Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: Current status of global economy and Global recession implications
Context
- There have recently been growing concerns about the global economy slipping into recession. These concerns were primarily triggered by the contraction of the US economy, observed in the first half of 2022. Negative growth in two consecutive quarters is commonly but not officially used as an indication of recession.
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Background: Status of the US economy
- First and second quarter of 2022: As reported by the Bureau of Economic Analysis (BEA), the US real Gross Domestic Product (GDP adjusted for inflation) decreased at an annual rate of 1.6 per cent and 0.6 per cent in the first and second quarters of 2022, respectively.
- Third quarter: In the third quarter, however, the US economy grew by 3.2 per cent, signalling a significant recovery.
- Fourth quarter: The latest BEA advance estimates show that the US real GDP increased at an annual rate of 2.9 per cent in the fourth quarter.
- Expansion of US economy a positive sign: Despite the slight decrease from the third quarter, the continued expansion of the US economy at the end of 2022 marks a positive sign, soothing concerns about a recession in 2023.
Economic recovery of the US economy
- Positive growth in fourth quarter: The positive growth in the fourth quarter can primarily be attributed to consumer spending, which increased by an annualised rate of 2.1 per cent, and private inventory investment that showed an upturn in 2022. Although a significant decline from the 5.9 per cent increase in 2021, the difference accounts for the enthused post-Covid economic recovery in 2021.
- The US labour market continues to remain robust: The unemployment rate was recorded at a low of 3.5 per cent in December 2022, matching the pre-pandemic levels. Also, the total non-farm payroll employment increased by 2,23,000 in December, exceeding the Dow Jones estimate of 2,00,000.
- Inflation has eased: While the labour market remains tight, US inflation has eased in the last few months. Consumer prices fell 0.1 per cent in December the largest month-over-month decrease since April 2020, due to reductions in motor vehicle and gasoline prices.
- Layoffs not yet translated into rise in jobless claims: Although not a perfect association, the decline in jobless claims in January shows that the mass layoffs in recent weeks, particularly in the tech sector, have not yet translated into a rise in claims, suggesting the possibility of finding new jobs.
- The reopening of China’s borders can have positive implications for the global economy: As China resumes its economic activities to pre-Covid levels by boosting growth, domestic consumption is expected to increase significantly. With the ease of trans-border movement and eventual increase in exports of consumer and industrial goods, global trade is expected to strengthen as well.
What is Recession?
- A recession is a significant decline in economic activity that lasts for months or even years.
- Experts declare a recession when a nation’s economy experiences negative GDP, rising levels of unemployment, falling retail sales, and contracting measures of income and manufacturing for an extended period of time.
- Recessions are considered an unavoidable part of the business cycle or the regular cadence of expansion and contraction that occurs in a nation’s economy.
- Elevated inflation continues to be a cause for global concern: Despite the fall in consumer prices, the headline CPI for the US showed an annual increase of 6.5 per cent in December 2022. In spite of the slow-paced increase in headline CPI, persistent elevation in core inflation excluding food and energy continues to be a major issue across economies.
- Interest Rate Hikes on the Horizon: Consequently, the central banks are expected to continue with interest rate hikes in the coming months. On an annualised level, the CPI inflation in Australia also jumped to 7.8 per cent in the 2022 fourth quarter, increasing the likelihood of respective interest rate hikes as well.
- China’s Impact on Commodity Prices: Moreover, an increase in China’s demand for goods post-reopening could drive up commodity prices, thereby creating an inflationary impact. For instance, China’s increased demand for natural gas would mean more competition with the European market, leading to higher commodity prices that can put further inflationary pressures on Europeans already dealing with high energy bills.
- Higher borrowing costs: Rising interest rates would incur even higher borrowing costs that could dampen consumer spending. While sectors sensitive to high borrowing costs such as housing and construction have slowed down significantly.
Conclusion
- Among the positive signs are the continued expansion of the US economy and the reopening of China’s borders. Rising inflation remains a cause for global concern. However, prevalence of mixed signals suggests that the onset and depth of a global recession in 2023 are not certain.
