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  • US moves to rejoin UN Human Rights Council

    The Biden administration is set to reengage with the much-maligned UN Human Rights Council that former Donald Trump withdrew from almost three years ago.

    Try this PYQ:

    Q.Consider the following:

    1. Right to education.
    2. Right to equal access to public service.
    3. Right to food.

    Which of the above is/are Human Right/Human Rights under “Universal Declaration of Human Rights”?

    (a) 1 and 2 only

    (b) Only 1

    (c) 1, 2 and 3

    (d) Only 3

    Why did the US pulled-out earlier?

    • Trump pulled out of the world body’s main human rights agency in 2018 due to its disproportionate focus on Israel.
    • Israel had received by far the largest number of critical council resolutions against any country.
    • The Trump administration took issue with the body’s membership, which currently includes China, Cuba, Eritrea, Russia and Venezuela, all of which have been accused of human rights abuses.

    About UN Human Rights Council

    • The UNHRC describes itself as “an inter-governmental body within the UN system responsible for strengthening the promotion and protection of human rights around the globe.
    • It addresses situations of human rights violations and make recommendations on them.
    • The first session took place from June 19-30, 2006, three months after the Council was created by UN General Assembly Resolution 60/251 on March 15 that year.
    • The UNHRC has the ability to discuss all thematic human rights issues and situations that require its attention throughout the year.
    • The HRC replaced the former United Nations Commission on Human Rights (UNCHR).

    HRC Meetings

    • The Human Rights Council holds no fewer than three regular sessions a year, for a total of at least 10 weeks.
    • The meetings take place for four weeks in March, for three weeks in June, and for another three weeks in September.
    • The sessions are held at the UN Office in Geneva, Switzerland.
    • If one-third of the Member States so request, the HRC can decide at any time to hold a special session to address human rights violations and emergencies.

    Membership

    • The Council is made up of 47 UN Member States, which are elected by the UNGA through a direct and secret ballot.
    • The General Assembly takes into account the contribution of the candidate states to the promotion and protection of human rights, as well as their voluntary pledges and commitments in this regard.
    • Members of the Council serve for a period of three years and are not eligible for immediate re-election after serving two consecutive terms.
    • As of January 1, 2019, 114 UN Member States have served on the HRC. Both India and Pakistan are on this list.
    • The HRC has a Bureau of one President and four Vice-Presidents, representing the five regional groups. They serve for a year, in accordance with the Council’s annual cycle.

    Seat distribution

    • African States: 13 seats
    • Asia-Pacific States: 13 seats
    • Latin American and Caribbean States: 8 seats
    • Western European and other States: 7 seats
    • Eastern European States: 6 seats
  • Prevention of Insults to National Honour Act

    Police have booked several under The Prevention of Insults to National Honour Act, 1971, for the alleged insult of the National Flag in farmers protest on Republic Day.

    Prevention of Insults to National Honour Act

    • The law, enacted on December 23, 1971, penalizes the desecration of or insult to Indian national symbols, such as the National Flag, the Constitution, the National Anthem, and the Indian map, as well as contempt of the Constitution of India.
    • Section 2 of the Act deals with insults to Indian National Flag and Constitution of India.

    Do you know?

    Article 51 ‘A’ contained in Part IV A i.e. Fundamental Duties asks:

    To abide by the constitution and respect its ideals and institutions, the National Flag and the National Anthem in clause (a).

    Other provisions

    • Section 3.22 of The Flag Code of India, 2002 deals with laws, practices and conventions that apply to the display of the national flag.
    • Section 3.58 says: On occasions of State/Military/Central Paramilitary Forces funerals, the flag shall be draped over the bier or coffin with the saffron towards the head of the bier or coffin.
    • The Flag shall not be lowered into the grave or burnt in the pyre.

    Try this PYQ:

    Q.The national motto of India, ‘Satyameva Jayate’ inscribed below the Emblem of India is taken from:

    (a) Katha Upanishad

    (b) Chandogya Upanishad

    (c) Aitareya Upanishad

    (d) Mundaka Upanishad

    Use of flag in funerals

    • The flag can only be used during a funeral if it is accorded the status of a state funeral.
    • Apart from police and armed forces, state funerals are held when people who are holding or have held the office of President, Vice-President, PM, Cabinet Minister, or state CM pass away.
    • The status of a state funeral can be accorded in case of death of people not belonging to the armed forces, police or the above-mentioned categories by the state government.
    • Then too, the national flag can be used.
  • Einsteinium: the mysterious element named after Albert Einstein

    The University of California has reported some of the properties of element 99 in the periodic table called “Einsteinium”, named after Albert Einstein.

