Why is it in the News?

The recent agitations by the governments of Kerala and Karnataka, and the support extended by several State governments, have highlighted many disquieting issues in the practice of fiscal federalism in India.

Context:

• The recent protests by the governments of Kerala and Karnataka, supported by several other state governments, have brought to light several concerning issues regarding fiscal federalism in India.
• These protests underscore the pressing need for the newly constituted 16th Finance Commission (FC) to approach the matter with seriousness and innovation to address grievances related to growing vertical and horizontal inequalities in resource allocation.

What is Fiscal Federalism?

• Fiscal federalism refers to the distribution of financial authority and obligations among various tiers of government within a nation.
• It encompasses considerations like determining the roles and responsibilities of the central and state governments in delivering services, devising mechanisms for revenue generation and allocation among these entities, and establishing fair and efficient systems for transfers or grants distribution to promote equity and effectiveness.

Fiscal Federalism in India:

• The framers of the Constitution stipulated that the Central government would share its tax revenues with the states and provide grants from the Consolidated Fund based on a formula determined by the Finance Commission every five years.
• India operates under a three-tier federal tax system, delineating the powers of the Central government, state governments, and local bodies to levy taxes.
• The Central government possesses the authority to impose taxes on individual and corporate incomes, along with indirect taxes like central goods and services tax (CGST), integrated goods and services tax (IGST), and customs duties. Additionally, it collects surcharges and cesses on various taxes.
• State governments are responsible for levying state goods and services tax (SGST), stamp duties, land revenue, state excise duties, and professional taxes.
• Local bodies exercise jurisdiction over taxes such as property or house taxes, tolls, and utility taxes on services like electricity and water.

What are the Constitutional Provisions?

• The Constitution of India outlines the taxation authority of both the Union and States, categorizing them into the Union List and the State List respectively (as outlined in the Seventh Schedule under Article 246).
  • Initially, there was no taxation provision in the Concurrent List.
• However, with the introduction of GST, the need for a concurrent taxation framework arose, leading to the insertion of Article 246A (as the 101st Amendment in August 2016).
• This amendment empowered the Union to legislate for CGST (Central GST) and IGST (Integrated GST), while the States were granted the authority to enact SGST laws.
• Article 270 of the Constitution outlines the mechanism for distributing net tax proceeds collected by the Union government among the Centre and the States.

What are the Concerns with the States?

• Growing Vertical and Horizontal Inequalities: States have raised concerns about increasing disparities both vertically, pertaining to the sharing of resources between the Union and States, and horizontally.
  • The Union government's inclination to retain a larger share of its proceeds outside the divisible pool has exacerbated these inequalities.
• Retention of Proceeds: The Union government's practice of withholding a greater portion of its proceeds from the divisible pool has diminished the share allocated to States, contravening mandates from successive Finance Commissions.
• Proliferation of Cesses and Surcharges: Various cesses and surcharges, such as the Agriculture Infrastructure and Development Cess, have been introduced by the Union government, leading to an expansion of these revenue streams.
  • This expansion has resulted in a larger portion of the gross tax revenue being excluded from net proceeds, thereby depriving States of their rightful share.
• Financial Exclusion of States: Over the period from 2009-10 to 2023-24, the Union government collected a substantial cumulative amount of ?36.6 lakh crore through cesses and surcharges, all of which remained unshared with the States.
  • The imposition of cesses and surcharges has faced criticism from the Comptroller and Auditor General (CAG), further highlighting concerns about their impact on state finances.

Way Forward

• Rectifying disparities in resource sharing and addressing the proliferation of cesses and surcharges are critical imperatives for the 16th Finance Commission (FC).
• The FC should proactively address historical imbalances in vertical devolution by compensating States appropriately and ensuring accurate estimates of "net proceeds" in budgetary documents.
• Moreover, it should consider providing lump sum untied grants to States to offset shortfalls in devolution over the past decade.
• Simultaneously, legislative measures must be enacted by the Union government to impose strict limits on the collection of cesses and surcharges, ensuring their automatic expiration after a defined period and preventing their rebranding under different names.
• Furthermore, States must adhere to the principles of fiscal federalism by allocating sufficient resources to local bodies and promoting dynamic and transparent development initiatives at the grassroots level.

What is the Finance Commission?

