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UPSC CURRENT AFFAIRS – 2 January 2024

InstaLinks :  help you think beyond the issue but relevant to the issue from UPSC prelims and Mains exam point of view. These linkages provided in this ‘hint’ format help you frame possible questions ina your mind that might arise(or an examiner might imagine) from each current event. InstaLinks also connect every issue to their static or theoretical background. This helps you study a topic holistically and add new dimensions to every current event to help you think analytically

Table of Contents:

GS Paper 2:

  1. Fiscal Federalism: Distribution of funds from Centre to States

 

Content for Mains Enrichment:

  1. Nina Singh

 

Facts for Prelims (FFP)

  1. Surya Namaskar
  2. The Kharsawan massacre of 1948
  3. Divya Kala Mela 2023 
  4. International Court of Justice (ICJ)
  5. National Transit Pass System
  6. Radiocarbon dating
  7. Chameleon Trojan

 

Mapping:

  1. Chinnar Wildlife Sanctuary (Kerala)

 


 

Fiscal Federalism: Distribution of funds from Centre to States

GS Paper 2

 Syllabus: Government Policies and Interventions, Relations Between Centre and State

  

Source: TH, Hindu Business Line

 

Context: The recent disagreement between the central and Tamil Nadu governments over flood relief following heavy rainfall sparked a debate on the criteria for awarding central grants to states.

Also, Uttar Pradesh (UP) has received the highest allocation of funds under the ‘Scheme for Special Assistance to States for Capital Expenditure/Investment’, while some other states such as Andhra Pradesh, Kerala, Manipur, and Punjab have received no allocation in 2023-24

 

What is Fiscal Federalism?

Fiscal federalism deals with the division of financial powers as well as the functions between multiple levels of the government in a country. It has within its ambit the imposition of taxes as well as the division of different taxes between the Centre and the constituent units.

 

Tools for Fiscal Federalism:

ToolsDescription
Constitutional Assignment of PowersThe Constitution of India delineates taxation and expenditure powers for different government levels, ensuring clear demarcation between the central and state governments.
Finance CommissionA constitutional body (Art 280) is responsible for recommending tax revenue distribution, suggesting ways to enhance state financial resources, and promoting fiscal discipline.
Goods and Services Tax (GST)A comprehensive indirect tax replacing multiple central and state taxes on goods and services, administered by a GST Council with representatives from the central and state governments.
Grants-in-Aid SystemInvolves the discretionary transfer of funds (Art 275) from the central government to state governments for specific purposes or schemes, addressing regional disparities and developmental gaps.

 

Issues in the Fiscal Federalism in India:

IssuesDetails
Central Assistance for DisastersThe Tamil Nadu government requested ₹21,692 crore in relief funds from the Union government due to the disaster caused by Cyclone Michaung. The central government allocated only ₹450 crore to the State Disaster Response Fund (SDRF) and ₹500 crore for a Chennai flood mitigation project.
Scheme for Special Assistance to States for Capital Expenditure/InvestmentUP and Bihar lead in meeting criteria for Capital Expenditure, securing the highest allocation in the last four years. However, Uttarakhand, Haryana, Kerala, and Punjab receive 1-2% of the total released amount. Andhra Pradesh, Kerala, Manipur, and Punjab have not received any allocation in 2023-24, as they didn’t meet the criteria.
The Scheme for Special Assistance to States for Capital Expenditure, initiated in FY 2020-21 during the Covid-19 pandemic, is extended as the ‘Scheme for Special Assistance to States for Capital Investment 2023-24’ with an allocation of over Rs 1lakh crore.
FRBM ActFiscal Responsibility and Budget Management (FRBM) Act, 2003 is applicable to all states. However, many of the states have missed its targets.
Issues w.r.t GSTFinancial Autonomy of the State: The GST has taken away much of the autonomy available to states, making the country’s indirect tax regime unitary in nature.
GST Compensation: The Centre missed the compensation amount, becoming a major point of contention.
GST Council: The GST Council’s voting structure gives a virtual veto to the central government, sidelining the principle of consensus.

 

Role of the 15th Finance Commission in fostering fiscal federalism:

  1. Increased tax devolution to states from 32% to 41%: This enhances states’ fiscal capacity and autonomy on spending, allocating more resources to states for economic development and governance roles. States’ fiscal buffer has widened.
  2. Emphasis on sector-specific purpose-based grants: The commission has provisioned Rs 4.36 lakh crore performance-based grants to states in areas like health, education, rural connectivity, and water conservation that address development gaps.
  3. Boosts local government finance: The commission mandates a 31% share of the divisible pool for local governments. Over Rs 2 lakh crore, grants to urban and rural local bodies strengthen decentralization.

 

Shortcomings:

  1. Centre retains larger revenue-raising powers and control over citizens’ vital personal finances & expenditures through GST, corporate taxes etc. constraining states’ capacity. RBI’s monetary powers also lie with the central government. This severely skews fiscal imbalance against states.
  2. Rigid fiscal consolidation goals overlook economic constraints: Mandating 4% fiscal deficit limits for states could curb their capital spending abilities and reduce fiscal legroom, posing risks amid the economic revival phase.
  3. Limited sectoral grants in a few specialized domains: The absence of performance incentives for states in many areas like environmental management, digital governance, and social security benefits leaves critical sectors underfunded hampering states’ capacity to uplift them.

