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  • Forest Conservation Efforts – NFP, Western Ghats, etc.

    Protection of ‘Heritage Trees’ in Maharashtra

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

    The Maharashtra government will make amendments to the Maharashtra (Urban Areas) Protection and Preservation of Trees Act of 1975, to introduce provisions for the protection of ‘heritage trees’.

    What are Heritage Trees?

    • Under the proposed amendment, a tree with an estimated age of 50 years or more shall be defined as a heritage tree.
    • It may belong to specific species, which will be notified from time to time.
    • Experts believe that in addition to the age, the state climate change department should also consider a tree’s rarity, its botanical, historical, religious, mythological and cultural importance in defining a heritage tree.
    • The local Tree Authority will have to ensure tree census to be carried out every five years along with counting of heritage trees

    How is the age of the tree determined?

    • The most common method of determining the age of the tree is Dendrochronology – or tree-ring dating also called growth rings.
    • Each year, roughly a tree adds to its girth, the new growth is called a tree ring. By counting the rings of a tree, the age can be determined.
    • However, the process is invasive. To analyse the rings, core samples are extracted using a borer that’s screwed into the tree and pulled out, bringing with it a straw-size sample of wood.
    • The hole in the tree is then sealed to prevent disease.

    Why was the concept of heritage tree introduced?

    • A heritage tree will get special protection.
    • Crucially, the tree’s age will determine the number of trees to be planted as part of the compensatory plantation – that is anyone cutting a heritage tree will need to plant trees in the same numbers as the cut tree’s age.
    • According to the current Compensatory Plantation in the state, one sapling has to be planted for each tree that is cut.
    • In Mumbai, as per the Tree Authority set up in 1976, to help in regulating the felling of trees and providing for the planting of an adequate number of new trees, the compensation ratios are 1:3.

    Changes with the amendment

    • As per the amendment, the number of trees planted will be equal to the age of the heritage tree that is cut.
    • For instance, if a 52-year-old tree is to be felled, then the party felling the tree will have to plant 52 trees in compensation, with each compensatory tree at least 6-8 ft in height at the time of planting.
    • The organization planting the compensation trees will also have to ensure the survival of the plantation for seven years and geo-tag the trees.
    • Such plantations can be carried out either in the same plot or a common amenity plot.
    • Through the introduction of a heritage tree, the state environment wants to discourage the cutting of heritage trees.
    • The amendment has the fine for illegal felling of trees from a maximum of Rs 5,000 to Rs 1 lakh per tree.

    What is the economic value of the tree?

    • In case compensatory plantation is not possible, the tree feller has to pay compensation for the economic valuation of the trees being felled.
    • While the state government has not defined the economic value of the tree, experts say that the amount of oxygen that a tree releases into the environment should determine its economic value.
    • A realistic assessment of the economic value of a tree, which may be permitted to fell, concerning its value to the environment and its longevity, about factors such as:

    the production of oxygen and carbon sequestration, soil conservation, protection of flora/fauna, its role in habitat and ecosystem integrity and any other ecologically relevant factor, distinct from timber/wood

    Tree Authority formation

    • The amendments also make room for the formation of the Maharashtra State Tree Authority and also tree authority in local civic bodies and councils.
    • The Tree Authority is tasked with “increasing the tree cover in urban areas and protecting the existing ones.” Experts shall be a part of the local tree authority.
    • Their knowledge and expertise will form the basis of decisions taken up by the authority.
    • A proposal to cut more than 200 trees of age 5 years or more, will be referred to the state tree authority.
    • The local TA will have to ensure that the project is not sub-divided into smaller parts to keep the number of trees below the defined threshold.
    • Ensure preparation of a tree plan and should aspire over the years to have 33 percent green belt in their area.

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  • Urban Transformation – Smart Cities, AMRUT, etc.

    Delhi’s Master Plan 2041

    | Governance | Mains Paper 1: Urbanization, Their Problems & Remedies

    The Delhi Development Authority gave its preliminary approval to the draft Master Plan for Delhi 2041.

    What is the Master Plan 2041 for Delhi?

    • The draft of the Master Plan seeks to “foster a sustainable, liveable and vibrant Delhi by 2041”.
    • It includes analysis, recommendations, and proposals keeping in mind the population, economy, housing, transportation, community facilities, and land use.
    • The current master plan of Delhi — Master Plan 2021 — expires this year.
    • The first volume is an introduction, providing an overview of Delhi in present times, its global and regional positioning, estimates of population, and projections for 2041.
    • The draft MPD presents a plan for the city for the next 20 years.