• The Finance Commission is constituted by the President under Article 280 of the Constitution, mainly to give its recommendations on the distribution of tax revenues between the Union and the States and amongst the States themselves.
• Two distinctive features of the Commission’s work involve redressing the vertical imbalances between the taxation powers and expenditure responsibilities of the center and the States respectively and equalization of all public services across the States.

Functions of the Finance Commission:

• It is the duty of the Commission to make recommendations to the President as to the distribution between the Union and the States of the net proceeds of taxes which are to be:
  • Divided between them and the allocation between the States of the respective shares of such proceeds;
  • The principles which should govern the grants-in-aid of the revenues of the States out of the Consolidated Fund of India;
  • The measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats in the State based on the recommendations made by the Finance Commission of the State;
  • The measures needed to augment the Consolidated Fund of a State to supplement the resources of the Municipalities in the State based on the recommendations made by the Finance Commission of the State;
  • Any other matter referred to the Commission by the President in the interests of sound finance.
• The Commission determines its procedure and has such powers in the performance of its functions as Parliament may by law confer on them.

Appointment of the Finance Commission and Qualifications for Members:

• The Finance Commission is appointed by the President under Article 280 of the Constitution.
• As per the provisions contained in the Finance Commission Act, 1951 and The Finance Commission (Salaries & Allowances) Rules, 1951, the Chairman of the Commission is selected from among persons who have had experience in public affairs, and the four other members are selected from among persons who:
  • (a) are, or have been, or are qualified to be appointed as Judges of a High Court; or
  • (b) have special knowledge of the finances and accounts of the Government; or
  • (c) have had wide experience in financial matters and administration; or
  • (d) have special knowledge of economics

How are the recommendations of the Finance Commission implemented?

• The recommendations of the Finance Commission are implemented  as under:
  • Those to be implemented by an order of the President:
  • The recommendations relating to the distribution of Union Taxes and Duties and Grants-in-aid fall in this category.
  • Those to be implemented by executive orders:
  • Other recommendations to be made by the Finance Commission, as per its Terms of Reference

When was the first Commission Constituted and how many Commissions have been Constituted so far?

• The First Finance Commission was constituted under the chairmanship of Shri K.C. Neogy on 6th April 1952.
• 15th Finance Commissions have been Constituted so far at intervals of every five years.
• The 16th Finance Commission was constituted on 31 Dec 2023 with Shri Arvind Panagariya, former Vice-Chairman, NITI Aayog as its Chairman.
  • The 16th Finance Commission is required to submit its recommendations by October 31st, 2025.
• However, the recommendations of the 15th FC cover the six years up to 31st March 2026.

Why is it in the News?

In August 2023, ahead of the Assembly elections in five States, the Election Commission of India (ECI) voiced its concern over the environmental risks associated with the use of non-biodegradable materials in elections.

Context:

• The Election Commission of India (ECI) has emphasized the environmental impact of traditional election materials, urging a shift towards eco-friendly practices, particularly given India's status as the world's largest democracy.
• India must prioritize environmental sustainability in its electoral procedures, recognizing successful eco-friendly initiatives in Kerala, Sri Lanka, and Estonia, and strategizing a comprehensive green transition involving diverse stakeholders.

Why Conducting Elections Require a Paradigm Shift?

• Unrecognized Environmental Impact of Elections: The emissions generated by campaign flights in the 2016 US presidential elections underscore the substantial carbon footprint linked to conventional election methodologies.
  • Conventional election practices, marked by paper-based materials, energy-intensive rallies, and disposable items, contribute to environmental harm and affect public health.
  • Given the colossal scale of India's elections, these concerns become more pressing, calling for a shift towards eco-friendly election processes.
• Startling Research Findings: Recent research from Estonia (2023) pinpoints transportation to and from polling booths as the primary contributor to carbon emissions in elections, closely followed by the operational footprint of polling booths.
  • Adopting digital voting systems has the potential to slash the overall carbon footprint by as much as 40%.

What are Some Successful Models of Eco-Friendly Elections?