    Try this PYQ:

    Q.The known forces of nature can be divided into four classes, viz, gravity, electromagnetism, weak nuclear force and strong nuclear force.

    With reference to them, which one of the following statements is not correct? (CSP 2012)

    (a) Gravity is the strongest of the four

    (b) Electromagnetism act only on particles with an electric charge

    (c) Weak nuclear force causes radioactivity

    (d) Strong nuclear force holds protons and neutrons inside the nuclear of an atom.

    Einsteinium

    • It was discovered in 1952 in the debris of the first hydrogen bomb (the detonation of a thermonuclear device called “Ivy Mike” in the Pacific Ocean).
    • Since its discovery, scientists have not been able to perform a lot of experiments with it because it is difficult to create and is highly radioactive.
    • Therefore, very little is known about this element.
    • With this new study published in the journal Nature last week, for the first time researchers have been able to characterize some of the properties of the element.

    The discovery of the element

    • Ivy Mike was detonated on November 1, 1952, as part of a test at a remote island location called Elugelab on the Eniwetok Atoll in the South Pacific.
    • The blast produced an explosion that was about 500 times more destructive than the explosion that occurred at Nagasaki.
    • Subsequently, the fallout material from this explosion was sent to Berkeley in California for analysis which identified over 200 atoms of the new element.

    Properties of the element

    • Einsteinium has a half-life of 20 days.
    • Because of its high radioactivity and short half-life of all einsteinium isotopes, even if the element was present on Earth during its formation, it has most certainly decayed.
    • This is the reason that it cannot be found in nature and needs to be manufactured using very precise and intense processes.
    • Therefore, so far, the element has been produced in very small quantities and its usage is limited except for the purposes of scientific research.
    • The element is also not visible to the naked eye and after it was discovered, it took over nine years to manufacture enough of it so that it could be seen with the naked eye.
  • [pib] Scheme for Management of Crop Residues

    The Scheme on ‘Promotion of Agricultural Mechanization for In-Situ Management of Crop Residue in the States of Punjab, Haryana, Uttar Pradesh and NCT of Delhi’ has been extended for the year 2021-22.

    We can cite the example of this scheme for crop residue management as an effective solution against stubble burning.

    Management of Crop Residues

    • In pursuance this, a central sector scheme (100% funded by centre) was launched in 2018 Budget to support the efforts of the governments of Haryana, Punjab, Uttar Pradesh and the NCT of Delhi to address air pollution.
    • It aimed to subsidize the machinery required for in-situ management of crop residue.

    Various objectives of the scheme:

    • Protecting the environment from air pollution and preventing loss of nutrients and soil micro-organisms caused by burning of crop residue;
    • Promoting in-situ management of crop residue by retention and incorporation into the soil through the use of appropriate mechanization inputs and
    • Creating awareness among stakeholders for effective utilization and management of crop residue

    Outcomes of the scheme

    • The residue burning events in 2020 in Punjab, Haryana and UP together have reduced by -30% as compared to 2016.
    • In Punjab the reduction is -22.7%, Haryana – 63.8% and UP – 52.01%.
  • [pib] Malabar Naval Exercises

    The 24th edition of Malabar maritime exercise, hosted by Indian Navy in 2020, witnessed the participation by Indian Navy, United States Navy, Japan Maritime Self Defence Force and Royal Australian Navy.

    Such news is nothing but the repetitive chunk that occurs every year with few or no new developments. Still, they are significant for the sake of information as Australia has joined it after several apprehensions.

     Question can be expected in CAPF, CDS or AFCAT exams.

    About Ex. Malabar

    • Exercise Malabar is a trilateral naval exercise involving the US, Japan and India as permanent partners.
    • This year Australia has joined as a permanent partner.
    • Originally begun in 1992 as a bilateral exercise between India and the United States, Japan became a permanent partner in 2015.
    • Past non-permanent participants are Australia and Singapore.
    • The annual Malabar series began in 1992 and includes diverse activities, ranging from fighter combat operations from aircraft carriers through Maritime Interdiction Operations Exercises.

