TAG: GS 3: ECOLOGY AND ENVIRONMENT

THE CONTEXT: The plight of the caracal is an enigmatic species facing extinction in India and it has garnered attention from conservationists.

EXPLANATION:

• The caracal, a rare and elusive species, plays a crucial ecological role in India’s ecosystems.
• Despite its historical association with royalty and nobility as a coursing animal, the caracal’s population has dwindled, pushing it towards the brink of extinction.
• The four-year-long research conducted involved a comprehensive examination of historical texts, journals, archival records, and interactions with various stakeholders, including historians, forest officers, and local community members.
• By collating scattered information, a concise yet informative narrative that sheds light on the caracal’s historical significance and contemporary conservation challenges has been produced.

Reviving Caracal Habitat

• Reviving grasslands and scrublands, the natural habitats of caracals, emerges as a critical aspect of their conservation.
• Land policies categorizing such habitats as ‘wasteland’ pose a threat to the caracal’s survival, necessitating urgent prioritization and protection of these ecosystems.

Historical Relationship with Humans

• The caracal’s historical relationship with humans, particularly royalty and nobility, as a coursing animal underscores its cultural significance.
• However, the need to balance historical perceptions with contemporary conservation priorities to ensure the species’ long-term survival has been highlighted.

Caracal:

• Caracal is a small wild cat noted for its long-tufted ears and a reddish-tan or sandy-brown coat.
• Caracals are naturally found in India, particularly in Northwestern India. They are also found in Africa, the Middle East, Central Asia and arid areas of Pakistan.
• Habitat: the Aravalli hill range; semi-deserts, steppes, savannah, scrubland, dry forest and moist woodland or evergreen forest; prefers open terrain and drier, scrubby, arid habitats
• As per estimates in a 2015 study, some 28 caracal individuals are found in the Ranthambhore Tiger Reserve in Rajasthan and scientists estimate around 20 in Kutch in Gujarat. These are reported to be the only two populations of the cat that remain in India.
• Historically, the caracal was found all across Central India and the Indo-Gangetic plains. But there has been no sighting of the animal in these regions for the last 40 years.
• In 2021, the National Board for Wildlife (NBWL) and the Ministry of Environment, Forest and Climate Change (MOEFCC) announced a Species Recovery Plan for the conservation and population revival of 22 species in India, including the caracal.
• The caracal is listed as ‘Least Concern’ in the IUCN Red List in India and falls in the Schedule-I of the Indian Wildlife (Protection) Act, 1972.

SOURCE: https://www.downtoearth.org.in/interviews/wildlife-biodiversity/protect-india-s-scrublands-to-save-the-caracal-dharmendra-khandal-ishan-dhar-95287

TAG: GS 3: ECONOMY

THE CONTEXT: The recent report India Employment Report 2024 released by the International Labour Organization (ILO) and the Institute for Human Development (IHD) sheds light on the concerning trend of declining real earnings among regular salaried and self-employed individuals in India.

EXPLANATION:

• This analysis delves into the implications of this trend and explores the underlying factors contributing to it.

Highlights of the report:

• The report indicates a decade-long decline in the real earnings of both regular salaried workers and self-employed individuals in India.
• While the real monthly earnings of casual workers have shown an increase, the situation remains grim for salaried and self-employed segments.
• For regular salaried workers, the average monthly real earnings have experienced an annual decline of 1.2% from 2012 to 2019 and 0.7% as of 2022.
• Similarly, self-employed individuals have witnessed a decline of 0.8% annually from 2019 to 2022.
• The declining real earnings highlight poor quality of employment generation in India between 2000 and 2022.
• This trend signifies broader challenges within the labor market and underscores the need for comprehensive policy interventions.
• The report also assesses whether employed individuals receive the minimum wage as prescribed by the Ministry of Labour and Employment.
• Shockingly, a significant percentage of both regular and casual workers across sectors did not receive the average daily minimum wage prescribed for unskilled workers.
• In the agriculture sector, 40.8% of regular workers and 51.9% of casual workers fell short of receiving the prescribed minimum wage.
• In the construction sector, 39.3% of regular workers and a staggering 69.5% of casual workers did not receive the minimum wage.
• Several factors could contribute to the decline in real earnings, including stagnant wage growth, inflationary pressures, structural changes in the economy, and disparities in skill development and education.
• Addressing the issue of declining real earnings requires a multi-pronged approach, encompassing measures to enhance productivity, promote skill development, ensure compliance with minimum wage standards, and foster inclusive economic growth.