Mains question
Q. Highlight the current situation of global economies. Discuss if there’s a global recession in 2023?
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: Mental health problems and solutions
Context
- Suicides rates in India are amongst the highest when compared to other countries at the same socio-economic level. According to WHO, India’s suicide rate in 2019, at 12.9/1,00,000, was higher than the regional average of 10.2 and the global average of 9.0. Suicide has become the leading cause of death among those aged 15–29 in India.
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Background: Mental Health
- While every precious life lost through suicide is one too many, it represents only the tip of the mental health iceberg in the country, particularly among young adults. Women tend to suffer more.
- Across the world, the prevalence of some mental health disorders is consistently higher among women as compared to men.
Prevalence of Mental ill-health
- The pandemic has further exacerbated the problem: Globally, it might have increased the prevalence of depression by 28 per cent and anxiety by 26 per cent in just one year between 2020 and 2021, according to a study published in Lancet.
- Increased among younger age groups: Again, the large increases have been noted among younger age groups, stemming from uncertainty and fear about the virus, financial and job losses, grief, increased childcare burdens, in addition to school closures and social isolation.
- Use of social media exacerbating the stress: Increased use of certain kinds of social media is also exacerbating stress for young people. Social media detracts from face-to-face relationships, which are healthier, and reduces investment in meaningful activities. More importantly, it erodes self-esteem through unfavourable social comparison.
Socio-economic implications of Mental ill-health
- People living in poverty are at greater risks: Mental ill health is a leading cause of disability globally and is closely linked to poverty in a vicious cycle of disadvantage. People living in poverty are at greater risk of experiencing such conditions.
- People experiencing mental health problems likely to fall in poverty: On the other hand, people experiencing severe mental health conditions are more likely to fall into poverty through loss of employment and increased health expenditure.
- Stigma and discrimination: Stigma and discrimination often further undermine their social support structures. This reinforces the vicious cycle of poverty and mental ill-health.
- Higher income inequality has high prevalence of ill mental ill health: Not surprisingly, countries with greater income inequalities and social polarization have been found to have a higher prevalence.
- Killing the deep stigma surrounding mental health issues: The first step should be killing the deep stigma which prevents patients from seeking timely treatment and makes them feel shameful, isolated and weak. Stigma festers in the dark and scatters in the light. We need a mission to cut through this darkness and shine a light.
- Making Mental health an integral part of public health programme: There is need to make mental health an integral part of the public health programme to reduce stress, promote a healthy lifestyle, screen and identify high-risk groups and strengthen interventions like counselling services. Special emphasis will need to be given to schools.
- Paying attention to highly vulnerable: In addition, we should pay special attention to groups that are highly vulnerable because of the issues such as victims of domestic or sexual violence, unemployed youth, marginal farmers, armed forces personnel and personnel working under difficult conditions.
- Creating a strong infrastructure for mental health care and treatment: Lack of effective treatment and stigma feed into each other. Currently, only 20-30 per cent of people with such disorders receive adequate treatment.
- Mental health services should be made affordable for all: Improved coverage without corresponding financial protection will lead to inequitable service uptake and outcomes. All government health assurance schemes, including Ayushman Bharat, should cover the widest possible range.
Why is the wide treatment gap?
- One major reason for a wide treatment gap is the problem of inadequate resources.
- Less than two per cent of the government health budget, which itself is the lowest among all G20 countries, is devoted to mental health issues.
- There is a severe shortage of professionals, with the number of psychiatrists in the country being less than those in New York City, according to one estimate.
- Substantial investments will be needed to address the gaps in the health infrastructure and human resources.
- Currently, most private health insurance covers only a restricted number of mental health conditions. Similarly, the list of essential medicines includes only a limited number of WHO-prescribed medications.
Conclusion
- We need an urgent and well-resourced whole of society approach to protecting, promoting and caring for the mental health of our people, like we did for the Covid pandemic. Brock Chisholm, the first Director General of WHO, famously said, “there is no health without mental health”.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: West Bank, Gaza
Mains level: Israel-Palestine Issue
US has urged Israel and the Palestinians to ease tensions amid a spike in violence that has put the West Bank region on edge.
Where is West Bank?