    Significance of Australia’s inclusion

    • Earlier, India had concerns that it would give the appearance of a “quadrilateral military alliance” aimed at China.
    • Now both look forward to the cooperation in the ‘Indo-Pacific’ and the strengthening of defence ties.
    • This has led to a convergence of mutual interest in many areas for a better understanding of regional and global issues.
    • Both are expected to conclude the long-pending Mutual Logistics Support Agreement (MLSA) as part of measures to elevate the strategic partnership.
  • 9th February 2021| Daily Answer Writing Enhancement

    Important Announcement:  Topics to be covered on 10th February

    GS-1  Salient features of Indian Society, Diversity of India. 

    GS-4 Contributions of moral thinkers and philosophers from India and world. 

    Question 1)

    Present a sketch of major Sufi orders in India. What was their goal? Explain. 10 marks

    Question 2)

    India has been at the receiving end of the international criticism for some of its internal affairs. Suggest the measures to avoid such criticism. 10 marks

    Question 3)

    The Union Budget has provided a stimulus to growth by focusing on the infrastructure. But this there are several concerns about such a push. In light of this, examine how the Budget provides a stimulus to the growth and what are the concerns about such provision in the Budget. 10 marks

    Question 4)  

    Define emotional intelligence and explain its major components. 10 marks

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  • [Burning Issue] Myanmar Coup

    https://d18x2uyjeekruj.cloudfront.net/wp-content/uploads/2021/02/myn.jpg
    • In the early hours of day, Myanmar’s military, also known as the Tatmadaw staged a bloodless coup which brought the country’s recent and limited experiment with democracy to an end.
    • Tens of thousands of protesters poured onto the streets across Myanmar in the biggest anti-coup rallies with deteriorating situation amidst internet ban.

    India voiced a strong condemnation of the deeply disturbing developments in Myanmar.

    Myanmar: A backgrounder

    • Myanmar, also known as Burma, is in South East Asia and neighbours Thailand, Laos, Bangladesh, China and India.
    • The biggest city is Yangon (Rangoon) but the capital is Nay Pyi Taw.
    • The main religion is Buddhism. There are many ethnic groups in the country, including Rohingya Muslims.
    • The country gained independence from Britain in 1948. It was ruled by the armed forces from 1962 until 2011, when a new government began ushering in a return to civilian rule.

    Myanmar under Suu Kyi

    • Aung San Suu Kyi became world-famous in the 1990s for campaigning to restore democracy.
    • She spent nearly 15 years in detention between 1989 and 2010 after organising rallies calling for democratic reform and free elections.
    • She was awarded the Nobel Peace Prize while under house arrest in 1991.
    • In 2015, she led the NLD to victory in Myanmar’s first openly contested election in 25 years.

    Her crackdown on Rohingyas

    • Suu Kyi’s international reputation has suffered greatly as a result of Myanmar’s treatment of the Rohingya minority.
    • Myanmar considers them illegal immigrants and denies them citizenship. Over decades, many have fled the country to escape persecution.
    • Thousands of Rohingya were killed and more than 700,000 fled to Bangladesh following an army crackdown in 2017.
    • Ms Suu Kyi appeared before the International Court of Justice in 2019, where she denied allegations that the military had committed genocide.

    The ‘infamous’ Coup

    • The military is now backing in charge and has declared a year-long state of emergency.
    • It seized control following a general election which Suu Kyi’s National League for Democracy (NLD) party won by a landslide.
    • The armed forces had backed the opposition, who were demanding a rerun of the vote, claiming widespread fraud.
    • The election commission said there was no evidence to support these claims.
    • Suu Kyi is thought to be under house arrest. Several charges have been filed against her, including breaching import and export laws and possession of unlawful communication devices.

    Public has outraged

    Suu Kyi has urged her supporters to “protest against the coup”. The nights that followed the military takeover saw people show their dissent by banging pots and honking car horns.