• Pioneering Initiatives in Kerala and Goa: During the 2019 general election, the Kerala State Election Commission spearheaded efforts to eliminate single-use plastic materials from campaign activities.
  • Subsequently, the Kerala High Court enforced a ban on non-biodegradable materials, leading to the adoption of eco-friendly alternatives like paper posters and wall graffiti.
  • Collaborative endeavors between government bodies and district administrations in Thiruvananthapuram ensured the implementation of green election practices, including training sessions for election workers in rural areas.
  • In 2022, the Goa State Biodiversity Board showcased eco-friendly election booths crafted from biodegradable materials by local artisans during the Assembly elections.
• Innovative Strategies from Sri Lanka: In 2019, the Sri Lanka Podujana Peramuna (SLPP) party initiated the world's first carbon-sensitive, environmentally friendly election campaign.
  • This groundbreaking campaign measured carbon emissions from campaign vehicles and electricity usage, offsetting them by planting trees across districts with public participation.
  • By addressing the immediate carbon footprint of the campaign and raising awareness about the importance of forest cover, Sri Lanka set a notable example for sustainable election practices.
• Estonia's Digital Voting Model: Estonia pioneered digital voting as an online alternative, significantly enhancing voter participation while reducing environmental impact.
  • The success of Estonia's approach underscores the feasibility of digital voting, complemented by stringent security measures, as an eco-friendly and voter-centric solution.

A Roadmap for Sustainable Green Elections:

• Political Leadership and Digital Campaigning: Political parties should enact legislation mandating eco-friendly election practices, integrating them into the Model Code of Conduct governing campaign activities.
  • Encouraging the adoption of digital platforms for campaigning and door-to-door outreach can substantially reduce the carbon footprint associated with traditional public rallies.
• Incentivizing Sustainable Practices and Infrastructure Development: Offering incentives for political parties to use sustainable materials like natural fabrics and recycled paper in place of plastic and paper-based campaign materials, alongside supporting waste management and local artisans.
  • Government investment in digital voting infrastructure, particularly in rural areas, ensures reliable internet access and accessible digital devices for all voters.
• Role of the Election Commission of India (ECI) with Government Backing: The ECI can advocate for digital voting systems, highlighting their environmental benefits and addressing security concerns through comprehensive measures.
• Public Awareness and Civil Society Engagement: Civil society organizations can lead public awareness campaigns, educating citizens about the environmental impact of traditional election methods and advocating for eco-friendly alternatives.
  • Monitoring the implementation of green initiatives and advocating for transparency and accountability in the electoral process.
• Media's Advocacy Role: Media outlets can spotlight the environmental consequences of conventional election methods through investigative reporting and by showcasing successful eco-friendly initiatives.
• Global Collaboration for Sustainable Elections: Collaborating with countries like Sri Lanka and Estonia, which have successfully implemented eco-friendly election practices, to share insights and support international platforms for exchanging best practices in sustainable electoral initiatives.

Hurdles and Potential Solutions for Conducting Eco-Friendly Elections:

• Technology Barriers: Ensuring a seamless transition to digital voting demands robust technological infrastructure, particularly in remote regions where connectivity may be sparse.
  • Upholding the integrity and security of digital systems is paramount, requiring comprehensive safeguards against cyber threats and manipulation to uphold public trust.
• Financial Impediments: Embracing eco-friendly materials and technologies entails significant initial investments, posing challenges for governments constrained by budgetary limitations.
  • Competing priorities may hinder the allocation of funds toward sustainable electoral practices, despite their long-term environmental advantages.
• Cultural Shifts and Public Doubts: Cultural norms often associate physical polling booth presence with democratic participation, necessitating efforts to shift perceptions towards digital methods.
  • Addressing public skepticism regarding new technologies, particularly concerns about security and reliability, requires proactive measures to build trust and confidence.
• Promoting Transparency and Accountability: The adoption of eco-friendly and digital strategies must be accompanied by transparent processes and robust auditing mechanisms.
  • Establishing clear protocols for auditing new practices fosters accountability and addresses concerns about fairness and impartiality, enhancing public trust.
• Tackling Logistical Complexities: Executing large-scale electoral reforms demands meticulous planning and coordination across various stages.
  • From sourcing eco-friendly materials to training personnel, addressing logistical challenges systematically is essential for smooth implementation.

Conclusion

Adopting environmentally conscious electoral practices represents not only an imperative for India but also a chance to lead by example on the global stage. Harmonizing high-level policies with ground-level efforts and engaging various stakeholders—political entities, Election Commissions, governments, citizens, media, and civil society—can position India as a trailblazer in conducting sustainable elections. This transformative approach not only integrates environmental responsibility but also reinforces the connection between ecological stewardship and the core tenets of democracy.

Why is it in the News?

The global economic impact of land degradation on ecosystem services amounts to an estimated $6 trillion annually.

