💥Mains Ready By December. Smash Mains & Smash PYQ Admissions Open
Talk to Mentor

Civilsdaily

Login

Type: Op-ed

  • A demand problem contributing to lower imports

    India registered a trade surplus after almost two decades. But this is not the result of a sudden rise in India’s export. It is due to subdued import indicating the low demand.

    What latest data indicate

    • Data released by the commerce ministry indicate a contraction in exports observed over the past few months easing slowly.
    • But the continuing contraction in import which indicates low demand is worrying.
    • This is trend is leading to the growing gap between import and export.

    India registered a trade surplus: what it indicates

    • This growing gap led to India registering a trade surplus of nearly $800 million in June.
    • This is the first time in almost two decades that the country has registered a trade surplus.
    • But does this mean that India’s exports have grown drastically?
    • No. It is a sign of collapse in domestic demand.

    Merchandise exports growing trends

    • India’s merchandise exports continue to witness an upward swing.
    • The pace of contraction fell to 12.4 per cent in June, from 36.2 per cent in May and 60 per cent in April.
    • Exports of items such as iron ore, drugs and pharmaceuticals, chemicals and various agricultural commodities saw an expansion in June.

    What growing exports and falling import indicate

    • An upswing in exports could be indicative of a faster recovery of India’s export partners.
    • Restrictions on economic activities in some of these countries had eased earlier.
    • Other reason could be the rush by Indian exporters to ship out orders to meet their seasonal deadlines.
    • Imports continue to remain deep in negative territory.
    • The contraction in non-oil exports has actually worsened with decline observed in both consumer and investment/industrial goods imports.
    • Some movement is visible in imports of electronic goods.
    •  But the import of machinery and transport equipment has not moved significantly.
    • Of the 30 main import items, only four registered mildly positive growth in June — this indicates the pace of the domestic slowdown.

    Conclusion

    Economic activities across the world will take time to return to normalcy, India’s exports will take time to reach pre-COVID levels. It seems that the chasm between exports and imports could persist, given the plateauing of the post-lockdown spurt in demand/production.

  • Centralisation in decision making in education

    The article tracks the evolution of the India education system after Independence. While the decentralisation and active encouragement underscores the initial years, recent trends shows a growing emphasis on centralisation.

    How Government support contributed to rise of educational institutions

    • In the initial decades after Independence, the government was conscious of various social, economic and financial challenges.
    • So, the government strongly supported universities, encouraging them to further develop an academic .
    • The IITs and IIM along with institutions of academic excellence like the IISc, Indian Statistical Institute, and JNU emerged as model institutions.
    • The institutional and academic autonomy offered was central to their emerging as premier institutions.
    • Other universities revised curricula and set about the task of reforming the university as a space for healthy academic engagement.

    Rise of decentralisation in collective decision making

    • The above changes were marked by the growing importance of various large representative institutional bodies.
    • For example, institutional bodies like faculty committees, committees of courses, board of studies, university senates, academic councils and executive councils grew in importance.
    • These bodies oversaw the administrative and academic functioning of the university and ensured collective decision-making.
    • Debate over ideological positions, scholarly beliefs shaped the process of nation-building in independent India.

    Policy changes and its impact (2005-15)

    • The constitution of the National Knowledge Commission and privatisation of education undermined the deliberative and independent character of these institutions of higher education.
    • Administrative and academic decisions were imposed from above.
    • Discussions within various academic bodies were discouraged.
    • The imposition of the semester system and a four-year undergraduate programme in many public and private universities were hallmarks of this new era of bureaucratic centralisation.
    • The academic achievements of scholars from Indian universities were undermined.
    • Those in positions of authority within the universities were encouraged to undermine academic bodies and limit their role.

    New government intervention after 2015

    • Futher changes were introduced starting from 2015.
    • Choice Based Credit System was introduced and there were renewed attempts to privatise higher education linked to an emphasis on rankings.
    • The government started to look into minute details pertaining to academic curricula, the teaching-learning process and the parameters that governed academic research within the university.

