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  • Renewable Energy – Wind, Tidal, Geothermal, etc.

    The consequences of an ill-considered green strategy

    27 January 2022 | op-ed snap | Economics
    Mains Paper 3: GS3-13.Infrastructure: Energy, Ports, Roads, Airports, Railways etc:, Indian Economy

    Context

    Europe’s push for renewable energy at the cost of conventional fuel may end up causing a global food crisis.

    Consequences of fuel shortage in Western Europe

    • Since August 2021, Western Europe has faced a problem with renewable energy – the wind doesn’t always blow when needed and the sun doesn’t always shine.
    • Commodity markets across the world operate on a balance of demand and supply — even seemingly “small” changes in either side of a few percentage points can push the prices up or down sharply.
    • High energy bills: Higher gas prices have pushed up energy bills for households and are expected to impact household spending and consumption as well.
    • High urea prices: Natural gas is used to produce urea – if gas prices go up, fertiliser also becomes expensive.
    •  Some poor and middle-income countries are already starting to face problems of fertiliser availability — there are reports from several Indian states as well. 
    • High food prices: The impact of expensive fertiliser will be felt some months down the line as expensive fertiliser and reduced harvests push up food prices.
    • India is relatively less affected as the share of natural gas in the country’s energy mix is low but will still face problems due to high food prices.
    • In 2007-08, when oil prices were high, there was a push to use “biofuels” led by the US and Europe.
    •  The effects of the 2008 food price crisis were felt around the world, especially by the poor.

    Lessons for India

    • Cheap and reliable energy sources should not be abandoned until the alternatives have been stringently stress tested.
    • India will be especially hard hit if oil prices spike as it imports close to 1.4 billion barrels of oil annually.

    Consider the question “What are the inherent dangers in rapid transition to the green energy? Suggest the way forward for India.”

    Conclusion

    A blind push to shut down traditional sources of energy and move to less reliable “clean” energy can have second and third order effects.

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  • Parliament – Sessions, Procedures, Motions, Committees etc

    Govt tweaks spending norms for Contingency Fund of India

    27 January 2022 | | Polity
    Mains Paper 2: GS2-01. Indian Constitution-Historical underpinnings & evolution; Features, amendments, significant provisions, basic structure of Constitution

    The government has tweaked spending norms for Contingency Fund of India, allowing 40% of the total corpus to be placed at disposal of the Expenditure Secretary.

    What are the proposed changes?

    • Budget 2021-22 proposed to enhance the Contingency Fund of India from ₹500 crore to ₹30,000 crore through Finance Bill.
    • An amount equivalent to 40 per cent of the Fund corpus shall be placed at the disposal of the Secretary, Ministry of Finance, Department of Expenditure.
    • This would serve the purpose of meeting unforeseen expenditure.

    What is Contingency Fund of India?

    • Contingency is a negative event which may occur in future, like recession or pandemic.
    • The Constitution has a provision for a contingency fund. Its corpus is always kept intact.
    • Article 267 of the Constitution mandates formation of a corpus under Contingency Fund of India to deal with any emergency situation.
    • It is placed at the disposal of the President of India.
    • Government cannot withdraw funds from it without authorization of the Parliament.
    • And the corpus has to be replenished with the same amount later.

    Management of the fund

    • The fund is held by the Department of Economic Affairs on behalf of the President of India and it can be operated by executive action.
    • The fund can be increased through a Finance Bill when Parliament is in the session.
    • Or through Ordinance if the House is not in session and situation warrants.
    • Withdrawal from the fund takes place with the approval of the Secretary of Department of Economic Affairs, in terms of the Contingency Fund of India Act, 1950.
    • An amount equivalent to 40% of the corpus has now been placed at the disposal of the Expenditure Secretary.
    • All further Contingency Fund releases beyond this limit will require the approval of the Expenditure Secretary in addition to the Economic Affairs Secretary’s approval.

    Back2Basics:

    Consolidated Funds of India

    • The provision for this fund is given in Article 266(1) of the Constitution of India.
    • The government meets all its expenditure from this CFI.
    • It receives money from:
    1. Direct and indirect taxes Loans taken by the Indian government
    2. Returning of loans/interests of loans to the government by anyone/agency that has taken it
    • The government needs parliamentary approval to withdraw money from this fund.
    • Each state has its own Consolidated Fund of the state with similar provisions.
    • The Comptroller and Auditor General of India audits these funds and reports to the relevant legislatures on their management.