    What are the main focus areas of the master plan?

    • In the housing sector, it talks about incentivizing rented accommodation by inviting private players and government agencies to invest more, keeping in mind the large migrant population.
    • It addresses parking problems and suggests a ‘user pays principle, which means users of all personal motor vehicles, except for non-motorized ones, have to pay for authorized parking facilities, spaces and streets.

    How does the master plan tackle environmental pollution?

    • The draft plan aims to minimize vehicular pollution through key strategies, including a switch to greener fuels for public transport and the adoption of mixed-use of transit-oriented development (also known as TOD).
    • It also addresses improving the quality of water, which is taken from the Yamuna river as well as various lakes, natural drains and baolis.
    • The draft lays a clear boundary of the buffer zone near the Yamuna river and explores how to develop it.
    • As per the plan, a green buffer of 300-metre width shall be maintained wherever feasible along the entire edge of the river.

    How is it different from the 2021 Master Plan?

    • The world has gone through a drastic change due to the pandemic, and the growing population has led to shrinking spaces and unemployment.
    • The 2041 plan aims to develop common community spaces to provide refuge spots, common kitchens and quarantine space in an emergency.
    • To improve the nighttime economy, the plan focuses on cultural festivals, bus entertainment, metro, sports facilities, and retail stores included in Delhi Development Authority (DDA)’s Night Life Circuit plan.
    • It also proposes to reduce vulnerability to airborne epidemics through decentralized workspaces, mandatory creation of open areas, better habitat design and green-rated developments to reduce dependence on mechanical ventilation systems.

    What challenges will its implementation face?

    • The master plan on paper looks like a perfect document for the city’s progress.
    • However, when the implementing agencies try to replicate it on the ground, they face challenges like confrontation from political wings, lack of resources and funds, corruption in different departments, lack of political and bureaucratic will and multiplicity of agencies.
    • For instance, despite talks of increasing surface parking, removing junk vehicles, imposing fines for dumping debris, garbage burning, and segregation of waste, a lot of these things could never be implemented.
    • In some cases like, increasing parking or increasing its charges, there is resistance from politicians due to vote-bank politics. In other cases, lack of funds and improper implementation mar the projects.

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  • International Space Agencies – Missions and Discoveries

    EnVision Mission to Venus

    Prelims Only | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    Following NASA’s footsteps, the European Space Agency (ESA) announced that it has selected EnVision as its next orbiter that will visit Venus sometime in the 2030s.

    Last week, NASA selected two missions to the planet Venus, Earth’s nearest neighbour. The missions called DAVINCI+ and VERITAS have been selected based on their potential for scientific value and the feasibility of their development plans.

    What is EnVision?

    • EnVision is an ESA-led mission with contributions from NASA. It is likely to be launched sometime in the 2030s.
    • The earliest launch opportunity for EnVision is 2031, followed by 2032 and 2033.
    • Once launched on an Ariane 6 rocket, the spacecraft will take about 15 months to reach Venus and will take 16 more months to achieve orbit circularization.
    • The spacecraft will carry a range of instruments to study the planet’s atmosphere and surface, monitor trace gases in the atmosphere and analyses its surface composition.

    What are other such missions?

    • EnVision will follow another ESA-led mission to Venus called ‘Venus Express’ (2005-2014) that focused on atmospheric research and pointed to volcanic hotspots on the planet’s surface.
    • Other than this, Japan’s Akatsuki spacecraft has also been studying the planet’s atmosphere since 2015.

    Why are scientists interested in studying Venus?

    • At the core of the ESA’s mission is the question of how Earth and Venus evolved so differently from each other considering that they are roughly of the same size and composition.
    • Venus is the hottest planet in the solar system because of the heat that is trapped by its thick cloud cover.
    • Last year, a team of scientists reported that they had found phosphine gas (a chemical produced only through biological processes) in the atmosphere of Venus.
    • This triggered excitement in the scientific community that some life forms might be supported by the planet.
    • But the existence of life on the planet is nearly impossible given the high temperatures of Venus and its acidic atmosphere.