- The West Bank is a landlocked territory near the coast of the Mediterranean in Western Asia that forms the main bulk of the Palestinian territories.
- It is bordered by Jordan and the Dead Sea to the east and by Israel to the south, west, and north.
Point of discussion: Anti-Semitism
- Anti-Semitism (hatred against Jews) is an officially stated policy of many theocratic countries (created by divine orders of religion).
- This includes entire Arab world, the self-proclaimed caliphate ‘Turkiye’ and even Pakistan.
- Jews, the micro-minority religion of the world were denied access to their homeland.
What is the Israel-Palestine Conflict?
- The land to which Jews and Palestinians lay claim to was under the Ottoman Empire and then the British Empire in early 20th century.
- Palestinian people —the Arab people from the same area— want to have a state by the name of Palestine in that area.
- The conflict between Israelis and Palestinians is over who gets what land and how it’s controlled.
- Jews fleeing the persecution in Europe at the time wanted to establish a Jewish state on the land which they believe to be their ancient homeland.
- The Arab at the time resisted, saying the land was theirs. The land at the time was called Palestine.
- In 1917’s Balfour Declaration, the United Kingdom declared its support for the establishment of a “national home for the Jewish people” in Palestine.
- Arabs resisted it which led to violence.
Jews into West Bank: Arab hinterland in Israel
- Some 75,000 Jews migrated to Palestine from 1922-26 and some 60,000 Jews emigrated in 1935, according to a history published by the University of Central Arkansas.
- It adds that Palestinian Arabs demanded the UK to halt Jewish emigration, but the UK ignored such calls. There were violent incidents, leading to deaths of some 500 people.
- In 1923, the British Mandate for Palestine came into effect.
- The document was issued by the League of Nations, the failed predecessor of the United Nations (UN).
- The mandate gave the UK the responsibility for creating a Jewish national homeland in the region.
- In 1936, the UK government recommended the partition of Palestine into Jewish and Arab states.
How did the issue escalate?
- In 1947, Britain referred the issue of Palestine to the UN, which came up with a partition plan.
- It put up two proposals. One, two separate states joined economically —the majority proposal— and, two, a single bi-national state made up of autonomous Jewish and Palestinian areas, the minority proposal.
- The Jewish community approved of the first of these proposals, while the Arabs opposed them both.
Israel’s independence
- In May 1948, Israel declared its independence. This was eye-pricking development for Arabs.
- The Arab countries of Lebanon, Syria, Iraq, and Egypt invaded the newly-declared country immediately.
- When the war ended, Israel gained some territory formerly granted to Palestinian Arabs under the UN resolution in 1947.
- It also retained control over the Gaza Strip and the West Bank respectively.
Resolving the conflict
Ans. Two-state solution
- The two-state solution refers to an arrangement where Israeli and Palestinian states co-exist in the region.
- However, such a solution has not materialised over the decades.
- As outlined in the beginning and in the briefly explained roots of the conflict, the two-state solution means two separate states for Israelis and Palestinians.
Why it hasn’t worked out?
There are four main reasons why the two-state solution has not materialized by now:
[1] Borders
- There is no consensus as to how to draw the lines dividing the two proposed states.
- Many people say borders should have pre-1967 lines.
- In 1967 Israeli-Arab war, Israel captured Sinai Peninsula, Gaza Strip, West Bank, Old City of Jerusalem, and Golan Heights.
- Israel is not willing to give up these gains. It returned Sinai to Egypt in 1982.
- Moreover, there is the question of Israeli settlements in West Bank.
[2] Question of Jerusalem
- Both Israel and Palestinians claim Jerusalem as their capital and call it central to their religion and culture.
- The two-state solution typically calls for dividing it into an Israeli West and a Palestinian East, but it is not easy to draw the line — Jewish, Muslim and Christian holy sites are on top of one another.
- Israel has declared Jerusalem its ‘undivided capital’, effectively annexing its eastern half, and has built up construction that entrenches Israeli control of the city.
[3] Refugees
- A large number of Palestinians had to flee in the 1948 War.
- They and their descendants —numbering at 5 million— demand a right to return. Israel rejects this.
