Note4Students
From UPSC perspective, the following things are important :
Prelims level: Cannabis , THCBD
Mains level: Read the attached story
Introduction
- To combat the menace of growing antibiotic resistance, scientists at CSIR-Indian Institute of Integrative Medicine (IIIM), Jammu, have made a groundbreaking discovery.
- They found that phytocannabinoids, compounds found in the cannabis plant, possess previously untapped antibiotic properties.
Understanding India’s AMR Challenge
- Escalating AMR Threat: AMR occurs when bacteria, viruses, fungi, and parasites no longer respond to antibiotics, leading to increased disease risk and treatment complications.
- Alarming Statistics: In 2019, India reported 2.97 lakh deaths attributed to AMR and 10.42 lakh linked to AMR-related factors.
- Contributing Factors: Overuse of antibiotics, misuse in animal husbandry, and inadequate waste disposal practices are exacerbating AMR, potentially making India the “AMR capital of the world.”
Cannabis Unveils Antibiotic Potential
- Phytocannabinoid Research: IIIM researchers explored the antibiotic properties of tetrahydrocannabidiol (THCBD), a semisynthetic phytocannabinoid derived from cannabis.
- Fighting MRSA: THCBD exhibited remarkable efficacy against Methicillin-resistant Staphylococcus aureus (MRSA), a highly resistant strain of bacteria responsible for numerous deaths worldwide.
- Synergy with Existing Antibiotics: THCBD complemented or showed indifference to common antibiotics like mupirocin, penicillin G, and ciprofloxacin, suggesting potential combinatory treatments.
Overcoming Cannabis Research Challenges
- Legal Constraints: Cannabis research faces legal constraints due to its intoxicating properties, making collaboration with other institutes challenging.
- Policy Advocacy: The research project aims to advocate for a unified national policy for cannabis research, highlighting its antibacterial potential and transforming it into a valuable resource.
Future Prospects for THCBD
- Collaborative Efforts: IIIM researchers seek collaborations to expedite their progress in developing THCBD as a potential drug.
- Addressing Solubility Challenge: Ensuring THCBD’s solubility is a critical step. The molecule leans slightly towards lipophilicity, requiring optimization for proper absorption in biological systems.
- Healthcare Impact: This research not only promises significant contributions to the healthcare system but also offers economic benefits by establishing related industries and creating sustainable job opportunities.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: SIGHT Program
Mains level: Read the attached story
Introduction
- The Union Ministry of New and Renewable Energy (MNRE) has embarked Strategic Interventions for Green Hydrogen Transition (SIGHT) Programme within the National Green Hydrogen Mission.
SIGHT Programme: An Overview
- Mission Alignment: SIGHT is an integral component of the National Green Hydrogen Mission, strategically designed to foster domestic electrolyser manufacturing and green hydrogen production.
- Financial Commitment: A substantial investment of Rs 17,490 crore has been allocated to SIGHT until 2029-30.
- Dual Incentive Mechanisms: SIGHT introduces two distinct financial incentive mechanisms:
-
- Incentive for Electrolyser Manufacturing: To boost the production of essential electrolysis equipment.
- Incentive for Green Hydrogen Production: Encouraging the generation of clean and sustainable green hydrogen.
- Adaptive Evolution: The incentive schemes and programs will evolve in response to market dynamics and technological advancements, ensuring the Mission’s adaptability.
- Execution Authority: The Solar Energy Corporation of India (SECI) is entrusted with executing the scheme, driving its effective implementation.
About National Green Hydrogen Mission
- Strategic Implementation: Launched by the MNRE, the mission commits an outlay of ₹ 19,744 crore from FY 2023–24 to FY 2029–30.
- Global Hub for Green Hydrogen: The overarching aim is to position India as a global hub for the production, utilization, and export of green hydrogen and its derivatives.
- Vision for 2030:
-
- Production Capacity: India’s green hydrogen production capacity is projected to reach 5 million metric tons (MMT) per annum, diminishing fossil fuel imports and saving ₹1 lakh crore by 2030.
- Economic Impact: The mission anticipates attracting over ₹8 lakh crore in investments and generating employment for more than 6 lakh people.