    • The military blocked access to Facebook, which is widely used across the country than Twitter and Instagram. But that failed to stop large nationwide protests on Saturday.
    • The rulers then ordered a full internet blackout. Protesters, again, took to the streets to denounce the coup.
    • Next day saw the country’s largest protests since the so-called Saffron Revolution in 2007, when thousands of the country’s monks rose up against the military regime.

    What has the international reaction been?

    Experts say that the real motivation behind the military’s action is Suu Kyi’s popularity and growing power, which it believes could erode its control over critical policy domains.

    • The UK, EU and Australia are among those to have condemned the military takeover.
    • UN Secretary-General António Guterres said it was a “serious blow to democratic reforms”.
    • US President Joe Biden has threatened to reinstate sanctions.

    Someone seems ‘pleased’

    China neither condemned nor expressed any concern. It just said that reconciliation is needed between the civilian set-up and Myanmar military or Tatmadaw.

    • China blocked a UN Security Council statement condemning the coup.
    • The country, which has previously opposed international intervention in Myanmar, urged all sides to “resolve differences”.
    • Its Xinhua news agency described the changes as a “cabinet reshuffle”.
    • Neighbours including Cambodia, Thailand and the Philippines, have said it is an “internal matter”.

    The two vastly different stances adopted by India and China offer a glimpse into who stands to gain as military rule returns to Myanmar after 10 years of gradual, albeit limited, political opening.

    An analysis: India-Myanmar Relations

    India-Myanmar relations are rooted in shared historical, ethnic, cultural and religious ties. As the land of Lord Buddha, India is a country of pilgrimage for the people of Myanmar. The geographical proximity of the two countries has helped develop and sustain cordial relations and facilitated people-to- people contact.

    Both share a long land border of over 1600 km (approx.) and a maritime boundary in the Bay of Bengal.

    A large population of Indian origin (according to some estimates about 2.5 million) lives in Myanmar. India and Myanmar signed a Treaty of Friendship in 1951.

    India’s interests

    • The geographically strategic location of Myanmar makes it a bridge between South Asia and Southeast Asia.
    • India needs a good working relationship with the Myanmar government for its diplomatic and strategic initiatives.
    • This is especially due to China’s nefarious designs in Myanmar, which wants to develop it as a geopolitical base against India.
    • Despite Myanmar being ruled by military junta over the years, India has developed close ties and shares a good relationship with Tatmadaw.

    (a) Strategic relations

    • Last year, despite facing shortage of its own, India handed over INS Sindhuvir, a submarine, to the Myanmar Navy.
    • Tatmadaw responded well to Indian overtures and even allowed India to conduct counter-interagency operations against Indian insurgents groups in Myanmar border areas.
    • Both nations seek to cooperate to counteract drug trafficking and insurgent groups operating in the border areas.

    (b) Economic relations

    (c) HADR operations

    • India responded promptly and effectively in rendering assistance after natural disaster in Myanmar such as the earthquake in Shan state (2010) Cyclone Mora (2017), and Komen (2015).
    • India offered to help in capacity building in disaster risk mitigation as well as strengthening Myanmar’s National Disaster Response Mechanism.

    What defines China-Myanmar relations?

    China has its own designs and wants to use Myanmar as another base in its ‘string of pearl’ strategy against India. Through the string of pearls approach, China intends to encircle India by developing military bases in India’s neighbouring countries and Myanmar has long been on China’s radar.

    (a) Debt traps

    • Burdening Myanmar under Chinese debt trap is the first step of the plan.
    • Under China-Myanmar Economic Corridor (CMEC) part of the Belt and Road Initiative (BRI), China is funding and developing many big projects in Myanmar that can be used as military bases in future.
    • These infrastructure projects have put Myanmar in massive Chinese debt trap, and accounts for over 40 per cent of the current $10 billion national debt.

    (b) Political interference

    • The second Chinese step was to control the political machinery.
    • Like in Nepal, where China maneuvered to install a pro-Beijing and anti-India group government, Myanmar is expected to witness the same thing with military coup.
    • Geostrategic experts say China instigated Nepal to start the border dispute with India.