    Public Account of India

    • All other public money (other than those covered under the Consolidated Fund of India) received by or on behalf of the Indian Government are credited to this account/fund.
    • It is constituted under Article 266(2) of the Constitution.
    • This is made up of:
      1. Bank savings account of the various ministries/departments
      2. National small savings fund, defense fund
      3. National Investment Fund (money earned from disinvestment)
      4. National Calamity & Contingency Fund (NCCF) (for Disaster Management)
      5. Provident fund, Postal insurance, etc.
      6. Similar funds
    • The government does not need permission to take advances from this account.
    • Each state can have its own similar accounts.
    • CAG makes audit of all the expenditure from the Public Account of India.

     

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  • Prime Minister’s Office : Important Updates

    What are Padma Awards?

    27 January 2022 | | Governance
    Mains Paper 2: Ministries & Departments Of The Government

    The central government has announced the names of Padma awardees for this year.

    What are Padma awards?

    • The Padma awards are the highest civilian honor of India after the Bharat Ratna.
    • They are announced every year on the eve of Republic Day.
    • The awards are given in three categories:
    1. Padma Vibhushan (for exceptional and distinguished service)
    2. Padma Bhushan (distinguished service of higher order) and
    3. Padma Shri (distinguished service)
    • The award seeks to recognize achievements in all fields of activities or disciplines where an element of public service is involved.

    Note: During the years 1978 and 1979 and 1993 to 1997, Padma awards were not announced.

    Who are the awardees?

    • The awards are given in certain select categories which include Art, Social Work, Public Affairs, Science & Engineering, Trade & Industry, Medicine, Literature & Education, Civil Service and Sports.
    • Awards are also given for propagation of Indian culture, protection of human rights, wild life protection among others.

    Its constitution

    • The PADMA Awards were instituted in 1954 along with Bharat Ratna.
    • At that time only Padma Vibhushan existed with three sub-categories – Pahela Varg, Dusra Varg and Tisra Varg.
    • These were subsequently renamed as Padma Vibhushan, Padma Bhushan and Padma Shri vide Presidential Notification issued on January 8, 1955.

    Particulars of the awards

    • The awardees do not get any cash reward but a certificate signed by the President apart from a medallion which they can wear at public and government functions.
    • The awards are, however, not a conferment of title and the awardees are expected to not use them as prefix or suffix to their names.
    • A Padma awardee can be given a higher award only after five years of the conferment of the earlier award.

    Terms of awarding

    • Not more than 120 awards can be given in a year but this does not include posthumous awards or awards given to NRIs and foreigners.
    • The award is normally not conferred posthumously.
    • However, in highly deserving cases, the Government could consider giving an award posthumously.

    Who is eligible for Padma awards?

    • All persons without distinction of race, occupation, position or sex are eligible for these awards.
    • However, government servants including those working with PSUs, except doctors and scientists, are not eligible for these awards.
    • The award seeks to recognize works of distinction and is given for distinguished and exceptional achievements or service in all fields of activities and disciplines.
    • According to Padma awards selection criteria, the award is given for “special services” and not just for “long service”.
    • It should not be merely excellence in a particular field, but the criteria has to be ‘excellence plus’.

    Who nominates the awardees?

    • Any citizen of India can nominate a potential recipient.
    • One can even nominate one’s own self. All nominations are to be done online where a form is to be filled along with details of the person or the organisation being nominated.
    • An 800-word essay detailing the work done by the potential awardee is also to be submitted for the nomination to be considered.
    • The government also writes to various state governments, governors, Union territories, central ministries and various departments to send nominations.

    Who selects the awardees?

    • All nominations received for Padma awards are placed before the Padma Awards Committee, which is constituted by the Prime Minister every year.
    • The Padma Awards Committee is headed by the Cabinet Secretary and includes Home Secretary, Secretary to the President and four to six eminent persons as members.
    • The recommendations of the committee are submitted to the Prime Minister and the President of India for approval.
    • The antecedents of the selected awardees are verified using the services of central agencies to ensure nothing untoward has been reported or come on record about them.
    • A final list is then prepared and announced.

    Is the recipient’s consent sought?

    • There is no provision for seeking a written or formal consent of the recipient before the announcement of the award.
    • However, before the announcement, every recipient receives a call from the Ministry of Home Affairs informing him or her about the selection.
    • In case the recipient expresses a desire to be excluded from the award list, the name is removed.