- Carbon Emission Reduction: A targeted production and utilization of green hydrogen is expected to avert nearly 50 MMT per annum of CO2 emissions.
- Pilot Projects: The Mission encompasses support for pilot initiatives in low-carbon steel, mobility, shipping, and ports.
- Flexible Allocations: The Mission allocates resources for various sub-components like SIGHT, pilot projects, research and development (R&D), enabling the funding of selected projects.
- State-Wide Impact: While the Mission has no state-wise allocation, its broad scope promises nation-wide benefits.
Significance of Green Hydrogen
- Eco-Friendly Production: Green hydrogen is produced through electrolysis, splitting water into hydrogen and oxygen using renewable energy sources like solar, wind, or hydropower.
- A Sustainable Fuel: This process yields a clean, emission-free fuel with immense potential to supplant fossil fuels and mitigate carbon emissions.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Batadrava Than
Mains level: Read the attached story
Introduction
- A politician was recently denied entry to Assam’s Batadrava Than for his political campaigning.
About Batadrava Than
- Location: Situated in Nagaon district, Batadrava Than, also known as Bordowa Than, holds deep significance for Assamese Vaishnavites.
- Birthplace of Srimanta Sankardeva: It stands at the birthplace of Srimanta Sankardeva (1449-1568), a revered Vaishnavite reformer-saint.
- Founder of Kirtan Ghar: Sankardeva established the first-ever Kirtan Ghar at Bordowa in 1494 AD, where he practiced and preached the neo Vaishnavite faith.
Sankardeva’s Philosophy
- Ek Saran Naam Dharma: Sankardeva’s philosophy centered on worship through bhakti (devotion) to Lord Krishna, emphasizing the singing and congregational listening of His name and deeds.
- Society Based on Equality: He advocated for a society free from caste distinctions, orthodox Brahmanical rituals, and sacrifices, promoting equality and fraternity.
- Devotion over Idol Worship: Sankardeva’s teachings favored prayer and chanting (naam) over idol worship.
- Four Components of Dharma: His dharma was founded on four components: deva (god), naam (prayers), bhakats (devotees), and guru (teacher).
Legacy of Sankardeva’s Movement
- Monastic Institutions: Sankardeva’s Neo-Vaishnavite reformist movement led to the establishment of monastic institutions known as Thans/Sattras across Assam.
- Religious, Social, and Cultural Reforms: These Thans/Sattras became centers for religious, social, and cultural reforms in the 16th century.
- “Worship Through Art” Approach: Today, the Sattras propagate Sankardeva’s unique approach of “worship through art” with music (borgeet), dance (xattriya), and theater (bhauna).
- Nucleus of Naamghar: Each Sattra has a naamghar (worship hall) as its nucleus and is led by an influential “Sattradhikar.”
Political Significance and Controversies
- Assamese Identity: Thans/Sattras are integral to Assamese identity, and Batadrava Than is frequently visited by politicians.
- Electoral Issue: The government has highlighted “land grabbing around Sattras by illegal settlers” as an electoral issue.
- Proposed Land Law: The CM has announced plans for a law preventing “non-indigenous people” from buying land within an eight-kilometer radius of Batadrava Than.
- Beautification Project: Home Minister Amit Shah launched a Rs 188 crore beautification project at Batadrava Than in 2021.
Also read:
Assam’s Sattras and their Political Significance
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: 1.5 degree Celsius Threshold
Mains level: Read the attached story
Introduction
- The year 2023 witnessed alarming signs of climate change, from record-breaking summer temperatures to shrinking Antarctic sea ice and extreme weather events across the globe.
- Despite the overwhelming scientific consensus on climate change, there remains confusion and misinformation on this critical issue.
Is the Earth Becoming Warmer?
- Temperature Measurement: Temperature measurements since the late 1880s show global warming trends. Satellite data confirms an increase of at least 1.1 degrees Celsius since 1880.
- Indirect Verification: Analyzing natural indicators like tree rings and ice cores. Observing effects such as warming oceans, shrinking ice cover, and rising sea levels. Multiple monitoring systems enhance confidence in global-scale warming.