International Labour Organization (ILO):

• The only tripartite U.N. agency, since 1919 the ILO brings together governments, employers and workers of 187 Member States, to set labour standards, develop policies and devise programmes promoting decent work for all women and men.
• It was created in 1919, as part of the Treaty of Versailles that ended World War I, to reflect the belief that universal and lasting peace can be accomplished only if it is based on social justice.
• The Constitution of the ILO was drafted in early 1919 by the Labour Commission
• It became the first affiliated specialized agency of the United Nations in 1946.
• Its headquarters is in Geneva, Switzerland
• Its founding mission is “social justice is essential to universal and lasting peace”.
• It promotes internationally recognized human and labour rights.
• It received the Nobel Peace Prize in 1969.

SOURCE: https://www.downtoearth.org.in/news/governance/for-a-decade-earnings-of-regular-salaried-self-employed-indians-have-been-declining-ilo-95290

TAG: GS 3: ECONOMY

THE CONTEXT: India’s hydropower output has experienced a significant decline, reaching its steepest fall in nearly four decades.

EXPLANATION:

• We will examine the reasons behind this decline, its implications for India’s energy landscape, and potential future scenarios.

Record Drop in Hydropower Generation

• During the fiscal year ending March 31, India witnessed a remarkable 16.3% drop in hydropower generation, marking the most significant decline in at least 38 years.
• This decline is attributed to erratic rainfall patterns, which have led to reduced water levels in reservoirs and heightened reliance on coal-fired power.

Impact on Renewable Energy Goals

• The decline in hydropower generation coincided with a marginal decrease in the share of renewables in India’s power output.
• Despite the government’s commitments to boost solar and wind capacity, renewables accounted for only 11.7% of power output, down from 11.8% in the previous year.

Challenges with Hydro as a Reliable Source

• Experts caution against over-reliance on hydro as a consistent power source due to erratic rainfall patterns.
• While there may be prospects for increased rainfall during the upcoming monsoon season, the impact on hydropower output would not be immediate.
• This uncertainty underscores the need for diversification in India’s energy mix.

Declining Share of Hydropower

• Hydropower’s share in India’s total power output reached a record low of 8.3%, compared to an average of 12.3% over the past decade.
• This decline is attributed to a slowdown in the addition of new hydropower capacity, while other sources such as coal, solar, and wind have gained prominence.

Rise in Coal-Fired Power Generation

• The reduction in hydropower output has led to an increase in coal-fired power generation, which rose by 13.9% in 2023-24.
• This trend highlights India’s ongoing dependence on fossil fuels, with coal accounting for a significant portion of the country’s energy mix.

Missed Renewable Energy Targets

• India’s failure to meet its 2022 target of installing 175 gigawatts (GW) of renewable energy underscores the challenges in transitioning to clean energy sources.
• The country remains 38.4 GW short of this goal, with renewables’ addition slowing to a five-year low in 2023.

Global Comparison

• Globally, hydropower output experienced a decline, attributed to factors such as lower rainfall and warmer temperatures.
• India’s decline in hydropower output surpassed the global average, reflecting the severity of the situation in the country.

