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  • Delhi Full Statehood Issue

    structural issues with legislatures in Union Territories

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Article 239A

    Mains level: Paper 2- Structural flaws in the composition of legislature of UTs

    There are structural flaws in the provisions of the composition of legislature and the relationship between the council of ministers and the Administrator in the UTs.

    Pattern in the resignations of MLAs

    • Recently, the resignations of MLAs from the Puducherry Assembly led to the fall of government there.
    • The same had happened in 2019 in Karnataka.
    • Resigning from the membership of the House is every member’s right.
    • But according to Article 190 of the Constitution, the resignation should be voluntary or genuine.
    • If the Speaker has information to the contrary, he or she is not obliged to accept the resignation.
    • But there is by now a familiar pattern to the resignations of Members of the Legislative Assembly.
    • Such resignations invariably lead to the fall of the government.

    Purpose of providing legislature to UTs

    • The Constitution-makers/ Parliament provided a legislature and Council of Ministers to some of the UTs to fulfil the democratic aspirations of the people of these territories.
    • There was a realisation that the administration of these territories directly by the President through the administrators under Article 239 does not meet the democratic aspirations of the people.
    • The creation of a legislature and a Council of Ministers is logical and in consonance with the policy of the state to promote democracy.

    Structural issues with legislature in UTs

    1) Nomination of members and issues with it

    • A closer look at the relevant provisions in the Constitution reveals that this professed aim has often been sought to be defeated by the Union.
    • Article 239A was originally brought in, in 1962, to enable Parliament to create legislatures for the UTs.
    • A legislature without a Council of Ministers or a Council of Ministers without a legislature is a conceptual absurdity.
    • Similarly, a legislature that is partly elected and partly nominated is another absurdity.
    • The issue of nomination of members to the Puducherry Assembly had raised a huge controversy.
    • The Government of Union Territories Act provides for a 33-member House for Puducherry of whom three are to be nominated by the Central government.
    • So, when the Union government nominated three BJP members to the Assembly without consulting the government, it was challenged in the court.
    • Finally, the Supreme Court (K. Lakshminarayanan v. Union of India, 2019) held that the Union government is not required to consult the State government for nominating members to the Assembly and the nominated members have the same right to vote as the elected members.
    • There is provision for nomination of members to the Rajya Sabha [Article 80 (i)(a)].
    • But clause (3) of the Article specifies the fields from which they will be nominated.
    • But in the case of nomination to the Puducherry Assembly, no such qualification is laid down either in Article 239A or the Government of Union Territories Act.
    • This leaves the field open for the Union government to nominate anyone irrespective of whether he or she is suitable.
    •  As things stand, the law invites arbitrariness in dealing with the nomination of members to the UT legislature.

    2) Administrator’s powers

    • The administrator has the right to disagree with the decisions of the Council of Ministers and then refer them to the President for a final decision.
    • The President decides on the advice of the Union government.
    • So, in effect, it is the Union government which finally determines the disputed issue.
    • Although in NCT of Delhi v. Union of India (2019), the Constitution Bench of the Supreme Court had said that the administrator should not misuse this power.
    • The bench also said that the Administrator should use it after all methods have failed to reconcile the differences between him/her and the Council of Ministers.
    • As a matter of fact, such conflicts between the administrator, who is the nominee of the President, and the elected government is inherent in the constitutional arrangement created for the UTs.

    Consider the question “The conflicts between the administrator, who is the nominee of the President and the elected government is inherent in the constitutional arrangement created for the UTs. Comment.”

    Conclusion

    Experience shows that the UTs having legislatures with ultimate control vested in the central administrator are not workable. So far as the conspiratorial resignation by legislators to bring down their own government is concerned, the political class will have to get the better of the predatory instincts of political parties through constitutional or other means.

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  • Panchayati Raj Institutions: Issues and Challenges

    Federalism and India’s human capital

    op-ed snap | Governance | Mains Paper 2: Government Scheme/Policies,Panchayats & Local Bodies

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: 73rd and 74th Amendments

    Mains level: Paper 3- Decentralisation and its relationship with human capital

    The article argues for recognising the correlation between human capital and decentralisation in India.

