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Type: Op-ed

  • 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.

     

  • China-Taiwan conflict

    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.

  • Fifteenth Finance Commission has increased proportion of grants conditional on 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.

  • Voice vote as constitutional subterfuge

    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.

  • A year of cautious optimism on economic front

    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.

  • Ramani Judgement

     

    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.

  • Big tech regulation and problems

    Article highlights the issues with the growing dominance of social media giants and challenges involved in regulating them.

    Issues to consider

    1) Conflict of interest

    • Many of the big tech companies were not, as they claimed, mere platforms.
    • This is because they began to curate and generate their own content, creating possible conflicts of interest.

    2) Monopoly power

    • There is a suspicion that big tech companies were acquiring more monopoly power leading to lack of free competition.
    • There is a conjunction of technology and finance here.
    • The more companies were valued, the more they needed monopoly rent extraction to be able to justify those valuations.

    3) Lack of accountability in algorithms

    • There was an irony in an opaque algorithm being the instrument of a free, open and equitable society.

    4) Mixed implications for distribution of wealth

    • While the companies had immense economic impact, their distributive implications were more mixed.
    • They empowered new players, but they also seem to destroy lots of businesses.
    • These companies themselves became the symbol of inequality of economic and political power.

    5) Lack of accountability and standards in regulating free speech

    • Big tech companies set themselves up almost as a sovereign power.
    • This was most evident in the way they regulated speech, posing as arbiters of permissible speech without any real accountability or consistency of standards.
    • The prospect of a CEO exercising almost untrammelled authority over an elected president only served to highlight the inordinate power  these companies could exercise.

    6) Effects of big tech on democracy and democratisation

    •  The social legitimacy of California Libertarianism came from the promise of a new age of democratic empowerment.
    • But as democracies became more polarised, free speech more weaponised, and the information order more manipulated, greater suspicion was going to be cast on this model.
    • All democracies are grappling with this dilemma.

    Big tech in Indian context

    • India will justifiably worry about its own economic interests.
    • India will be one of the largest bases of internet and data users in the world.
    • The argument will be that this should be leveraged to create iconic Indian companies and Indian value addition.
    • India can create competition and be more self-reliant in this space.
    • Pushing back against big tech is not protectionism, because this pushback is to curb the unfair advantages they use to exploit an open Indian market.
    • India can also justifiably point out that in China keeping out tech companies did not make much of a difference to financial flows or investment in other areas.

    The real challenge

    • It will be important to distinguish between regulations that are solving some real problems created due to Big tech, and regulation that is using this larger context to exercise more control.
    • It will be easier to address those issues if the government showed a principled commitment to liberty, commitment to root out crony capitalism, an investment in science and technology commensurate with India’s challenges, and a general regulatory independence and credibility.

    Consider the question “What are the challenges posed by the dominance of social media giants? Suggest the measures to deal with these challenges.”

    Conclusion

    We should not assume that just because big tech is being made to kneel, the alternative will be any better.

  • India Inc must follow global example, take affirmative action on climate change

    The article explains the global trend in investors and lendors are demanding companies to recognise their impact on environment and act on it.

    Accountability on climate change: global trend

    • There is a wave of investors pushing large corporations from across sectors, to recognise their carbon footprint and take affirmative action.
    • Aviva, the British insurance company announced it would divest stock and bond holdings in 30 of the biggest corporate emitters of carbon, if their boards failed to take affirmative action over climate change.
    • MPs in the United Kingdom called on the Bank of England to ratchet up environment standards in its pandemic stabilising, corporate bond programme.
    • Swedbank AB, Sweden’s biggest mortgage bank, has taken a decision not to provide fresh loans to new oil and gas projects.