    Centralisation in Covid-19 pandemic

    • The centralisation trend intensified with the outbreak of the COVID-19 pandemic.
    • The Central government and the University Grants Commission have imposed themselves on the daily functioning of all higher educational institutions.
    • This represents a new government-oriented bureaucratic centralisation.
    • Decisions about the conclusion of academic term, the modalities for evaluation and the conduct of the teaching-learning process have become exclusive government prerogatives.
    • The various academic bodies that had original jurisdiction over these matters have been made redundant.
    • How and whether examinations are to be conducted has become an issue of contention between State and Central governments.

    Consider the question “Centralisation of the decision making instead of at institutional level in educational institutions and universities lies at many woes of the higher education in India. Comment.”

    Conclusion

    The time has come for institutions of higher education in India to recover their lost voice and restore the fertile academic space where ideas are discussed and debated rather than suppressed and dismissed.

    Original article:

    https://www.thehindu.com/opinion/lead/the-lost-voice-of-the-indian-university/article32105945.ece

  • U.S.-Asia coordination to preserve global order

    The focus of this article is on the U.S. policy in the Indo-Pacific and its relations with its allies there in countering China.

    Instances of China’s aggression

    • Galwan Valley is not an exception in Beijing’s recent behaviour in Asia.
    • China has also engaged in a tense geopolitical confrontation with its other neighbours.
    • Stand-offs with Vietnam and Malaysia in the South China Sea and threatening Australia with boycotts are a few examples.

    Response to China

    • Beijing’s aggressiveness is fueling debates about the underlying costs of reliance on China.
    • China’s aggression is also increasing support for closer coordination between other Indo-Pacific partners.
    • Indian, Japan, Malaysia, and Australia have all taken concrete steps to reduce their economic exposure to Beijing.
    •  India and Australia recently inked a new military logistics agreement in the “virtual summit”.
    • A similar agreement between Delhi and Tokyo may follow.
    • The Quadrilateral Dialogue between Australia, India, Japan, and the United States is growing stronger and even expanding.
    • And recently Association of Southeast Asian Nations (ASEAN) issued one of their strongest statements to date on the South China Sea.
    • The ASEAN statement insisted that maritime disputes must be resolved in accordance with the UN Law of the Sea treaty.

    Asian multilateralism: Born out of crises

    • Recently the “Milk Tea Alliance”, reaction of people, born to forge solidarity between Taiwanese, Hong Kongers, and Southeast Asians online to deal with Chinese cyberbullying.
    • The Chiang Mai Initiative — a financial swap mechanism between China, Japan, South Korea, and Southeast Asia — emerged in the aftermath of the late 1990s financial crisis.
    • ASEAN, created in 1967, did not convene its first heads of state meeting until fall of Saigon in 1976 in the Vietnam War.

    Role of the U.S.

    • The COVID-19 crisis is remaking the geopolitics of the Indo-Pacific.
    • The ongoing crisis has made countries aware of seriousness of Chinese dominance.
    • This situation has given the U.S. opportunity it has long sought: 1) More credible multilateral coordination among allies, 2) Pushback against online disinformation. 3) The desire to better integrate like-minded economies and supply chains.
    • But the crisis is also raising renewed questions about the American leadership.
    • The question now facing the U.S. is whether or not it can harness this new regional momentum.

    Alienating allies

    • U.S. continues to make unforced errors that create distance with U.S. allies and partners.
    • For example, its focus on cutting support for the WHO and asserting that COVID-19 originated in a Wuhan lab alienated Canberra.
    • Similarly, the administration’s suspension of various worker visas will almost certainly have serious repercussions in India.

    What should be the U.S. approach to Asia?