    (c) Trade dependence

    • With this second step done, the third step comes into play: making a country your economically held scapegoat.
    • When it comes to bilateral trade with India, it stood at just $1.5 billion dollars in 2019-20, nowhere near that of China.  With China, the bilateral trade is worth $12 billion dollars.
    • But if we go by an official Chinese report quoting the Ministry of Commerce of China, export and import between China and Myanmar was worth $168 billion dollars in 2019.
    • That is huge for a small country like Myanmar.

    Through the prism of Coup

    (a) Impact on India

    While the coup invited international condemnation, not much will change for India as it has built ties with the Tatmadaw over the years.

    • The handing over late last year of INS Sindhuvir, a kilo-class submarine of the Indian Navy, to the Myanmar Navy, was the most recent sign of the deepening ties between New Delhi and the Tatmadaw.
    • India and China have been competing for influence in Myanmar.
    • If India hadn’t agreed to help Myanmar meet its naval requirements, it would have meant a greater Chinese presence in the Bay of Bengal.

    Senior General Min Aung Hlaing (behind this coup) has made multiple visits to India over the last few years, most recently in 2019, when he met our PM.

    (b) Impact on China

    • India was the largest supplier of weapons and other military equipment to Myanmar in 2019, the last year for which records are available in the SIPRI Military Expenditure Database.
    • Tatmadaw exported military hardware worth $100 million from India that year while it spent only $47 million on Chinese military equipment the same year.
    • This is significant because China has been the largest supplier of weapons to the Southeast Asian country over the decades.
    • The General has also been critical of China, accusing Beijing of providing support to certain insurgent groups in the country, including the Arakan Army in Rakhine state, which the Tatmadaw has been fighting.

    Many rebel groups in Myanmar have been using Chinese-made weapons against the military. This, experts say, rules out a tight embrace of China in the near term.

    Repercussions of the Coup

    • And with over 50 years of military rule and an isolated status in the world, it seems that most of the relations are held by China alone.
    • If the US goes ahead with its threat of sanctions because of the coup, Myanmar will have to turn to Beijing as a shield.
    • In a nutshell, Myanmar’s economy is largely dependent on China, and with a pro-Beijing government in place, Myanmar may well fall finally into Chinese debt trap by allowing China funded BRI projects.
    • If that happens, Myanmar will be reducing to a mere economic scapegoat of its largest trading partner China, and a hostile neighbour for India’s geopolitical interests.
    • This in turn will emerge as a deterrent in the global vision of Indo-Pacific.

    It may be often tempting to describe India’s Myanmar policy as suffering from a dilemma between values and interest.

    Wait….. India never acts blindfolded

    India’s interest in Myanmar has always been guided strategically by the centrality of democracy to ensure deeper ties.

    India has also learned to accept that “the liberal democratic paradigm will not automatically come about” in Myanmar, nor in any other part of India’s politically volatile neighbourhood.

    So while Indian policymakers have always been clear about their democratic endgame in Myanmar, they also recognise that pragmatic adjustments are sometimes necessary to engage with the military, which remains the ultimate guarantor of internal stability and order.

    Since Nehruvian times….

    60 years ago, the Burmese armed forces, the Tatmadaw, first took over power to end a decade of democratic reforms in the 1950s.

    • The coup of March 1962 was a severe setback for India’s investment in a federal, democratic Burma under the leadership of Nehru’s great friend U Nu.
    • However, with the democratic regime in deep crisis, it made sense to engage General Ne Win to protect Indian interests, including cross-border insurgencies, China’s influence and the safety of the larger Indian diaspora.
    • Despite his personal distress at the imprisonment of his friend and the end of democracy, Nehru gave the green light for India to become one of the first countries to recognise the military regime, even before China.
    • For the time being, India will push for democracy in public domain but in private it will pivot to engage with Myanmar’s new military regime.

    The road to democracy in Myanmar lies through its military

    • Sixty years later, the situation is strikingly similar.
    • This marks a return to India’s dual policy of the 2000s, when it built a relationship of high-level trust with the Myanmar military while also nudging and supporting the Generals to embrace democratic reforms.
    • This approach was first crafted in the late 1990s by Shyam Saran, then India’s ambassador in Yangon, and executed in 2000 with a rare display of successful defence diplomacy led by Army chief VP Malik.
    • This was no easy task. Western analysts criticised India for blindly engaging Myanmar.
    • At the UN India came under attack for not supporting sanctions and condemnatory resolutions, especially during the failed 2007 democratic uprising.

