Mentor’s Comments-
- https://www.livemint.com/opinion/online-views/india-should-incentivize-state-level-fiscal-responsibility-11667752420919.html
- In the introduction, write about Rajasthan, Chhattisgarh and Punjab governments restoring the old pension scheme.
- In the body, begin with briefly mentioning the importance of fiscal devolution. Then, write on how it is leading to a lack of state-level fiscal responsibility.
- Suggest a way forward.
- Conclude suitably.
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Arjun
Decent attempt. Some parts of the question are well addressed. Introduction is good fiscal profligacy example is also mentioned.
Way forward is decent too.
However, the question asks to analyse on how fiscal devolution induces fiscal irresponsiblilty… So other than over reliance you can mention some more points there too.. Example of Bihar can be mentioned on how they have prohibited the sale of alcohol, this indicates that there is an under reliance on state’s own tax resources ; India’s devolution formula is based on income distance- again this leads to lack of efforts to close the income distance gap; ‘protected revenue’ clause in GST regime again disincentivizes state for economic reforms.
Basically you need to establish that fiscal devolution is indeed one of the reasons for fiscal irresponsiblilty.
Otherwise rest of the answer is quite good.
Keep practicing. 🙂
3.5/10
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Pallab
Good attempt overall.
Introduction is good. Significance of fiscal devolution is also well stated.
However, some more dimensions can be added in explaining how fiscal devolution induces fiscal irresponsiblilty…you can first mention fiscal devolution based on income distance here…it leads to lack of efforts to close the income distance gap; presence of ‘protected revenue’ clause in GST regime again disincentivizes state for economic reforms. This part is the crux of the answer, so more focus, multiple dimensions should be there. Example of populist policies such as liquor ban in Bihar due to over reliance on fiscal devolution is also a good example.
Way forward is decent.
Conclusion is fine too, last line can be avoided, that is taking a bit too extreme. Advocacy of reform-linked devolution can be maintained.
Keep practicing. 🙂
4.5/10
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Abhishek
The main concern of the question is an analysis on how fiscal devolution induces fiscal irresponsiblilty… So other than over reliance on central funds and an under- reliance on its own tax revenues for example in case of Bihar, you could mention some other dimensions too in this part.
India’s devolution formula is based on income distance-this leads to lack of efforts to close the income distance gap; ‘protected revenue’ clause in GST regime again disincentivizes states for economic reforms.
Introduction of the answer is good, you have substantiated the fiscal profligacy part.
However, other parts can be kept short. Features of fiscal devolution need not be mention, just mention the objective and move on. Also, in 3rd point there, you have written fiscal devolution is proportional to household income (not clear how?).
Way forward is decent but rather than privatization of policy, you could talk about competition between Indian states for investments, incentivizing political innovation and development; adopting a competitiveness framework that transfers fiscal resources based on the state’s GSDP performance and increasing the share of transfers based on reforms undertaken by the state.
Overall, although you have written a lot of things, a bit of diversion from the point is there.
Keep practicing. 🙂
3.5/10
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@Staff
Rao
Introduction is good.
Next, briefly explain fiscal devolution first, basically it’s objectives. 2nd point of your next part is apt.
After that write the section on how fiscal devolution is leading to fiscal irresponsiblilty… Last two points are good.. You can illustrate it a bit with examples… Bihar example of banning liquor can be used to demonstrate how states are not depending upon their own tax revenues.
A devolution formula based on income distance leads to lack of efforts to close the income distance gap; ‘protected revenue’ clause in GST regime again disincentivizes states for economic reforms. These things could be mentioned.
Way forward is decent.. In first point you could explain what outcomes( incentivizing political innovation and development; transfers based on reforms undertaken etc)
Conclusion is good.
Keep practicing. 🙂
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Megha
Good attempt. Content is quite rich.
Introduction and explanation of the objective of fiscal devolution is fine.
Points mentioned in next part also good. You can talk about the devolution being based on income distance gap which leads to perverse incentivization.
Way forward is decent. Legislative measures such as revising the FRBM act can be suggested too.
Conclusion is fine.
Keep practicing. You are writing well. 🙂
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Staff @CD
Alankrit
Introduction is good, quite data rich.
Next, briefly explain fiscal devolution first, basically it’s objectives. 1st and 2nd point of your next part can be mentioned here only.
After that write the section on how fiscal devolution is leading to fiscal irresponsiblilty. . . Last two points are decent but rather than mentioning the opinion of someone, it is better if you can substantiate using factual examples (there can be allegations of bias in opinions). Bihar example of banning liquor can be used to demonstrate how states are not depending upon their own tax revenues.
Example of states like Punjab and Rajasthan with sufficiently high debt to GDP renewing old pension scheme can be mentioned.
A devolution formula based on income distance leads to lack of efforts to close the income distance gap; ‘protected revenue’ clause in GST regime again disincentivizes states for economic reforms. These things could be added.
Way forward is decent… Last 3 points are similar though, you could add dimensions such as legislative measure of revising the FRBM act, conditional transfers by the centre based on reforms undertaken by the state.
Also, write a concluding statement, otherwise the answer looks incomplete.
Keep practicing. 🙂
3.5/10