    • The U.S. needs to make two major shifts.
    • First, U.S. policy needs to start supporting, rather than attempting to commandeer, regional efforts to build a less China-centric future for the Indo-Pacific.
    • While Chinese aggression provides powerful motivation for coordination, U.S. partners are seeking an agenda that is framed in broader terms than simply rallying to counter Beijing.
    • If the U.S. wants to reduce reliance on Beijing and “re-couple” investments and supply chains among allied nations, it is going to have to make compromises.
    • U.S. should work with Indo-Pacific partners on the issues that they prioritise and provided them with space for independent action.
    • Second, Washington should avoid repeating Beijing’s mistakes of bullying.
    • U.S. should offer a clear alternative in word and deed to China’s “Wolf Warrior” diplomacy.
    • Moves such as demanding that a G-7 communiqué refer to COVID-19 as the “Wuhan virus” and blocking mask shipments to close allies are the kind of counterproductive bullying.

    Options for Asian countries

    • Beijing’s recent aggression is not an aberration but part of a growing pattern.
    • As Beijing’s confidence in its growing material and military power solidifies, its neighbours will need to think carefully about the long-term decisions necessary to preserve an open regional order.
    • Facing the unprecedented health and economic crises spawned by COVID-19, the U.S. and Asian partners will need to coordinate more closely.
    • Asian countries should strengthen their own regional networks.
    • This Asian network will challenge the views of those in both Washington and Beijing who would see the region only as a sparring ground.

    Conclusion

    For American and Asian leaders, the choice is stark: encourage and foster this trend, recognising that stronger regional coordination will require more compromises as well as tougher choices, or resist it and risk being left behind.

  • India should believe in the EU

    India and the EU have many things in common. And there are many areas in which both can expand the cooperation. This article explores commonalities and the areas which offer the scope for enhancing the cooperation. 

    Common interests

    • Both aim to enhance strategic autonomy and their global standing.
    • Diversifying strategic value chains is also a common interest.
    • Both seek to address the issue of climate change on an urgent basis.

    Economic ties with the EU

    • The EU is India’s largest trading partner accounting for €80 billion worth of trade in goods in 2019.
    • This is equal to 11.1% of total Indian trade.
    • The EU is also the biggest foreign investor, with €67.7 billion worth of investments made in 2018.
    • Which is equal to 22% of total FDI inflows.

    Scope for improving the economic ties

    • The EU’s investments in China amounted to €175.3 billion (2018).
    • So, India could succeed in attracting EU investment that might be moving out of China.
    • To attract this outflowing investment, India must address the mutual trust deficit.
    • Enhanced business cooperation can help both the EU and India diversify their strategic value chains.
    • Increasing people’s mobility and connectivity is another area that can create opportunities for innovation and growth.

    Talks on FTA

    • Both sides need to move further on the Free Trade Agreement.
    • A new study from the European Parliament estimates the impact of an EU-India trade agreement between €8 billion and €8.5 billion.
    • The study also mentions additional potential gains from enhanced coordination on the provision of global public goods, such as environmental standards.

    Cooperation on climate change

    • Under the new industrial strategy, the Green Deal, the EU has set an ambitious target to be carbon-emission neutral by 2050.
    • If the EU and India succeed in transforming into carbon-neutral economies by 2050, we all would gain from the investment.

    Strategic partnership with EU

    • The Indo-Pacific region is becoming contentious, so India should capitalise on its geopolitical leverage there.
    • Cooperation with like-minded, democratic powers can support this effort, especially towards assertive competitors like China.
    • The EU as a whole offers more to India than the strongest bilateral relations with individual EU member state.
    • New Delhi must learn how to maximise benefits from this strategic partnership.
    • The disruption caused by COVID-19 has been the occasion for the EU to prove its worth.
    • “Next-generation EU proposal” submitted by the European Commission has economic as well as geopolitical implications.
    • The proposal shows that the ties that bind the EU extend well beyond treaties and individual members’ self-interest.
    • The EU champions the rules-based international order, so the EU and India must act to promote sustainable reform of multilateral institutions starting from the WTO.

    Consider the question “India-EU ties with many common interests assume significance as rule-based order is being challenged by the rise of exceptionalism. Comment.”

