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  • [12th November 2024] The Hindu Op-ed: The LAC agreement, the détentes and the questions

    PYQ Relevance:

    Q) China is using its economic relations and positive trade surplus as tools to develop potential military power status in Asia’, In light of this statement, discuss its impact on India as her neighbour. (UPSC CSE 2014)

    Q) The China-Pakistan Economic Corridor (CPEC) is viewed as a cardinal subset of China’s larger ‘One Belt One Road’ initiative. Give a brief description of CPEC and enumerate the reasons why India has distanced itself from the same. (UPSC CSE 2019)

    Mentor’s Comment:   The India-China border conflict is a complex and longstanding issue primarily centred around the 3,488-kilometer (2,167-mile) Line of Actual Control (LAC) in the Himalayan region. Tensions have escalated significantly in recent years, particularly in June 2020.

    Both countries have recently reached a significant bilateral agreement regarding patrolling along their disputed border, specifically the LAC, in the context of the tensions that arose from the 2020 Galwan Valley clash.

    Today’s editorial explores the pressing issues related to LAC between India and China’s recent agreement.

    _

    Let’s learn!

    Why in the News?

    Two weeks after announcing military disengagement, a meeting between PM Modi and President Xi at the BRICS Summit led to positive gestures at the LAC, signalling renewed goodwill.

    Key Highlights of the Agreement:    

    • Resumption of Patrols: The agreement allows Indian and Chinese troops to resume patrolling along the Line of Actual Control (LAC) in areas such as the Depsang Plains and Demchok, reverting to norms that existed before the 2020 tensions. This is expected to help reduce the likelihood of confrontations.  
    • Disengagement Process: The deal signifies that the disengagement process has been finalized, indicating a mutual understanding to pull back troops from certain friction points, which aims to stabilize the situation along the border.  
    • Monitoring Mechanism: Regular monitoring and monthly review meetings will be instituted to ensure compliance with the terms of the agreement, helping to maintain stability and prevent future clashes between both nations.  
    • Diplomatic Engagement: The timing of this agreement aligns with high-level diplomatic interactions, including potential meetings between Indian Prime Minister Narendra Modi and Chinese President Xi Jinping at the BRICS summit, indicating a broader effort to normalize bilateral relations beyond military issues.

    No Clarity on this agreement: 

    • Unclear Agreement Details: India and China have not provided clear details on the new “patrolling arrangements” at the Line of Actual Control (LAC).
      • Reports suggest possible PLA access in areas like Yangtse (Arunachal Pradesh), yet no official clarity exists.
    • Pattern of Ambiguity: Since the start of tensions in 2020, the government has provided limited information. This was first seen when violent clashes occurred at Pangong Tso in 2020, which the government downplayed in terms of changes in troop levels.
    • Impact of Buffer Zones: Although disengagement has occurred at some points like Depsang and Demchok, the establishment of buffer zones may hinder a full return to pre-2020 conditions without dismantling these zones.

    What are the reasons behind China’s actions on the Indian border?

    • Territorial Ambitions (Xi’s 2014 Policy): China’s increased aggressiveness, possibly a result of President Xi Jinping’s 2014 policy to control “every inch of territory,” has been evident across multiple regions, including Taiwan, South China Sea, Doklam, and the Tibet-India border.
    • Check on India-U.S. Partnership: China may be signaling that India’s maritime partnership with the U.S. will not mitigate India’s 3,500 km continental border challenges with China.
    • Infrastructure Security Concerns: India’s border infrastructure improvements, like Daulat Beg Oldie and new border roads, have heightened China’s security concerns around Xinjiang and Tibet. China’s own construction in the region may have increased in response.
    • Timing Linked to J&K Reorganization (August 2019): China reacted strongly to India’s changes in Jammu & Kashmir, particularly regarding Ladakh, leading some to believe this may have influenced China’s aggressive LAC moves in 2020.

    Need for Government Transparency (Way Forward)

    • Call for Openness in Sensitive Border Decisions: For sustainable peace and transparency with citizens, the government should clarify its plans for the northern region, especially given the unexpected events at the LAC.
    • Lessons from LAC Events: The government should review the causes and responses to Chinese transgressions, which took the public and officials by surprise, and communicate lessons learned.
    • Engaging Citizens: As a democratic government, India is urged to move away from “shock and awe” surprise announcements and foster transparency about national security moves with profound impacts on its citizens.

    https://www.thehindu.com/opinion/lead/the-nilgiris-as-a-shared-wilderness/article68820359.ece

  • Ending discrimination in prisons

    Why in the News?