Context:

• Land plays a crucial role across various human endeavors, offering ecological, economic, social, and cultural benefits.
• However, the multi-faceted nature of land is often overlooked in management practices, leading to heightened stress, degradation, and environmental strain.
• Globally, land degradation results in annual losses of ecosystem services estimated at USD 6 trillion.
• The 14th Conference of Parties (COP14) of the United Nations Convention to Combat Desertification (UNCCD), held in New Delhi in 2019, highlighted the widespread challenge of land degradation faced by different nations and emphasized the importance of achieving Land Degradation Neutrality (LDN).

What is Land Degradation?

• Land degradation refers to the deterioration of the quality and productivity of land resources, typically caused by human activities and natural processes.
• It involves the loss of soil fertility, reduction in vegetation cover, depletion of water resources, and overall decline in the capacity of the land to support various ecosystem functions and human activities.
• Land degradation can take various forms, including soil erosion, desertification, deforestation, salinization, and contamination by pollutants.
• It poses significant environmental, economic, and social challenges, impacting agricultural productivity, food security, biodiversity, and the livelihoods of millions of people around the world.
• Addressing land degradation is crucial for sustainable land use, environmental conservation, and the well-being of present and future generations.

What is the Current Status of Land Degradation in India?

• From 2015 to 2019, UNCCD data reported that 30.51 million hectares of India's land had degraded, accounting for 9.45% of the nation's total landmass by 2019, up from 4.42% in 2015.
• During this period, 251.71 million Indians, constituting 18.39% of the population, were exposed to land degradation, with 854.4 million individuals experiencing drought from 2015 to 2018.
• According to the Desertification and Land Degradation Atlas of India, published by the Space Applications Centre (SAC) of the Indian Space Research Organisation (ISRO), the extent of land degradation and desertification in India reached 97.84 million hectares in 2018-19.
• This atlas offers state-wise data on degraded land, aiding in the planning and execution of initiatives aimed at land restoration by providing crucial data and technical insights.

Global Scenario:

• Land degradation exhibits significant regional variations, with Sub-Saharan Africa, Western and Southern Asia, Latin America, and the Caribbean witnessing degradation rates surpassing the global average between 2015 and 2019.
• In Eastern and Central Asia, Latin America, and the Caribbean, over 20% of the total land area faced severe degradation by 2019.
• Since 2015, Sub-Saharan Africa saw its degraded land increase from 6.7% to 14.63%, while Western Asia and Northern Africa experienced a rise from 3.78% to 7.18%.

What are the Different Causes of Land Degradation?

• Deforestation: Driven by population growth and resource demand, deforestation weakens soil structure, making it prone to erosion by wind and water.
  • Deforestation is particularly rampant in areas like Maharashtra, Rajasthan, Madhya Pradesh, and Gujarat.
• Mineral Processing: Industries such as limestone grinding and ceramic production release substantial dust, settling in surrounding areas and contributing to land degradation.
• Soil Erosion: Processes like water flow, wind, rainfall, and landslides strip away the fertile topsoil layer, leaving behind less fertile subsoil, and rendering land unsuitable for cultivation and agriculture.
• Overgrazing: Excessive grazing by animals removes grass cover, making soil susceptible to erosion by wind and water.
  • This phenomenon, common in hilly areas like Maharashtra, Rajasthan, Madhya Pradesh, and Gujarat, disrupts soil structure and fertility.
• Over-Irrigation: In states like Punjab, Haryana, and Uttar Pradesh, excessive irrigation leads to soil salinity and alkalinity, diminishing its fertility and suitability for agriculture.
• Mining Sites: After mining activities, abandoned sites leave deep scars and harmful materials that degrade the soil, rendering it unsuitable for productive use.
  • Deforestation due to mining in states like Chhattisgarh, Jharkhand, Madhya Pradesh, and Odisha exacerbates land degradation.
• Industrial Effluents: Waste disposal from industries is a significant source of land and water pollution, contributing to land degradation.
• Mining and Developmental Projects: Large-scale clearing of forests for mining and construction projects further accelerates land degradation under the guise of development.
• Commercial Exploitation of Forests: High-value trees and plants are harvested for economic gain, disrupting soil-plant interactions essential for soil stability.
  • Overgrazing, mining, agricultural expansion, floods, and forest fires are key drivers of deforestation, exacerbating land degradation.
• Desertification: Human activities and climate change contribute to desert-like conditions in arid or semi-arid regions, leading to the spread of sand onto fertile agricultural lands, reducing soil fertility, and hampering agricultural productivity.