    Conclusion

    A strong partnership would help both the EU and India become global decision-makers and tackle the challenges caused by the disruption of global order collectively.

  • Skill India For Atmanirbhar Bharat

    As India embarks on the path of self-reliance through Atmanirbhar Bharat Abhiyan, it has to nurture the skilled workforce. This article highlights the need to upgrade the skills or upskill the youth to meet the employment needs of technology-driven 21st century.

    Context

    • The effects of the pandemic are expected to have a lasting impact on every sphere of activity.
    • Considering this impact, India announced the Atmanirbhar Bharat Abhiyan to propel the country on the path of self-sustenance.

    Objectives

    • Atmanirbhar Bharat has twin objectives- short term and long term.
    • 1) Reviving different spheres of the economy in the short term.
    • 2) Insulating India from any future global economic downturn, by making it robust in the long run.
    • The Abhiyan seeks to build capacities across sectors and promote local products.
    • Further, it would focus on scaling up manufacturing, accelerating infrastructure development, attracting investments and promoting a consumption-led growth.

    Youth: Strength of India

    • About 65 per cent of India’s population is below 35 years and 50 per cent is below 25 years.
    • With a huge, educated young population, India is uniquely poised to realise its demographic potential.
    • The fact that Indians are heading several MNCs shows that there is no dearth of knowledge and talent in the country.
    • However, we need to upgrade the skills or upskill the youth to meet the employment needs of technology-driven 21st century.

    Opportunities and challenges

    • Pandemic and is being seen by many as an opportunity to upgrade their knowledge and acquire new skills.
    • The fourth industrial revolution has triggered a paradigm change in which digital technology drives the job market.
    • Remote working with increasing adoption of digital technology might continue to be dominant mode of working for the near future.
    • It is estimated that nearly 70 per cent of the world’s learners are affected by school closures due to pandemic across education levels.
    • Artificial intelligence, machine learning, data science, cloud computing and Internet of Things will be area of interest for companies.
    • With people opting to online buying, companies will seek to adopt new online marketing strategies.
    • Another important issue that needs to be addressed is ensuring equitable employment through higher participation of women in the workforce.

    Way forward for Atmanirbhar Bharat

    1) Local to glocal

    • There have been some reassuring developments with an accent on “local to glocal”
    • The production of several lakh PPE kits, a collaboration of automobile industries to produce ventilators, manufacture of more than 70 Made in India products by the DRDO are just a few examples of the capability of Indian scientists, IT professionals and technocrats.

    2) Reducing import

    • We must aim to gradually reduce imports in every sector from crude oil to heavy machinery.
    • This reduction should be based on the locally available resources, talent, and skills of the human capital.

    3) Globally competitive product

    • While remaining vocal about local, we must aim at making Indian products to be globally competitive. 
    • We should try to stay ahead in the innovation-led knowledge economy.
    • PSUs and the private sector should not only complement but collaborate wherever feasible.
    • The private sector must massively step up investments R&D. PSUs too need to modernise in terms of technology.

    Consider the question “Atmanirbhar Bharat Abhiyan has the aim of reviving the Indian economy. Examine its objective and how it seeks to revive the economy”

    Conclusion

    To remain globally competitive with a well-assured future, we need to focus on “skills, scale and speed”. India has the potential to emerge as the global hub for providing skilled manpower to other nations.

  • Breaking the politicians-criminals-bureaucrats nexus

    The root cause of impunity with which police perpetrated crimes lies in the in a nexus. The nexus between politicians, criminals and government functionaries needs to be broken down. This article suggests the ways to do that.

    The context

    • The recent custodial deaths in Tamil Nadu and encounter of a criminal by the UP police showed the police in a bad light.
    • However, when we dig deeper into the problem we realise that its root lies in the nexus of politicians, criminals and the government functionaries.

    Past attempt to break the nexus

    • In 1993, the Vohra Committee had submitted a report on the nexus between the criminals, politicians and government functionaries.
    • DIB suggested that an institution be set up to effectively deal with the menace.
    • There were discussions in parliament, but the matter ended there.
    • There was hardly any follow-up action.