Hydroelectric Potential in India:

• Hydropower potential is located mainly in northern and north-eastern regions.
• Arunachal Pradesh has the largest unexploited hydropower potential of 47 GW, followed by Uttarakhand with 12 GW.
• The unexploited potential is mainly along three river systems — the Indus, Ganges and Brahmaputra
• India has several international issues across these river systems. Like electricity, hydropower should also be brought on the concurrent list to formulate uniform policies and processes for faster development.
• India has over 90 GW of pumped storage potential, with 63 sites identified and recognised in national energy policies for their valuable grid services.
• India has an estimated hydropower potential of 1, 45,320 MW, excluding small hydro projects (SHPs) which has 20 GW potential.
• India ranks as the fourth country in the world by undeveloped hydropower potential, after Russia, China and Canada, and fifth by total potential, surpassed also by Brazil.

SOURCE: https://www.thehindu.com/news/national/indias-hydropower-output-records-steepest-fall-in-nearly-four-decades/article68015359.ece

TAG: GS 2: INTERNATIONAL RELATIONS

THE CONTEXT: The Financial Action Task Force (FATF), a global watchdog for money laundering and terrorist financing, has conducted a survey on the implementation of its standards regarding virtual assets (crypto assets) and virtual asset service providers (VASPs).

EXPLANATION:

• Despite the FATF’s efforts to strengthen regulations through a road map agreed upon in February 2023, many countries have yet to fully implement these requirements.

Definition and Scope of Virtual Assets

• Virtual assets encompass any digital representation of value that can be digitally traded, transferred, or used for payment.
• The FATF’s focus on regulating virtual assets and VASPs is aimed at preventing their misuse for illicit financial activities such as money laundering and terrorist financing.

Status of Implementation

• The study, involving 58 jurisdictions, reveals varying levels of implementation across countries.
• While some countries like India have conducted risk assessments and taken regulatory measures, others are still in the process of prohibiting the use of virtual assets and VASPs.

India’s Compliance and Actions

• India, a member country of FATF, has taken several steps to address the risks associated with virtual assets and VASPs.
• It has conducted risk assessments, enacted legislation, and applied Anti-money Laundering/Counter-terrorism Financing measures.
• India has also conducted supervisory inspections, taken enforcement actions against VASPs, and enacted the travel rule for VASPs.

Concerns and Global Implications

• The FATF emphasizes the international and borderless nature of virtual assets, highlighting the need for effective regulation across jurisdictions.
• Failure to regulate VASPs in one jurisdiction could have significant global implications, as evidenced by recent reports of illicit activities involving virtual assets.
• Instances include the laundering of funds for the proliferation of weapons of mass destruction by the Democratic People’s Republic of Korea (DPRK) and the use of virtual assets by terrorist groups such as ISIL and Al Qaeda.

Importance of Regulatory Framework

• Given the increasing misuse of virtual assets for illicit purposes, the FATF stresses the importance of robust regulatory frameworks.
• Ransomware incidents, terrorist financing, and other illicit activities underscore the urgency of implementing and enforcing effective regulations to mitigate risks associated with virtual assets.

Financial Action Task Force (FATF):

• The Financial Action Task Force (FATF) was established in 1989 by the G7 to examine and develop measures to combat money laundering.
• It originally included the G7 countries, the European Commission and eight other countries.
• Initially it was mandated to examine and develop measures to combat money laundering and in 2001, the FATF expanded its mandate to also combat terrorist financing.
• FATF mutual evaluations are in-depth country reports analysing the implementation and effectiveness of measures to combat money laundering and terrorist financing.
• The Financial Action Task Force (FATF) is commonly referred to as the world’s “terrorism financing watchdog”, which means it is the author — and custodian — of an international regime that works to ensure that the flows of money in the global financial system are not misused to fund terrorist activities.
• FATF maintains a “grey list” of countries that it watches closely. In essence, these are countries that have, in the assessment of the FATF, failed to prevent international money laundering and terrorist financing, and are, therefore, on a global watchlist for bad behaviour.
• Pakistan was the most important country on the list. After it (along with Nicaragua) was taken off the list, 23 countries remain under watch.
• Among these countries are the Philippines, Syria, Yemen, the United Arab Emirates, Uganda, Morocco, Jamaica, Cambodia, Burkina Faso, and South Sudan, and the tax havens of Barbados, Cayman Islands, and Panama.