 

Key principles that guided 15th Finance Commission recommendations:

  1. Equity: Balanced distribution of resources between the Centre and states based on sound criteria like demographics, development levels etc. to bridge inequality.
  2. Efficiency: Results-based incentives were introduced for the first time across sectors like agriculture, education, and health to boost effective governance.
  3. Conditionality: Certain sector grants are tied to state-level reforms to enable the realization of national priorities like power sector viability and ease of doing business.
  4. Inclusiveness: Enhanced funds allocation to deprived groups and backward regions to ensure even development. Also empowered local governments by allotting them a share of central taxes.
  5. Responsiveness: Sector-specific grants responsive to emerging priorities like improving air quality, water conservation and metro connectivity made growth more sustainable.
  6. Cooperative Federalism: Constant consultation between the Centre and states throughout the Commission’s five-year award period to better reconcile national and sub-national priorities.

 

Suggested measures for improving centre-state fiscal relations:

SuggestionsProposed Solutions
Equity-Oriented Intergovernmental TransfersIntergovernmental transfers, like funds from the central government to states, should be designed to promote equity.
Horizontal and Vertical Fiscal ImbalancesAddressing both horizontal imbalances (disparities among states) and vertical imbalances (between central and state governments) is crucial.
The devolution formula should be designed to account for both sets of imbalances to ensure that resources are allocated fairly.
Constitutional ReformsRevisit Articles 246 and the Seventh Schedule to redefine the division of powers and responsibilities between the central and state governments. This can help clarify which functions should be carried out at each level, reducing confusion and enhancing efficiency.
Empowering Local GovernmentsStrengthen the third tier of government by providing them with adequate resources, functions, and autonomy.
Fiscal Responsibility and Budget Management (FRBM) ActAlign the FRBM Act provisions for both central and state governments to maintain fiscal discipline while accommodating their unique fiscal situations.
Promote the implementation of FRBM Acts at the state level, as suggested by the Fourteenth Finance Commission.
Devolving Tax PowersProvide states with more flexibility and control over taxation, enabling them to generate revenue according to their local economic conditions and priorities.
Cooperative FederalismFoster a spirit of cooperative federalism where the central and state governments collaborate to design and implement policies that benefit the nation as a whole.
Regularization of Appointments of FC

 

Implement the recommendations of the Punchhi Commission, which suggested that the Finance Commission’s appointment should be regularized to ensure its autonomy and periodic review.
Clear Guidelines for Disaster ReliefThere is a need for clear guidelines for disaster relief and debates about the exclusion of long-term restoration works from SDRF/NDRF funding.
Scheme Funds for Disaster ReliefA parliamentary committee recommended in 2021 that states should be allowed to use more than the allocated 25% flexi-fund of centrally sponsored schemes for post-disaster restoration.

 

Conclusion

A careful re-evaluation of fiscal arrangements, prioritization of central expenditure, and discussions on a new grant framework are crucial for fostering effective fiscal federalism in India. The government has given the Terms of Reference of the 16th Finance Commission in order to better prioritise government finances.

  

Insta Links:

 

Prelims Links:

Which of the following is/are included in the capital budget of the Government of India? (UPSC 2016)

 

  1. Expenditure on acquisition of assets like roads, buildings, machinery, etc.
  2. Loans received from foreign governments
  3. Loans and advances granted to the States and Union Territories

 

Select the correct answer using the code given below:

(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

 

Ans: D

Nina Singh

Content for Mains Enrichment:

 

Source: DH

 Context: Nina Singh, a 1989 batch IPS officer of the Rajasthan cadre, has made history as the first woman to head the Central Industrial Security Force (CISF), responsible for securing Delhi Metro and airports nationwide.

Originally from Bihar, Singh, who served as a special DG with the CISF since 2021, has an impressive career. She was the first woman to hold the top police post in Rajasthan, played a key role in developing an outreach program for the State Women’s Commission, collaborated with Nobel laureates Abhijit Banerjee and Esther Duflo, and worked on projects to enhance police accessibility. Singh, associated with high-profile cases, received the ‘Ati Utkrisht Seva Medal’ for professional excellence in 2020.

 Ethical Values: She reflects ethical values such as pioneering leadership as the first woman to hold top police posts, dedication to public service through outreach programs, commitment to accessibility in policing, and handling high-profile cases with integrity.

Surya Namaskar

Facts for Prelims (FFP)

 

Source: TH

 Context: Gujarat set a Guinness World Record with over 50,000 people performing ‘Surya Namaskar’ simultaneously at 108 venues.

  • The main event took place at Modhera Sun Temple in Mehsana

 

About Surya Namaskar:

Surya Namaskar, also known as Sun Salutation, is a yogic practice that involves a series of 12 postures or asanas. The practice is said to pay respect to the sun.

