Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Critique of the Fifteenth Finance Commission recommendations with regard to local government
The article highlights the issues with the Fifteenth Finance Commission recommendations with regard to the third tier of the local governments.
Significance of Finance Commission recommendations for local government
- The primary task of the Union Finance Commission is to rectify the vertical and horizontal imbalances in resources and expenditure responsibilities between Union and States including the third tier of local governments.
- Part IX and Part IX-A were incorporated into the Constitution by the 73rd and 74th Constitutional Amendment.
- Part IX and Part IX-A mandate the Union Finance Commission to supplement the resources of panchayats and municipalities on the basis of the recommendations of the State Finance Commission.
- Now, nearly 2.5 lakh local governments and over 3.4 million elected representatives form the real democratic base of the Indian federal polity.
Increase in vertical devolution
- The Fifteenth Finance Commission has raised the vertical devolution recommended to local governments to 4.23% with a reasonably estimated amount of ₹4,36,361 crore.
- Compared with the Fourteenth Finance Commission there is a 52% increase in the vertical share.
- Even if we deduct the grant of ₹70,051 crore earmarked for improving primary health centres, the share is still an all-time high of 4.19%.
- All the Commissions since the Eleventh Commission have tied specific items of expenditure to local grants and the Fifteenth Finance Commission has raised this share to 60% and linked them to drinking water, rainwater harvesting, sanitation and other national priorities in the spirit of cooperative federalism.
Reduction in performance-based grants
- The Fifteenth Finance Commission has reduced the performance-based grant to just ₹8,000 crore — and that too for building new cities, leaving out the Panchayati Raj Institutions (PRIs) altogether.
- The performance-linked grants were introduced by the Thirteenth Finance Commission and covered a wide range of reforms.
- The transformative potential in designing performance-linked conditionalities for improving the quality of decentralised governance in the context of indifferent states is missed.
Encouraging standardisation of accounting system
- An important recommendation of the Fifteenth Finance Commission is the entry-level criterion to avail the union local grant (except health grant) by local governments.
- For panchayats, the condition is the online submission of annual accounts for the previous year and audited accounts for the year before.
- For urban local governments, two more conditions are specified: fixation of the minimum floor for property tax and improvement in its collection.
- It is not clear why gram panchayats are left out from this.
- Although Finance Commissions, from the Eleventh to the Fourteenth, have recommended measures to standardise the accounting system and update the auditing of accounts, the progress made has been halting.
- Therefore, the entry-level criteria of the Fifteenth Finance Commission are timely.
Missed opportunity to ensure minimum public services
- The Fifteenth Finance Commission failed to carry policy choices forward systematically.
- Articles 243G, 243W and 243ZD read along with the functional decentralisation of basic services like drinking water, public health care, etc., mandated in the Eleventh and Twelfth schedules demand better public services and delivery of ‘economic development and social justice’ at the local level.
- A good opportunity to ensure comparable minimum public services to every citizen irrespective of her choice of residential location has not been taken forward in an integrated manner.
Missing equalisation principle for the local government
- The Fifteenth Finance Commission claims that it seeks to achieve the “desirable objective of evenly balancing the union and the states”.
- It is not clear why there is no recognition of the third tier in this balancing act.
- It may be relevant to recall that the Alma-Ata declaration of the World Health Organization (1978) which outlined an integrated, local government-centric approach with a simultaneous focus on access to water, sanitation, shelter and the like.
- There is no integrated approach in the recommendations of the Fifteenth Finance Commission about the local governments (in contrast to the recommendations of the Thirteenth Finance Commission).
- Although the Fifteenth Finance Commission stresses the need to implement the equalisation principle, it is virtually silent when it comes to the local governments.
Equity and efficiency sidelined
- The Fifteenth Finance Commission employed population (2011 Census) with 90% and area 10% weightage for determining the distribution of grant to States for local governments.
- The same criteria were followed by the Fourteenth Finance Commission.