    Despite such pressure, India stood firm and also paid a price for it. PM Manmohan Singh, for example, declined two invitations and only visited Myanmar in 2012, after the democratic opening.  

    Way forward

    • The carefully calibrated policy of the 2000s will serve India well today, where circumstances are even more favourable.
    • Thanks to the rise of China, the US and the EU are now more wary of isolating Myanmar.
    • And the Tatmadaw is now also less enamored of China and keen to deepen relations with India.
    • But New Delhi will still have to work hard to pursue its democratic realist policy in Myanmar.

    For India to play a role

    (a) Domestically

    • The first challenge will be to preserve trust with the Generals even while keeping up the pressure to restore a democratic order.
    • Delhi will have to keep the relationship going at the highest level to ensure that the Generals respect India’s core concerns.
    • This includes the Naga peace process, keeping an eye on China’s activities, and cross-border connectivity initiatives.

    (b) Internationally

    • The second challenge will be for India to coordinate its position internationally and buy itself manoeuvering space to engage Myanmar.
    • The US and the EU are still likely to be less understanding of India’s position than the Association of South-East Asian Nations and Japan.
    • Especially at the UN Security Council, India could play an important role to bridge differences and develop a common platform to nudge Myanmar back on to the democratic track.

    Conclusion

    • Among the first countries to react, India’s statement was crystal clear, expressing “deep concern” about the future of democracy and the rule of law.
    • Such harsh words are not just out of moral solidarity with Aung San Suu Kyi and other democrats detained.
    • They reflect India’s long-held understanding that democracy is the only model for Myanmar to achieve political stability, internal security and sustainable development.

    References

    https://mea.gov.in/Portal/ForeignRelation/myanmar-july-2012.pdf
    https://www.bbc.com/news/world-asia-55902070
    https://swarajyamag.com/world/explained-how-the-military-coup-unfolded-in-myanmar-and-what-it-means-for-india
    https://www.hindustantimes.com/opinion/indias-long-game-with-the-generals-101612444928293.html
  • 8th February 2021| Daily Answer Writing Enhancement

    Important Announcement:  Topics to be covered on 9th February

    GS-1  Indian culture will cover the salient aspects of Art Forms, Literature and Architecture from ancient to modern times. 

    GS-4 Emotional Intelligence.

    Question 1)

    What is “Love Jihad”? Critically analyse the issues associated with the law against love jihad. 10 marks

    Question 2)

    Being the largest democracies and unions of linguistically, culturally and ethnically diverse States, both the EU and India are well suited for a special relationship, but the reality is that the status is one without any spark of mutual chemistry. In light of this, examine the factors that explain the lack of mutual chemistry. 10 marks

    Question 3)

    The Insolvency and Bankruptcy Code 2016 has been criticised for liquidating rather than rescuing the companies. Do you agree with this criticism of the Act? Give reasons in support of your argument. 10 marks

    Question 4)  

    For effective functioning of civil services, what should be the main characteristics of aptitude? Elucidate with justification. 10 marks

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  • Infrastructure push now, fiscal consolidation later

    The Budget will aid the growth in the aftermath of the pandemic, however, concerns remain over the fiscal deficit.

    Concerns about fiscal deficit

    • The Budget, taken as a whole, has provided reasonable stimulus to growth through a change in the composition of expenditure and other measures to improve the climate for investment.
    • But concerns remain about fiscal deficit.

    High expenditure growth

    • Proposed growth in central expenditure, both in 2020-21 Revised Estimates (RE) and in 2021-22 Budget Estimates (BE), indicates the extent of contemplated fiscal stimulus.
    • For reaching the projected 2020-21 RE levels, the growth required in the last quarter of the current fiscal year over the corresponding period of the previous year appear extraordinary.
    • This involves transferring on to the Budget, the accumulated food subsidies amounting to ₹2,54,600 crore given to the Food Corporation of India through National Small Savings Fund (NSSF) loans.
    • The balance of subsidies amounting to ₹1,68,018 crore would be the food subsidy pertaining to 2020-21 (RE).
    • This is a desirable change towards transparency.
    • Taking revenue expenditure figures as budgeted and adjusting for the NSSF-accumulated food subsidy amount, the growth is 6.7% in revenue expenditure in 2021-22 (BE) over 2020-21(RE).
    • A good part of expenditure for the last quarter of 2020-21 may also pertain to clearing unpaid dues of various stakeholders including the private sector, autonomous bodies and government-aided institutions.
    • Clearing these payments is desirable and would add to demand.
    • The main expenditure push comes through a budgeted growth of 26.2% in capital expenditure in 2021-22.
    •  Relative to GDP, capital expenditure is expected to increase from 1.6% in 2019-20 to 2.3% in 2020-21 RE and 2.5% in 2021-22 BE, signalling a significant change in priority.