    On October 3, the Supreme Court in Sukanya Shantha v. Union of India (2024) struck down caste-based segregation in prisons, deeming it discriminatory and a violation of prisoners’ fundamental rights to equality.

    What are the key findings regarding caste-based discrimination in Indian prisons?

    • Prevalence of Caste-based Roles: The recent Supreme Court decision in Sukanya Shantha v. Union of India (2024) highlighted discriminatory practices based on caste within Indian prisons.
      • Specifically, prisoners from marginalized castes were relegated to menial labour like cleaning, while other prisoners were assigned tasks such as cooking. This segregation was rooted in prison manuals that cited traditional caste roles.
    • Violation of Fundamental Rights: The Supreme Court ruled that such caste-based segregation violates Articles 14 (Right to Equality) and 15 (Prohibition of Discrimination) of the Indian Constitution. The Court noted that assigning prison labour based solely on caste perpetuates harmful caste hierarchies and obstructs prisoners’ equal rights to reform and rehabilitation.
    • Historical Precedents: Previous cases like Prem Shankar Shukla v. Delhi Administration (1980) and Inacio Manuel Miranda v. State (1988) also struck down irrational classifications within prison rules that discriminated based on economic or social status, reiterating that discrimination in any form within prisons is unconstitutional.

    What actions has the Supreme Court mandated to combat this discrimination?

    • Abolition of Caste-based Job Assignments: The Supreme Court directed that prison rules segregating labour assignments based on caste be abolished. It ordered that job assignments within prisons must reflect prisoners’ individual abilities and should not perpetuate caste stereotypes.
    • Amendment of State Prison Rules: The Court instructed state governments to review and amend existing prison rules that institutionalize caste-based roles, ensuring that prisons become more inclusive and non-discriminatory spaces.

    What challenges remain in implementing these reforms effectively?

    • Resistance to Cultural Change: Prison administrations may resist or be slow in adapting to changes in labour assignments and other reforms, given the deeply ingrained social norms and bureaucratic rigidity.
    • Lack of Resources and Training: Ensuring non-discriminatory job assignments will require retraining prison staff to implement reforms sensitively. Resource limitations and an undertrained workforce can impede effective reform.
    • Need for Comprehensive Prison Reforms: While the Court’s decision targets caste-based discrimination, broader systemic reforms are needed, such as improving prison conditions, expanding prisoner rights to amenities, and aligning all states with the Model Prison Manual 2016 for consistent standards across India.

    Way forward: 

    • Comprehensive Training and Monitoring: Implement mandatory training for prison staff on anti-discrimination practices, coupled with regular monitoring to ensure caste-neutral job assignments and adherence to reformed rules.
    • Standardized Prison Reform Across States: Uniformly adopt the Model Prison Manual 2016 nationwide, with added emphasis on equality and dignity for all prisoners, ensuring consistent and humane treatment across all states.

    Mains PYQ:

    Q “Caste system is assuming new identities and associational forms. Hence, caste system cannot be eradicated in India.” Comment. (UPSC IAS/2018)

  • How AI can help chart pathways of sustainable development for India

    Why in the News?

    With 270 million people set to move to Indian cities in the next 20 years, rapid urbanization will bring major challenges. AI can help tackle these by improving data handling and coordination, supporting India’s vision for a developed nation by 2047.

    How can AI technologies be effectively integrated into India’s sustainable development strategies?

    • AI-Driven Decision Support: AI systems, such as decision support models, can assess impacts of policy decisions (e.g., zoning changes) by simulating various outcomes. This aids urban planning by providing insights into environmental and economic effects.
    • Enhancing Urban Infrastructure: AI can improve last-mile connectivity for public transport, making it more efficient and accessible by continuously analyzing data on transit needs and traffic patterns.
    • Multimodal Urban Transit Systems: AI can support seamless integration of multiple forms of urban transport, allowing coordinated planning for buses, trains, and other transit modes on a digital platform.
    • Digital Twins for Municipal Governance: AI-based digital twins of cities can assist municipal governments in monitoring and predicting urban needs, streamlining operations, and making governance more responsive and data-driven.
    • Energy Distribution and Environmental Monitoring: AI technologies can optimize energy distribution networks, as seen in partnerships like Airawat and Adani, and enable high-precision air and water quality monitoring for real-time governance action.