    Low human capital indicators

    • In the World Bank’s Human Capital Index, the country ranked 116th.
    • The National Family Health Survey-5 for 2019-20 shows that malnutrition indicators stagnated or declined in most States.
    • The National Achievement Survey 2017 and the Annual Status of Education Report 2018 show poor learning outcomes.
    • In addition, there is little convergence across States.
    • India spends just 4% of its GDP as public expenditure on human capital:1% and 3% on health and education respectively— one of the lowest among its peers.

    Initiatives to address these issues

    • Investing in human capital through interventions in nutrition, health, and education is critical for sustainable growth.
    • The National Health Policy of 2017 highlighted the need for interventions to address malnutrition.
    • On the basis of NITI Aayog’s National Nutrition Strategy, the Poshan Abhiyaan was launched, as part of the Umbrella Integrated Child Development Scheme.
    • The latest Union Budget has announced a ‘Mission Poshan 2.0’ and the Samagra Shiksha Abhiyan has been the Centre’s flagship education scheme since 2018.

    Relation between decentralisation and human capital

    • International experience suggests that one reason why these interventions are not leading to better outcomes may be India’s record with decentralisation.
    • Globally, there has been a gradual shift in the distribution of expenditures and revenue towards sub-national governments.
    • These trends are backed by studies demonstrating a positive correlation between decentralisation and human capital.

    Issues with decentralisation in India

    1) Letting states decide the way of empowerment

    • The 73rd and 74th Amendments bolstered decentralisation by constitutionally recognising panchayats and municipalities as the third tier.
    • The Amendment also added the Eleventh and Twelfth schedules containing the functions of panchayats and municipalities.
    • These include education, health and sanitation, and social welfare for panchayats, and public health and socio-economic development planning for municipalities.
    • However, the Constitution lets States determine how they are empowered.
    • In effect, three tiers of government are envisaged in the Constitution it divides powers between the first two tiers — the Centre and the States
    • This has resulted in vast disparities in the roles played by third-tier governments.

    2) Centralised nature of fiscal architecture

    • While the Constitution assigns the bulk of expenditure responsibilities to States, the Centre has major revenue sources.
    • To address this vertical imbalance, the Constitution provides for fiscal transfers through tax devolution and grants-in-aid.
    • In addition, the Centre can make ‘grants for any public purpose’ under Article 282 of the Constitution.
    • While fiscal transfers that are part of tax devolution are unconditional, transfers under grants-in-aid or Centrally Sponsored Schemes (CSSs) can be conditional.
    • Therefore, the increase in the States’ share of tax devolution represents more meaningful decentralisation.
    • Despite some shifts towards greater State autonomy in many spheres, the centralised nature of India’s fiscal architecture has persisted. 
    • Centrally Sponsored Schemes (CSS) have formed a sizeable chunk of intergovernmental fiscal transfers over the years, comprising almost 23% of transfers to States in 2021-22.
    • But its outsized role strays from the intentions of the Constitution.
    • There are issues in the design of CSSs as well, with the conditions being overly prescriptive and, typically, input-based.
    • Against this, international experience reveals that schemes with output-based conditions are more effective.
    • Moreover, CSSs typically have a cost-sharing model, thereby pre-empting the States’ fiscal space.

    3) Lack of fiscal empowerment

    • Third-tier governments are not fiscally empowered.
    • The collection of property tax, a major source of revenue for third-tier governments, is under 0.2% of GDP in India, compared to 3% of GDP in some other nations.
    • The Constitution envisages State Finance Commissions (SFCs) to make recommendations for matters such as tax devolution and grants-in-aid to the third tier.
    • However, many States have not constituted or completed these commissions on time.

    Solution

    • The Centre should play an enabling role, for instance, encouraging knowledge-sharing between States.
    • For States to play a bigger role in human capital interventions, they need adequate fiscal resources.
    • To this end, States should rationalise their priorities to focus on human capital development.
    • The Centre should refrain from offsetting tax devolution by altering cost-sharing ratios of CSSs and increasing cesses.
    • Concomitantly, the heavy reliance on CSSs should be reduced, and tax devolution and grants-in-aid should be the primary sources of vertical fiscal transfers.
    • Panchayats and municipalities need to be vested with the functions listed in the Eleventh and Twelfth Schedules.

    Consider the question “There is a positive correlation between decentralisation and human capital. This in part explains India’s low human capital indicators. In light of this, examine the issues with the decentralisation in India and suggest the measures to deal with it.”