- Acceleration of Warming: Recent decades witness unprecedented rapid warming. The majority of warming observed since 1975. 2022 marked the 46th consecutive year of temperatures above the 20th-century average.
Role of Human Activities
- Natural Factors: Throughout Earth’s history, natural factors like solar variations and volcanic activity influenced climate.
- Current Acceleration: However, natural factors exert too little influence and operate too slowly to account for recent rapid warming, as acknowledged by NASA.
- Greenhouse Gases: The primary driver of global warming is the increasing concentration of greenhouse gases, particularly carbon dioxide (CO2), methane (CH4), and water vapor.
- Human Influence: Since the Industrial Revolution, human activities, especially the burning of fossil fuels, have released substantial greenhouse gases into the atmosphere.
- Unprecedented Change: Changes that would typically occur over hundreds of thousands of years are now happening within decades.
Overwhelming Evidence
- Scientific Consensus: The Intergovernmental Panel on Climate Change (IPCC) has stated that “human influence on the climate system is clear and growing.”
- Unprecedented Warmth: 2022 marked the 46th consecutive year with global temperatures exceeding the 20th-century average, with the last nine years ranking among the warmest.
1.5 Degree Celsius Threshold
- Paris Agreement: 195 countries pledge to limit warming to “well below 2 degrees Celsius” and aim to limit the increase to 1.5 degrees Celsius.
- Baseline Year: Pre-industrial levels based on measurements from 1850 to 1900, providing a reliable historical reference.
- Reason for 1.5 Degrees: Scientific consensus: 1.5 degrees is a defense line against severe climate impacts. It avoids extreme and irreversible consequences associated with 2 degrees warming.
- Continuous Improvement: Lowering the target reduces climate risks further. Science supports aiming for the lowest possible temperature increase.
Consequences of Breaching the Threshold
- Increased Extreme Weather: More frequent and intense heavy precipitation. Elevated drought intensity and frequency in some regions.
- Warmer Oceans: Higher number of strong hurricanes with rapid strengthening.
- Intensified Wildfires: Longer-lasting and more intense wildfires.
- Rapid Sea Ice Melt: Accelerated sea-level rise.
- Emerging Consequences: Many of these impacts are already underway. Breaching the threshold exacerbates these effects.
How Close Are We to Breaching the Threshold?
- WMO Warning: World Meteorological Organisation (WMO) warns of a 66% chance of crossing the 1.5-degree limit between 2023 and 2027.
- Hottest Year: 2023 declared the hottest year on record, 1.48 degrees Celsius warmer than pre-industrial levels.
- Daily Fluctuations: Daily temperatures occasionally exceed 1.5 degrees Celsius, but long-term trends are the focus.
Conclusion
- The evidence of climate change and global warming is undeniable.
- Human activities, primarily the release of greenhouse gases, are driving these changes at an unprecedented rate.
- Understanding the science behind climate change is crucial in addressing this real global crisis.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: FCRA
Mains level: Read the attached story
Introduction
- In recent developments, the Foreign Contribution Regulation Act, 2010 (FCRA) registration of two prominent non-governmental organizations (NGOs), the Centre for Policy Research (CPR) and World Vision India (WVI), has been cancelled.
FCRA: Regulating Foreign Donations
- Objective: FCRA regulates foreign donations to ensure they do not adversely affect India’s internal security.
- Compulsory Registration: Any association, group, or NGO intending to receive foreign donations must register under FCRA.
- Amendments: The FCRA was first enacted in 1976 and amended in 2010, with further changes in 2020.
Registration and Renewal
- Initial Registration: NGOs initially register under FCRA for five years, with the possibility of renewal if they adhere to the specified norms.
- Scope of Usage: Registered groups can receive foreign contributions for various programs, including social, educational, religious, economic, and cultural.
Cancellations and Renewals
- Cancellations: Since 2015, over 16,000 NGOs have had their FCRA registrations cancelled due to violations.
- Active NGOs: As of January 22, 16,989 FCRA-registered NGOs were active in India.