- While this ensures continuity, equity and efficiency criteria are sidelined.
- Abandoning tax effort criterion incentivises dependency, inefficiency and non-accountability.
Consider the question “Discuss the various aspects of the Fifteenth Finance Commission’s recommendations with regard to local governments.”
Conclusion
In sum, if decentralisation is meant to empower local people, the primary task is to fiscally empower local governments to deliver territorial equity. We are far from this goal.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much
Mains level: Paper 2- Changes in U.S. foreign policy
The article highlights the paradigm shift in the U.S. foreign policy in which the U.S. engages with a country on several parallel lines with little or no scope for a trade-off between them.
Changes in the U.S. foreign policy
- US foreign policy is no longer based on old friend-or-foe classification under which transgressions by a “friend” or an “ally” were overlooked if the country was helpful to US self-interests.
- Instead, the US foreign policy paradigm has shifted to one where a country’s position on an issue — trade, climate change, security, or human rights — is the categorising principle and not the country.
- Put differently, engagement with countries will be done on issues with little or no trade-off among them.
- Competition, cooperation, and confrontation can all characterise the US’s bilateral engagement depending on the specific issue.
- For example, trade will involve competition while climate change and pandemics will necessitate cooperation.
- Human rights and national security issues could be confrontational.
Smart sanctions
- A key instrument of foreign policy will be the now well-honed system of “smart” sanctions.
- Sanctions in the past were directed at a country as a whole but such sanctions were counterproductive and created anti-US sentiment.
- In its latest version, smart sanctions do not target countries, but specific individuals, firms, and institutions for a variety of alleged transgressions.
- US businesses and individuals cannot transact with sanctioned entities.
- The Magnitsky Accountability Act of 2012, for example, targeted those involved in the death of Russian lawyer Sergei Magnitsky and others responsible for human rights abuses in Russia.
- When this was found to be successful, an executive order, passed in 2017, extended the provisions in the Magnitsky Act, to all who are corrupt or violate human rights in the world.
What does this mean for India
- Unlike in the antiquated rational-actor paradigm where there are imagined trade-offs across issues, in the new framework the US engages with countries on parallel lines.
- The engagement is multifaceted across trade, intellectual property rights, climate change, security, terrorism, and, importantly, human rights, with limited trade-off across them.
- Whether cooperation, competition, or confrontation dominate the nature of the engagement will depend on the specifics not whether India is a friend or a foe.
Conclusion
This marks the shift in the U.S. foreign policy, if others, including India, do not adapt to this paradigm shift, then they will find engagement with the US starkly different and surprisingly difficult.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Article 244(A), Sixth Schedule
Mains level: Statehood issues in NE
A national party leader has promised to implement Article 244 (A) of the Constitution to safeguard the interests of the people in Assam’s tribal-majority districts.
What is Article 244(A)?
- Article 244(A) allows for the creation of an ‘autonomous state’ within Assam in certain tribal areas.
- Inserted into the Constitution in 1969 by the then government, it also has a provision for a Legislature and a Council of Ministers.
Try this PYQ from CSP 2018:
Q.The Government enacted the Panchayat Extension to Scheduled Areas (PESA) Act in 1996. Which one of the following is not identified as its objective?
(a) To provide self-governance
(b) To recognize traditional rights
(c) To create autonomous regions in tribal areas
(d) To free tribal people from exploitation
How is it different from the Sixth Schedule of the Constitution?
- The Sixth Schedule of the Constitution — Articles 244(2) and 275(1) — is a special provision that allows for greater political autonomy and decentralized governance.
- It is applicable to certain tribal areas of the Northeast through autonomous councils that are administered by elected representatives.
- Article 244(A) accounts for more autonomous powers to tribal areas.
- In Autonomous Councils under the Sixth Schedule, they do not have jurisdiction of law and order.
How did the demand arise?
- In the 1950s, a demand for a separate hill state arose around certain sections of the tribal population of undivided Assam.