Challenges in the Management of Land Degradation in India:

• India with only 2.4% of the world’s geographical area and more than 17% of the world's population experiences several land management challenges.
• Arable land in India is around 55% of the total geographical area and forest cover accounts for another 22%.
  • The rest is desert, mountains, etc.
• Around 30% of the total geographical area is degraded land.
• Access to agricultural land continues to be an important livelihood issue as a significant share of the population depends on agriculture for their sustenance.
• Development targets and the demand for land to accommodate the growing population, infrastructure, rapid urbanization, and social, cultural, and environmental aspects are placing unprecedented pressure on land.
  • This is resulting in more competition among farmers and between agriculture and other land resource-based sectors, as well as land use conflicts, escalation of land prices, and changing land rights.
• Across the country, natural areas are being squeezed and ecological functions are being lost.
• Not only does this adversely affect the livelihood opportunities of the people who directly depend on environmental resources, but also the buffering effects of natural ecosystems in the face of disasters such as floods and droughts, temperature rise, and environmental pollution are severely compromised.
• Climate change has brought with it another set of challenges.
• In India, current land management practices are sectoral with each department following its own approach.
  • Land management falls under the purview of State governments.
• Further, cultural land is privately owned and land-use decisions are constitutionally vested with the owner.
• Apart from this administrative complexity, the challenges to adopting and implementing appropriate land management practices in the country include knowledge gaps, a short-term planning bias, a fragmented approach, a lack of action for unforeseen events, and regulatory barriers.

What Steps Need to be Taken for Land Management?

• Set up a Multi-stakeholder Platform: As a critical mechanism to achieving sectoral integration and addressing these challenges, it is imperative to set up a multi-stakeholder platform at the district and sub-district levels to bring together farmers, other land managers, policymakers, civil society organizations, business leaders, and investors under a common platform.
  • Article 243ZD (1) of the Constitution provides for district planning committees to consolidate plans from panchayats and municipalities.
  • This committee may be activated in the direction of preparing a land management plan, covering both agricultural and non-agricultural sectors.
• Landscape Approach: A landscape approach will be useful in this context as it will provide deep insights to assess the potential of land and the scope of allocation and reallocation of land for appropriate uses.
  • This will help with evaluation, negotiation, trade-off, and decision-making.
  • A climate-smart landscape approach will contribute to climate objectives, increased agricultural production, improved local livelihoods, and the conservation of biodiversity.

Government Initiatives to Combat Land Degradation and Desertification in India:

• Desertification and Land Degradation Atlas of India, published by Space Applications Centre (SAC) Indian Space Research Organisation, Ahmedabad, which provides the extent of land degradation and desertification in India, states that the land degradation and desertification in the country has been estimated to be 97.84 million hectares in 2018-19.
  • It provides state-wise areas of degraded land which is helpful in the planning and implementation of schemes aimed at the restoration of land by providing important data and technical inputs.
• An online portal has been developed with the help of Space Application Center(SAC), Ahmedabad for visualization of degraded areas of land with the processes causing degradation.
• A Centre of Excellence has been envisaged at the Indian Council for Forestry Research and Education (ICFRE) Dehradun for enhanced South-South Cooperation.
  • It aims at knowledge sharing, promotion of best practices, sharing India’s experiences with cost-effective and sustainable land management strategies, developing ideas for transformative projects and programs, and capacity building.

Way Forward:

• Advancing Integrated Landscape Management: Despite existing on-ground experiences, there is a lack of systematic institutional support for this approach, highlighting the need for concerted efforts to promote it.
• Embracing the Value of Landscape: Echoing the European Landscape Convention's recognition of landscape as vital for individual and societal well-being, greater emphasis should be placed on understanding and preserving landscapes.
• Recognizing the Role of Sustainable Land Management: Reports like the U.K. Parliamentary Office of Science and Technology's assessment underscore the importance of managing land sustainably for environmental benefits, including addressing climate change, ensuring food security, and mitigating biodiversity loss.
• Parliamentary Action in India: Indian lawmakers can spearhead discussions on the evolving challenges of integrated land management practices and play a pivotal role in crafting policies for long-term sustainability.
• This necessitates the involvement of stakeholders at all levels, fostering collaboration horizontally and vertically across the spectrum.

Why is it in the News?

The big data economy, powered by massive datasets and unprecedented levels of personal information has fundamentally altered how a country conducts elections, and how people vote.