- Expired Registrations: Nearly 6,000 NGOs’ FCRA registrations ceased from January 1, 2022, either due to the MHA’s refusal to renew or NGOs not applying for renewal.
Significance and Controversies
- Risk of Money Laundering and Terrorism Financing: The MHA’s 2012 report highlighted the vulnerability of the NGO sector to money laundering and terrorist financing risks.
- Record Number of Registrations: In 2023, 1,111 associations received fresh FCRA registrations.
- Reasons for Rejection: Out of 1,615 applications received for FCRA registration in 2021 and 2022, 722 were granted clearance, while 225 were rejected.
- Foreign Contribution Amount: In 2019-2022, a total of 13,520 associations received ₹55,741.51 crore in foreign contributions.
Reasons for Cancellation: CPR and WVI
- CPR Allegations: The MHA accused CPR of diverting foreign donations to fund protests and legal battles against developmental projects, affecting India’s economic interests. CPR’s publication of current affairs programs using foreign funds was deemed a violation.
- CPR’s Response: CPR deemed the ministry’s decision incomprehensible and disproportionate, challenging the reasoning behind equating policy reports on their website with current affairs programming.
- WVI’s Allegations: WVI had its FCRA registration cancelled for alleged violations from 2012-13 to 2020-21. WVI received the highest amount of foreign donations among all NGOs registered under the Act in 1986.
FCRA Amendments: Recent Changes
The FCRA underwent significant amendments in 2020, introducing several restrictions:
- Fund Transfer Prohibition: Section 7 of the Act prohibits the transfer of foreign funds received by an organization to any other individual or association.
- Designated Bank Account: Recipients must open an FCRA bank account in a designated SBI branch in New Delhi, mandating that all foreign funds be received in this account.
- Shared Information: The designated bank informs authorities about foreign remittances with source and receipt details.
- Aadhaar Requirement: The Government can collect Aadhaar numbers of key functionaries of organizations applying for FCRA registration.
- Cap on Administrative Expenditure: The portion of funds allowed as administrative expenditure was reduced from 50% to 20%.
Criticisms and Government’s Perspective
- Arbitrary Restrictions: NGOs criticize the prohibition on fund transfer as arbitrary and restrictive.
- Non-Sharing of Funds: This prohibition hinders the sharing of aid received as material, impacting collaborative efforts.
- Inconvenient Designated Bank: The requirement for a Delhi-based bank account is inconvenient for NGOs operating elsewhere.
- Government’s Justification: The government maintains that these amendments are necessary to prevent foreign state and non-state interference in India’s internal affairs and to curb malpractices in fund utilization.
Conclusion
- The FCRA plays a crucial role in regulating foreign donations to NGOs in India.
- The recent cancellations of CPR and WVI registrations, coupled with the amendments, highlight the complex and evolving landscape of foreign contributions and their impact on Indian NGOs.
- Understanding these developments is essential for comprehending the dynamics of funding, regulation, and accountability in the non-profit sector.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Pradhan Mantri Suryodaya Yojana
Mains level: Read the attached story
Introduction
- PM Modi announced the launch of the ‘Pradhan Mantri Suryodaya Yojana,’ a government initiative aimed at providing rooftop solar power systems to one crore households in India.
- This ambitious scheme builds upon previous efforts to promote rooftop solar installations in the country, addressing the growing demand for clean and sustainable energy sources.
About Pradhan Mantri Suryodaya Yojana
- Rooftop Solar Installations: The scheme focuses on the installation of solar power systems on 1 crore residential rooftops.
- Reduced Electricity Bills: It aims to reduce electricity bills for households, especially benefitting the “poor and middle class.”
- Energy Self-Reliance: The scheme aligns with India’s goal of achieving self-reliance in the energy sector.
India’s Current Solar Capacity
- Total Solar Capacity: As of December 2023, India boasts a total solar power installed capacity of approximately 73.31 GW.
- Rooftop Solar Capacity: The rooftop solar capacity stands at around 11.08 GW, emphasizing the need for expansion.
- Leading States: Rajasthan leads in total solar capacity with 18.7 GW, while Gujarat tops the list in rooftop solar capacity with 2.8 GW.