    What ethical and regulatory frameworks are necessary to ensure responsible AI deployment?

    • Data Privacy and Security: With the vast data required for AI in urban planning, robust data privacy laws are essential to protect individual and community information.
    • Transparency and Accountability: AI decisions, especially those affecting urban infrastructure and environmental policies, should be transparent. Regulatory bodies should ensure AI-driven decisions can be audited, and stakeholders are accountable for outcomes.
    • Equity and Inclusivity: AI systems must avoid biases that could disadvantage marginalized communities. Regulations should mandate fairness, requiring AI models to consider equitable access and outcomes for all socioeconomic groups.
    • Environmental Sustainability Mandates: Given India’s resource constraints, frameworks should prioritize energy-efficient and environmentally conscious AI deployments. Environmental impact assessments should be integrated into the approval process for new AI systems.

    What collaborative efforts are required among stakeholders to maximize AI’s impact on sustainable development?

    • Public-Private Partnerships (PPP): Effective collaboration between government, industry, and research institutions, as demonstrated by Airawat’s partnerships with Adani and TCS, can drive advancements in sustainable energy and urban management systems.
    • Government Oversight and Support: Ministries like the Ministry of Housing and Urban Affairs (MOHUA) play an essential role in offering guidance and oversight, ensuring AI initiatives align with national sustainability objectives and regulations.
    • Research and Academic Collaboration: Involvement of academic institutions such as IITs, as seen with Airawat, brings research rigor and technical expertise to AI solutions, fostering innovation tailored to India’s unique needs.
    • Community Engagement: Collaborating with local communities ensures that AI solutions are grounded in real needs, enhancing acceptance and the relevance of AI in addressing local sustainability challenges.
    • Standardized AI Governance Platforms: Partnerships, such as those with eGovernance Foundation’s DIGIT platform, are essential to create uniform AI governance tools that can be scaled across multiple cities, promoting a cohesive approach to sustainable development across India.

    Mains PYQ:

    Q Major cities of India are becoming vulnerable to flood conditions. Discuss. (UPSC IAS/2016)

  • On improving wind energy generation

    Why in the News?

    Tamil Nadu, a leader in wind energy with turbines over 30 years old, introduced a new policy for upgrading old windmills in August 2024. However, wind energy producers opposed it, took the issue to the Madras High Court, and obtained a stay.

    What is Tamil Nadu’s wind power capacity? 

    • Installed Capacity: As of November 2023, Tamil Nadu has an installed wind energy capacity of approximately 10,377.97 MW, making it the second-largest wind energy producer in India after Gujarat. This represents about 23% of India’s total installed wind capacity.
    • Age of Turbines: Many turbines in Tamil Nadu are over 30 years old, which raises concerns about efficiency and technological advancements5.
    • Potential for Repowering: The state has a repowering potential of over 7,387 MW, which could significantly enhance its energy generation capabilities if older turbines are replaced or refurbished.

    What about national wind energy capacity? 

    • Total Potential: The National Institute of Wind Energy (NIWE) estimates that India has a wind power potential of 1,163.86 GW at a height of 150 meters, ranking fourth globally for installed capacity.
    • Current Utilization: At 120 meters (the standard height for modern turbines), India’s potential is around 695.51 GW, with only about 6.5% currently utilized nationally and nearly 15% in Tamil Nadu.
    • Leading States: The states contributing most to India’s wind power include Gujarat, Tamil Nadu, Karnataka, Maharashtra, Rajasthan, and Andhra Pradesh, which collectively account for approximately 93.37% of the country’s installed capacity.

    What does the repowering and refurbishing of wind turbines mean?

    • Repowering involves replacing old turbines with new ones to enhance efficiency and output. Refurbishing includes upgrading components like gearboxes and blades to improve performance without complete replacement.
    • Regulatory Framework: The Tamil Nadu government introduced a new policy aimed at facilitating these processes. However, generators argue that the policy lacks provisions that effectively promote wind energy generation and financial viability.