Background:

• The emergence of the big data economy has significantly altered the landscape of elections and individual voting patterns, offering both benefits and challenges.
• As the general elections approach in two months, it becomes imperative to delve into the far-reaching effects of extensive datasets on political scenarios.
• Equally important is a comprehensive understanding of the privacy implications, emphasizing the critical necessity for robust data protection measures, especially in anticipation of the upcoming elections in India.

What are the Challenges Arising from Big Data's Influence on Elections?

• Precision Targeting and Tailoring: Big data enables political campaigns to engage in micro-targeting, tailoring messages and campaign content to specific demographics or individual voters.
  • By analyzing extensive datasets, candidates gain insights into voters' preferences, behaviors, and opinions, facilitating highly customized outreach efforts across various communication channels.
• Lack of Transparency and Consent: A significant concern is the opacity surrounding collecting, processing, and utilizing personal information.
  • Voters often lack awareness of databases containing detailed personal data and the extent to which it's used for political purposes.
  • Informed consent becomes elusive, as individuals are unaware of how their data is harnessed, limiting their ability to control its usage.
• Reinforcement of Power Dynamics: The abundance of data amplifies the power of political entities to influence voters through targeted messaging and strategic communication.
  • Candidates can craft narratives tailored to specific groups, addressing issues and concerns discerned from data analysis.
  • This sophisticated targeting extends beyond demographic attributes, delving into personal preferences and habits.
• Risks of Manipulation and Exploitation: While big data offers campaign efficiency and targeted communication, it also presents risks of manipulation and exploitation.
  • Unethical practices, such as the strategic dissemination of misinformation to exploit voter sentiments, can undermine the integrity of the electoral process.
  • Information asymmetry between political entities and voters raises concerns about privacy invasion and democratic principles.

 What are the Consequences of Social Media and Networks Effects?

• Network Effect: The network effect, central to social media platforms, describes the increasing value and utility of a network as more users join.
  • Larger user bases offer enhanced connectivity, content creation, and interaction opportunities, drawing individuals to these platforms.
• Profound Data Collection and User Profiling: Social media platforms thrive on comprehensive data collection, going beyond basic demographics to create detailed user profiles.
  • Users' interactions provide valuable insights into their preferences, behaviors, and associations, enabling targeted advertising and personalized content delivery.
• Lack of Transparency in Data Practices: Users often lack awareness of the extent and granularity of data collected by social media platforms, raising concerns about privacy invasion and potential misuse.
  • Limited transparency results in minimal user control over data utilization, highlighting the need for greater transparency and accountability.
• Algorithmic Personalization and Decision-Making: Algorithms drive personalized user experiences on social media platforms, curating content based on collected data.
  • While personalization enhances user satisfaction, it also introduces concerns regarding algorithmic biases and selective information presentation, influencing user perspectives and behaviors.
• Commercialization and Data Exploitation: Social media platforms monetize user data through direct sales or personalized advertising, leveraging extensive user profiling for targeted marketing.
  • While this practice benefits platforms economically, it sparks ethical debates surrounding the commercialization and commodification of user information.

The Indian Data Protection Act has Critical Flaws.:

• India’s Data Protection Act has not yet come into force. Its critical flaws include:
• Absence of Limitations on Government’s Powers to Access Data: The Act lacks clear limitations on governmental powers to access data, raising concerns about potential misuse and infringing on citizens' right to privacy.
  • This ambiguity undermines the fundamental principle of safeguarding individuals from unwarranted surveillance.
• Lack of Independence for the Data Protection Board: The absence of proper checks and balances compromises the independence and effectiveness of the Data Protection Board, leaving it vulnerable to external influences and pressures.
  • Instances of withholding information by authorities, citing the Data Protection Act, underscore the potential for confusion and misuse during this transitional phase.
• Challenges in Enforcement and Redressal: The non-functional status of the Data Protection Board exacerbates challenges in enforcement and redressal mechanisms.
  • Individuals lack a reliable channel for seeking recourse in privacy violations, further complicating the protection of individual rights.
• Deficiencies in Actionable Rights: The Act needs to adequately address individual rights, notably omitting essential provisions such as the right to compensation.
  • This limitation restricts individuals' ability to seek appropriate remedies for privacy infringements, weakening the overall efficacy of the data protection framework.