    Companies realising social and environmental impacts

    • Several large and growing companies, especially in Europe, are realising their social and environmental impacts and making it a boardroom agenda even without investor guns on their heads.
    • Schneider Electric, the energy management and automation company, has embedded environmental, social and governance (ESG) considerations into every facet of its activities.
    •  The company climbed from 29th to number 1 rank in the 2021 Global 100 ranking in the Corporate Knights index of the world’s most sustainable companies.
    • Only one company from India, Tech Mahindra, has made it to the world’s 100 most sustainable list.

    Indian scenario

    • Indian institutional lenders and investors are simply not demanding enough on sustainability.
    • A majority of Indian companies are only meeting compliance norms set out by various state or city authorities.
    • Rarely do they go beyond rule-based compliances and implement environment, social and governance or ESG goals with purpose and passion like their European counterparts.

    Way forward

    • SEBI is putting the final touches on the Business Responsibility and Environment Reporting (BRSR) guidelines.
    • The new ESG reporting norm will apply to the top 1,000 listed companies on Indian exchanges.
    • Under BRSR reporting guidelines, companies will have to declare their R&D spends on improving environmental and social outcomes. 
    • They will have to disclose energy and water consumed to turnover ratios, and the percentage of recycled or reused input materials, among many other social and governance disclosures such as CSR, employee skilling and gender diversity.
    • It’s time for lending institutions and investors to align with SEBI and use their muscle to drive a deeper change.

    Consider the question “Indian institutional lenders and investors are  not demanding enough on sustainability from the companies. Rarely do they go beyond rule-based compliances and implement environment, social and governance or ESG goals with purpose and passion like their European counterparts. In light of this, suggest the measures to nudge the businesseses to act on their environmental responsibilities.” 

    Conclusion

    Stepping up green standards to meet Paris Climate Agreement goals cannot be the government’s responsibility alone. Businesses must be part of the movement, or the target of containing global warming to less than 1.5 degrees of pre-industrial levels, will remain elusive.

  • 15th Finance Commission could catalyse accountability, effective governance at grassroots

    The article explains the innovative approach adopted by the Fifteenth Finance Commission in devolution of funds.

    Steep hike in grants

    • Local governments are the closest to the people at the grassroots level. 
    • They provide critical civic amenities such as roads, water and sanitation, and primary education and health.
    • With this in view, the Fifteenth Finance Commission (FFC) has recommended grants of Rs 4,36,361 crore from the Union government to local governments for 2021-26.
    • This is an increase of 52 per cent over the corresponding grant of Rs 2,87,436 crore by its predecessor for 2015-20.

    Innovation in recommendations

    1) Scaling of capacities in municipalities

    • The Commission has recommended Rs 8,000 crore as performance-based grants for incubation of new cities and Rs 450 crore for shared municipal services.
    • This is designed to foster innovations in urban governance to transform our cities with speed and scale.
    • There is an urgent need for synergistically combined area-based development to spur economic growth and job creation, and decongesting through the development of satellite townships.
    • Separately, the massive scaling of capacities in municipalities, particularly the 4,000-odd smaller ones, cannot be done by building capacities in each one of them, but through institutional and technological innovations, without compromising their autonomy.
    • The shared municipal services model, with mobile internet, maps, platform thinking, and outsourced services all taken together, can help us fast-track the creation of municipal capacities at scale.
    • This is one of the innovations in the FFC recommendations.

    2) Allocation covers all three tiers of panchayats

    • Of grants for all local governments with 90 per cent weightage on population and 10 per cent on area remains unchanged from the Fourteenth Finance Commission.
    • For panchayats, the FFC allocations cover all the three tiers — village, block, and district — as well as the Excluded Areas in a state exempted from the purview of Part IX and Part IX-A of the Constitution.
    • Funds to all three can improve functional coordination and facilitate the creation of assets collectively across smaller jurisdictions.
    • This is the second new aspect of the FFC recommendations.