    Conclusion

    Leveraging the true potential of our multi-level federal system represents the best way forward towards developing human capital.

     

     

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  • Electric and Hybrid Cars – FAME, National Electric Mobility Mission, etc.

    Being petroleum independent

    op-ed snap | Economics | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia,Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: FAME

    Mains level: Paper 3- Reducing India's energy import dependence

    The article discusses the steps taken by the government to improve fuel efficiency standards and the for the transition to clean sources of energy.

    Reducing energy import dependence

    • Speaking on the increase in petrol and diesel prices, Prime Minister emphasised the need for clean sources of energy.
    • Expanding and diversifying energy supply is good, but if India is to reduce its energy import dependence, it must look towards first managing the demand for petroleum products.
    • It is worthwhile to reflect on measures taken by the previous governments as well as this government in this context.

    Steps taken

    National Electric Mobility Mission Plan

    • The UPA-2 administration formulated fuel efficiency standards for passenger vehicles that are now in effect.
    • It also constituted the National Electric Mobility Mission Plan (NEMMP).
    • While well-intended, both these actions fell short in terms of ambition.
    • India’s 2022 fuel efficiency standards for passenger cars are nearly 20% less stringent than the European Union’s standards.
    • The NEMMP primarily focused on hybrid electric vehicles.
    • Most of the incentives under the NEMMP went towards subsidising mild hybrids instead of electric vehicles.

    Multiple fuel pathways

    • Recently, the government has encouraged multiple fuel pathways in the transport sector including natural gas.
    • The Faster Adoption and Manufacturing of Electric Vehicles (FAME-II) scheme now focuses largely on electric vehicles.
    • The government has also provided several additional fiscal and non-fiscal incentives to encourage a transition to electric vehicles.

    Steps need to be taken

    • There are many things that the government can and should do to
    • First, the government should formulate a zero-emissions vehicle (ZEV) programme that would require vehicle manufacturers to produce a certain number of electric vehicles.
    • At present, the electric mobility initiative in India is driven largely by new entrants in the two- and three-wheeler space.
    • A ZEV programme would require all manufacturers to start producing electric vehicles across all market segments.
    • The government should also strengthen fuel efficiency requirements for new passenger cars and commercial vehicles.
    • Two-wheelers, which consume nearly two-third of the petrol used in India, are not subject to any fuel efficiency standards.
    •  Adopting stringent fuel efficiency standards and a ZEV programme by 2024 can result in India’s petroleum demand peaking by 2030.
    • The FAME should be extended not only to all passenger cars and commercial vehicles but also to agricultural tractors.

    Conclusion

    As the economy recovers from the pandemic, the demand for petroleum products will rise, as will prices. But the government can save money for the consumer while enhancing long-term energy security by wielding the regulatory tools at its disposal.

     

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  • Government Budgets

    A changing fiscal framework

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Primary surplus

    Mains level: Paper 3- Change in government's fiscal policy stance

    The article examines the changes in government’s fiscal policy stance which supports the debt-financing and apparent contradiction displayed by increased excise duty.

    Increase in excise duty

    • Well before India began to globalise there was a time when each Union Budget announced sales tax increases on tobacco products.
    • The rise in tax was expected to be a shot in the arm for the revenue-starved government of our poor country.
    • India is less poor now, having risen to the rank of an emerging market economy.
    • Yet, COVID-19 has wreaked havoc.
    • As opposed to a Budget estimate of 3.5% for fiscal deficit, the revised estimates show a 2.7 times larger deficit of 9.5% for FY 2020-21. 
    • A comparison of the government’s revised Budget estimates with the original Budget estimates reveals a fall in receipts from every source of taxation except excise.
    • The revised Budget shows a rise of ₹94,000 crore on account of excise duties alone.
    • Presumably, the increase comes from the much-debated excise duty increases on petroleum and diesel.
    • The excise duty rise will hardly compensate for the huge falls in other tax revenues.
    • The larger excise duty collection is not large enough to have significantly reduced the inflated fiscal deficit figure.

    Implications of hike in excise duty

    • Given the nature of the products on which the excise duty has gone up, prices of commodities will rise in general.
    • With annual output shrinking by an estimated 7.7%, it is straightforward to conclude that unemployment has risen significantly.
    • The accompanying price rise will be the unemployed persons’ worst nightmare.
    • The result will be severe inequality.