- In 1960, various political parties of the hill areas merged to form the All Party Hill Leaders Conference, demanding a separate state.
- After prolonged agitations, Meghalaya gained statehood in 1972.
- The leaders of the Karbi Anglong and North Cachar Hills were also part of this movement. They were given the option to stay in Assam or join Meghalaya.
- They stayed back as the then government promised more powers, including Article 244 (A). Since then, there has been a demand for its implementation.
- In the 1980s, this demand took the form of a movement with a number of Karbi groups resorting to violence. It soon became an armed separatist insurgency demanding full statehood.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: PIO, OCI
Mains level: Indian Diaspora
People of Indian origin (PIO) and the Indian diaspora having Overseas Citizens of India (OCI) cards are now not required to carry their old, expired passports for travel to India.
UPSC can ask statement based question in prelims based on the definition and privileges of OCI card-holders.
Who is an Overseas Citizen?
- An OCI is a category introduced by the government in 2005.
- Persons of Indian Origin (PIOs) of certain categories as specified in the Citizenship Act, 1955 are eligible for being OCI cardholders.
- Some of the benefits for PIO and OCI cardholders were different until 2015 when the government merged these two categories.
- The MHA defines an OCI as a person who was a citizen of India on or after January 26, 1950; or was eligible to become a citizen of India on that date; or who is a child or grandchild of such a person, among other eligibility criteria.
- According to Section 7A of the OCI card rules, an applicant is not eligible for the OCI card if he, his parents or grandparents have ever been a citizen of Pakistan or Bangladesh.
Privileges to an OCI
- OCI cardholders can enter India multiple times, get a multipurpose lifelong visa to visit India, and are exempt from registering with Foreigners Regional Registration Office (FRRO) no matter how long their stay.
- If an individual is registered as an OCI for a period of five years, he/she are eligible to apply for Indian citizenship.
- At all Indian international airports, OCI cardholders are provided with special immigration counters.
- OCI cardholders can open special bank accounts in India, they can buy the non-farm property and exercise ownership rights and can also apply for a driver’s license and PAN card.
- However, OCI cardholders do not get voting rights, cannot hold a government job and purchase agricultural or farmland.
- They cannot run for public office either, nor can they travel to restricted areas without government permission.
Why such a move?
- There had been inconvenience caused to members of the Indian diaspora due to certain OCI card rules as they undertook to travel to India during the pandemic.
- He said some of the passengers were not allowed to board flights to India and were sent back from airports as they were not carrying their old foreign passports, which was required as per government rules.
- The OCI card, among other benefits, allows multiple entries, multi-purpose lifelong visa to an Indian-origin foreign national to visit India.
- Under the provisions of the OCI card, which gives the cardholder a lifelong visa to India, those below 20 years and above 50 years need to renew their OCI card every time they have their passport renewed.
Back2Basics: PIO vs. OCI
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not Much
Mains level: India-Pakistan Trade
Partially reversing a two-year-old decision to suspend all trade with India, Pakistan recently announced that it would allow the import of cotton and sugar from across the border.
Ever wonder why the neighbour next door suddenly wants to normalize all ties? Read this edition of ours:
India-Pakistan trade relations
- Trade between the subcontinental neighbours has always been linked to their political interactions, given their tumultuous relationship.
- For instance, India’s exports to Pakistan dropped by around 16 per cent to $1.82 billion in the 2016-17 financial years from $2.17 billion in 2015-16.
- This coincided with the rise in tensions between the two countries following the terrorist attacks in Uri in 2016 and the surgical strikes by India against Pakistan-based militants.
How much is the volume of trade?
- Trade between the two countries grew marginally in subsequent years despite continuing tensions.
- India’s exports to Pakistan increased to nearly 6 per cent to $1.92 billion in 2017-18, and by around 7 per cent to $2.07 billion in 2018-19.
- Imports from Pakistan, though much lower than India’s exports to the country, also increased by 7.5 per cent to $488.56 million in 2017-18 from $454.49 million in 2016-17.