    Criminalisation of politics

    • The number of members of parliament with criminal background has been going up with every successive election.
    • It was, according to the Association of Democratic Reforms, 30 per cent in 2009, 34 per cent in 2014 and 43 per cent in 2019.
    • The present UP Assembly has 36 per cent or 143 MLAs with criminal cases against them.
    • This lead to the administration turning a blind eye to the illegal activities of the criminals.
    • The nexus has proliferated and grown in strength down the years.
    • It creates an environment where the criminals who are part of the nexus are able to dodge the due processes of law.

    Suggestions

    • 1) We must have a law which debars persons with serious criminal cases from entering the assemblies and the Parliament.
    • 2) The criminal justice system must be revamped as recommended by the Malimath Committee.
    • 3) The Supreme Court’s directions on police reforms must be implemented.
    • 4) An institution comprising representatives of the police/CBI/NIA, IB, IT department, Revenue Intelligence and Enforcement Directorate should be set up to monitor the activities of the mafia and criminal syndicates in the country.
    • 5) A Central act on the lines of MCOCA should be enacted to curb the activities of organised criminal gangs.
    • 6) The concept of federal crime, as recommended by the Second Administrative Reforms Commission, should be accepted.
    • Crimes with all-India ramifications or are trans-national in character, like those of terrorism and organised crimes, should be brought within the ambit of federal crimes.

    Consider the question “The nexus of criminals, politicians and government functionaries is at the root of many problems the country faces today. Examine the problems created by the nexus and suggest ways to deal with the problem.”

    Conclusion

    We must, without further delay, build an environment where police become an instrument of service to the people, where monsters like Dubey do not thrive and become a menace to society.

  • Smart Cities Mission and the public health

    “Smart Cities Mission” lacks the focus on public health. This article highlights the consequences of this. The article suggests strengthening the of local governments and provisions for the livelihood through an urban employment guarantee scheme.

    “Smart Cities Mission”: Progress so far

    • The ‘Smart Cities Mission’, a flagship programme of the government, completed five years, in June 2020.
    •  The Mission had sought to make 100 selected cities “smart”.
    • Cities are being developed under “Area-Based Development” model.
    • Under this model, a small portion of the city would be upgraded by retrofitting or redevelopment.
    • Many of the projects undertaken under the ‘Smart Cities Mission’ are behind schedule.
    • According to the Ministry of Housing and Urban Affairs, of the 5,151 smart city projects, only 1,638 projects have been completed.
    • In terms of expenditure, of the total investment of ₹2,05,018 crore, only projects worth ₹26,700 crore have been completed.

    Lack of focus on Public health in Smart Cities Mission

    • ‘Smart Cities Mission’ has given little importance to basic services such as public health.
    •  An analysis shows that only 69 of over 5,000 projects undertaken under the Mission were for health infrastructure.
    • These projects are for an estimated cost of ₹2,112 crore, amounting to just around one per cent of the total mission cost.
    • Hence, public health seems to be a major blind spot in India’s smart city dreams.

    Public Health: Essential local government function

    • ‘Smart Cities Mission’ had the stated aim of improving the quality of life of urban residents.
    • Further, public health is an essential local government function in India’s constitutional scheme.
    • As per the 74th Amendment ( 12th Schedule), “public health” is one of the 18 functions that are to be devolved to the municipalities.
    • However, public health infrastructure of cities has often been neglected over the years.

    Strengthening Local Governments

    • Success of Kerala in containing the pandemic has shown how a decentralised political and administrative system can be effective.
    • It is important to strengthen local government capacities.
    • Investment in urban public health systems is needed.
    • Promoting programmes that improve the livelihoods of urban vulnerable communities should be the priority.
    • Programs such as the National Urban Livelihoods Mission and National Urban Health Mission, need to be strengthened.

