specifically in relation to the management of water quality and fishing activities, it says. Inshore land-based activities, often outside the protected area, are particularly responsible for the degraded water quality in GBR. Pollutants from agricultural and construction activities have been damaging and other proposed developments around the Queensland coast are matters of concern.
• The foremost is adding the GBR to the List of World Heritage in Danger. Among other things, recommendations also include monitoring and evolving farming practices, greater commitments to reduce greenhouse gas emissions, addressing land erosion on the coast, and adopting sustainable fishing practices.

About Great Barrier Reef:

• The Great Barrier Reef is the world’s largest coral reef system composed of over 2,900 individual reefs and 900 islands.
• The reef is located in the Coral Sea (North-East Coast), off the coast of Queensland, Australia.
• The Great Barrier Reef can be seen from outer space and is the world’s biggest single structure made by living organisms.
• The reef structure is composed of and built by billions of tiny organisms, known as coral polyps. It was selected as a World Heritage Site in 1981.

3. KERALA’S MAN-ANIMAL CONFLICT MITIGATION TEAM SELECTED FOR WILDLIFE TRUST OF INDIA AWARD

THE CONTEXT: An eight-member team from Chinnakanal that comes under the Munnar forest division, which has been instrumental in bringing down the incidents of man-animal conflict in the region, has won recognition for its efforts.

THE EXPLANATION:

Why it is significant?

According to the Ministry of Environment, forest, and climate change between 2018-19 and 2020-21, 222 elephants were killed by electrocution across the country, 45 by trains, 29 by poachers and 11 by poisoning. Among tigers, too, 29 were killed by poaching between 2019 and 2021, while 197 tiger deaths are under scrutiny.

THE EXPLANATION:

• Among human casualties of conflict with animals, elephants killed 1,579 humans in three years — 585 in 2019-20, 461 in 2020-21, and 533 in 2021-22. Odisha accounted for the highest number of these deaths at 322,followed by Jharkhand at 291 (including 133 in 2021-22 alone), West Bengal at 240, Assam at 229, Chhattisgarh at 183, and Tamil Nadu at 152.
• Tigers killed 125 humans in reserves between 2019 and 2021. Maharashtra accounted for nearly half these deaths, at 61. For tiger deaths caused by human activity.
• Among the 222 elephant deaths caused by electrocution, Odisha accounted for 41, Tamil Nadu for 34 and Assam for 33. Odisha (12 out of 45) also had the highest number of elephant deaths caused by trains, followed by West Bengal (11) and Assam (9). Poaching deaths were highest in Meghalaya (12 out of 29) while poisoning deaths were highest in Assam (9 out of 11, including 8 in 2018-19 alone).
• As a result of concerted efforts made for protection and conservation of wildlife, the population of several wildlife species like Tigers, Elephants, Asiatic Lion, Rhino etc. in the country has increased”.
• “Assessments of human-wildlife conflicts indicate that the main causes of human wildlife conflict include habitat loss, growth of population of wild animals, changing cropping patterns that attract wild animals to farmlands, movement of wild animals from forests area to human dominated landscapes for food and fodder, movement of human beings to forests for illegal collection of forest produce, habitat degradation due to growth of invasive alien species, etc.

VALUE ADDITION:

About Project REHAB:

• Project RE-HAB stands for Reducing Elephant-Human Attacks using Bees. It is an initiative of the Khadi and Village Industries Commission (KVIC).
• The project has been launched as a sub-mission of KVIC’s National Honey Mission.
• It intends to create “bee fences” to thwart elephant attacks in human habitations using honeybees.
• Bee boxes have been placed on the ground as well as hung from the trees.
• The boxes are connected with a string so that when elephants attempt to pass through, a tug causes the bees to swarm the elephant herds and dissuade them from progressing further.
• This idea stems from the elephants’ proven fear of the bees.
• The project aims to mitigate Human– elephant conflicts in the country.
• It was launched as a pilot project launched on the periphery of Nagarhole National Park in Karnataka.

National Honey Mission:

• Launched by Khadi and Village Industries Commission(KVIC)
• To provide sustainable employment and income to rural and urban unemployed youth.
• To conserve the honeybee habitat and tapping untapped natural resources.
• Promote beekeeping for increasing crop productivity and pollination services avenue for beekeepers and farmers.

4. PROJECT GIB

THE CONTEXT: Hearing a plea to protect the endangered bird Great Indian Bustard (GIB), the Supreme Court asked if a ‘Project GIB’, on the lines of ‘Project Tiger’, could be launched.

THE EXPLANATION:

Why is the Great Indian Bustard endangered?

• Among the biggest threats to the GIBs are overhead power transmission lines. Due to their poor frontal vision, the birds can’t spot the power lines from a distance, and are too heavy to change course when close. Thus, they collide with the cables and die.
• According to the Wildlife Institute of India (WII), in Rajasthan, 18 GIBs die every year after colliding with overhead power lines.