What are countries on the grey list expected to do?

• FATF calls these countries “jurisdictions under increased monitoring”. Basically, these countries have to comply with certain conditions laid down by the FATF, failing which they run the risk of being “black listed” by the watchdog. Their compliance is periodically reviewed by the FATF.
• According to the FATF, when a jurisdiction is placed under increased monitoring, “it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to extra checks”.
• Specifically, these jurisdictions are now “actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing”.

SOURCE: https://www.thehindu.com/news/national/many-countries-yet-to-fully-implement-measures-to-prevent-misuse-of-virtual-assets-and-vasps-fatf/article68009634.ece

TAG: GS 3: ECOLOGY AND ENVIRONMENT

THE CONTEXT: Tropical cyclones, characterized by strong winds, heavy precipitation, and storm surges, pose significant threats to coastal communities and infrastructure. The intensification of these storms, fueled by global warming, has led to the emergence of cyclones with wind speeds surpassing the existing Category 5 threshold.

EXPLANATION:

• This necessitates the consideration of a new category, Category 6, on the Saffir-Simpson (SS) hurricane wind scale.

Tropical Cyclones:

• Tropical cyclones form over warm tropical ocean basins with sea surface temperatures exceeding 26.5°C.
• They are prevalent in regions such as the North Atlantic, East Pacific, West Pacific, South Pacific, and the Indian Ocean.
• The Western Pacific basin is particularly active, accounting for a significant portion of global tropical cyclones.
• However, the North Indian basin, while contributing a smaller share, remains highly vulnerable to cyclone impacts.

Saffir-Simpson Hurricane Wind Scale

• It was introduced in the early 1970s.
• The SS hurricane wind scale categorizes cyclones based on maximum sustained wind speeds at a height of 10 meters.
• Categories range from 1 to 5, with Category 5 representing wind speeds exceeding 252 km/hour.
• Factors like storm surge and rainfall contribute to cyclone-related damage.
• Wind speed remains a crucial metric for assessing risk and impact.

Impact of Global Warming

• Man-made greenhouse gas emissions have led to a warming of approximately 1.10°C since pre-industrial times.
• This warming trend extends to ocean depths, increasing the heat content of oceans and favoring cyclone intensification.
• Long-term data indicate a rise in the frequency of intense tropical cyclones, with each degree of warming corresponding to a 12% increase in wind speed and a 40% increase in destructive potential.

Emergence of Category 6 Cyclones

• Recent research suggests that cyclones exceeding Category 5 intensity are becoming more frequent, with record wind speeds expected to continue rising.
• Observations reveal that half of the Category 5 cyclones occurred in the last 17 years, with several storms surpassing the hypothetical Category 6 threshold.
• Climate simulations predict a further increase in the annual exceedance of Category 6 thresholds, especially in regions prone to intense cyclones.
• Given the escalation of cyclone intensity due to global warming, there is a compelling case for introducing Category 6 on the SS hurricane wind scale.
• This additional category would raise awareness of the heightened risks posed by large cyclones and underscore the urgency of addressing climate change.

Implications for Vulnerable Regions

• While the North Indian Ocean currently experiences fewer Category 6 storms, ongoing climate change suggests a heightened risk in the future.
• Revisiting disaster management strategies and early warning systems is imperative to mitigate the potential impacts on lives and infrastructure in vulnerable regions.

SOURCE: https://www.thehindu.com/sci-tech/science/increasing-tropical-cyclones-of-higher-intensity-necessitates-a-new-category/article68006554.ece

THE CONTEXT: India’s wheat stocks in government godowns are at a 7-year low as of March 1, 2024. While a bumper harvest is expected in the Indo-Gangetic plains, the crop in central India may have been impacted by warmer temperatures in November-December. This highlights the increasing susceptibility of wheat and agriculture to climate change, which manifests as both the early onset of summer and delayed winter.

