October 2019
M T W T F S S
« Sep   Nov »
 123456
78910111213
14151617181920
21222324252627
28293031  

[oped of the day] Firm steps to ease the fiscal federalism tension

Mains Paper 2 : Federalism |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Fiscal federalism in India


Context

A “camel’s nose” is a metaphor to describe a situation where one permits a small entry to an outsider into one’s territory, only to be soon pushed out entirely. The fiscal relationship between the Centre and the States is fast turning into a “camel’s nose” syndrome for the States. 

Gaining entry to pushing out

  • Centre gained an entry through the GST into the territory of taxation powers of States.
  • It is now arming itself to elbow the States out entirely of its fiscal powers. 

Federalism

  • India is a union of States. Citizens of every State elect their government independently. 
  • The primary responsibility of such an elected government is efficient governance and accountability to its voters. 
  • An elected government is typically granted the powers to be able to raise revenues through taxation of its citizens and incur appropriate expenditure for their benefit.
  • Over the past five years, democratically elected State governments have been stripped of almost all powers of taxation.
  • There is an attempt to palm off the Centre’s expenditure obligation to the States and there is talk of even limiting expenditure powers of the States.

Lessons from the past : Meal scheme

  • In 1982, the newly elected Chief Minister of Tamil Nadu, MG Ramachandran (MGR) wanted to expand the midday meal programme to all 70 lakh children across 52,000 government schools to improve student enrolment. 
  • This entailed an additional expenditure of ₹150 crore, which the government did not have. 
  • MGR decided to levy an additional sales tax on goods sold in Tamil Nadu to cough up the amount needed. 
  • The programme was then further expanded by successive governments under the DMK. 
  • It catapulted Tamil Nadu’s literacy rate from 54% in 1981 to 83% in 2011. In just three decades, Tamil Nadu was counted as one of India’s most literate States.
  • MGR and other Chief Ministers of Tamil Nadu did not have to rush to New Delhi to make the decision to implement a midday meal programme and impose additional sales taxes to fund it. It was decided and approved in Chennai. 
  • In today’s India, MGR would have had to dash to Delhi and seek approval.

Fiscal federalism – goes against states

  • More than 80% of government’s revenues come from taxes, primarily from income tax (direct tax) and sales taxes (indirect tax). 
  • State governments in India do not have powers to levy income taxes. 
  • With GST, the Centre stuck its nose into the indirect taxes of State governments. States lost their sole powers to levy indirect taxes. 
  • Instead, they depend on a GST Council to determine tax rates and revenues.
  • A democratically elected State government in India can neither levy income tax nor sales tax. Effectively, it’s a representation without taxation.

Extending the intrusion into states’ domain – Defence

  • The Centre is now stretching its arms and legs to capture more. 
  • It has now proposed that there should be a permanent expenditure fund created for defence spending out of the total tax revenue pool. 
  • The Centre keeps 52% of the total tax revenue pool and distributes 48% to all the States and Union Territories. 
  • Instead of using its 52% share to spend on defence, the present government wants to palm off this expenditure to all the States. 
  • This will likely further reduce the tax revenues distributed to States for their own expenditure. 

Expenditure Council

  • There is now talk of constituting an Expenditure Council, similar to the GST Council. 
  • Not only did States lose their taxation powers but with this idea, they will lose its sole spending powers too. 
  • An elected Chief Minister of a State with no discretionary powers to earn or spend for the people of the State can virtually hand over the reins of governance to Delhi. 

Challenges

  • There is huge economic and cultural diversity among the various States. It is a terrible mistake to presume that all of India can be governed from Delhi.
  • Elected State governments and leaders cannot be made dummies without any fiscal powers for long. 
  • This fiscal federalism tension between the Centre and States can erupt into something more dangerous and spread wide.

Way ahead

  • Grant State governments the powers to levy income taxes. In large federal democracies such as the United States, State governments and even local governments have the right to levy income taxes. 
  • State governments should be given powers to raise revenues and incur expenditure in accordance with each State’s needs and priorities.
  • Amend the Constitution to grant States the powers to levy income taxes as they deem fit.

Conclusion

There is a distinction between unity and uniformity. Uniformity is not an essential condition for unity. On the contrary, a celebration of plurality may foster greater unity in a nation such as ours. The days of imperialistic London are over. It is the era of Gandhinagar, Chennai, Lucknow and Kolkata.