    Focus on Urban Employment

    • It is time to consider the introduction of a national urban employment guarantee programme.
    • Kerala has been running such a scheme since 2010.
    • States such as Odisha, Himachal Pradesh and Jharkhand have also recently launched similar initiatives in the wake of the COVID-19 crisis.

    Consider the question “Covid pandemic has highlighted the lack of focus on public health in our Smart Cities Mission. Suggest the measures to make our cities resilient and source of livelihood. 

    Conclusion

    As Indian cities face an unprecedented challenge, it is important to get the priorities of urban development right and invest in programmes that improve the health and livelihoods of its residents.

  • Policing the police

    Custodial deaths in Tamil Nadu and death of a criminal in UP has brought to the fore the issue of illegalities carried out by the police. This article discusses the ways in which people face such illegalities and need for the reforms.

    Issue of illegalities by police

    • It is common practice in police stations to ignore the statute, laid down processes and Supreme Court guidelines.
    • So frequent is the brazen disobedience to the law that a lot of illegality seems to have morphed into accepted practice.

    Following are the ways in which police illegalities are carried out

    1) Custodial deaths

    •  The National Crime Records Bureau records 853 custodial deaths between 2010 to 2018.
    • At 1,636, the National Human Rights Commission puts the death figure much higher.
    • For this, just 3 policemen have been convicted.

    2) Issues of encounters

    •  The Supreme Court is clear that in each encounter case, an FIR must be registered and the matter probed independently.
    • If false, an “encounter” is premeditated murder.
    • Encounter threaten the basis of the rule of law.

    3) Avoiding registering complaint

    • Avoiding registration of complaint is the most common problem faced by the people.
    •  Even when the complaint is registered its magnitude is often diluted.
    • It is difficult for women, in particular, to get crimes registered.
    • So, in 2013, the law itself had to be changed.
    • Now a policeman who refuses to register a complaint of a sexual assault faces a two-year sentence.
    • The crime rate in India in 2018, it stood at 383.5 per 1,00,000 population.
    • By contrast, the crime rate in the US was over 2,500 per 1,00,000 .
    • This difference in crime rate highlights the reluctance by the police to registering crime.
    • This low crime rate on paper makes a fine excuse for governments to leave vacancies unfilled, go short on equipment and upgrades.
    • At 158, India’s police to population ratio which is police staff per 1,00,000 citizens, is one of the worst in the world. 

    4) Detention without cause

    •  People with prior records form a pool of easy pickings, as do the powerless.
    •  Often it is because the local public wants a quick arrest and the police want a scapegoat.

    5) Discrimination in arrest and investigation

    •  In the Tuticorin custodial murder, it took six days, the Madras High Court’s dogged intervention and a national hue and cry before six policemen could be arrested.
    • While police act swiftly in some cases, it goes soft against in other cases.

    Mechanisms and Checks and balances

    • There are many checks and balances from taluka to the national level to avoid police transgressions.
    • Internally, there are disciplinary mechanisms.
    • Outside, there are the courts.
    • Every state has human rights commissions, special interest bodies like the scheduled castes and scheduled tribes, women, and minorities commissions, and some have the police complaints authorities.
    • The Supreme Court’s clear directions coupled with the criminal code provide ample safeguards against excess.

    Why these checks and balances fail

    • In real life, internal mechanisms are overindulgent of illegal behaviour, obscure and dilatory.
    • The first responder lower courts are constrained by capacity and circumstance.
    • Very few of the over one hundred guardian bodies dotted around the country work effectively

    Issues with the Guardian bodies

    • Many bodies are without any functions and powers.
    • Others are deliberately left understaffed and under-resourced.
    • The Andhra Pradesh SHRC has no chairperson nor members.
    • Gujarat, Bihar, Chhattisgarh, Kerala and Tamil Nadu SHRCs function with acting chairs.
    • The few institutions that have the power and resources restrain their own functioning through terminal timidity.

    Consider the question “Issue of the illegalities by the police raises the question of guarding the guardians. Examine the ways in which police illegalities are manifested and suggest ways to deal with the issue.”