ISSUES:

• Susceptibility of wheat and agriculture to climate change: Unseasonal weather events like temperature spikes and heavy rains during the final grain formation and filling stage can lead to yield losses. Warm temperatures during sowing and initial vegetative growth can result in fewer tillers and premature flowering. Climate change affects wheat production by manifesting in both the early onset of summer and the delayed onset of winter.
• Potential impact on wheat production and food security: Wheat stocks in government godowns are at a 7-year low as of March 1. While a bumper harvest seems likely in the Indo-Gangetic plains, the wheat crop in central India may have been affected by warm temperatures during November-December. The extent to which lower yields in central India are offset by better production in the Indo-Gangetic plains will determine the overall wheat production for the year.
• Need for investment in climate-resilient agriculture: The focus should shift to “Green Revolution 2.0” with a focus on input use efficiency and breeding of drought-resistant and heat-tolerant crop varieties. This would require screening germplasm and identifying genes responsible for desirable traits.
• Potential for wheat imports: Global wheat prices are currently at their lowest in four years, making imports feasible. To enable wheat imports, the government should consider removing the 40% customs duty.

THE WAY FORWARD:

• Breeding for Climate-Resilient Wheat Varieties: Developing Heat-Tolerant Wheat Varieties in India has been an extensive exercise. The Indian Council of Agricultural Research (ICAR) has been actively working on developing heat-tolerant wheat varieties through conventional breeding and biotechnology approaches. One such example is the development of the wheat variety ‘HD 3086’, which can withstand temperatures up to 35°C during the grain-filling stage without significant yield loss. According to ICAR data, ‘HD 3086’ has shown a 10-15% higher yield under heat stress conditions than other popular wheat varieties.
• Improving Agronomic Practices for Climate Resilience: Israeli farmers have adopted precision farming techniques, such as sensor-based irrigation and variable-rate fertilizer application, to optimize water and nutrient use for wheat production. Studies have shown that precision farming can increase wheat yields by 10-15% while reducing water and fertilizer inputs by 20-30% compared to traditional farming practices.
• Optimizing Wheat Imports and Stocks Management: Egypt, one of the world’s largest wheat importers, has implemented a comprehensive strategy to ensure food security through wheat imports and strategic stock management. The government maintains a strategic wheat reserve equivalent to 4-6 months of domestic consumption, which helps to stabilize prices and ensure availability during times of supply disruptions. China, the world’s largest wheat producer and consumer, has a well-established system of wheat reserves and buffer stock management. The government maintains a strategic wheat reserve of around 30-40 million tonnes, which is used to stabilize domestic prices and ensure food security.
• Investing in Research and Development for Climate-Smart Agriculture: The International Wheat Improvement Network (IWIN) is a global collaborative research initiative led by the International Maize and Wheat Improvement Center (CIMMYT) and partners in over 100 countries. The network focuses on developing and testing new wheat varieties adapted to diverse agro-climatic conditions, including heat, drought, and disease resistance. Through this collaborative approach, IWIN has released several climate-resilient wheat varieties widely adopted by farmers in different regions.
• Leveraging Indigenous and Traditional Knowledge: A study prioritized major adaptation strategies used by native communities in India, including changes in cropping patterns, use of drought-tolerant crops, and traditional water harvesting techniques. Integrating indigenous knowledge with modern scientific approaches can enhance the effectiveness of climate change adaptation in agriculture.
• Improving Access to Climate Information and Early Warning Systems: The Indian government has developed agriculture contingency plans to help farmers manage weather aberrations and extreme climatic events. These plans provide timely information on weather forecasts, crop advisories, and emergency response measures to enable proactive adaptation.