- Growth of imports from Pakistan slowed to around $494.87 million in 2018-19 — an increase of around 1 per cent — before political relations between the two countries took a turn for the worse in 2019.
Why did Pakistan ban trade with India?
- Pakistan’s decision to suspend bilateral trade with India in August 2019 was primarily a fallout of India’s decision to scrap Article 370.
- Pakistan called the move “illegal”, and took this trade measure as a way of showing its dissatisfaction.
- However, an underlying reason for suspending trade between the two countries was also the 200 per cent tariff imposed by New Delhi on Pakistani imports.
- This was a move that India implemented earlier that year after revoking its status as a Most Favoured Nation following the suicide bomb attack on the CRPF in Pulwama.
- Pakistan’s announcement, coupled with India’s decision to revoke its MFN status and hike duties on its goods, was considered by some experts to be one of the most drastic measures ever taken in diplomatic tensions.
Why is Pakistan allowing cotton and sugar import now?
- Textiles from Pakistan are its value-added export.
- The proposal to lift the ban on cotton imports came in the backdrop of a shortfall in raw material for Pakistan’s textile sector, which has reportedly been facing issues due to a low domestic yield of cotton in the country.
- On top of this, imports from other countries like the US and Brazil have reportedly been more expensive and takes longer to arrive in the country.
Why only these two commodities?
- Even when we had a very small positive list (of goods for trade with Pakistan), agricultural commodities were always there in the list.
- Cotton has been one of Pakistan’s major imports from India. In 2018-19, Pakistan imported $550.33 million worth of cotton from India.
- When coupled with $457.75 million worth of organic chemicals, these products made up around half of its total imports from India.
- Where sugar is concerned, trade experts feel it is a result of a long-standing interdependence between India and Pakistan over such agricultural commodities and a potential shortage in domestic supply.
- If finally approved, cotton and sugar would be the second and third commodities allowed for export from India after Islamabad lifted the ban on medicine and related raw material imports during the Covid-19 pandemic.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Whitsun Reef
Mains level: South China Sea Row
China’s aggressive expansion in the South China Sea has found a new ground, Whitsun Reef, where 220 Chinese vessels are currently anchored under the Philippines’ Exclusive Economic Zones (EEZ).
Once again, the South China Sea finds itself closer to becoming a security flashpoint amidst rising concerns over a military conflict.
Also, try this:
Q.Recently, Senkaku Island was in the news. Where is it located?
a) South China Sea
b) Indian Ocean
c) East China sea
d) Red sea
Whitsun Reef
- Whitsun Reef is a reef at the northeast extreme limit of the Union Banks in the Spratly Islands of the West Philippine Sea.
- It is the largest reef of the Union Banks.
- The reef is V-shaped with an area of about 10 sq. km.
- Until at least the 1990s it was submerged most of the time and was visible above the water only during the low tide, at other times the reef could be detected due to the pattern of breaking waves.
- At the end of the 20th-century small sand dunes had developed on the reef making a territorial claim possible (an International Court of Justice judgment in 2012 stated that “low-tide elevations cannot be appropriated”).
- The development of the dunes could have occurred naturally, but the rumours had it that the island was being built up by Vietnam and China.
Territorial disputes
- As of 2016, the reef was unclaimed, the reports to the contrary (Chinese control) were based on confusion.
- However, due to the reef’s strategic importance, it was expected that the reef would be occupied “soon”.
- On 21 March 2021, about 220 Chinese fishing ships were moored at the reef ostensibly taking shelter due to the sea conditions.
Why is the Philippines concerned?
- The Philippines considers the reef to be a part of its exclusive economic zone and continental shelf and protested the Chinese presence.
- Currently, Philippine military aircraft and navy are monitoring the situation daily, and China has been warned that there will be an increased military presence to conduct ‘sovereignty patrols’.
- If China is successful with its moves, the Philippines may lose another fishing ground, similar to what happened in 2012 when China took control of Scarborough Shoal.