 

About the Sun Temple:

Built in 1026-27 CE during Bhima I’s rule in the Solanki dynasty, the Modhera Sun Temple is a protected monument managed by the Archaeological Survey of India. Divided into Gudhamandapa, Sabhamandapa, and Kunda, it’s believed to commemorate the defence of Modhera against Mahmud of Ghazni.

The Maru-Gurjara or Solanki style architecture showcases exquisite craftsmanship from the Golden Age of Gujarat. Recognized as a Monument of National Importance, it was listed on the UNESCO World Heritage tentative list in December 2022.

The annual Uttarardha Mahotsav dance festival is organized at the temple by the Tourism Corporation of Gujarat. Other notable Sun Temples in India include Konark, Martand, Katarmal, Dakshinarkaa, Bhramanya, Surya Prahaar, Suryanar Kovil, and Suryanarayana temples.

The Kharsawan massacre of 1948

Facts for Prelims (FFP)

 

Source: IE

 Context: On January 1, 1948, Kharsawan in present-day Jharkhand witnessed a massacre similar to the Jallianwala Bagh incident.

  • During a protest against the merger of Kharsawan with Orissa, police opened fire on a gathering of Adivasis, killing hundreds or possibly thousands.

 

Background:

  • The demand for a separate tribal state had been ongoing since 1912, gaining momentum over the years.
  • Kharsawan’s merger with Orissa triggered the protest, with over 50,000 tribals assembling, expecting leader Jaipal Munda.
  • However, his absence led to unrest, and police fired on the crowd, resulting in numerous casualties.

 

A memorial now stands at Kharsawan, and the day is observed as a day of mourning and remembrance in the Kolhan region of Jharkhand.

The Jallianwala Bagh Massacre, also known as the Amritsar Massacre, occurred on April 13, 1919. British troops opened fire on a peaceful crowd of unarmed Indians who had gathered to protest the Rowlatt Act and the arrest of pro-independence activists.

Divya Kala Mela 2023

Facts for Prelims (FFP)

 

Source: PIB

  

Context: The Department of Empowerment of Persons with Disabilities (Divyangjan) is set to inaugurate the Divya Kala Mela 2023 in Bengaluru.

  • ‘Divya Kala Melas’ organized across India is part of the initiative to empower Persons with Disabilities (PwD) during the year 2023-2024.

  

About Divya Kala Mela:

  • Around 100 Divyang artisans from 20 states/UTs will display their products in categories such as home décor, clothing, stationery, eco-friendly items, packaged food, organic products, toys, gifts, and personal accessories.
  • The Mela will also feature cultural activities and performances by Divyangjan artists, providing a platform for marketing and showcasing their skills.

Chameleon Trojan

Facts for Prelims (FFP)

 

Source: IE

 

Context: A new version of the ‘Chameleon Trojan’ malware has been discovered by security researchers, capable of disabling biometric authentication methods such as fingerprint and face unlock to steal a phone’s PIN.

  • The malware attaches itself to legitimate Android apps like Google Chrome to evade detection, running code in the background.
  • It uses the Accessibility service to gain unauthorized access, showing an HTML page with instructions on enabling the service in newer Android versions.
  • Chameleon Trojan collects sensitive information, such as PINs and passwords, and tracks user app usage habits to launch attacks when the device is least likely to be in use.

 

To protect against this malware, users are advised to avoid unofficial app sources, refrain from enabling the Accessibility service for unknown apps, run regular security scans, and keep Google Play Protect enabled.

Chinnar Wildlife Sanctuary (Kerala)

Mapping:

 

Source: TOI

 Context: A team of researchers in Kerala has identified the presence of the Eurasian Otter (Lutra lutra) in the state for the first time, specifically at Chinnar Wildlife Sanctuary in Idukki.

 

About Otters:

Otters, belonging to the Mustelidae family with 13 species, inhabit every continent except Australia and Antarctica. The Eurasian otter is categorized as ‘near threatened’ on the IUCN Red List. Recognized as a flagship species, it serves as an indicator of high-quality aquatic habitats.

 

The Eurasian otter holds the broadest range in the world, but it faces persecution in countries like India, China, and Nepal, leading to a decline in populations due to hunting, habitat loss, pollution, and climate change.

This discovery adds a new member to Kerala’s mammal list, making it the third species of otter found in the state, alongside the Smooth-coated Otter and Small-clawed Otter.

 

About Chinar WLS:

AspectDetails
LocationSituated in the Idukki district of Kerala. Major rivers include Chinnar and Pambar.
ClimateRainshadow region of Western Ghats with a 6-7 month dry season in lower areas. The average rainfall is 500mm, mostly during the NE monsoon.
BiodiversityHome to 965 floral species, 29 mammal species including the endangered Grizzled Giant Squirrel, 225 bird species, 52 reptile species, and endemic fish like Deccan Mahseer.
Cultural SignificanceInhabited by the Muthuvan and Hill Pulaya tribes. Contains the largest megalithic sites in Kerala.

 

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