THE CONCLUSION:

In the short term, India can offset lower yields in central India with better production in the Indo-Gangetic plains and by enabling wheat imports by removing customs duty, as global prices are currently low. However, in the medium to long term, India must invest in breeding for climate change, focusing on input use efficiency and developing drought-resistant and heat-tolerant varieties through screening germplasm and identifying desirable genes in plants.

UPSC PAST YEAR QUESTIONS:

Q.1 How is science interwoven deeply with our lives? What are the striking changes in agriculture triggered by science-based technologies? 2020

Q.2 What are the primary reasons for the cropping system’s declining rice and wheat yield? How is crop diversification helpful in stabilizing the crop yield in the system? 2017

MAINS PRACTICE QUESTION:

Q.1 Discuss the key climate change adaptation strategies being implemented in the Indian agricultural sector. Analyze the effectiveness of these strategies using relevant case studies and data.

SOURCE:

https://indianexpress.com/article/opinion/columns/viksit-bharat-must-also-be-inclusive-bharat-9243988/

THE CONTEXT: Kerala’s public debt management has come under scrutiny amidst the state’s fiscal challenges and a lawsuit against the central government’s borrowing restrictions. The issue requires broader discussion as debt-deficit dynamics significantly impact Centre-State financial relations. Kerala’s outstanding liabilities stand at 36.9% of GSDP for 2024-25 (BE), with a relatively low rollover risk compared to other states like Telangana.

ISSUES:

• Asymmetric Fiscal Rules: The call for “asymmetric fiscal rules” about deficits and debts underscores the need for tailored fiscal policies that consider the unique economic conditions and challenges of different states. This is particularly relevant in the aftermath of the COVID-19 pandemic, where fiscal strategies must be adaptive and responsive to the evolving economic landscape.
• Fiscal Deficit and Public Debt Targets: The specific targets for fiscal deficit and public debt, with states envisaged to maintain a fiscal deficit to GDP ratio of 3.5%, and a general government public debt to GDP ratio at 60%. Kerala’s outstanding liabilities are 36.9% of GSDP for 2024-25, indicating a focus on managing debt levels while addressing the need for economic recovery and growth.
• Revenue Stability and Fiscal Marksmanship: The stability of revenue streams and the accuracy of fiscal projections (fiscal marksmanship) are highlighted as essential for effective public expenditure design. Kerala’s reliance on its tax revenue and the challenges in achieving budget estimates for tax revenue underscore the importance of enhancing revenue collection and management.
• Volatility in Intergovernmental Fiscal Transfers: The volatility and decline in the share of Union Finance Commission tax transfers to certain states, including Kerala, raise concerns about the predictability and adequacy of fiscal transfers. This issue is critical for states’ budget planning and execution, affecting their ability to meet developmental and welfare objectives.
• Equity vs. Efficiency in Fiscal Transfers: The debate on equity versus efficiency in the design of intergovernmental fiscal transfers is brought to the fore, especially with the Fifteenth Finance Commission’s tax-transfer formula. The impact of this formula on growing states like Kerala, which may be disadvantaged by the weightage given to per capita income distance, calls for a reevaluation of criteria to ensure fair and equitable fiscal transfers.
• Investment in Sustainable Development: The need for investment in a green, resilient, and knowledge-based economy is emphasized as crucial for sustainable economic development. This includes the importance of state adaptation communications and budget allocations that support environmental sustainability and address climate change challenges.
• Gender Budgeting and Economic Growth: The significance of fiscal transfers and policies that advance gender budgeting and address gender inequalities is sin quo non. By promoting increased labor force participation of women and investing in gender-aware human capital formation, states can contribute to broader economic growth and social equity.
• Fiscal Austerity vs. Economic Recovery: The dilemma between implementing fiscal austerity measures and supporting sustained economic growth recovery is often visible. Austerity measures, which may compress expenditures, are not advisable, highlighting the importance of maintaining investment in human capital formation and social infrastructure to support recovery.