Finance Commission – Issues related to devolution of resources

[op-ed snap] The NREGA signal

Mains Paper 3 : Indian Economy |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Youth on MNREGA shows the distress in economy


Context

As per a paper released recently, the proportion of young workers, those in the age group of 18-30, in the MGNREGA scheme, has begun to rise, especially after 2017-18, when the economy was hit first by demonetisation and later by the implementation of the GST.

What the report says

  • The number of young workers employed under rose to 70.71 lakh in 2018-19 — up from 58.69 lakh in FY18.
  • This aleo seems to be on an upward trajectory this year also, with 57.57 lakh having been employed upto October 21 this year.

Bad news

  • Contraction of factory output by 1.1% in August compared to the past year.
  • The sharp decline in commercial credit in the year till September.
  • Among such gloomy indicators, fresh signs of the deepening slowdown are visible.

What this data reflects

  • MGNREGA is a scheme targeted at the hinterland, aiming to provide 100 days of work to each rural household. 
  • It is clearly a reflection of the little or limited opportunities for young people in rural India to venture out to bigger towns or cities given the slump in construction, real estate and manufacturing and the informal sector besides services, especially the hospitality business.
  • The warning signs were evident earlier when the demand for work under the MGNREGA rose almost 10% compared to the previous year.
  • This shows the mounting rural distress and low farm support prices.

Issue with MNREGA

  • The government pegged the allocation for this scheme for FY20 at Rs 60,000 crore.
  • This is a marginal decline compared to the revised estimates for the last fiscal.
  • A minister said that the government did not want MGNREGA to be a programme in perpetuity.

Way ahead

  • Nobel laureate Abhijit Banerjee had recently pointed to a worrying factor — average consumption expenditure at 2018 prices had fallen from Rs 1,587 per person each month in 2014 to Rs 1,524 in 2017-18 in rural areas, according to NSSO data. 
  • Banerjee has suggested raising wages under MGNREGA and farm support prices.

MGNREGA Scheme

[op-ed snap] Keys to kingdom

Mains Paper 3 : Social Media Networks & Internal Security |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Social media - security vs regulation


Context

In the Supreme Court, a matter related to communication platforms is being debated. 

Debate

  • The matter was originally a plea for regulatory parity between internet telephony platforms and OTT communications providers like WhatsApp.
  • It has turned into a question of national security and the threat to democracy posed by social media platforms.

Social media – security issues 

  • The government’s anxieties about social media date back at least to 2016, when there was a mass exodus of workers from the Northeast from Bengaluru panicked by rumours. 
  • Recently, fake news and lynchings across the country has intensified public fears.
  • Government has told the court that the internet is “a potent tool to cause unimaginable disruption to the democratic polity,” and will publish rules for its regulation in three months.

Internet 

  • It was seen as the democratic force-multiplier of Arab Spring.
  • It has become a foe of democracy — even in the US, where the attorney general has requested Facebook not to deploy software which makes interception impossible.

Issues out of the debate – Technical Issue and Political

  • This turns the spotlight to the two issues, technical and political. 
  • Technically, it would mean rolling back or compromising end to end encryption, which would affect the data security of everyone, and not only suspects.
  • This would represent a huge step back for privacy as a right. 
  • Dismantling or bypassing encryption could work in a climate of political probity where they limit their attention to legitimate targets only. 
  • But if governments snoop obsessively and take arbitrary action, it becomes a cause of concern.
  • Social media companies have shown a reluctance to police content, and Mark Zuckerberg’s speech at Georgetown University last week spelled it out explicitly. 
  • They have opened the door to governments seeking increased access to private communications, in the interest of public safety — and now of democracy.

Issue with governments 

  • Governments in India have shown themselves to be incompetent and malignant by incarcerating harmless citizens arbitrarily for trivial communications, wilfully misreading satire as sedition and weaponising the law.
  • This has continued even after Section 66A of the Information Technology Act was struck down as unconstitutional by the Supreme Court, on the ground that it offered too much latitude. 

Conclusion 

Governments must demonstrate that they are able guardians of citizens’ data before they demand the security keys.

Social Media: Prospect and Challenges

Explained: Should Aadhaar be linked to social media accounts?

Mains Paper 2 : Indian Constitution - historical underpinnings, evolution, features, amendments, significant provisions and basic structure |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Debate over right to privacy


News

  • From January 2020 the Supreme Court will hear cases seeking the linking of Aadhaar with social media profiles of individuals.
  • It will be the first big legal battle on the right to privacy after the Supreme Court held in a landmark verdict in 2017 that privacy is a fundamental right.

What is the Issue?