Way Forward:

• Seizing the Opportunity for Improvement: The forthcoming rules to operationalize the Data Protection Act represent a pivotal moment to address existing shortcomings and enhance privacy safeguards.
  • Engaging stakeholders through multi-stakeholder consultations is imperative to ensure a comprehensive and diverse range of perspectives informs the regulatory framework.
• Placing Individuals at the Core: Prioritizing the impact on individuals is paramount in shaping the rules.
  • By emphasizing individuals' rights and privacy concerns, the regulatory framework can better serve the needs and interests of citizens.
  • Sustained and inclusive consultation processes must remain ongoing, fostering an environment conducive to incorporating feedback from diverse stakeholders.
• The urgency for Legislative Reforms: While the rules offer avenues for corrective action, the imperative for legislative reforms cannot be overstated.
  • Foundational flaws, particularly concerning governmental powers and the independence of the Data Protection Board, necessitate substantive changes at the legislative level.
  • Striking a delicate balance between feasibility and inclusivity is essential to avoid hasty amendments that may compromise the integrity and effectiveness of the data protection regime.

Conclusion

As India approaches elections, the need for a people-centric data protection framework becomes evident, striking a delicate balance between the advantages of digitization and the preservation of privacy and democratic values. Emphasizing inclusive and rights-based models is crucial in effectively addressing the complexities presented by the big data landscape, fostering a resilient and equitable digital future that cannot be underestimated.

Why is it in the News?

Recently, the government of India has approved the amendment in the Foreign Direct Investment (FDI) policy for the space sector.

Context:

• India’s space industry, though nascent compared to global leaders such as the US, Russia, and China, has made significant strides in cutting-edge technologies, as evidenced by successful missions like Chandrayaan-3, Aditya-L1, and XpoSat.
• These achievements have not only demonstrated India’s economic prowess in space technology but have also positioned the Country favourably on the global map.
  • However, the sector faces challenges, particularly in funding.
• Despite the sector’s expansion from 10 to 150 startups within three years, the absence of a substantial domestic investor pool interested in space ventures, which are inherently slow to yield returns, has hindered growth.
• The only other way out was to look at Foreign Direct Investment (FDI) policy.
• According to experts, “India stands at a critical juncture in its space journey.
• With strategic investments in infrastructure and manufacturing, alongside fostering innovation and education, India can achieve its goal of a US$44 billion space economy by 2033, enhancing its position as a global leader in space technology and services.

What is the Current Status of India’s Space Sector?

• India's expertise in the space sector is globally acknowledged, with achievements ranging from cost-effective satellite construction to launching foreign satellites.
• Aligned with its commitment to the Geneva Conference on Disarmament (1979), India advocates for the peaceful and civilian utilization of outer space, opposing any militarization efforts.
• The Indian Space Economy is valued at approximately $8.4 billion, constituting around 2-3% of the global space economy.
• ISRO stands as the 6th largest space agency globally, boasting an impressive success rate.
  • India also ranks 5th worldwide in the number of private space companies, with over 400 such entities.
• Budgetary Allocation: The Department of Space has witnessed a nominal 4% increase in its allocation in the Interim Union Budget for 2024-25, rising from ?12,545 crore to ?13,043 crore.
• Future Projections: Implementation of the Indian Space Policy 2023 could propel the Indian space economy to reach $44 billion by 2033.
• Growth in Space Start-Ups: The number of Space Start-Ups has surged from just 1 in 2014 to 189 in 2023, as reported by the DPIIT Start-Up India Portal.
  • Investment in Indian Space Start-Ups has concurrently risen to $124.7 million in 2023.

Key Changes in FDI Policy:

• With the privatization of space launches, India aims for a significant five-fold increase in its share of the global launch market.
• The recent changes in the FDI policy reflect a more welcoming approach to foreign investment.
• Specifically, the satellite sector which used to have strict rules has now been split into different parts each with its own limits on how much foreign investment is allowed.
• Launch Vehicles and Associated Systems/Subsystems: Foreign investment up to 49% is permitted under the automatic route with government approval mandated for anything beyond this threshold.
  • This includes activities related to the establishment of spaceports for spacecraft launches and receptions.
• Satellite Manufacturing and Operation: The automatic route allows for up to 74% FDI covering satellite manufacturing, operation, satellite data products and both the Ground Segment and User Segment.
  • Approval from the government is required for FDI exceeding 74% in these activities.
• Manufacturing of Components and Systems/Subsystems: Foreign investors are now allowed to invest up to 100% in manufacturing components and systems for satellites, ground segments and user segments through the automatic route.
• The decision to liberalize FDI norms in the space sector stems from a strategic vision outlined in the Indian Space Policy 2023.
• By fostering a more investor-friendly environment the government aims to tap into the potential of non-government entities (NGEs) encouraging them to invest in Indian companies within the space domain.
• This move is expected to drive technological advancements, scale up operations globally and boost India's position in the global space economy.