    Change in economic policy framework

    • The Economic Survey 2020-21 considers Olivier Blanchard’s prescription that a fiscal deficit automatically transformed to government debt.
    • Such debts along with their servicing liabilities have a tendency to magnify over the years where present borrowings keep increasing to repay past borrowings and service charges.
    • This leaves little room for growth-enhancing expenditure and reduces a government’s creditworthiness in the eyes of lenders.
    • Debt-financed fiscal spending could well be a driver of growth.
    • It can improve the standard of living of the entire population, without necessarily removing inequality.
    • A government’s fiscal expenditure, Professor Blanchard points out, has stronger multiplier effects during recessions than during booms
    • The inequality, however, could well be benignant, for even though the rich will grow richer, the poor will escape out of poverty.

    Condition for debt-financed fiscal spending

    • Debt or the fiscal deficit constitutes the government’s spendable resources.
    • What will prevent the government from sinking into a debt trap?
    • Professor Blanchard shows that the debt-to-GDP ratio can be prevented from exploding if the rate of growth of GDP happens to be higher than the sovereign rate of interest.
    • This is the case in developed economies.
    • In such economies, debt financed government expenditure will create a positive primary surplus out of which interest payments can be made to keep the debt-GDP ratio under control.
    • There will, of course, be a maximum value that this ratio can attain, a value that is higher the larger is the excess of the growth rate over the interest rate.

    Contradiction in fiscal policy and fiscal regime

    • According to the Economic Survey, India’s average interest rate and growth rate over the last 25 years (leaving out FY 2020-21) have been 8.8% and 12.8% respectively.
    • Hence, Professor Blanchard’s condition is satisfied.
    • This, of course, is not to support excise duty increases, for it goes against the very principle of the Blanchard argument.
    • Therefore, there appears to be a contradiction between the government’s announced fiscal policy stance and the fiscal regime it is actually running.

    Consider the question”The Economic Survey 2020-2021 calls for the debt-financed fiscal spending. Do you think that this view is suitable for India economy? What are the risks involved?”

    Conclusion

    The government must consider the implications of increased excise on the economy and should focus on removing the contradiction in its fiscal policy and fiscal regime.

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  • Animal Husbandry, Dairy & Fisheries Sector – Pashudhan Sanjivani, E- Pashudhan Haat, etc

    Animal Husbandry Infrastructure Development Fund (AHIDF)

    op-ed snap | Agriculture | Mains Paper 3: Economics Of Animal-Rearing

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Animal Husbandry Infrastructure Development Fund (AHIDF)

    Mains level: Paper 3- Animal Husbandry Infrastructure Development Fund (AHIDF)

    Importance of animal husbandary and dairy sector

    • As an allied industry of agriculture, the animal husbandry and dairy sector collectively employs more than 100 million people.
    • Since the bulk of establishments in this sector is concentrated in rural India, the socio-economic relevance of this sector cannot be overstated.
    • the Central government unveiled a string of measures to cushion the economy, as a part of which the Animal Husbandry Infrastructure Development Fund (AHIDF) was announced.

    More about AHIDF

    • The AHIDF has been set up with an outlay of ₹15,000 crore.
    • As per the provisions of AHIDF, a project will be eligible for a loan amount that covers up to 90% of the estimated cost –
    • There will be interest subvention of 3% for all eligible entities.
    • Applicants can submit the proposal with a complete Detailed Project Report through the Udyami Mitra Portal.
    • The fund includes a diverse set of stakeholders such as FPOs, private dairy players, individual entrepreneurs, and non-profits within its ambit.

    Strengthening dairy value chain

    • There is a pressing need to enhance chilling infrastructure at collection centres by setting up bulk milk coolers.
    • If the infrastructure needs for milk processing and distribution are included, then the overall potential investment opportunity is to the tune of ₹1,40,000 crore across the dairy value chain.
    • There is also considerable potential to increase the productivity of cattle, especially by enhancing the quality of animal feed.
    • With this in mind, the AHIDF has been designed to support the establishment of animal feed plants of varying capacities.
    • The infrastructure gap of 10-18 MMT in the production and supply of affordable compound cattle feed translates into an investment potential of around ₹5,000 crore.