    Why are wind energy generators opposing the new policy of the TN government?

    • Concerns from Generators: Wind energy generators have opposed the new “Tamil Nadu Repowering, Refurbishment and Life Extension Policy for Wind Power Projects – 2024”, claiming it does not adequately support the promotion of wind energy generation. They have approached the Madras High Court and received a stay on the policy implementation.
    • Financial Viability Issues: The opposition stems from concerns that repowered turbines will be treated as new installations without banking facilities for generated energy, impacting financial returns on investments.
      • Generators emphasize that without a commercially beneficial framework, investments in repowering will decline.

    Way forward: 

    • Revise the Policy to Ensure Financial Viability: The Tamil Nadu government should amend the policy to provide incentives like banking facilities for energy generated from repowered turbines, making the projects financially viable for investors.
    • Promote Technological Advancements and Infrastructure Upgrades: The policy should focus on facilitating the replacement of old turbines with modern, high-capacity ones and improving wind energy transmission infrastructure to harness the full potential of Tamil Nadu’s wind resources.

    Mains PYQ:

    Q Do you think India will meet 50 percent of its energy needs from renewable energy by 2030? Justify your answer. How will the shift of subsidies from fossil fuels to renewables help achieve the above bjective? Explain. (UPSC IAS/2022)

  • [pib] Decline in Out-of-Pocket Expenditure (OOPE) in Health in India

    Why in the News?

    National Health Accounts (NHA) data for 2021-22 shows a decline in Out-of-Pocket Expenditure (OOPE) on healthcare due to increased government health expenditure (GHE) and an enhanced public healthcare framework.

    What are NHA estimates?

    • The NHA estimates are based on the globally accepted framework of ‘A System of Health Accounts (SHA), 2011’ which facilitates inter-country comparisons.
    • This report provides a systematic description of the financial flows in India’s health system by different sources, how the money is spent, how healthcare is provided, and the nature of healthcare services that are used.

    Key Observations from the NHA 2021-22 Data:

    Details
    Decline in Out-of-Pocket Expenditure (OOPE) OOPE has decreased due to increased government investment and improved public healthcare infrastructure, making healthcare more accessible and affordable.
    Rise in Government Health Expenditure (GHE) GHE as a percentage of GDP rose from 1.13% in 2014-15 to 1.84% in 2021-22. GHE’s share of overall government spending increased from 3.94% to 6.12%, reflecting the government’s commitment to public healthcare.
    Increase in Per Capita Health Spending Per capita health spending tripled from ₹1,108 in 2014-15 to ₹3,169 in 2021-22, allowing for more investment in infrastructure, workforce, and services.
    Expansion of Social Security Expenditure (SSE) SSE on healthcare grew from 5.7% to 8.7% of Total Health Expenditure (THE), helping protect individuals from catastrophic health expenses and reducing OOPE.
    Growth of Government-Funded Insurance Schemes Programs like Ayushman Bharat and state-level health insurance schemes increased healthcare access for economically vulnerable populations, reducing reliance on personal funds.
    Foundation for Universal Health Coverage (UHC) The decline in OOPE and increased public health spending are integral to achieving UHC, aiming for equitable healthcare access for all citizens.

     

    PYQ:

    [2021] “Besides being a moral imperative of a Welfare State, primary health structure is a necessary precondition for sustainable development.” Analyse.

    [2019] In India, the term “Public Key Infrastructure” is used in the context of:

    (a) Digital security infrastructure

    (b) Food security infrastructure

    (c) Health care and education infrastructure

    (d) Telecommunication and transportation infrastructure

  • Amchang Wildlife Sanctuary

    Why in the News?

    A decomposed carcass of an elephant was discovered in the Khanapara range of the Amchang Wildlife Sanctuary.

    About Amchang Wildlife Sanctuary:

    Details
    Location Eastern fringe of Guwahati, Assam.

    Extends from the Brahmaputra River in the north to the hilly forests of Meghalaya in the south.
    Formation Established in 2004 by combining Amchang, South Amchang, and Khanapara reserved forests
    Flora and Fauna Tropical moist deciduous forest, with semi-evergreen areas in valleys and river depressions.