     

    Try this question from CSP 2021

    Q.Consider the following statements in respect of Bharat Ratna and Padma Awards

    1. Bharat Ratna and Padma Awards are titles under the Article 18(1) of the Constitution of India.
    2. Padma wards, which were instituted in the year 1954, were suspended only once.
    3. The number of Bharat Ratna Awards is restricted to a maximum of five in a particular year.

    Which of the above statements are not correct?

    (a) 1 and 2 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

     

    [wpdiscuz-feedback id=”q2fw95675q” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

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  • Corruption Challenges – Lokpal, POCA, etc

    Corruption Perceptions Index (CPI), 2021

    27 January 2022 | IOCR | Governance
    Mains Paper 2: Governance, Transparency & Accountability, Citizens Charters

     

    The 2021 Corruption Perception Index by Transparency International places India 85th on a list of 180 countries, one position above last year.

    Corruption Perceptions Index (CPI)

    • The CPI is an index which ranks countries “by their perceived levels of public sector corruption, as determined by expert assessments and opinion surveys.”
    • The CPI generally defines corruption as an “abuse of entrusted power for private gain”.
    • The index is published annually by the non-governmental organisation Transparency International since 1995.
    • The index ranks 180 countries and territories by their perceived levels of public sector corruption according to experts and business people.
    • It uses a scale of 0 to 100 to rank CPI, where 0 is highly corrupt and 100 is very clean.

    What kind of corruption does the CPI measure?

    The data sources used to compile the CPI specifically cover the following manifestations of public sector corruption:

    • Bribery
    • Diversion of public funds
    • Officials using their public office for private gain without facing consequences
    • Ability of governments to contain corruption in the public sector
    • Excessive red tape in the public sector which may increase opportunities for corruption
    • Nepotistic appointments in the civil service
    • Laws ensuring that public officials must disclose their finances and potential conflicts of interest
    • Legal protection for people who report cases of bribery and corruption
    • State capture by narrow vested interests
    • Access to information on public affairs/government activities

    The CPI does NOT cover:

    • Citizens’ direct perceptions or experience of corruption
    • Tax fraud
    • Illicit financial flows
    • Enablers of corruption (lawyers, accountants, financial advisors etc)
    • Money-laundering
    • Private sector corruption
    • Informal economies and markets

    Highlights of the 2021 Report

    • The top-performing countries were Denmark, Finland and New Zealand — all having a corruption perceptions score of 88 — followed by Norway, Singapore and Sweden, all of them scoring 85.
    • In contrast, the worst-performing countries were South Sudan with a corruption perceptions score of 11, followed by Syria (13), Somalia (13, Venezuela (14) and Afghanistan (16).

    India’s performance

    • In 2021, India ranked 86th with the same CPI score of 40.
    • The report highlighted concerns over the risk to journalists and activists who have been victims of attacks by the police, political militants, criminal gangs and corrupt local officials.
    • Civil society organizations that speak up against the government have been targeted with security, defamation, sedition, hate speech and contempt-of-court charges, and with regulations on foreign funding.

     

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  • Tribes in News

    Who are the Chakmas and Hajongs?

    27 January 2022 | Prelims Only | Indian Society
    Mains Paper 1: Population & Associated Issues

    In Arunachal Pradesh, the Chakma and Hajong people are feeling heat since the State government decided to conduct a special census in December 2021.

    What is the news?

    • The North-Eastern States have had a history of being paranoid about outsiders outnumbering the indigenous communities and taking their land, resources and jobs.
    • The threat from “non-locals” in a specific area has also been perceived to be from communities indigenous elsewhere in the region.
    • This has often led to conflicts such as the recent attacks on non-tribal people in Meghalaya’s capital Shillong or an Assam-based group’s warning to a fuel station owner in Guwahati against employing Bihari workers.

    Who are the Chakmas and Hajongs?

    • The Chakmas and Hajongs of Arunachal Pradesh are migrants from the Chittagong Hill Tracts of erstwhile East Pakistan, now Bangladesh.
    • Displaced by the Kaptai dam on the Karnaphuli River in the 1960s, they sought asylum in India.
    • They settled in relief camps in the southern and south-eastern parts of Arunachal Pradesh from 1964 to 1969.
    • A majority of them live in the Changlang district of the State today.
    • Mizoram and Tripura have a sizeable population of the Buddhist Chakmas while the Hindu Hajongs mostly inhabit the Garo Hills of Meghalaya and adjoining areas of Assam.