- The return of these people would end the demographic majority of Jews, ending the idea of Israel that’s both democratic and Jewish.
[4] Security
- Security concerns are also central to Israel as it’s constantly harassed by terrorist group Hamas that controls Gaza Strip.
- Hamas and other Islamist group in Gaza launch rockets into Israel time-to-time.
- Moreover, there are also concerns of Palestinians’ attack inside Israel.
- This year in March-April, at least 18 Israelis were killed in Palestinian attacks inside Israel.
- A total of 27 Palestinians were also killed in the period, including those who carried out attacks inside Israel. Palestinians too have their concerns.
- For Palestinians, security means an end to foreign military occupation.
Why the two-state solution is needed?
- Besides fulfilling the basic desire of both Jews and Arabs of their own states, supporters of two-state solutions say it must be backed because its alternatives are simply not workable.
- A single state merging Israel, West Bank, and Gaza would reduce Jews to a minority.
- At the same time, in such a state, Jews would be a significant minority which would mean that the Arab majority would be miffed.
Moral reasoning for a two-state solution
- It says that the aspirations of one person should not be overridden for others’ aspirations.
- It’s a struggle for collective rights between two distinct groups of people.
- Jews are the global micro-minority with a very small piece of land to exist.
- Depriving Israeli Jews of a Jewish state or Palestinians of a Palestinian state would represent a subordination of one group’s aspirations to someone else’s vision.
Way forward
- India opines that long-term peace in Israel and Palestine can be achieved only through a negotiated two-State solution leading.
- This can be done with the establishment of a sovereign, independent and viable State of Palestine living within secure and recognized borders.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Electoral Bond Scheme
Mains level: Transparency in election funding
The Supreme Court is scheduled to examine whether petitions challenging the validity of electoral bonds scheme need to be referred to a Constitution Bench.
What is a Constitution Bench?
- The constitution bench is the name given to the benches of the Supreme Court of India.
- The Chief Justice of India has the power to constitute a Constitution Bench and refer cases to it.
- Constitution benches are set up when the following circumstances exist:
- Interpretation of the Constitution: Article 145(3) provides for the constitution of at least five judges of the court which sit to decide any case “involving a substantial question of law as to the interpretation” of the Constitution of India.
- President of India seeking SC’s opinion: When the President has sought the Supreme Court’s opinion on a question of fact or law under Article 143 of the Constitution. Article 143 of the Constitution provides for Advisory jurisdiction to the SC. As per the provision, the President has the power to address questions to the apex Court, that he deems important for public welfare.
- Conflicting Judgments: When two or more three-judge benches of the Supreme Court have delivered conflicting judgments on the same point of law, necessitating a definite understanding and interpretation of the law by a larger bench.
- The Constitution benches are set up on ad hoc basis as and when the above-mentioned conditions exist.
- Constitution benches have decided many of India’s best-known and most important Supreme Court cases, such as:
- K. Gopalan v. State of Madras (Preventive detention)
- Kesavananda Bharati v. State of Kerala (Basic structure doctrine) and
- Ashoka Kumar Thakur v. Union of India (OBC reservations) etc.
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What are Electoral Bonds?
- Electoral bonds are banking instruments that can be purchased by any citizen or company to make donations to political parties, without the donor’s identity being disclosed.
- It is like a promissory note that can be bought by any Indian citizen or company incorporated in India from select branches of State Bank of India.
- The citizen or corporate can then donate the same to any eligible political party of his/her choice.
- An individual or party will be allowed to purchase these bonds digitally or through cheque.
About the scheme
- A citizen of India or a body incorporated in India will be eligible to purchase the bond
- Such bonds can be purchased for any value in multiples of ₹1,000, ₹10,000, ₹10 lakh, and ₹1 crore from any of the specified branches of the State Bank of India
- The purchaser will be allowed to buy electoral bonds only on due fulfillment of all the extant KYC norms and by making payment from a bank account
- The bonds will have a life of 15 days (15 days time has been prescribed for the bonds to ensure that they do not become a parallel currency).
- Donors who contribute less than ₹20,000 to political parties through purchase of electoral bonds need not provide their identity details, such as Permanent Account Number (PAN).