Importance of Expanding Solar Energy
- Growing Energy Demand: India is projected to experience substantial energy demand growth over the next 30 years, requiring a reliable energy source.
- Diversifying Energy Mix: To meet this demand and reduce dependency on coal, India aims to reach 500 GW of renewable energy capacity by 2030.
- Solar Power Growth: India has significantly increased its solar power capacity, from less than 10 MW in 2010 to 70.10 GW in 2023.
Existing schemes: Rooftop Solar Programme
- Launched in 2014: The programme seeks to boost rooftop solar installations in the residential sector.
- Financial Assistance: It offers Central Financial Assistance and incentives to distribution companies (DISCOMs).
- Capacity Target: The programme aims to achieve 40 GW of rooftop solar capacity by March 2026, having already grown from 1.8 GW in March 2019 to 10.4 GW by November 2023.
- Consumer Benefits: Consumers can access the scheme through DISCOM tendered projects or the National Portal. They have the flexibility to select vendors and solar equipment. Subsidies are directly transferred to their bank accounts, and surplus solar power can be exported to the grid, offering monetary benefits.
Conclusion
- The news scheme signifies India’s commitment to harnessing solar power as a clean and sustainable energy source for its growing population.
- With a focus on residential rooftop installations, this scheme aims to reduce electricity bills for millions of households while contributing to India’s energy self-reliance goals.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: COP-28:
Mains level: indigenize supply chains for clean energy
Central Idea:
India aims to balance economic growth and environmental concerns as it strives to become the fastest-growing economy, focusing on decarbonizing the power sector, ensuring development, and securing energy needs. Coal remains crucial, but strategies involve managing existing assets, enhancing coal fleet flexibility, incentivizing energy storage, and promoting domestic manufacturing of renewable energy technologies.
Key Highlights:
- India is actively involved in climate action, reducing fossil fuel subsidies, and planning a threefold increase in renewable power capacity by 2030.
- Coal, despite being essential, is slated to persist until India attains developed country status.
- Strategies include better managing thermal plant outages, increasing coal fleet flexibility, incentivizing energy storage, and promoting domestic clean energy manufacturing.
Key Challenges:
- Balancing economic growth with the imperative to phase down unabated coal.
- Uncertainty in predicting India’s coal reliance due to rising electricity demand.
- Adapting existing coal plants for flexibility in integrating renewable energy.
- Compensating entities for energy storage services and boosting domestic value and job creation in clean energy.
Key Terms:
- COP-28: The 28th Conference of the Parties, relevant to global climate change negotiations.
- Unabated Coal: Coal burning without a reduction in carbon emissions.
- Renewable Power Generation: Electricity from sustainable sources like wind, solar, and hydropower.
- Atmanirbhar: A Hindi term signifying self-reliance, commonly used in promoting domestic manufacturing.
Key Phrases:
- “Decarbonizing the power sector while ensuring economic development and energy security.”
- “Reducing overall fossil fuel subsidies” and “tripling installed renewable power generation capacity by 2030.”
- “Managing thermal plant outages during peak demand periods.”
- “Increasing the flexibility of the existing coal fleet to integrate more renewable energy into the grid.”
- “Indigenizing supply chains for battery storage and renewable energy technologies.”
Key Quotes:
- “India has reduced overall fossil fuel subsidies by 76% between FY14 and FY22.”
- “Coal will remain a vital energy source until India reaches the status of a developed country.”
- “Entities deploying batteries must be compensated for the value they bring to grid operation.”
- “Boosting domestic value and job creation in clean energy will mitigate concerns associated with disruptions in the global supply chain.”
Key Statements:
- “To keep the economy powered while decarbonizing, India must use existing assets better and invest in energy storage capabilities.”
- “Improving availability and utilization of existing plants can mitigate the need for investments in new thermal assets.”
- “Indigenizing supply chains for clean energy will support exports and domestic value additions, mitigating concerns of global supply chain disruptions.”
Key Examples and References:
- “In 2023, coal-based power plants in India witnessed unplanned outages during peak demand days.”