    Boosting the poultry industry

    • There are not only economic but nutritional benefits to boosting the poultry segment’s output, efficiency and quality.
    • India is the fourth largest chicken meat producer and the second largest egg producer in the world.
    • India is well-positioned to help mitigate rampant malnutrition given that chicken meat provides the cheapest source of protein per unit.
    • With eggs being introduced as part of the mid-day meal within several anganwadis in the country, an upgradation in poultry infrastructure would be closely intertwined with social justice outcomes too.
    • Macro benefits regarding climate change and employment are linked to this sector.
    • Enhanced infrastructure can make processing units more energy-efficient and help mitigate their carbon footprint.

    Consider the question ” As an allied industry of agriculture, the animal husbandry and dairy sector are important for rural area and the socio-economic relevance of this sector cannot be overstated. In light of this, examine the role Animal Husbandry Infrastructure Development Fund (AHIDF) could play in transforming rural economy.”

    Conclusion

    The AHIDF also has the potential to create over 30 lakh jobs, even as it overhauls domestic infrastructure towards giving greater prominence to India’s dairy and livestock products in the global value chain.

     

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  • Foreign Policy Watch: India-China

    China-Taiwan conflict

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- India's relations with Taiwan

    The article underscores the centrality of Taiwan in the realms of semiconductor production and how that dominant spills over in geopolitics.

    Silicon shield of Taiwan

    • Taiwan’s security situation has been worsening amidst mounting economic, political and military pressure from China.
    • Any Chinese attack on Taiwan that disrupts the flow of semiconductors would produce significant challenges not only for the US but also China that relies on semiconductor supplies from Taiwan.
    • That factor appears to be preventing the crisis from boiling over into a full-scale war that could draw the US and Japan into it.
    •  It is Taiwan’s so-called “silicon shield”.

    Taiwan’s dominance in semiconductor industry

    • Taiwan is the world’s leading producer of semiconductors and other electronic components.
    • The Taiwan Semiconductor Manufacturing Company (TSMC) has more than 55 per cent of the global market share in the production of high-end custom-made chips.
    • Of the two rival companies that have survived, US-based Intel is in trouble and Korea’s Samsung has challenges of its own.
    •  There will be no generation of data without the semiconductors.
    • It might be more accurate to say that “semiconductors are the new oil” and their production is increasingly dominated by Taiwan and the TMSC.

    Geopolitics over Taiwan

    • As its economic heft and political salience rose in the 21st century, China has ratcheted up pressure on countries that have diplomatic relations with Taiwan.
    • China has also compelled international organisations to push Taiwan out of their activities, even when Taiwan had much to contribute.
    • Amidst the deterioration of US-China relations in recent years, President Donald Trump was far more supportive of Taiwan than his recent predecessors.
    • The Biden team has also signalled continuity with Trump’s Taiwan policies.
    • All indications are that Washington will continue to seek some technological decoupling and diversification of sensitive supplies away from China.
    • Taiwan will inevitably be the key element in the American quest for resilient supply chains in the digital domain.

    Opportunity for India

    • Taiwan’s position as a semiconductor superpower opens the door for more intensive strategic-economic cooperation between Delhi and Taipei.
    • Part of the problem is that India’s strategic community continues to view Taiwan as an adjunct to India’s “One-China policy”.
    • India’s policy oscillates between keeping needless distance with Taipei when ties with Beijing are warm and remembering it when Sino-Indian ties enter a freeze.
    • This changed in the early 1990s, when it began to engage with Taiwan, but the policy remained a restricted one.
    • In the last few years, though, there has been a steady expansion of bilateral engagement.
    • Trade has increased from about $1 billion in 2001 to about $7 billion in 2018.
    • India has made a special effort to woo Taiwanese companies that are moving some of their production away from China.
    • India is yet to tap into the full range of commercial and technological opportunities possibilities with Taiwan.
    • This is particularly true of semiconductor production.

    Way forward

    • Delhi must begin to deal with Taiwan as a weighty entity in its own right that offers so much to advance India’s prosperity.
    • Delhi does not have to discard its “One-China policy” to recognise that Taiwan is once again becoming the lightning rod in US-China tensions.

    Consider the question “India needs to explore the opportunities in relationship with Taiwan even as it pursues and sticks to its One China policy. Comment.