    Back2Basics: Venus Planet

    • For those on Earth, Venus is the second-brightest object in the sky after the moon.
    • It appears bright because of its thick cloud cover that reflects and scatters light.
    • But while Venus, which is the second closest planet to the Sun, is called the Earth’s twin because of their similar sizes, the two planets have significant differences between them.
    • For one, the planet’s thick atmosphere traps heat and is the reason that it is the hottest planet in the solar system, despite coming after Mercury, the closest planet to the Sun.
    • Surface temperatures on Venus can go up to 471 degrees Celsius, which is hot enough to melt lead.
    • Further, Venus moves forward on its orbit around the Sun but spins backwards around its axis slowly.
    • This means on Venus the Sun rises in the west and sets in the East.
    • One day on Venus is equivalent to 243 Earth days because of its backward spinning, opposite to that of the Earth’s and most other planets.
    • Venus also does not have a moon and no rings.

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  • Cyber Security – CERTs, Policy, etc

    What is Fastly Internet Outage?

    Prelims Only | Security Issues | Mains Paper 3: Cyber Security

    Several big websites around the world went down for about half an hour because of a major issue with the content delivery network (CDN) of American cloud computing services provider Fastly.

    Global internet outage: Which websites were affected?

    • com, Reddit, Twitch, Spotify, Pinterest, Stack Overflow, GitHub, gov.uk, Hulu, HBO Max, Quora, PayPal, Vimeo and Shopify are some of the big names.
    • Prominent news websites impacted were the Financial Times, the Guardian, the New York Times, CNN, and Verge, to name some.
    • Most users would have seen a 503 error when trying to access these websites, indicating that the browser was not able to access the server.

    What is Fastly?

    • Fastly is a cloud computing services provider, which offers CDN, edge computing, cloud storage services.
    • All of its geographies, including the three stations it has in India — Chennai, Mumbai and New Delhi — were suffering from “Degraded Performance”.

    Answer this PYQ from CSP 2018:

    Q.The terms ‘WannaCry, Petya, Eternal Blue’ sometimes mentioned news recently are related to

    (a) Exoplanets

    (b) Crypto currency

    (c) Cyber attacks

    (d) Mini satellites

    What is a CDN?

    • A CDN refers to a geographically distributed group of servers that work together to provide fast delivery of Internet content.
    • They house content close to the telecom service providers’ networks.
    • Majority of web traffic across the world today is routed through CDNs.
    • Platforms such as Netflix, Facebook, Amazon — ones with large quantities of data held in global libraries — host their geographically relevant content closer to where that content is to be consumed.
    • This ensures the end customer is able to access the content faster.
    • Another reason companies rely on these CDNs is to help protect their sites against traffic spikes, distributed denial of service (DDOS) attacks, etc.

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  • [pib] Aspirational Districts Programme

    PIBSchemes | Governance | Mains Paper 2: Government Scheme/Policies

    In an independent appraisal report released today, United Nations Development Programme (UNDP) India has lauded the Aspirational Districts Programme (ADP) as a very successful model of local area development.

    Aspirational Districts Programme

    • Launched in January 2018, the ‘Transformation of Aspirational Districts’ initiative aims to remove this heterogeneity through a mass movement to quickly and effectively transform these districts.
    • The broad contours of the programme are Convergence (of Central & State Schemes), Collaboration (of Central, State level ‘Prabhari’ Officers & District Collectors), and Competition among districts driven by a spirit of mass Movement.
    • With States as the main drivers, this program will focus on the strength of each district, identify low-hanging fruits for immediate improvement, measure progress, and rank districts.

    Selection of districts

    • A total of 117 Aspirational districts have been identified by NITI Aayog based upon composite indicators.
    • These include Health & Nutrition, Education, Agriculture & Water Resources, Financial Inclusion and Skill Development and Basic Infrastructure which have an impact on Human Development Index.

    Weightage has been accorded to these districts as below:

    • Health & Nutrition (30%)
    • Education (30%)
    • Agriculture & Water Resources (20%)
    • Financial Inclusion & Skill Development (10%)
    • Basic Infrastructure (10%)

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  • Promoting Science and Technology – Missions,Policies & Schemes

    [pib] Sub-Mission on Agricultural Mechanization (SMAM)

    PIB | Agriculture | Mains Paper 3:

    To empower the farmers through the Sub-Mission on Agricultural Mechanization (SMAM) scheme, the government has released funds for various activities of Farm Mechanization.

    Sub-Mission on Agricultural Mechanization (SMAM)

    • The Agri ministry has launched this mission in 2014-15 with the objectives of increasing the reach of farm mechanization to small and marginal farmers and to the regions & difficult areas where farm power availability is low.
    • Under this scheme, it has been proposed to established Village Level farm Machinery Bank (VLFMB), Custom Hiring Centres (CHC) and High Tech Hubs (HTH) in order to facilitate easy availability of farm implements and machinery for hire by farmers.