    3) Focus on metropolitan governance

    • The FFC calls for a focus on urban agglomerations (UAs) that include urban local bodies, census towns and outgrowths.
    • In 2011, out of the total urban population of 377 million, 61 per cent lived in UAs.
    • The FFC has emphasised the need to focus on the complex challenges of air quality, drinking water supply, sanitation, and solid waste management in the million-plus UAs and cities.
    • Thus, for 2021-26, there is a Million-plus Challenge Fund of Rs 38,196 crore that can be accessed by million-plus cities only through adequate improvements in their air quality and meeting service level benchmarks for drinking water supply, sanitation, and solid waste management.
    • This focus on metropolitan governance through substantive but 100 per cent outcome-based grants is the third innovation.
    • For ULBs other than the million-plus category, the total grants are Rs 82,859 crore.
    • The grants to local governments, both urban (less than a million category) and rural, contain a mix of basic, tied as well as performance grants.

    4) Entry-level conditions

    • The efficiency, smooth functioning and accountability of local bodies have been plagued by:
    • (i) lack of readily accessible and timely audited accounts,
    • (ii) absence of timely recommendations of State Finance Commissions and suitable actions thereon,
    • (iii) inadequate mobilisation of property tax revenues (especially in ULBs).
    • Finance Commissions in the past have drawn pointed attention to these issues, but with limited success.
    • These entry-level conditions for availing any grants and their applicability to all local governments is the fourth innovation.

    Consider the question “Examine the innovative approach adopted by the Fifteenth Finance Commission for the devolution of funds to panchayats and municipal bodies.”

    Conclusion

    Hopefully, over the next five years, through a partnership among the Union, states, and local governments, in the spirit of cooperative federalism, these recommendations and innovations will catalyse progress in the accountability and effectiveness of local governments in India.

     

  • Drafting labour code keeping in mind the realities of informal sector workers

    The article highlights the vulnerabilities of workers in the informal sector and also highlights the issues in the draft rules in the labour codes.

    Context

    • The budget referred to the implementation of the four labour codes.
    • There is also a provision of Rs 15,700 crore for MSMEs, more than double of this year’s budget estimate.

    Impact of pandemic on informal workers

    • India’s estimated 450 million informal workers comprise 90 per cent of its total workforce, with 5-10 million workers added annually.
    • Nearly 40 per cent of these employed with MSMEs.
    • According to Oxfam’s latest global report, out of the total 122 million who lost their jobs in 2020, 75 per cent were lost in the informal sector.
    • The National Human Rights Commission recorded over 2,582 cases of human rights violation as early as April 2020.

    Issues with the draft rules in labour code

    • The rush to clear the labour codes and form the draft rules shows little to no intent on part of the government to safeguard workers.
    • The draft rules envisage wider coverage through the inclusion of informal sector and gig workers, at present the draft rules apply to manufacturing firms with over 299 workers.
    • This leaves 71 per cent of manufacturing companies out of its purview.
    • The draft rules mandate the registration of all workers (with Aadhaar cards) on the Shram Suvidha Portal to be able to receive any form of social security benefit.
    • This would lead to Aadhaar-driven exclusion and workers will be unable to register on their own due to lack of information on the Aadhaar registration processes.
    • A foreseeable challenge is updating information on the online portal at regular intervals, especially by the migrant or seasonal labour force.
    • It is also unclear as to how these benefits will be applicable in the larger scheme of things.

    Neglect of informal sector

    • The draft rules fail to cater to the growing informal workforce in India.
    • The growing informal nature of the workforce and the lack of the state’s accountability makes it a breeding ground for rising inequality.
    • The workers face the risk of violations of their human and labour rights, dignity of livelihood, unsafe and unregulated working conditions and lower wages.

    Consider the question “Assess the impact of covid pandemic on workers in the informal sector. Also examine the issues with the draft rules in the labour code.”

    Conclusion

    The Code on Social Security was envisaged as a legal protective measure for a large number of informal workers in India but unless the labour codes are made and implemented keeping in mind the realities of the informal sector workers, it will become impossible to bridge the inequality gap.