    • Fauna: Asiatic elephants, Chinese pangolin, slow loris, Assamese macaque, rhesus monkey, hoolock gibbon, leopard,  Leopard cat, jungle cat, sambar, barking deer, red serow, Malayan giant squirrel, Himalayan porcupine.
    • Vultures and raptors: White-backed vulture, Slender-billed vulture, White-cheeked hill partridge, Grey peacock pheasant,
    • Birds: Kaleej pheasant, Greater adjutant stork, Great pied hornbill, Oriental pied hornbill, Green imperial pigeon.
    Conservation Status Recognized as an Important Bird & Biodiversity Area (IBA).

     

    PYQ:

    [2018] In which one of the following States is Pakhui Wildlife Sanctuary located?

    (a) Arunachal Pradesh

    (b) Manipur

    (c) Meghalaya

    (d) Nagaland

  • In news: Flashpoint Reef

    China reasserted its claim over Flashpoint Reef (the Scarborough Shoal) in the South China Sea following Philippines’ establishment of defined sea boundaries.

    Why in the News?

    China reasserted its claim over Flashpoint Reef (the Scarborough Shoal) in the South China Sea following Philippines’ establishment of defined sea boundaries.

    Do you know?

    • Fiery Cross Reef is a rock located in the Spratly Islands. China first took possession of the feature in 1988.
    • Mischief Reef is a Low-Tide Elevation (LTE) within the Philippines’ EEZ. It is part of the submerged continental shelf of the adjacent coastal state, which is the Philippines.

    About the Flashpoint Reef 

    • It generally refers to Scarborough Shoal, a contested reef in the South China Sea.
    • Known as Huangyan Dao in China, this reef has become a focal point of territorial disputes between China and the Philippines.
    • It lies close to the Philippines’ Exclusive Economic Zone (EEZ) but is also claimed by China, which asserts control over nearly the entire South China Sea under its nine-dash line claim.
    • China took control of the shoal in 2012 after a standoff with the Philippines, despite an international tribunal ruling in 2016 that invalidated China’s claims.

    Its significance in the South China Sea

    • It is strategically located near key shipping lanes that are essential for global trade, with about one-third of global shipping passing through the South China Sea.
    • Its proximity to the Philippines, Vietnam, and China makes it an ideal location for military outposts, providing control over surrounding waters and a base for monitoring activities in the region.
    • Control over Scarborough Shoal could allow China to extend its air and naval reach, reinforcing its influence and deterrence capabilities over other Southeast Asian nations.
    • The South China Sea, including Scarborough Shoal, is believed to hold vast reserves of oil and natural gas—up to 11 billion barrels of oil and 190 trillion cubic feet of natural gas.
    • This reef is strategically important due to its proximity to rich fishing grounds and potential undersea mineral resources.

    PYQ:

    [2011] Southeast Asia has captivated the attention of global community over space and time as a geostrategically significant region. Which among the following is the most convincing explanation for this global perspective?

    (a) It was the hot theatre during the Second World War

    (b) Its location between the Asian powers of China and India

    (c) It was the arena of superpower confrontation during the Cold War period

    (d) Its location between the Pacific and Indian oceans and its preeminent maritime character

  • [pib] India shines in QS Asia University Rankings

    Why in the News?

    India made impressive gains, with 2 institutions in the top 50 and 7 in the top 100 of the QS Asia Rankings 2025.

    About QS University Rankings:

    Details
    Overview Annual ranking of global universities, published by Quacquarelli Symonds (QS).
    Criteria – Academic Reputation: 40%
    – Employer Reputation: 10%
    – Faculty/Student Ratio: 20%
    – International Ratios: 5%
    – Citations per Faculty: 20%
    Coverage Ranks over 1,300 institutions across 100+ countries.
    Key Indicators – Academic Reputation (survey of academic experts)
    – Employer Reputation (survey of employers)
    – Citations per Faculty (research influence)
    Regional Rankings Includes regional rankings for Asia, Latin America, Europe, etc.
    Annual Release Published annually, typically in June.

    Key Insights from QS Asia Rankings 2025

    The 2025 rankings cover 984 institutions across 25 countries in Eastern, Southern, South-Eastern, and Central Asia, offering a detailed comparison of institutional performance in the region.