    Why need such a scheme?

    • Agricultural Mechanization plays a vital role in optimizing the use of land, water energy resources, manpower and other inputs like seeds, fertilizers, pesticides etc to maximize the productivity of the available cultivable area and make agriculture a more profitable and attractive profession for rural youth.
    • It is one of the key drivers for the sustainable development of the agriculture sector.
    • Sustainable Agriculture mechanization growth will require appropriate and precision agricultural machinery adequately supported by the latest technology.

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  • Air Pollution

    [pib] Aerosol Nucleation

    PIB | Enviro & Biodiversity | Mains Paper 1: Important Geophysical Phenomena

    Scientists tracing the concentration, size and evolution of aerosol particles smaller than 3 nanometers at an urban location in India have found the frequent formation of sub-3nm aerosol particles in the atmosphere.

    What is Aerosol Nucleation?

    • The formation of small molecular clusters of sub-3nm size is technically called aerosol nucleation, and subsequent growth of these newly formed clusters to the large sizes is called atmospheric new particle formation (NPF).
    • NPF occurs everywhere in the terrestrial troposphere, and therefore it is a large source of aerosol numbers to the atmosphere.
    • Though extensively studied globally using field observations, laboratory experiments and modelling approach, it is largely unexplored in India.

    What has the new research found?

    • The research showed that a pool of sub-3nm particles is often present in the atmosphere, but how fast these clusters grow depends on various factors.
    • The scientists observed that only half of these events showed newly formed molecular clusters growing past 10 nm size.
    • Thus particle size distributions display a conventional banana-shaped aerosol growth, which is indicative of regional NPF event.

    Role of Sulphur

    • The team found a strong positive correlation between sub-3nm particle concentrations and sulphuric acid concentrations, confirming the potential role of sulfuric acid in the formation of sub-3nm particles.
    • While NPF often starts with sulphuric acid in the atmosphere, sulphuric acid alone fails to explain observed particle formation and growth rates in the atmosphere.
    • Other vapours such as ammonia, amines and organics play a crucial role in the growth of newly formed particles.
    • This has critical importance as a major fraction of these newly formed particles can reach to sizes of cloud condensation nuclei where they have climatic impacts.

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  • Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

    Why companies are adopting sustainable business models?

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

    The article discusses the three undercurrents that are pushing companies to adopt more sustainable business models.

    Demand for sustainable business practices

    • Companies across the world are facing pressure to adopt sustainable business practices.
    • In a global first, a judicial court in the Netherlands has invoked the principles of human rights obligations of companies to rule that the Royal Dutch Shell will have to further accelerate its targeted reduction in greenhouse gas (GHG) emission.
    •  The shareholders of Chevron forced upon the management a resolution to set strict emission targets from the products that it sells.
    • The German cabinet approved a law that requires all coal-fired plants to close down much earlier than the target date set only eighteen months ago.
    • In India, the SEBI came out with a new set of Business Responsibility and Sustainability Reporting (BRSR).
    • BRSR will be mandatory for the top 1,000 companies from the next year.

    Three factors driving the change

    1) Investors’ pull

    • Workers saving for their pension do not want their investments to go to companies whose tailings-dam can burst and cause hundreds of death in Brazil.
    • Investors also realise the long-term business risk of companies if sustainability isn’t a focus.

    2) Governments’/regulators’ push

    • In 2021, the US announced that it will cut emissions by over 50% by 2030.
    • Japan has almost doubled its 2030 targets.
    • The UK has now announced a target to cut 40-45% by the same time, from the earlier goal of a 30%-cut.
    • China has announced that its emissions will peak by 2030, and by 2060, it would have net zero emissions.
    • India is expected by the global community to announce net-zero by 2050.
    • All of these have huge implications not only for hydrocarbon companies but across multiple sectors.
    • Banking regulators are asking banks to include climate in the risk assessment of the companies they lend to.
    • Insurance and pension regulators are raising similar questions in their sector.

    3) Measurement/reporting

    • When sustainability debates picked up, many organisations like CDP, CDSB, PRI, GRI, TCFD, IMP, IIRC, SASB, etc, sprang up to fulfill the need for sustainability reporting.
    • Often, these worked at cross purposes and in competition with each other, leading to ‘greenwashing’ and other malpractices and creating confusion in the minds of investors.
    • But, the realisation that the investors need a set of comparable and verifiable reporting formats has gathered momentum in the past one year.
    • The last excuse to avoid focus on sustainable business practices will also wither away.