    Why was a special census of the two communities planned?

    • The Arunachal Government has cited to resolve the protracted issue of racial antagonism.
    • It seeks to rehabilitate the Chakma-Hajongs in other States.
    • The census plan was however dropped after the Chakma Development Foundation of India petitioned the PMO.

    Issues with the census

    • Chakma organizations said the census was nothing but racial profiling of the two communities because of their ethnic origin and violated Article 14 of the Indian Constitution.
    • It is against Article 1 of the International Convention on the Elimination of All Forms of Racial Discrimination, ratified by India.

    What is their citizenship status?

    • Members of the two communities had been settled in Arunachal Pradesh six decades ago with a rehabilitation plan, allotted land and provided with financial aid depending on the size of their families.
    • Although local tribes claim the population of the migrants has increased alarmingly, the 2011 census says there are 47,471 Chakmas and Hajongs in the State.
    • They are granted citizenship by birth under Section 3 of the Citizenship Act, 1955, after having been born before July 1, 1987, or as descendants of those who were born before this date.

     

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  • Wildlife Conservation Efforts

    Specie in news: Spot-billed Pelicans

    27 January 2022 | Species | Environment
    Mains Paper 3: GS3-18.Conservation, Environmental Pollution and Degradation, Environmental Impact Assessment.

    A nematode infestation has led to mass mortality of spot-billed pelicans (Pelicanus philippensis) at Telineelapuram Important Bird Area (IBA) in Andhra Pradesh.

    Spot-billed Pelicans

    • The spot-billed pelican (Pelecanus philippensis) or grey pelican is a member of the pelican family.
    • It breeds in southern Asia from southern Iran across India east to Indonesia.
    • It is a bird of large inland and coastal waters, especially large lakes.
    • The breeding population of these pelican species is limited to India, Sri Lanka and Cambodia.
    • In the non-breeding season they are recorded in Nepal, Myanmar, Thailand, Laos and Vietnam.

    Conservation status

    • IUCN status: Near Threatened
    • Wildlife (Protection) Act, 1972: Schedule IV (Hunting prohibited but the penalty for any violation is less compared to the first two schedules)

     

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  • Parliament – Sessions, Procedures, Motions, Committees etc

    The strength of our republic

    26 January 2022 | op-ed snap | Polity
    Mains Paper 2: GS2-01. Indian Constitution-Historical underpinnings & evolution; Features, amendments, significant provisions, basic structure of Constitution, Parliament & State Legislatures

    Context

    A republic is made robust and kept alive by its people. In its current form, the Indian republic marks 73 years of maintaining a dynamic balance.

    Directly elected representation

    •  It is to the credit of our people that today we have a pyramidal three-layered elected representative system that governs us.
    • This system today has over 3 million elected representatives (a million of them women), over 4,000 elected to the state legislatures and over 500 in the Parliament.
    • This scale of directly elected representation, perhaps, can be seen nowhere else in the world.

    Moral and spiritual basis of the Constitution

    • In Pilgrimage to Freedom, K M Munshi writes, “our Constitution has a moral background — to secure justice for every section of our society; as also a spiritual basis — to preserve and protect all religions in the exercise of their functions”.
    • The challenges continue in securing justice for every section of our society.
    • The Backward Classes, the Scheduled Castes and the Scheduled Tribes and the poor across all categories clamour for better opportunities and affordable justice.
    • What Munshi calls the spiritual basis of our Constitution in having to preserve and protect all religions is also seen under stress.
    • When the right to practise one’s religion is denied or threatened, the silence of the thinking public or the media weakens that constitutionally embedded protection.

    Challenges posed by social media

    • Through the power of technology and its capacity to broadcast at mass scale, an otherwise useful tool, social media, has become a challenge and sometimes a threat to one or several of the rights enshrined in our Constitution.
    • Curtailing them to protect the rights of citizens is seen as trampling upon the right to free speech.
    • Without any action, the damage caused to social harmony by such rampant false news can result in people losing faith in the Constitution itself.

    Constitution as a living, dynamic process

    • Our Constitution is the most amended of all constitutions in the world.
    • If there are more than 100 amendments made to the Constitution, there are more than 1,500 laws that have been repealed because they have outlived their times.
    • These deadwood laws, by remaining on paper, occasionally became a weapon in the hands of rent-seekers.
    • Their removal, as a part of administrative reform, has kept the role of the executive transparent and accountable.
    • That the Constitution is always evolving is best exemplified by the 101st amendment which rolled out the Goods and Services Tax.
    • his amendment brought in a unified indirect tax regime by subsuming most of the indirect taxes of the Centre and the states.
    • Yet to complete five full years, the GST Council has stood the test of challenging times even in its initial years.
    • It augurs well for cooperative federalism.