    Conclusion

    The number and regularity of heinous crimes by the police calls out for root and branch repair of the police and the many guardian agencies tasked with keeping them lawful.

  • For the sake of sound fiscal federalism

    Faultlines in the Centre-State fiscal relations have widened due to Covid. This article examines how States are not getting what they should as per the 14th Finance Commission report.

    Centre-state tussle

    • The tussle for the rights of States has been focused on Article 356.
    • Partial behaviour by the Governors, regional party governments were politically destabilised.
    • Little was done to implement the report of  Justice R.S. Sarkaria Commission on Centre-State relations.
    • The new faultline in the Centre-State relation could be over the way report of 14th Finance Commission is being implemented.
    • This began well before COVID-19, but the pandemic and its economic disruption have brought things to an edge.

    Issues over the implementation of 14th Finance Commission report

    • The 14th Finance Commission report in 2015 promised devolution of more finances to the States.
    • As part of the process, States would have new responsibilities, especially in the social sector.
    •  The Goods and Services Tax (GST) regime was also justified as a grand bargain that would eventually leave all States better off.
    • In reality, tax devolution to States has been consistently below 14th Finance Commission projections.
    • One reason for this has been the economic slowdown, and lower-than-expected GST collections.
    • The shortfall in GST collection for 2018-2019 was 22% when compared to projections.
    • Payments to the States have been delayed as well.
    • There is a ₹6.84 lakh crore gap between what the 14th Finance Commission promised to States and what they have received.
    • States undertook programmes and projects spending 46% more than the Central Government; today the figure is 64%.
    • Despite spending less than the states the Centre’s fiscal deficit exceeds the consolidated State deficit by 14%.

    Need to revisit the FRBM provisions

    • Due to pandemic, the fiscal deficit for States, collectively, is inevitably going to breach the projection of 2.04%.
    • As per provisions of the Fiscal Responsibility and Budget Management (FRBM) Act, the GSDP can actually accommodate a fiscal deficit of 3%.
    • Now, post-pandemic, this limit will be crossed.
    • The FRBM has an “escape clause” that allows for a one-time relaxation of the fiscal deficit threshold upto 0.5% in a time of exigency.
    • The escape clause has been utilised by the Centre but it has proven woefully insufficient in addressing the current crisis.
    • Fiscal policymakers and technocrats agree that the rigidity of the FRBM has to be revisited.
    • It should allow for greater flexibility and consultation as to when and how the “escape clause” can be applied.
    • The Centre has gone in for subjective interpretation, imposing conditions that are outside the scope of the FRBM.

    Consider the question “Fiscal tensions have emerged as  a new front in the Centre-State relations. Suggest the steps the Centre should take to address it.”

    Conclusion

    Centre government needs to be more considerate of the financial woes of the State and try to deliver on the recommendations of the 14th Finance Commission report.

  • Do we need Fiscal Council

    Why there is a need for Fiscal Council?

    • With a complex polity and manifold development challenges, India need institutional mechanisms for prudent fiscal practices.
    • An independent fiscal council can bring about much needed transparency and accountability in fiscal processes across the federal polity.
    • International experience suggests that a fiscal council improves the quality of debate on public finance, and that, in turn, helps build public opinion favourable to fiscal discipline.
    • In a globalised world of enormous capital flows, market volatility across the world and especially in emerging markets, in response to monetary policy changes in major economies, and geopolitical tensions that ebb and flow, causing currencies and commodity prices to swing, countries like India need macroeconomic management as an active function round the year.
    • Also, it is supposed to report to the parliament regarding the practicability of government forecasts in the budget. This will make executive more responsible in budget preparation.
    • For the last eight years the projections of the government has fallen short by a consistent 10 percent, leading to fund cuts in the middle of the year. Thus, an independent Fiscal council would evaluate budget proposals and forecasts using objective criteria.
    • This would also boost confidence in global credit rating agencies about government’s fiscal commitment.