The two significant questions of law that the court will look into are:

  1. Whether mandatory linking of Aadhaar to social media accounts violates an individual’s right to privacy, and
  2. The balance between intermediary liability and free speech.

Context

  • The government submitted an affidavit stating that the Internet has emerged as a potent tool to cause unimaginable disruption to the democratic polity.
  • It said that it will notify “extant rules” for “effective regulation of intermediaries” such as social media platforms.
  • Intermediaries, as defined by the IT Act, 2000, include telecom service providers, network service providers, Internet service providers, web-hosting service providers, search engines, online payment sites, online auction sites, online market places, and cyber cafes.
  • Section 87 of the IT Act gives power to the central government to frame Rules; currently, Rules framed in 2011 regulate intermediaries.

The cases

  • Facebook, WhatsApp and Google had appealed for the transfer of such cases to the Supreme Court from the Madras, Bombay and Madhya Pradesh High Courts, where at least four such cases were pending.
  • In October 2018, Sagar Suryavanshi, an advocate, moved the Bombay High Court seeking a ban on all paid political content online 48 hours before elections.
  • Suryavanshi has withdrawn the case, and informed the High Court that he would join the proceedings before the Supreme Court as an intervener.
  • In July 2019, advocate Amitabh Gupta move the MP High Court seeking mandatory KYC of all social media users using Aadhaar and other identity proof.
  • Facebook argued that these cases involved answering questions related to fundamental rights — specifically the rights to privacy and free speech.
  • If different High Courts heard the cases separately and gave conflicting verdicts, citizens’ fundamental rights could be affected, Facebook argued.

New guidelines on the way

  • The central government informed the apex Court that fresh guidelines for regulating intermediaries under the IT Act were in the pipeline.
  • There are various messages and content spread/shared on the social media, some of which are harmful. Some messages can incite violence.
  • There may be messages which are against the sovereignty and integrity of the country. Social media has today become the source of large amount of pornography.
  • Paedophiles use social media in a big way. Drugs, weapons and other contraband can be sold through the use of platforms run by the intermediaries the court said.
  • In January, the Ministry for Information and Technology had published draft Rules on regulating intermediaries, seeking responses from the public.

Privacy and sovereignty

  • The Madras High Court had sought an affidavit from V Kamakoti, a professor with IIT Madras, who said he could provide the technology to enable the intermediary to decrypt the encrypted message when necessary.
  • WhatsApp, on the other hand, has submitted that it is impossible for it to trace the creator of the “questionable content” since it has end-to-end encryption.
  • While the court highlighted that “de-encryption, if available easily, could defeat the fundamental right of privacy.
  • The court said that de-encryption of messages may be done under special circumstances but it must be ensured that the privacy of an individual is not invaded.
  • At the same time “the sovereignty of the state and the dignity and reputation of an individual are required to be protected”.
Aadhaar Card Issues

Global Wealth Report 2019

Mains Paper 3 : Inclusive Growth & Issues |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Global Wealth Report 2019

Mains level : Income inequality in India



News

  • The Credit Suisse Group, a Switzerland-based multinational investment bank, has released the 10th edition of its annual Global Wealth Report.

Global Wealth Report 2019

  • The report typically tracks both the growth and distribution of wealth – in terms of the numbers of millionaires and billionaires.
  • It tracks the proportion of wealth that they hold – as well as the status of inequality around the world.

How is wealth defined?

  • Wealth is defined in terms of “net worth” of an individual.
  • This, in turn, is calculated by adding up the value of financial assets (such as money) and real assets (such as houses) and then subtracting any debts an individual may have.

What are the drivers of the wealth of nations?

1) Size of the population

  • Several factors can explain why wealth per adult follows a different path in different countries.
  • For instance, the overall size of the population is one possible factor that drives wealth per adult in the country. For a country with a huge population, in terms of final calculation, this factor reduces the wealth per adult.
  • But there is a flip side as well. A big population also provides a huge domestic market and this creates more opportunities for economic growth and wealth creation.

2) Saving behaviour

  • Another important factor is the country’s saving behaviour. A higher savings rate translates into higher wealth. The two variables share a strong positive relationship.
  • Overall, a percentage point rise in the savings rate raises the growth rate of wealth per adult by 0.13% each year on average.
  • Thus, for example, household wealth in Poland (with an 18% savings rate) would be expected to be 27% higher in mid-2019 if it had matched the savings rate of Sweden (28%),” states the Credit Suisse report.