    Conclusion

    Our Constitution has served us well in these seven decades. Several republics in the post-imperial era have rejected their earlier constitutions and tested new ones. It is the people who can keep the republic robust and alive.

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  • Parliament – Sessions, Procedures, Motions, Committees etc

    A festival to salute India’s vibrant democracy

    26 January 2022 | op-ed snap | Polity
    Mains Paper 2: Parliament & State Legislatures

    Context

    This year we are celebrating our 73rd Republic Day. The Constitution has been our guiding force in the journey of the nation as a mature democracy among comity of nations.

    Historical background

    • The Constituent Assembly undertook intensive deliberations over a period of two years, 11 months and 18 days spread over 11 sessions, during which the Constitution of India took shape.
    • Our Constituent Assembly played a dual role after Independence, given the insurmountable task of nation-building.
    • Our Constituent Assembly had performed the functions of the provisional Parliament of India in the interval between the time our Constitution was enforced and the day when the new Parliament was formed following the first General Elections (October 25, 1951-February 21, 1952).
    • The Constituent Assembly of India acted as the first Parliament of independent India.

    Role of the Parliament

    • Representative institutions and democratic traditions have always been an integral part of our rich heritage
    • Our Parliament has been playing a pivotal role in the all-round development of the nation by adopting many parliamentary devices for ensuring free and fair discussions and dialogue.
    • We have to ensure that our institutions and governance ensure inclusivity and the participation of our population in our developmental journey, particularly our women, Scheduled Castes, Scheduled Tribes and all other marginalised sections become equal partners in our growth story.

    Ensuring the best legislative practices

    • Repository of the proceedings: To ensure that best legislative practices are shared, a national portal is being planned to serve as a repository of the proceedings of Parliament and all State/Union Territory legislatures in the country.
    • Research support is being provided to Members to help them participate better and meaningfully in matters brought before Parliament.
    • Review of the laws to make them relevant: It is also time in the journey of our nation to take stock and review laws that were enacted during the pre-Independence era so as to make them more relevant to our current requirements and future challenges.

    Conclusion

    Republic Day is an occasion for people’s representatives and all citizens of this proud nation to reaffirm faith in the ideals enshrined in our Constitution.

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  • Climate Change Impact on India and World – International Reports, Key Observations, etc.

    Towards low emissions growth

    26 January 2022 | op-ed snap | Environment
    Mains Paper 3: GS3-18.Conservation, Environmental Pollution and Degradation, Environmental Impact Assessment.

    Context

    While many developing countries made net-zero pledges at COP26 in Glasgow, they face enormous developmental challenges in their attempts to grow in a climate-constrained world.

    Developmental challenges for India

    • For India, the national context is shaped by high youth unemployment, millions more entering the workforce each year, and a country hungry for substantial investments in hard infrastructure to industrialise and urbanise.
    • Growth with low emission footprint: India’s economic growth in the last three decades, led by growth in the services sector, has come at a significantly lower emissions footprint.
    • But in the coming decades, India will have to move to an investment-led and manufacturing-intensive growth model to create job opportunities and create entirely new cities and infrastructure to accommodate and connect an increasingly urban population.
    •  All of this requires a lot of energy. Can India do all of this with a low emissions footprint?

    What could India do to pursue an industrialization pathway that is climate-compatible?

    • A coherent national transition strategy is important in a global context where industrialised countries are discussing the imposition of carbon border taxes while failing to provide developing countries the necessary carbon space to grow or the finance and technological assistance necessary to decarbonise.
    • What India needs is an overarching green industrialisation strategy that combines laws, policy instruments, and new or reformed implementing institutions to steer its decentralised economic activities to become climate-friendly and resilient.

    Issues with India’s domestic manufacturing of renewable technology components

    • India’s industrial policy efforts to increase the domestic manufacturing of renewable energy technology components have been affected by policy incoherence, poor management of economic rents, and contradictory policy objectives.
    • India managed to create just a third of jobs per megawatt that China has managed to in its efforts to promote solar PV and wind technologies.
    • China has created more jobs in manufacturing solar and wind components for exports than domestic deployment.
    • India could have retained some of those jobs if it were strategic in promoting these technologies.