ABOUT GREAT INDIAN BUSTARD:

• GIBs are the largest among the four bustard species found in India – the other three being MacQueen’s bustard, lesser florican and the Bengal florican. GIBs prefer grasslands as their habitats. It is important to note that Great Indian Bustards are State bird of Rajasthan.
• Being terrestrial birds, they spend most of their time on the ground with occasional flights to go from one part of their habitat to the other.
• They feed on insects, lizards, grass seeds etc.
• GIBs are considered the flagship bird species of grassland and hence barometers of the health of grassland ecosystems.
• In February 2020, the Central government told at the 13th Conference of Parties to the United Nations Convention on Migratory Species of Wild Animals (CMS) that the GIB population in India had fallen to just 150.
• Maximum numbers of GIBs are found in Jaisalmer and the Indian Army controlled field firing range near Pokhran, Rajasthan.
• Other areas where they are found in less than 10 in number are Kutch district in Gujarat, Nagpur and Solapur districts in Maharashtra, Bellary and Koppal districts in Karnataka and Kurnool district and Amravati in Andhra Pradesh.
• Pakistan is also believed to host a few GIBs.
• The GIB lays one egg every 1-2 years, and the success rate of these eggs is 40-50 % due to predators like foxes and dogs.

Protected areas:

• Rajasthan: Desert National Park – Jaisalmer and Balmer
• Gujarat: Naliya Sanctuary in Kutch
• Madhya Pradesh: Karera Wildlife Sanctuary (The species disappeared from Madhya Pradesh in early 90s’)
• Maharashtra: Nannaj Grasslands, Solapur
• Andhra Pradesh: Rollapadu Wildlife Sanctuary

Recent Development:

India’s proposal to include Great Indian Bustard, Asian Elephant and Bengal Florican in Appendix I of UN Convention on migratory species was unanimously accepted during the 13th Conference of the Parties to the Convention on Migratory Species (CMS). This conference was held at Gandhinagar in Feb 2020. The mascot for CMS COP13 was “Gibi – The Great Indian Bustard”.

ECONOMIC DEVELOPMENTS

5. REVISION SERIES: CENTRAL BANK DIGITAL CURRENCY (CBDC)

THE CONTEXT: The Reserve Bank of India (RBI) recently began the much-awaited trial run of India’s first retail central bank digital currency (CBDC) or ‘e-rupee’ in four cities—Mumbai, Delhi, Bengaluru, and Bhubaneswar—through eight participating banks.

THE EXPLANATION:

• Nine banks — State Bank of India (SBI), Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC — have been identified for participation in the pilot.

What is Digital Rupee?

• A Central Bank Digital Currency (CBDC) or Digital Rupee is a digital form of currency notes issued by a central bank. Digital currency or rupee is an electronic form of money, that can be used in contactless transactions.
• Presenting Union Budget 2022, Finance Minister announced that the Reserve Bank of India (RBI) would be rolling out its digital currency soon.

CBDC can be classified into two types

1. Retail (CBDC-R): Retail CBDC would be potentially available for use by all
2. Wholesale (CBDC-W) is designed for restricted access to select financial institutions.

What will the retail digital rupee be?

• In effect, the retail e-rupee will be an electronic version of cash, and will be primarily meant for retail transactions. It will be potentially available for use by all — the private sector, non-financial consumers and businesses — and will be able to provide access to safe money for payment and settlement, as it will be the direct liability of the central bank.
• According to RBI, “CBDC is the legal tender issued by a central bank in a digital form. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency. Only its form is different.”

And how will the retail digital rupee work?

• The e-rupee would be in the form of a digital token that represents legal tender. It will be issued in the same denominations as paper currency and coins, and will be distributed through intermediaries, i.e., banks.
• Users will be able to transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones and devices, according to the RBI.
• Transactions can be both person to person (P2P) and person to merchant (P2M). Payments to merchants can be made using QR codes displayed at merchant locations. “The e₹-R would offer features of physical cash like trust, safety and settlement finality. As in the case of cash, it will not earn any interest and can be converted to other forms of money, like deposits with banks.”

THE PRELIMS PERSPECTIVE

6. BAGUETTE MAKES IT TO UNESCO INTANGIBLE CULTURAL HERITAGE LIST

THE CONTEXT: Recently, Baguette — the staple French bread — was inscribed into the UN’s list of intangible cultural heritage (ICH).

THE EXPLANATION:

UNESCO, the international body which aims at promoting peace and cooperation among nations through education, arts, sciences and culture, recognized the “Artisanal know-how and culture of baguette bread” as a world cultural heritage.

What is a baguette?

• The baguette is a long and thin loaf made of flour, water, salt and yeast, and is consumed as a staple in France. It gained its official name in 1920.
• The history of the bread is uncertain, some also believe that Napoleon Bonaparte, the French military leader, ordered thin sticks of bread for consumption by his soldiers as they could be carried from one place to another more conveniently.

Why did France nominate it for the UN list?

• In March 2021, France nominated the baguette as its candidate for consideration within the UNESCO ICH list. It drew attention to the steady decline in the number of bakeries in the country as around 20,000 of them have closed down since 1970.
• About 10 billion baguettes are consumed every year in France by a population of 67 million, according to the data website Planet scope. One loaf is priced at around 1 Euro. However, people are increasingly becoming inclined towards purchasing products from supermarkets, rather than the traditional way. This method interferes with the quality of the bread, according to an AP report.
• French officials were seen raising the loaf in celebration, as soon as the decision to include it within the UNESCO list was pronounced in Morocco.

What is intangible cultural heritage according to UNESCO?

• UNESCO defines “intangible” as “expressions that have been passed from one generation to another, have evolved in response to their environments and contribute to giving us a sense of identity and continuity…”
• According to an official document by UNESCO, ‘intangible cultural heritage’ includes “oral traditions, performing arts, social practices, rituals, festive events, knowledge and practices concerning nature and the universe or the knowledge and skills to produce traditional crafts.”