    Consider the question “Financial capital is just one of the multiple capitals a successful company must possess. This brings sustainability into the focus. In light of this, discuss the factors that are forcing the companies to factor in the sustainability in their business models.”

    Conclusion

    The decades-old debate on environmental damage and sustainability is now reaching a decisive phase. Companies need to factor in the sustainability aspect in their profit calculus to remain relevant in changing world.

    Source:

    https://www.financialexpress.com/opinion/the-sustainability-heat-on-companies/2268494/

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

    What Centre must do to meet the economic challenges

    op-ed snap | Economics | Mains Paper 3: Government Budgeting

    The article takes an overview of the fiscal and monetary challenges posed by the second covid wave and suggest ensuring the availability of liquidity.

    GDP projections need to be re-examined

    •  According to NSO’s provisional estimates for 2020-21, the annual contraction in real GDP turned out to be 7.3 per cent.
    • The erstwhile GDP growth projections for 2021-22 are being re-examined to take into account the adverse impact of the second wave of the pandemic.
    • The RBI has revised down its 2021-22 real GDP growth forecast to 9.5 per cent.
    • Some other recent estimates (ICRA) indicate the feasibility of a 9 per cent growth.
    •  It is also important to consider nominal GDP growth for 2021-22 since that would be a critical determinant of fiscal prospects. 
    • In the light of supply-side and cost-push pressures, the RBI has projected CPI inflation at 5.1 per cent.
    • The nominal GDP growth may be projected at 13.4 per cent, that is, 1 percentage point lower than Centre’s budget assumption of 14.4 per cent.

    Fiscal aggregates

    • The Controller General of Accounts’ data indicate a gross tax revenues (GTR) of Rs 20.2 lakh crore and net tax revenue of Rs 14.2 lakh crore for 2020-21. 
    • The likely growth in GTR for 2021-22 may be derived by applying a buoyancy of 0.9.
    • This gives a tax revenue growth of 12 per cent, translating that to projected gross and net tax revenues for 2021-22 would mean Rs 22.7 lakh crore and Rs 15.8 lakh crore respectively. 
    • This implies some additional net tax revenues to the Centre amounting to Rs 0.35 lakh crore as compared to the budgeted magnitudes.
    • The main expected shortfall may still be in non-tax revenues and non-debt capital receipts.
    • According to the CGA numbers, their 2020-21 levels are respectively Rs 2.1 lakh crore and Rs 0.57 lakh crore.
    • Applying a growth rate of 15 per cent on these, a shortfall in 2021-22 to the tune of Rs 1.3 lakh crore may arise in non-tax revenues and non-debt capital receipts.

    So, how much would be the Fiscal Deficit?

    • The growth rates of non-tax revenues and and non-debt capital receipts average to a little lower than 15 per cent during the five years preceding 2020-21.
    • In any case, the large budgeted growth of 304 per cent in non-debt capital receipts for 2021-22 seems quite unlikely because of the challenges posed by the second wave.
    • Taking into account RBI’s recently announced dividend of Rs 0.99 lakh crore to the Centre, the main shortfall may be in non-debt capital receipts.
    • Together, the overall shortfall in total non-debt receipts may be limited to about Rs 0.9 lakh crore, or 0.4 per cent of estimated nominal GDP.
    • This indicates that a slippage, if any, in the budgeted fiscal deficit of 6.7 per cent of GDP, as revised in view of the recently released GDP data, could be a limited one.

    Way forward: Prioritise three heads

    • First, an increase in the provision for income support measures for the vulnerable rural and urban population.
    • Second, in light of the recent decision, the budgeted expenditure on vaccination of Rs 0.35 lakh crore ought to be augmented, at the very least, doubled.
    • Third, additional capital expenditure for select sectors, particularly healthcare, should also be provided for.
    • Together these additional expenditures would amount to Rs 1.7 lakh crore, about 0.8 per cent of the estimated nominal GDP.
    • Thus, we need to plan for a fiscal deficit of about 7.9 per cent of GDP.