    Conclusion

    As Taiwan becomes the world’s most dangerous flashpoint, the geopolitical consequences for Asia are real. Although Delhi has embraced the Indo-Pacific maritime construct, it is yet to come to terms with Taiwan’s critical role in shaping the strategic future of Asia’s waters.

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  • Finance Commission – Issues related to devolution of resources

    Fifteenth Finance Commission has increased proportion of grants conditional on reforms

    op-ed snap | Polity | Mains Paper 2: Constitutional Bodies

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: State Finance Commission

    Mains level: Paper 2- Conditional grants to incentivise the states for reforms

    The article highlights the crucial recommendations made by the 15th Finance Commission and also explains the importance of conditions for grants from the Centre to push the state for reforms.

    Crucial recommendations by 15th Finance Commission

    • The Fifteenth Finance Commission’s report for the period 2021-22 to 2025-26 outlines some crucial recommendations for state governments.
    • These recommendations cover tax devolution, grants from the Centre, and the guidelines for the borrowings that they are permitted to incur over the medium-term.
    • The commission has recommended that 41 per cent of the government’s divisible pool of taxes be transferred to state governments.

    Horizontal devolution formula

    • The horizontal devolution formula specifies each state’s share in the overall pie.
    • The 15th FC was required to use the states’ population as per the 2011 Census — a highly contentious change.
    • It has also introduced a demographic performance criterion.
    • Additionally, it has also introduced a new criterion –tax effort.
    • Tax effort is measured by the ratio of the three-year average of per-capita own tax revenues and per-capita gross state domestic product (GSDP).
    • The net result of the change in criteria is that the share of 10 states in the divisible pool has declined.
    • Karnataka is the biggest loser, while Maharashtra is the biggest gainer.

    Grants from the Centre conditioned on reforms in states

    • Another major set of the commission’s recommendations pertain to grants from the Centre.
    • In a major shift, the 15th FC has sharply increased the proportion of grants whose receipt is conditional on specified reforms being undertaken.
    • 57 per cent of the 15th FC-recommended grants accepted so far by the GoI are conditional, relative to just 17 per cent for the 14th FC (including J&K).

    What are the conditions

    1) Setting up of State Finance Commission (SFC) and applicability of SFC’s recommendations for 5 years only

    • Constitution requires state governments to set up State Finance Commissions (SFC).
    • The 15th FC has asserted that the mandate of any given SFC is intended to be applicable only for five years.
    • It revealed that only 15 states have set up their fifth or sixth SFCs, whereas several states have not moved beyond their second or third SFC.
    • Accordingly, a staggering 84 per cent of the Rs 4.4 trillion grants for local bodies recommended by the 15th FC are conditional on the states setting up SFCs for the coming five-year period, and acting on their recommendations by March 2024.

    2) Availability of online accounts

    • Another entry-level condition for availing grants by rural and urban local bodies pertains to the timely availability of their accounts online from 2021-22 onwards.

    3) Notiflying floor rate for property tax

    • For the receipt of grants by the urban bodies, states are required to notify a floor rate for property tax by 2021-22, and demonstrate consistent year-wise improvement from 2022-23 onwards.
    • This will complement the conditions set previously by SEBI for ULBs to become eligible to raise municipal bonds.

    Changes in limit on net borrowings of state governments

    • The commission has recommended that the normal limit for net borrowings of state governments be fixed at 4 per cent of GSDP in 2021-22.
    • This will ease to 3.5 per cent by 2022-23, thereafter reverting to the erstwhile 3 per cent limit till 2025-26.
    • The additional borrowing space of 0.5 per cent of GSDP for states is conditional on the completion of power sector reforms.

    Prospect of huge gaps in states’ revenue in the future

    • The states’ fiscal arithmetic will alter in 2022-23 with the GST compensation set to cease at the end of June 2022 as things stand today.
    • The ensuing drop in grants, combined with the tapering of the front-loaded revenue deficit grants is likely to leave a big gap in some states’ revenues.

    Consider the question “What are the conditions laid down by the 15th Finance Commission on the states for the central grants? How these conditions could benefit the states?”

    Conclusion

    The question is whether this revenue gaps will force the states to move on both the power sector reforms, which have proven challenging in the past, and the municipal reforms, so that their resource availability may be enhanced.