- “The PLI scheme committed funds to solar manufacturing, supporting domestic value additions.”
Key Facts and Data:
- “India reduced overall fossil fuel subsidies by 76% between FY14 and FY22.”
- “India produced coal worth substantial amounts in FY22, providing significant revenues to the government.”
- “The PLI scheme committed funds to solar manufacturing, supporting potential domestic value addition.”
Critical Analysis:
- The article underscores the tension between economic growth and environmental concerns in India’s energy strategy.
- Emphasizing strategies for managing existing assets and enhancing coal fleet flexibility reflects a pragmatic approach to the transition to renewables.
- Highlighting the importance of incentivizing energy storage services and promoting domestic manufacturing underscores the need for a comprehensive and sustainable energy policy.
Way Forward:
- Prioritize transparent assessments of long-term opportunity costs of conventional power sources.
- Focus on affordable electricity for all segments of the economy.
- Build on the success of the PLI scheme to further indigenize supply chains for clean energy.
- Implement policies encouraging flexibility in the coal fleet and compensating entities for energy storage services.
- Continue investing in renewable energy and storage technologies to align with global decarbonization commitments while ensuring energy security.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: S.R. Bommai case
Mains level: potential consequences of One Nation, One Election
Central Idea:
The article discusses the formation and potential implications of the ‘High Level Committee on One Nation, One Election’ set up by the Union Government in September 2023. It delves into the reasons for and against the concept, focusing on the financial aspects and governance downtime. The author raises legal concerns, particularly regarding the constitutional autonomy of states, linguistic bias in consultations, and the role of the Election Commission. The looming possibility of a constitutional showdown in the Supreme Court is emphasized, drawing parallels with the U.S. case of Baker v. Carr.
Key Highlights:
- Formation of the ‘High Level Committee on One Nation, One Election’ chaired by former President Ramnath Kovind.
- Reasons supporting the concept include reducing election expenses and minimizing governance downtime caused by the Model Code of Conduct.
- Opposition argues that democratic processes, including elections and the Model Code of Conduct, are essential for a functioning democracy.
- Legal concerns raised, citing potential violation of state autonomy and constitutional provisions, particularly as stated in the S.R. Bommai case.
- The linguistic bias in consultations, with the committee’s website available only in English and Hindi, is highlighted.
- The Election Commission’s seemingly passive role and lack of involvement in the process are questioned.
Key Challenges:
- Constitutional and legal concerns regarding the potential alteration of the duration of State Legislative Assemblies.
- Linguistic bias in consultations, limiting the inclusivity of the decision-making process.
- Potential compromise of the Election Commission’s independence and autonomy.
- Balancing financial considerations with the fundamental principles of democracy.
- The challenge of ensuring a fair and unbiased decision-making process amid political interests.
Key Terms and Phrases:
- One Nation, One Election
- High Level Committee
- Model Code of Conduct
- S.R. Bommai case
- Constitutional autonomy
- Governance downtime
- Baker v. Carr moment
- Linguistic bias
- Election Commission
- Constitutional showdown
Key Quotes:
- “The cost of holding free and fair elections… is a price that can never be high.”
- “The introduction of a common election process would necessarily require alteration of the existing duration of a number of State Legislatures.”
- “Similar to demonetisation, when the Reserve Bank of India was kept in the dark, the Election Commission seems to be a silent spectator.”
Key Statements:
- “The Supreme Court would be called upon to determine the ultimate fate of Indian democracy.”
- “The potential alteration of the duration of State Legislatures would be anti-federal and unconstitutional.”
- “The stage is set for a constitutional showdown in the not-too-distant future.”
Key Examples and References:
- Baker v. Carr case in the U.S. as a reference for the potential role of the Supreme Court in a constitutional showdown.
- Comparison with demonetization to highlight concerns about the Election Commission’s apparent lack of involvement.
Key Facts and Data:
- The estimated cost of the 2014 general elections was ₹3,870 crore.
- The High Level Committee’s website is available only in English and Hindi.
Critical Analysis:
The article critically examines the potential consequences of One Nation, One Election, questioning its feasibility and highlighting legal and constitutional concerns. It underscores the importance of democratic processes and the need for the Supreme Court to play a pivotal role in preserving India’s constitutional architecture.