    Borrowing programme would need RBIs support

    • The Centre has announced borrowings of Rs 1.6 lakh crore to meet the shortfall in the GST compensation cess.
    • Given the higher fiscal deficit, it would need to add to its borrowing programme another Rs 2.6 lakh crore, taking the total borrowing, including GST compensation, to about Rs 16.3 lakh crore, from Rs 12.05 lakh crore now.
    • Borrowing by states would be in addition to this.
    • The net result will be an unprecedented borrowing programme by the Centre which may require RBI’s support.
    • RBI is injecting liquidity into the system through various channels.
    • Banks have sufficient liquidity to subscribe to new debt.
    • This is indirect monetisation of debt.
    • This is not new, but the scale is much higher.
    • Direct monetisation is best avoided.
    • The success of the borrowing programme of the Centre depends on the support provided by the RBI.
    • The support need not be direct.
    • It can be indirect as is currently happening. RBI is injecting liquidity into the system in a big way.
    • Despite this, the money multiplier is low.
    • This may be attributed to two reasons: Low credit expansion and larger leakage in the form of currency.
    • The potential for money supply growth is large.
    • The discussion in the monetary policy statement on inflation is focused entirely on supply availability and bottlenecks in the distribution of commodities.
    • The output gap is certainly relevant.
    • But equally relevant in an analysis of inflation is liquidity in the system, and its impact on output and prices with lags.
    • The injection of liquidity has its limits.

    Conclusion

    With higher expenditure, financed through borrowings, the impact of liquidity expansion on inflation needs to be monitored.

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  • Goods and Services Tax (GST)

    Issues with special treatment of states with higher contribution to GST pool

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

    The article highlights the issues with the demand for special treatment of states with higher contribution to GST pool.

    Debate on GST

    • The issue of GST concessions on COVID relief has brought into focus the structural flaws in the GST structure.
    • In this process, the structure and design of GST — essentially a tax on consumption — is being questioned.
    • The issue of  “rich” states versus “poor” ones, the decision-making process in the GST Council, and the representation of various states in the Council have also come into the focus.

    Why States should be treated equally in GST Council

    1) Consensus on GST

    • The structure and design of GST and its basic features, as enshrined in the 101st Constitution Amendment Act, were unanimously adopted and endorsed by Parliament.
    • The broader and finer points of the law, were thoroughly discussed and debated and recommended by the GST Council after a complete consensus.
    • These were further debated and approved by not only Parliament but also by each of the state legislatures.
    • There was complete consensus even on the issue of delegated legislation — something unheard of in a federal environment.

    2) Equality of all states

    • In this process of consensus building, no state was accorded even the slightest of special privilege.
    • That is why the consensus surrounding GST was unprecedented whether in India or any other federation.
    • Therefore, arguing for special treatment of some states is a dangerous idea, particularly in governance, and more so in a welfare state.
    • For, this would open the gates for elitist arguments such as special rights for bigger taxpayers, unequal voting rights in elections and preferential treatment for a select few.

    3) Issues with greater contribution to GST revenue pool

    • It is not correct to argue that the GST collected in a state represents the revenue of that particular state for, under the GST mechanism, the tax deposited by a taxpayer in a state is a function of largely the value of supplies made by such taxpayer.
    • Approximately 50 per cent at the aggregate level and much higher at the state level of such values are of an inter-state nature.
    • In other words, most supplies made from any producing state are consumed elsewhere and the revenue in such a situation naturally and rightfully accrues to the destination state.

    4) No transfers based on a formula

    • It is equally fallacious to argue that under GST, most of the revenue is collected by the Union and is transferred to the states on the basis of some formula.
    • The quantum of IGST revenue that is settled to any state is directly related to the returns filed in that state and the cross utilisation of credit exhibited in such returns; part of this settlement also comprises tax on supplies destined to that state, as exhibited in the returns of such suppliers.
    • There is no “formula” as such for “transfer” of revenue collected by the Centre. Instead, such “transfers” are directly relatable to the consumption (whether intermediate or final) in any state.

    5) Locational or geographical advantage

    • There is another dimension to the higher revenue collection in a few states.
    • One may note that such states enjoy locational or geographical advantages, being mostly coastal and immensely suited to the needs of trade and distribution as also manufacturing.
    • Also, the disadvantage to such states on account of lower availability of certain vital minerals like coal and iron ore was undone by the principle of freight equalisation resorted to in the years following Independence.
    • This contributed, in no small measure, to the development of such states.

    6) Unequal transfers of Central receipts

    • The argument of unequal transfers of central receipts also does not hold water, either in India or in any other federation.
    • As is well known, such transfers are intended for correcting horizontal fiscal imbalances in a federation.

    Conclusion

    We should thus concentrate on carrying forward the glorious traditions of perhaps the only institution of co-operative federalism that we have been able to build so far.

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