3) Level of economic activity

  • But by far the most important factor in determining the different trends in household wealth among countries is the general level of economic activity as represented by aggregate income, aggregate consumption or GDP.
  • That’s because the expansion of economic activity increases savings and investment by households and businesses, and raises the value of household-owned assets, both financial and non-financial.
  • But wealth and GDP do not always move in tandem, cautions the report. This is especially so when asset prices fluctuate markedly as they did during the financial crisis.

Key findings of the report

  • A key finding of 2019’s report is that China has overtaken the US this year to become “the country with most people in the top 10% of global wealth distribution.
  • As things stand, just 47 million people – accounting for merely 0.9% of the world’s adult population – owned $158.3 trillion, which is almost 44% of the world’s total wealth.
  • At the other end of the spectrum are 2.88 billion people – accounting for almost 57% of the world’s adult population – who owned just $6.3 trillion or 1.8% of the world’s wealth.
  • The other way to look at this distribution of wealth is from the prism of inequality.
  • The bottom half of wealth holders collectively accounted for less than 1% of total global wealth in mid-2019, while the richest 10% own 82% of global wealth and the top 1% alone own 45%,” states the report.

Indian case

  • Total wealth in India increased fourfold between 2000 and 2019, reaching $12.6 trillion in 2019, making India the fifth globally in terms of the number of ultra-high net-worth individuals, as per the report.
  • India has 8.27 lakh adults in the top 1% of global wealth holders – 1.6% share of the global pool .
  • It is estimated that India has 4,460 adults with wealth of over $50 million and 1,790 that have more than $100 million.
  • However, the study also found that while the number of wealthy people in India has been on the rise, a larger section of the population has still not been part of the growth in overall wealth.

Inequality persists

  • While wealth has been rising in India, not everyone has shared in this growth.
  • There is still considerable wealth poverty, reflected in the fact that 78% of the adult population has wealth below $10,000,” stated the report.
  • While highlighting the fact that a small fraction of the population — 1.8% of adults — has a net worth of more than $100,000.
  • Meanwhile, as per the financial major, India is expected to grow its wealth very rapidly and add $4.4 trillion in just five years, reflecting an increase of 43%.
Economic Indicators-GDP, FD,etc

BHIM 2.0

Mains Paper 2 : E-Governance |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : BHIM 2.0

Mains level : Promoting digital payments in India



News

  • The IT Ministry unveiled a slew of new initiatives and programmes, including BHIM 2.0 that packs-in new functionalities, support additional languages and has increased transaction limits.

BHIM 2.0

  • BHIM app, a UPI based payment interface developed by National Payments Corporation of India (NPCI) that allows real-time fund transfer, was launched in December 2016.
  • Some of the striking features marking BHIM 2.0 include a ‘Donation’ gateway, increased transaction limits for high-value transactions, linking multiple bank accounts, offers from merchants, the option of applying in IPO, gifting money etc.
  • The new version of BHIM also supports three additional languages — Konkani, Bhojpuri and Haryanvi — over and above the existing 13.
Digital India Initiatives

QS India Ranking 2020

Mains Paper 2 : Health & Education |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : QS India Ranking 2020

Mains level : State of higher education in India


News

  • The Quacquarelli Symonds (QS) India Rankings 2020 was recently released.

Top institutions in India

About QS Rankings

  • The British higher education analysts QS has ranked the higher education institutions in India on the basis eight parameters which have different weightage.
  • The eight parameters with their weightage are academic reputation (30%), employer reputation (20%), faculty student ratio (20%), staff with PhD (10%), Papers per faculty (10%), citation per paper (5%), international faculty (2.5%) and international students (2.5%).
  • This is the second time QS has published separate ranking for top institutions in India.
Higher Education – RUSA, NIRF, HEFA, etc.

Species in news: White bellbird- the world’s loudest bird

Mains Paper 3 : Conservation, Environmental Pollution & Degradation, Eia |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Bellbirds

Mains level : NA



News

  • Bellbirds have the loudest bird calls yet documented in the world, according to a study.

Bellbirds

  • The study found that their mating songs pack more decibels than the screams of howler monkeys and the bellows of bisons.
  • The male white bellbird’s mating call is about three times louder than screaming phias — the previously loudest bird singer.
  • The bellbird’s calls were so loud that they wondered how the females of the species listened to them at close range without permanent damage to their hearing.
  • The loud singing ability also came with a trade-off, according to the researchers, who said that as the songs of bellbirds became louder, they also got shorter in duration.
Wildlife Conservation Efforts