Objective of the scheme
- Transparency in political funding: To ensure that the funds being collected by the political parties is accounted money or clean money.
Who can redeem such bonds?
- The Electoral Bonds shall be encashed by an eligible Political Party only through a Bank account with the Authorized Bank.
- Only the Political Parties registered under Section 29A of the Representation of the People Act, 1951 (43 of 1951) and which secured not less than one per cent of the votes polled in the last General Election to the Lok Sabha or the State Legislative Assembly, shall be eligible to receive the Electoral Bonds.
Restrictions that are done away
- Earlier, no foreign company could donate to any political party under the Companies Act
- A firm could donate a maximum of 7.5 percent of its average three-year net profit as political donations according to Section 182 of the Companies Act.
- As per the same section of the Act, companies had to disclose details of their political donations in their annual statement of accounts.
- The government moved an amendment in the Finance Bill to ensure that this proviso would not be applicable to companies in case of electoral bonds.
- Thus, Indian, foreign and even shell companies can now donate to political parties without having to inform anyone of the contribution.
Issues with the Scheme
- Opaque funding: While the identity of the donor is captured, it is not revealed to the party or public. So transparency is not enhanced for the voter.
- No IT break: Also income tax breaks may not be available for donations through electoral bonds. This pushes the donor to choose between remaining anonymous and saving on taxes.
- No anonymity for donors: The privacy of the donor is compromised as the bank will know their identity.
- Differential benefits: These bonds will help any party that is in power because the government can know who donated what money and to whom.
- Unlimited donations: The electoral bonds scheme and amendments in the Finance Act of 2017 allows for “unlimited donations from individuals and foreign companies to political parties without any record of the sources of funding”.
Way ahead
- The worries over the electoral bond scheme, however, go beyond its patent unconstitutionality.
- The concern about the possibility of misuse of funds is very pertinent.
- The EC has been demanding that a law be passed to make political parties liable to get their accounts audited by an auditor from a panel suggested by the CAG or EC. This should get prominence.
- Another feasible option is to establish a National Election Fund to which all donations could be directed.
- This would take care of the imaginary fear of political reprisal of the donors.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: NA
Mains level: TV Content on National Importance
The Information and Broadcasting Ministry clarified that the topics of national importance and social relevance embedded in the programs broadcast by private TV channels would qualify for “Public Service Broadcasting” Obligation.
What is the news?
- The Ministry had earlier issued the guidelines on November 9 last year.
- Following consultations with the stakeholders, it has now come up with the advisory.
Content on National Importance: Key Guidelines for TV channels
- The obligations are under the “Guidelines for Uplinking and Downlinking of Television Channels in India, 2022” to telecast such contents for 30 minutes every day.
- The time for which the public service broadcasting content is telecast in between commercial breaks shall not be accounted for the 12-minute limit for commercial breaks.
- The time for the content shall be accounted cumulatively on monthly basis i.e. 15 hours per month.
- Broadcasters have the liberty to modulate their content.
Themes of National Interest
- The relevant content embedded in the programs may be accounted for public service broadcasting.
- However, it should be done in a manner that the overall objective of the public service broadcasting may be achieved.
- The content could include the themes of:
- Education and spread of literacy
- Agriculture and rural development
- Health and family welfare
- Science and technology
- Welfare of women
- Weaker sections of society
- Protection of environment and cultural heritage and
- National integration
Provisions for voluntary compliance
- Other subjects: The above list is indicative and could be extended to include similar subjects such as water conservation, disaster management, etc.
- Self-certification: The advisory seeks to achieve the objective of public service broadcasting by the private TV channels through voluntary compliance and self-certification.
- Repeat telecast: As advised, the content can be shared between the broadcasters and telecast repeatedly on one or several TV channels.
- Common e-platform: Such platform can also be developed as a repository of relevant videos or textual content from various sources for access and use.
Rationale behind
- Social responsibility: The government has argued that since “airwaves/ frequencies are public property” they “need to be used in the best interest of the society”.
- Creating awareness: The role of mass media, especially the new channels plays a vital role in reshaping public opinion.