    • India made impressive gains, with 2 institutions in the top 50 and seven in the top 100 of the QS Asia Rankings 2025.
    • India has the highest number of ranked institutions, dominating the top 10 universities in Southern Asia with seven Indian institutions.
    • Top Rankings for India:
      • Top 50: IIT Delhi (44th) and IIT Bombay (48th).
      • Top 100: Includes IIT Madras (56), IIT Kharagpur (60), Indian Institute of Science (62), IIT Kanpur (67), and University of Delhi (81).
      • Top 150: Features IIT Guwahati, IIT Roorkee, JNU, Chandigarh University (120), UPES (148), and Vellore Institute of Technology (150).
    • IIT Delhi achieved India’s highest rank at 44th with a 99% employer reputation score, while IIT Bombay follows with 99.5% employer reputation and 96.6% academic reputation.
    • University of Delhi improved its ranking from 94th to 81st, with a high score of 96.4% in the International Research Network indicator.
    • Anna University scored a perfect 100 in Papers per Faculty, highlighting its strong research output.
    • 15 universities scored over 99% in the Staff with PhD indicator, reflecting India’s focus on qualified faculty and teaching quality.
    • North Eastern Hill University and University of Agricultural Sciences, Bangalore, both scored 100 in faculty-student ratio, indicating top-tier academic credibility.

    PYQ:

    [2014] Should the premier institutes like IITs/IIMs be allowed to retain premier status, allowed more academic independence in designing courses and also decide mode/criteria of selection of students. Discuss in light of the growing challenges.

  • [11th November 2024] The Hindu Op-ed: States and the Centre’s fetter of ‘net borrowing ceiling’

    PYQ Relevance:

    Q) What changes has the Union Government recently introduced in the domain of Centre-State relations? Suggest measures to be adopted to build the trust between the Centre and the States and to strengthen federalism. (UPSC CSE 2024)
    Q) The jurisdiction of the Central Bureau of Investigation (CBI) regarding lodging an FIR and conducting a probe within a particular State is being questioned by various States. However, the power of the States to withhold consent to the CBI is not absolute. Explain with special reference to the federal character of India. (UPSC CSE 2021)
    Q) Though the federal principle is dominant in our Constitution and that principle is one of its basic features, it is equally true that federalism under the Indian Constitution leans in favour of a strong Centre, a feature that militates against the concept of strong federalism. (UPSC CSE 2014)

    Prelims:

    Which one of the following in Indian polity is an essential feature that indicates that it is federal in character?​  (UPSC CSE 2021)
    a) The independence of the judiciary is safeguarded.​
    b) The Union Legislature has elected representatives from constituent units.​
    c) The Union Cabinet can have elected representatives from regional parties.​
    d) The Fundamental Rights are enforceable by Courts of Law.

    Mentor’s Comment:  Kerala filed an original suit under Article 131 of the Constitution, which allows the Supreme Court to resolve disputes between state and central governments. The state claims that the Net Borrowing Ceiling (NBC), set at 3% of its Gross State Domestic Product (GSDP) for FY2023-24, arbitrarily restricts its ability to borrow funds, thereby threatening its financial stability. 

    Today’s editorial discusses the implications of the NBC imposed by the central government on state governments, particularly focusing on Kerala’s situation. The article also highlights Constitutional provisions, Fiscal decentralization, and the ongoing legal challenges regarding borrowing powers.

    _

    Let’s learn!

    Why in the News?

    The Supreme Court of India is currently reviewing a case brought by the Kerala government challenging the Net Borrowing Ceiling (NBC) imposed by the central government.

    • This case raises significant questions about federalism and fiscal autonomy in India, particularly regarding the borrowing powers of state governments.

    What is Net Borrowing Ceiling (NBC) imposed by the Central government on the states?