The larger dispute
- China and the Philippines, along with other Southeast Asian countries, have long been part of disputes over sovereign claims over the region’s islands, reefs and seabeds.
- A third of the world’s maritime trade travels through the South China Sea annually.
- The seabeds here are believed to be reserves of oil and natural gas while being home to fisheries essential for the food security of millions in South Asia.
- The majority of the disputes concern the lack of adherence to the international ‘Exclusive Economic Zones’ which stretch up to 200 nautical miles from the coast of any state.
- China, especially, has been notorious for disregarding the law on various occasions.
What does China have to say?
- On the present matter, the Chinese have reiterated that the vessels are mere fishing boats seeking shelter from unruly weather, though no bad weather has been reported in the area.
- It is also unlikely that fishermen would have the financial capital to remain stationary for weeks on end.
- Experts say through their present occupation, China might be looking to create a civilian base on the reef, an artificial island or even just control the airspace.
- It is widely assessed that Philippines’s soft approach has further strengthened China’s ambitions in the South China Sea.
Back2Basics: South China Sea Row
- It is a dispute over territory and sovereignty over ocean areas, and the Paracels and the Spratlys – two island chains claimed in whole or in part by a number of countries.
- China, Vietnam, the Philippines, Taiwan, Malaysia and Brunei all have competing claims.
- Alongside the fully-fledged islands, there are dozens of rocky outcrops, atolls, sandbanks and reefs, such as the Scarborough Shoal.
- China claims by far the largest portion of territory – an area defined by the “nine-dash line” which stretches hundreds of miles south and east from its most southerly province of Hainan.
- Beijing says its right to the area goes back centuries to when the Paracel and Spratly island chains were regarded as integral parts of the Chinese nation, and in 1947 it issued a map detailing its claims.
- It showed the two island groups falling entirely within its territory. Those claims are mirrored by Taiwan.
Spat over Chinese claims
- China has backed its expansive claims with island-building and naval patrols.
- The US says it does not take sides in territorial disputes but has sent military ships and planes near disputed islands, calling them “freedom of navigation” operations to ensure access to key shipping and air routes.
- Both sides have accused each other of “militarizing” the South China Sea.
- There are fears that the area is becoming a flashpoint, with potentially serious global consequences.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Military farms, Project Freiswal
Mains level: NA
Military farms have been closed after 132 years of service.
Read till the end to know what Project Freiswal is.
What are Military Farms?
- The farms were set up with the sole requirement of supplying hygienic cow milk to troops in garrisons across British India.
- The first military farm was raised on February 1, 1889, at Allahabad.
- Post-independence, the farms flourished with 30,000 heads of cattle in 130 farms all over India.
- They were even established in Leh and Kargil in the late 1990s.
Why are they shutdown?
- The major task was the management of large tracts of defence land, production and supply of baled hay to animal holding units.
- There have been several recommendations in the past to shut down the farms.
- In 2012, the Quarter Master General branch had recommended their closure.
- Again in December 2016 by Lt. Gen. DB Shekatkar (retd) committee was appointed to recommend measures to enhance combat capability and rebalance defence expenditure of the armed forces.
Their significance
- For more than a century, the farms with dedication and commitment supplied 3.5 crore litres of milk and 25,000 MT of hay yearly.
- It is credited with pioneering the technique of artificial insemination of cattle and the introduction of organised dairying in India, providing yeoman service during the 1971 war.
- It also supplied milk at the Western and Eastern war fronts as well as during the Kargil operations to the Northern Command.
Another initiative: Project Freiswal
- It utilizes Friesian-Sahiwal cross-breeds as a base for the evolution of a new milch strain – “Frieswal” – through interbreeding, selection and progeny testing of bulls.
- It was introduced on 3 November 1987 at the Military Farm School and Research Centre in Meerut.
- It had the objective of studying the genetic aspects of Holstein x Sahiwal crossbreeds and those of important indigenous cattle breeds for their improvement through selection.
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