Ensuring compliance
- Once the guidelines are implemented, the Ministry will monitor the channels for the broadcast of this content. In case non-compliance is observed in the Ministry’s view, an explanation will be sought.
- If a channel continues to be non-compliant, more steps can be taken based on specific advisories that will be issued from time to time, and on a case-to-case basis.
Exemptions
- Sports channel: The guidelines specify exceptions where it may not be feasible, such as in the case of sports channels, etc.
- Wildlife channels: The exemption may also apply to wildlife channels and foreign channels, besides live telecasts in the case of sports channels.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Finance Commission
Mains level: Not Much
The Centre will soon kick off the process to set up the Sixteenth Finance Commission, with the Finance Ministry likely to notify the terms of reference.
What is the Finance Commission?
- The Finance Commission (FC) was established by the President of India in 1951 under Article 280 of the Indian Constitution.
- It was formed to define the financial relations between the central government of India and the individual state governments.
- The Finance Commission (Miscellaneous Provisions) Act, 1951 additionally defines the terms of qualification, appointment and disqualification, the term, eligibility and powers of the Finance Commission.
- As per the Constitution, the FC is appointed every five years and consists of a chairman and four other members.
- Since the institution of the First FC, stark changes in the macroeconomic situation of the Indian economy have led to major changes in the FC’s recommendations over the years.
Constitutional Provisions
Several provisions to bridge the fiscal gap between the Centre and the States were already enshrined in the Constitution of India, including Article 268, which facilitates levy of duties by the Centre but equips the States to collect and retain the same.
Article 280 of the Indian Constitution defines the scope of the commission:
- Who will constitute: The President will constitute a finance commission within two years from the commencement of the Constitution and thereafter at the end of every fifth year or earlier, as the deemed necessary by him/her, which shall include a chairman and four other members.
- Qualifications: Parliament may by law determine the requisite qualifications for appointment as members of the commission and the procedure of selection.
- Terms of references: The commission is constituted to make recommendations to the president about the distribution of the net proceeds of taxes between the Union and States and also the allocation of the same among the States themselves. It is also under the ambit of the finance commission to define the financial relations between the Union and the States. They also deal with the devolution of unplanned revenue resources.
Important functions
- Devolution of taxes: Distribution of net proceeds of taxes between Center and the States, to be divided as per their respective contributions to the taxes.
- Grants-in-aid: Determine factors governing Grants-in-Aid to the states and the magnitude of the same.
- Augment states fund: To make recommendations to the president as to the measures needed to augment the Fund of a State to supplement the resources of the panchayats and municipalities in the state on the basis of the recommendations made by the finance committee of the state.
- Any financial function: Any other matter related to it by the president in the interest of sound finance.
Members of the Finance Commission
- The Finance Commission (Miscellaneous Provisions) Act, 1951 was passed to give a structured format to the finance commission and to bring it to par with world standards.
- It laid down rules for the qualification and disqualification of members of the commission, and for their appointment, term, eligibility and powers.
- The Chairman of a finance commission is selected from people with experience of public affairs. The other four members are selected from people who:
- Are, or have been, or are qualified, as judges of a high court,
- Have knowledge of government finances or accounts, or
- Have had experience in administration and financial expertise; or
- Have special knowledge of economics
Key challenges for 16th FC
- Overlap with GST council: A key new challenge for the 16th FC would be the co-existence of another permanent constitutional body, the GST Council.
- Conflict of interest: The GST Council’s decisions on tax rate changes could alter the revenue calculations made by the Commission for sharing fiscal resources.
- Feasibility of recommendations: Centre usually takes the Commission’s recommendations on States’ share of tax devolution and the trajectory for fiscal targets into account, and ignores most other suggestions.
Major outstanding recommendations
- Creating a Fiscal Council: The 15th FC has suggested creating a Fiscal Council where Centre and States collectively work out India’s macro-fiscal management challenges, but the government has signalled there is no need for it, he pointed out.
- Creating a non-lapsable fund for internal security: The centre accepted to set up a non-lapsable fund for internal security and defense ‘in principle’, its implementation still has to be worked out.
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