    • It is a fiscal policy tool imposed by the Indian central government to regulate the borrowing capacity of state governments where the NBC is set at 3% for FY 2023-24 from the projected Gross State Domestic Product (GSDP) for each state (recommended by the Fifteenth Finance Commission).
    • This ceiling encompasses all forms of borrowing, including loans from financial institutions, open market borrowings, and liabilities from the public accounts of the states.
    • The NBC includes not only direct borrowings by state governments but also extends to borrowings by state-owned enterprises (SOEs) that are serviced through state budgets, which aims to prevent states from bypassing borrowing limits through SOEs.
    Constitutional Provisions:

    The Constitution of India outlines borrowing powers under Chapter II of Part XII:
    • Article 266(2): This article provides that all money received by the government should be credited to the Consolidated Fund of India or the Consolidated Fund of the State. It implies that funds not part of these consolidated accounts can be managed separately, suggesting that certain state revenues should not be included in calculations for borrowing limits.
    • Article 292 allows the central government to borrow against the Consolidated Fund of India.
    • Article 293 empowers state governments to borrow against their own Consolidated Funds but requires prior consent from the central government if previous loans are outstanding.
    • Entry 43 of the State List: This entry allows states to legislate on matters concerning public debt, indicating that states have a degree of autonomy over their financial affairs.

    What are the arguments presented?
    • Kerala’s Position: The imposition of NBC violates principles of fiscal federalism and undermines its Constitutional autonomy. The ability to determine borrowing limits should reside with individual states, allowing them to address their unique financial situations effectively.
    • Union Government’s Defense: The borrowing limits are based on recommendations from Finance Commissions and are applied uniformly across all states. Kerala’s financial difficulties are attributed to its fiscal mismanagement over two decades. Allowing Kerala to exceed its borrowing limits could set a dangerous precedent that might encourage other states to disregard fiscal discipline.
    • Supreme Court’s Interim Ruling: On April 1, 2024, the SC declined to grant interim relief to Kerala, stating that any financial hardship faced by the state could not be attributed solely to the NBC. The Court emphasized that providing additional funds could have broader implications for national fiscal health. It noted that Kerala had already received substantial relief from the Centre during its financial crisis.

    Restrictions imposed by the NBC and their implications on the States:

    • Financial Constraints: States may find it challenging to meet essential expenditures such as pensions and welfare schemes due to limited borrowing capacity.
    • Impact on Development: The ceiling restricts states’ ability to invest in infrastructure and developmental projects, potentially stunting economic growth and public service delivery
    • Legal Challenges: The ongoing legal disputes highlight tensions between state autonomy and central control over fiscal policies, raising questions about the balance of power in India’s federal structure.

    How do these borrowing restrictions affect Fiscal Federalism in India?

    • Constraints on State Autonomy: The NBC limits states’ ability to borrow, undermining their financial independence and capacity to manage their own budgets. States struggle to finance essential services and infrastructure projects, which can hinder economic development and public welfare initiatives.
      • For Example, Kerala’s ability to finance initiatives through the Kerala Infrastructure Investment Fund Board (KIIFB) is hampered, leading to delays in development activities crucial for economic growth.
    • Erosion of Cooperative Federalism: The imposition of NBC reflects a shift towards central control, potentially eroding the principles of cooperative federalism that empower states to address local needs.
      • Legal challenges, like Kerala’s case against the NBC, highlight conflicts between state rights and central authority, raising questions about the balance of power in fiscal governance.
    • Implications for Fiscal Responsibility: While the Centre argues that NBC promotes fiscal discipline, states contend that it infringes on their constitutional rights, creating tension between maintaining national fiscal health and respecting state autonomy.

    Need for the Reform:

    • Article 293 needs to be strengthened to enhance cooperative federalism. Proposed reforms include:
      • Establishing a commission similar to the Finance Commission to address loan approvals based on states’ financial conditions.
      • Implementing guidelines for transparency and equitable treatment in borrowing decisions made by the Centre.
      • Ensuring that restrictions do not excessively hinder states’ fiscal management capabilities.

    Way Forward: Without reforming the current borrowing framework, states like Kerala may face severe financial constraints, hampering their ability to meet essential expenditures. The ongoing legal discourse around NBC reflects broader concerns about fiscal decentralization and the balance of power between state and central governments in India that needs to be addressed soon.

    https://www.thehindu.com/opinion/lead/net-borrowing-ceiling-as-a-financial-fetter-on-states/article68853078.ece

  • Can India get rich before growing old?

    Why in the News?

    Since liberalization opened up new opportunities, there has been a lot of excitement about India’s demographic dividend, which is the advantage of having a large working-age population but there are major challenges like the middle-income trap.