THE WAY FORWARD:

• Ensuring Financial Sustainability: Borrowers, including states, must plan fiscal spending and deficits carefully to keep public debt sustainable. Before taking on new debt, the potential returns on projects and the ability to repay through increased tax revenues should be considered. Lenders should assess the impact of new loans on the borrower’s debt position before extending credit. In 2018, the IMF introduced a new debt sustainability framework for low-income countries, which includes a more comprehensive assessment of debt vulnerabilities and a focus on the quality of public investment.
• Comprehensive and Transparent Reporting: Union and State governments should adhere to comprehensive and transparent reporting of public debts. Strengthening institutions responsible for recording, monitoring, and reporting debt is essential, especially in developing countries. Creditors should allow more extensive disclosure of borrowing terms and conditions to prevent the accumulation of large “hidden” liabilities. The World Bank’s Debt Reporting Heat Map shows that many developing countries have gaps in their debt reporting, particularly in contingent liabilities and debt of state-owned enterprises. In 2021, the G20 endorsed the Debt Service Suspension Initiative (DSSI) Disclosure Framework, which aims to improve the transparency of debt data and facilitate better coordination among creditors.
• Promoting Official Creditor Collaboration: Collaboration among official creditors is crucial, particularly in debt restructuring cases involving non-traditional lenders. Effective coordination among official creditors is critical for resolving debt crises.
• Investing in Sustainable Development: States should invest in green, resilient, knowledge-based economies to ensure sustainable development. A “State adaptation communication” with appropriate budget allocations is required to address state-specific issues such as demographic transition, inward and outward migration, and climate change crisis. According to the United Nations, achieving the Sustainable Development Goals (SDGs) will require an estimated $3.5 trillion per year in additional investment. In 2019, the State Bank of India issued a $650 million green bond to fund renewable energy and low-carbon transport projects.
• Gender Budgeting and Economic Growth: Fiscal transfers based on advancing gender budgeting in the state are critical to redressing gender inequalities. Increasing economic growth through increased labor force participation of women is significant, and states have a positive role in gender-aware human capital formation. A study by the McKinsey Global Institute found that advancing gender equality could add $12 trillion to global GDP by 2025.
• Balancing Austerity with Growth: India should not pursue austerity measures that impede growth but focus on strategic investments, inclusive development, and tax reforms to bolster government revenues. Optimizing spending through subsidy reforms and better targeting social programs could reduce wasteful expenditures. Strengthening economic growth through policy reforms and encouraging foreign investment could enhance GDP and tax revenues. Accelerating disinvestment and asset monetization could provide immediate fiscal relief and reduce the debt burden. India’s commitment to fiscal consolidation is evident from its adherence to the FRBM Act and the proposed LIC IPO. The disinvestment target for FY 2021-22 is INR 1.75 lakh crore, a significant step towards reducing the fiscal deficit.

THE CONCLUSION:

Moving forward, Kerala must focus on investing in a green, resilient, and knowledge-based economy for sustainable development. The state should negotiate with the Sixteenth Finance Commission for specific-purpose transfers to address state-specific issues like demographic transition, migration, and climate change. Furthermore, emphasizing gender budgeting and fiscal marksmanship is crucial to maintaining voters’ trust and promoting inclusive growth, as fiscal austerity measures may hinder human capital formation and economic recovery.

UPSC PAST YEAR QUESTION:

Q.1 How have the recommendations of the 14th Finance Commission of India enabled the States to improve their fiscal position? 2021

MAINS PRACTICE QUESTION:

Q.1 Asymmetric fiscal rules relating to deficits and debts are a significant issue in Centre-State financial relations in India. Critically analyze this statement in the context of public debt management and the fiscal challenges states face.

SOURCE:

https://www.thehindu.com/opinion/op-ed/the-finance-commission-and-public-finance-in-kerala/article68013652.ece