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  • Parliament – Sessions, Procedures, Motions, Committees etc

    Voice vote as constitutional subterfuge

    op-ed snap | | Mains Paper 2: Parliament & State Legislatures

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Bicameralism

    Mains level: Paper 2- Importance of bicameralism

    The article discusses the issue of undermining of the upper house by passing the certain bills through voice vote and use of money bill route.

    Passing of the Bill by voice vote

    • The Karnataka Prevention of Slaughter and Preservation of Cattle Bill was passed by the State’s Legislative Council by voice vote without any division.
    • The law was passed by the Council despite the lack of a majority.
    • There was no division vote based on actual voting as is usual and as the Opposition members had demanded.

    A new legislative precedent

    • Similar process was followed to pass the controversial farm laws (by the Rajya Sabha) in September 2020.
    • The pandemonium in the House caused by heated interventions by the Opposition was used as a pretext to resort to a voice vote.
    • The laws passed with a voice vote seem like a new template for bypassing the constitutionally envisaged legislative process.
    • Another process repeatedly used over the last few years to bypass the Upper House of Parliament is the Money Bill route.
    • The Aadhaar Bill was passed in this manner.
    • Other controversial laws such as those pertaining to electoral bonds, retrospective validation of foreign political contributions and the overhaul of the legal regime relating to tribunals have also been carried out through the Money Bill route.

    The Rajya Sabha’s role

    • The Lok Sabha is seen as directly representing the will of the people, and the Rajya Sabha as standing in its way.
    • The countervailing function of the Upper House is rarely seen as legitimate.
    • The Rajya Sabha has historically stopped the ruling party from carrying out even more significant legal changes.
    • The Rajya Sabha is imperfect, partly because of constitutional design.
    • And partly because obviously undesirable practices, such as members representing States they have no affiliation to, have been allowed to flourish.

    Importance of bicameralism

    • The very questioning of the monopoly of the Lower House to represent the ‘people’ makes bicameralism desirable, argues legal philosopher Jeremy Waldron.
    • In India, the fact that the Rajya Sabha membership is determined by elections to State Assemblies leads to a different principle of representation, often allowing different factors to prevail than those in the Lok Sabha elections.
    • John Stuart Mill had warned about a single assembly becoming despotic and overweening, if released from the necessity of considering whether its acts will be concurred in by another constituted authority.
    • The other merit of bicameralism is significant in a Westminster system like India, where the Lower House is dominated by the executive.
    • The Rajya Sabha holds the potential of a somewhat different legislative relation to the executive, making a robust separation of powers possible.

    Consider the question “Examine the importance of bicameralism in India. Why passage of certain bills as money bill is causing controversies?”

    Conclusion

    The important role played by the upper house needs to be recognised and respected in the legislative processess.

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

    A year of cautious optimism on economic front

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Gross fixed capital formation

    Mains level: Paper 3- Year of economic consolidation

    The article argues that we are less likely to witness high growth next year rather it is going to be the year of consolidation.

    Year of consolidation

    • The Economic Survey, the Union budget, and the RBI credit policy attest that the economy is on the recovery path.
    • The fourth quarter will register a positive growth rate, and as a consequence, the contraction for the full year will be between 7.5-8 per cent.
    • The contraction sets the pace for growth in 2021-22 which is now going to be critical as it is the foundation for the fructification of the budget revenue targets.
    • But consider this: GDP in 2019-20 was Rs 146 lakh crore, which has come down to Rs 134 lakh crore in 2020-21.
    • Hence, a 10 per cent growth will take the Indian economy to Rs 147 lakh crore — when compared to Rs 145 lakh crore, this reflects modest growth.
    • Therefore, expectations should be tempered when we talk of growth next year.
    • There will be a revival in economic activity on all ends which will probably bear fruit in 2022-23 — FY 2021-22 will be a year of consolidation.

    Policy architecture

    • The government has brought in a cogent policy framework right from the time of the Atmanirbhar announcements, culminating in the budget.
    • There is a focus on infrastructure as well as providing incentives to investment through the Production Linked Incentive (PLI) scheme.
    • Real estate, power and construction saw several policy reforms last year.
    • There is a strong capex push by the government and there will more action taken here.