    Can India leverage its sustained economic growth?

    • Harnessing the Demographic Dividend: With a large working-age population, India has a potential advantage, but it must ensure that this workforce is employed in productive sectors, particularly by shifting labor from low-productivity agriculture to higher-productivity manufacturing and services.
    • Strengthening the Manufacturing Sector: The manufacturing sector, especially labor-intensive industries like textiles, has the potential to create millions of jobs. By addressing barriers such as complex regulations, high tariffs, and infrastructure constraints, India can boost manufacturing growth, empower women, and drive economic mobility.
    • Reforming Infrastructure and Business Environment: Improving ease of doing business, simplifying trade and labor regulations, and increasing investment in infrastructure are critical for unlocking India’s potential for sustained growth. These reforms will enable large-scale job creation and enhance India’s global competitiveness.

    Challenges arising due to the middle-income trap

    • Declining Demographic Dividend: The proportion of working-age individuals in India’s population is set to decline in the coming decade, marking the potential end of the demographic dividend. Fertility rates have dropped across various states, which means India may face an aging population sooner than expected.
    • Stagnation in Key Sectors: India has struggled to reduce its agricultural workforce in the same way China did after liberalisation, making it harder to transition people to higher-productivity industries. Despite some growth in the services sector, manufacturing has stagnated and failed to generate the necessary number of jobs, especially in labor-intensive industries.
    • Limited Economic Mobility: High levels of youth unemployment and the lack of opportunities for individuals to move up the economic ladder have hindered India’s economic progress. The country’s labor force participation rate (LFPR) remains low, particularly among women, and urban job creation has not been sufficient to absorb the growing population.
    • Infrastructure and Regulatory Bottlenecks: The business environment is constrained by complex regulations, high tariffs, cumbersome licensing procedures, and a lack of access to land, all of which prevent the manufacturing sector from thriving. India’s slow regulatory reforms have stifled growth in manufacturing, which is essential for absorbing the workforce.

    How the Manufacturing sector can help India grow?

    • Job Creation: Manufacturing, especially in labour-intensive sectors like textiles and apparel, can create large numbers of jobs. This is vital for absorbing the surplus labour from agriculture and providing employment opportunities for the youth.
      • For example, the textile and apparel industry employs 45 million people compared to just 5.5 million in IT-BPM, highlighting its potential for mass employment.
    • Women’s Empowerment: Manufacturing, particularly industries like textiles, offers significant employment to women (60-70% of factory workers), helping reduce gender disparities in the labour force.
    • Economic Mobility: By creating better job opportunities, manufacturing helps people transition from low-productivity agricultural jobs to higher-wage, more stable positions in the industrial and service sectors. This transition is key to achieving sustained economic growth and avoiding the middle-income trap.
    • Global Competitiveness: Reducing barriers to manufacturing — such as simplifying business licensing, lowering tariffs on inputs, improving access to land, and streamlining trade regulations — can help India increase its competitiveness globally. Expanding market access through free trade agreements and making the business environment more conducive to manufacturing can unlock the potential of this sector.

    Steps taken by the government: 

    • “Make in India” Initiative: Launched in 2014, this initiative aims to transform India into a global manufacturing hub by promoting domestic production, reducing regulatory hurdles, and attracting foreign direct investment (FDI) in key manufacturing sectors such as electronics, textiles, and automobiles.
    • Atmanirbhar Bharat (Self-reliant India): This program focuses on reducing dependence on imports by boosting local manufacturing, especially in strategic sectors like defense, electronics, and pharmaceuticals.
      • It includes initiatives such as the Production-Linked Incentive (PLI) scheme, which offers incentives for manufacturing and exporting specific products like electronics, textiles, and solar panels.

    Way forward: 

    • Enhance Skill Development and Workforce Transition: India must invest in targeted skill development programs to equip its labor force, particularly those transitioning from agriculture, with the necessary skills for higher-productivity manufacturing and services sectors.
    • Accelerate Regulatory and Infrastructure Reforms: To unlock the full potential of the manufacturing sector, India should expedite regulatory reforms, simplify land acquisition processes, and enhance infrastructure.

    Mains PYQ:

    Q Can the strategy of regional-resource-based manufacturing help in promoting employment in India? (UPSC IAS/2019)