    Increase in receipts

    • Significant increases are planned in non-tax revenues and non-debt capital receipts.
    • This increase is mainly predicated on higher dividends from non-departmental undertakings and spectrum sales.
    • From a contraction of 35.6% in 2020-21 (RE), non-tax revenues are budgeted to grow by 15.4% in 2021-22.
    • In the case of non-debt capital receipts, mainly covering disinvestment, a budgeted growth of 304.3% in 2021-22 stands in contrast with the contraction of 32.2% in 2020-21 (RE).
    • Disinvestment initiatives have so far yielded minimal results.
    • Budgeted increase in the Centre’s gross tax revenues is dependent on nominal GDP growth of 14.4%, with a buoyancy of 1.6 for direct taxes and 0.8 for indirect taxes. 

    Steps towards asset monetisation

    • An important initiative pertains to the launching of a National Monetisation Pipeline.
    • The time lags involved in starting yielding revenue remain unpredictable because of various potential disputes and claims involving government-owned land.
    • A transparent auction process needs to be set up to facilitate suitable price discovery.

    Other institutional initiatives

    • The Budget includes central government’s share to the National Infrastructure Pipeline.
    • However, success of the infrastructure expansion plan would depend on other stakeholders of the pipeline playing their due role.
    • The Budget also proposes setting up of a Development Finance Institution (DFI), to serve as a catalyst for facilitating infrastructure investment.
    • The DFI would have an initial capital of ₹20,000 crore.
    • In order to manage non-performing assets of public sector banks, there is a proposal to set up an Asset Reconstruction Company (ARC) and an Asset Management Company (AMC).
    • Much depends upon the fine-tuning the operations of these institutions.

    Finance Commission’s recommendations

    • In the action taken report, the Union government has accepted the recommended vertical share of 41% for the States in the shareable pool of central taxes.
    • The government has accepted the Fifteenth Finance Commission’s recommendation for revenue deficit grants, local body grants and disaster-related grants.
    • The scope of revenue deficit grants has been extended to cover 17 States in the initial years.
    • The determination of these grants is not based on equalisation principle although some norms have been used in the assessment exercise.
    • However, the government has put on hold the consideration of State-specific and sector-specific grants including performance-based incentives.
    • The substantive issue pertains to the mode of transfers in terms of general-purpose unconditional transfers against specific purpose and conditional transfers.
    • States had shown a preference for the former mode and it is for this reason that the 14th Finance Commission had raised the States’ share from 32% to 42%.
    • The reduction from 42% to 41% is only on account of the consideration of 28 States excluding Jammu and Kashmir because of its new status.
    • The imposition of cesses which are almost permanent has reduced the shareable pool.
    • In fact, the States’ share in the Centre’s gross tax revenues is only 30% in 2021-22 (BE).

    Way forward

    • The Fifteenth Finance Commission has also proposed a revised fiscal consolidation road map for the Centre and States.
    • The Fifteenth Finance Commission has recommended the setting up of a High-Powered Intergovernmental Group to re-examine the fiscal responsibility legislations of the Centre and States.
    • Giving up the prudential norms will be a wrong lesson to learn from the crisis.
    • The issue of debt sustainability can be certainly re-examined by taking into account the evolving profiles of debt, interest payments, and primary deficits relative to GDP.

    Conclusion

    Fiscal deficit must be related to household savings in financial assets and the interest payments to revenue receipts. It should not be forgotten that in fiscal 2021-22, interest payments to total revenue receipts will be 45.3%, pre-empting a significant proportion of revenue receipts. We must be conscious of the burden of the rising stock of debt.

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