    Opportunities in decarbonising transport and industry sector

    • Technologies needed to decarbonise the transport and industry sectors provide a significant opportunity for India.
    • However, India’s R&D investments in these emerging green technologies are non-existent.
    • PLI is a step in right direction: The production-linked incentives (PLIs) under ‘Aatmanirbhar Bharat’ are a step in the right direction for localising clean energy manufacturing activities.
    • Focus on R&D: Aligning existing RD&D investments with the technologies needed for green industrialisation is crucial for realising quantum jumps in economic activities.
    • Encourage private entrepreneurship: India also needs to nurture private entrepreneurship and experimentation in clean energy technologies.
    • Besides China, Korea’s green growth strategy provide examples of how India could gain economic and employment rents from green industrialisation without implementing restrictive policies.

    Way forward

    • India should set its pace based on its ability to capitalise on the opportunities to create wealth through green industrialisation.
    • India should follow a path where it can negotiate carbon space to grow, buying time for the hard-to-abate sectors; push against counterproductive WTO trade litigations on decarbonisation technologies; all while making R&D investments in those technologies to ensure that it can gain economic value in the transition.

    Consider the question “What are the challenges India faces as it strives to reach the goal of net-zero emission by 2070. Suggest the strategy India should follow to maximise the developmental gains.”

    Conclusion

    The government should neither succumb to international pressure to decarbonise soon nor should it postpone its investment in decarbonisation technologies and lose its long-term competitiveness in a global low-carbon economy.

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  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    Dealing with the macroeconomic uncertainties

    25 January 2022 | op-ed snap | Economics
    Mains Paper 3: Indian Economy

    Context

    Macroeconomic uncertainties are mounting.

    Impact of US Fed’s decision

    • Against the backdrop of possible interest rate hikes by the U.S. Federal Reserve and the taper tantrum, there is pressure on the Reserve Bank of India (RBI) to increase its interest rates to prevent capital outflows.
    • The monetary policy corridor is still “accommodative” to support the growth recovery.
    • Globally, central banks have started increasing the interest rates.

    Macroeconomic uncertainties

    1] Inflationary pressure

    •  In India, the wholesale price index (WPI) inflation rose to a record high of 14.32% in November 2021 as per the data released by the Ministry of Commerce and Industry.
    • The consumer price index (CPI) inflation now is 5.03%, though that is still within the comfort zone of the inflation targeting framework envisaged in India’s new monetary framework.
    • The official nominal inflation anchor in India is 4%, with a band of variations of +/- 2. 

    2] Absorbing excess liquidity

    • The RBI Financial Stability Report, published on December 29, 2021, revealed a possible worsening of the gross non-performing asset (GNPA) ratio of scheduled commercial banks — from 6.9% in September 2021 to 9.5% by September 2022.
    • Absorbing the excess liquidity that was injected to stimulate growth as part of the pandemic response is crucial to reversing trends in non performing assets (NPAs).
    • Absorption of excess liquidity was attempted by increasing the cut-off yield rate of variable rate reverse repo (VRRR) to 3.99%, and curtailing the government securities acquisition programme.

    3] Interest rate structure and implications for government borrowing

    •  The call money market rates are below the repo rate.
    • The bond yields are increasing ahead of the Union Budget 2022-23.
    • The rise in bond yields will result in higher borrowing costs for the Government.

    Way forward for fiscal policy

    • Maintain accommodative policy stance: Given these macroeconomic uncertainties, maintaining an accommodative fiscal policy stance in the upcoming Union Budget for FY23 is crucial for a sustainable recovery.
    • Don’t focus on fiscal consolidation: Any attempt at fiscal consolidation at this juncture employing capital expenditure compression rather than a tax buoyancy path can adversely affect economic growth. 
    •  Public investment — infrastructure investment in particular — is a major growth driver through “crowding-in” of private corporate investment.
    • Strengthening investments in the health-care sector is crucial at this juncture as a prolonged lockdown can accentuate the current humanitarian crisis and deepen economic disruptions.
    • When credit-linked economic stimulus has an uneven impact on growth recovery, the significance of fiscal dominance cannot be undermined.
    • Address unemployment: Rising unemployment needs to be addressed through an urgent policy response that strengthens job guarantee programmes.

    Conclusion

    The upcoming Union Budget for 2022-23 should maintain an accommodative fiscal stance in order to support the sustainability of the economic growth process and also for financing human development.

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