Way Forward:
- Ensure comprehensive and inclusive consultations in multiple languages to address linguistic bias.
- Strengthen the autonomy of the Election Commission and ensure its active participation in decision-making processes.
- Balance financial considerations with the preservation of democratic principles.
- Address legal concerns, particularly those related to state autonomy and constitutional provisions.
- Encourage public discourse to raise awareness and engage citizens in the decision-making process.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: 16th Finance Commission
Mains level: inclusion of tax contribution, particularly from Goods and Services Tax (GST) and petroleum consumption, as a significant efficiency indicator in the distribution formula used by Finance Commissions to allocate Union tax revenue among states.
Central Idea:
The article advocates for the inclusion of tax contribution, particularly from Goods and Services Tax (GST) and petroleum consumption, as a significant efficiency indicator in the distribution formula used by Finance Commissions to allocate Union tax revenue among states. The authors argue that these measures provide a fair and stable representation of a state’s economic contribution to the national exchequer.
Key Highlights:
- Finance Commissions play a crucial role in recommending the distribution of Union tax revenues among states.
- Historically, tax contribution had less weight in the distribution formula, but it was completely dropped since the 10th Finance Commission.
- The article contends that tax contribution, especially under the GST regime, is a reliable measure of efficiency, unlike other indicators like tax effort and fiscal discipline.
- The authors propose that GST and petroleum consumption, being stable and indicative of income, should be given a substantial weight in the distribution formula.
Key Challenges:
- Resistance from states that may perceive a potential shift in their shares based on tax contribution.
- The stability of indicators like tax effort and fiscal discipline is questioned, making it challenging to assign them higher weights.
- The need to ensure that the inclusion of tax contribution does not lead to unfair outcomes or discourage states from adopting progressive tax policies.
Key Terms:
- Goods and Services Tax (GST): A unified consumption-based destination tax equally divided between the State and Central governments.
- Tax Contribution: The amount of revenue generated by a state through taxes, considered as an efficiency indicator.
- Finance Commission: A body responsible for recommending the distribution of Union tax revenues among states in India.
Key Phrases:
- “Equity and efficiency in tax revenue transfers.”
- “Tax contribution as an efficiency indicator.”
- “GST and petroleum consumption as fair measures of states’ contributions to the national exchequer.”
Key Quotes:
- “Tax contribution is an efficiency indicator because a State’s level of development and economic structure decides its tax contribution.”
- “GST satisfies the criterion of stability in tax structure, making it an ideal efficiency indicator.”
- “There is a persuasive case for the 16th Finance Commission to debate and include these ratios as a measure of efficiency.”
Key Statements:
- “Since the 10th Finance Commission, tax contribution was dropped from the distribution formula.”
- “GST is a consumption-based destination tax that is equally divided between the State and Central governments.”
- “The Finance Commissions have always favored assigning more than 75% weight to equity indicators.”
Key Examples and References:
- The article references the 15th Finance Commission’s distribution formula, which included tax effort, fiscal discipline, and demographic performance.
- The stability of GST as an efficiency indicator is supported by calculations presented by the authors.
Key Facts:
- The share of personal and corporate income taxes is 64% in Central tax revenue in 2021-22.
- Finance Commissions historically assigned 10% to 20% weight to tax contribution in the distribution formula.
Key Data:
- The weightage of tax effort in the 15th Finance Commission’s distribution formula was 2.5%, with demographic performance receiving a weight of 12.5%.
- The recommended weight for equity indicators in the same formula was 85%.
Critical Analysis:
The article provides a compelling argument for the inclusion of tax contribution in the distribution formula, highlighting the stability and fairness of GST as an efficiency indicator. However, potential challenges such as resistance from states and the need for careful consideration to prevent unintended consequences are acknowledged.
Way Forward:
The authors suggest that the 16th Finance Commission should actively debate and consider including GST and petroleum consumption with a substantial weight in the distribution formula. This, they argue, would better represent states’ contributions to the national exchequer and promote efficiency in resource allocation.
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