    RBI policies

    • The RBI has promised to continue accommodative policies, which sends a signal of managing liquidity considering the large borrowing programme of the government of Rs 12.8 lakh crore.
    • RBI will carry out more open market operations, and long-term repo operations during the year to ensure that interest rates remain stable.
    • However, there will be concern around state government borrowings too, which will exert pressure on the availability of funds.
    • Hence, there will be more central bank intervention in the market to ensure that funds are available.

    Inflation concerns

    • Inflation is a concern as global commodity prices have already started going up and this has led to core inflation rising.
    • Given that the monsoon has been good in the last four years, there is a possibility of an adverse season this time which can affect food prices. 
    • In India, too, we have seen that the price of petrol and diesel is rising sharply.
    • Add to this rising manufactured goods inflation witnessed of late, and there is a possibility of inflation rising above the MPC’s tolerance levels.

    Lack of consumption growth

    • For growth to take place, consumption growth has to be real and rapid.
    • Consumption growth has been affected by the absence of commensurate job creation.
    • Consumption growth is unlikely too soon as consumption is dependent on job creation.
    • Jobs get created when growth is high and hence there is circular reasoning here.
    • Income has been affected in 2020 due to the pandemic which has led to job losses as well as salary cuts.
    • This has affected the sustainability of the pent-up demand seen in October and November.

    Falling investment

    • Investment has lagged with gross fixed capital formation falling to a low of 24.2 per cent in 2019-20 from 34.3 per cent in 2011-12.
    • Reversing this decline will be challenging because the demand for such projects has slowed down and banks have been wary of lending for infrastructure.
    • There is also surplus capacity in industry with the capacity utilisation rate being 63.3 per cent in the second quarter of 2020-21.
    • Therefore, private investment will rise only gradually and the onus is on governments to manage their targets.
    • Private investment will follow, but at a slower pace and realistically speaking, will fire more in 2022-23 rather than 2021-22.

    Consider the question “Growth has to be driven by two engines- consumption and investment. India has been facing challenges on both fronts. In light of this, suggest the measures India needs to adopt to move forward on both fronts.

    Conclusion

    The year 2021-22 will be one of cautious optimism. Growth will trend upwards, but it has to be interpreted with caution, keeping a check on the consumption while pushing the investment while arresting the inflation.

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  • Women Safety Issues – Marital Rape, Domestic Violence, Swadhar, Nirbhaya Fund, etc.

    Ramani Judgement

    op-ed snap | Governance | Mains Paper 2: Laws, Institutions & Bodies Constituted For The Vulnerable Sections

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Not much

    Mains level: Paper 2- Sexual harassment at workplace

     

    Why the Ramani judgement matters

    • The verdict went beyond a mere refusal to convict Ramani for criminal defamation.
    • The verdict vindicated Ramani by accepting Ramani’s truth as a defence to the charge of defamation.
    • The verdict urged society to “understand that sometimes a victim may for years not speak up due to mental trauma,” and underlined that a woman has a right to speak up about the abuse, even after decades.
    • It pointed out that since sexual harassment typically takes place in private, women’s testimonies cannot be dismissed as untrue or defamatory simply because they are unable to provide other witnesses to back their allegations.
    • Institutional mechanisms have systemically failed to protect women or provide justice, the verdict reasoned.
    • Therefore, survivors are justified in sharing their testimonies on media or social media platforms as a form of self-defence.

    Right to dignity

    • The Ramani verdict points out that sexual abuse violates the constitutionally recognised rights to dignity (Article 21) and equality (Articles 14 and 15), and that (a man’s) right to reputation cannot be protected at the cost of (a woman’s) right to dignity. 
    • The Ramani verdict is a huge moral vindication of the #MeToo movement and will serve to deter powerful men from using the defamation law to silence survivors.

    Problem of institution

    • Sexual harassment is a problem of institutions rather than of individuals alone.
    • The world over, employers deploy sexual harassment as a means to discipline and control women workers.
    • In India and Bangladesh, at least 60 per cent of garment factory workers experience harassment at work.
    • In Guangzhou, China, a survey found that 70 per cent of female factory workers had been sexually harassed at work, and 15 per cent quit their jobs as a result.
    • For factory workers, domestic workers, street vendors, sanitation and waste workers, construction workers, sex workers, labour laws or laws against sexual harassment exist only on paper.

    Conclusion

    The women who spoke were unanimous that individual complaints were not an option, they needed unions to fight collectively. Women workers fighting sexual harassment, need more support and attention.

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