Recent Advancements in the India’s Space Sector:

• Indian Space Policy 2023: This policy delineates the roles and responsibilities of entities like ISRO, NewSpace India Limited (NSIL), and private sector players with the aim of bolstering involvement from research, academia, startups, and industry.
• Strategic Proposals by SIA: The Space Industry Association – India (SIA-India) has recommended in its Pre-Budget Memorandum for FY 2024-25 a substantial increase in India's space budget.
• Defence Space Agency (DSA): India inaugurated its Defence Space Agency (DSA) alongside the Defence Space Research Organisation (DSRO), tasked with developing space-based weapons to counter adversaries.
• Defence Space Mission Launch: The Indian Prime Minister unveiled the Defence Space Mission during the Defence Expo 2022 in Gandhinagar.
• Expansion of Satellite Manufacturing: India's satellite manufacturing sector is forecasted to grow to USD 3.2 billion by 2025, up from USD 2.1 billion in 2020.
• SAMVAD Program: ISRO introduced the SAMVAD Student Outreach Program at its Bengaluru facility, aimed at fostering space research among young minds.
• The objective is to bolster India's expanding space program, encourage private sector participation, drive technological innovation, and position the nation as a prominent player in the global space landscape.

Importance of Foreign Direct Investment (FDI) in the Space Sector:

• Advancement in Space Missions: India's achievements in space missions have positioned it as a reliable provider of cost-effective space solutions globally, with FDI expected to further enhance technological capabilities and expand operations.
• Boost to Manufacturing: Encourages the establishment of manufacturing facilities within India, aligning with the government's 'Make In India' initiative and bolstering domestic manufacturing capabilities.
• Private Sector Engagement: FDI facilitates greater private sector involvement in India's space endeavours, transitioning from ISRO-driven initiatives to leveraging space technology for commercial applications and fostering industry participation.
• Integration into Global Value Chains: Expected to integrate Indian companies into global value chains, enabling them to contribute significantly to the global space economy.
• Technology Uptake and Global Collaboration: FDI promotes the absorption of advanced technology and facilitates global integration, enabling companies to enhance product sophistication, scale operations globally, and increase their share in the global space economy.
• Enhanced Business Environment: FDI policy reforms improve the Ease of Doing Business in India, attracting greater FDI inflows and fostering investment, income, and employment growth.
• Stimulus for Research and Innovation: FDI in the space sector stimulates technology transfer, fosters research collaborations, and encourages innovation, driving advancements in space technology and applications.

What are the Challenges?

• Limited Investor Engagement: Investors show limited interest in the later stages of space tech development, likely due to perceived high risks and long-term investment horizons.
• Talent Shortage: The space tech sector faces a shortage of skilled professionals, highlighting the need for expanded talent development initiatives.
• Policy Ambiguity: Ambiguous policies in the space sector create uncertainty, necessitating clear and consistent regulatory frameworks to attract foreign investment.
• Streamlining FDI Procedures: Simplification of foreign direct investment processes is essential to remove barriers and encourage investor participation in the space industry.
• High Capital Requirements: Space technology ventures demand substantial capital investments, posing challenges for startups and smaller enterprises in accessing necessary funds.
• Competition Concerns with ISRO: Foreign investors express reservations due to competition concerns with ISRO, highlighting the importance of addressing perceived conflicts of interest to instil investor confidence.

Conclusion

The amendment in the FDI policy on the space sector heralds a new era of growth and opportunity for India’s space industry. By opening doors to foreign investment, India aims to leverage private sector participation to enhance its space capabilities, drive innovation, and foster economic development. The policy reform underscores India’s commitment to becoming a global leader in space exploration and technology.

Why is it in the News?

There is a need to educate elected representatives and the public on the significance and the need for panchayats to be able to survive on its own resources

Context:

• Three decades have passed since the enactment of the 73rd and 74th Constitutional Amendment Acts, designed to institutionalize local bodies as entities of local self-government.
• Presently, the degree of devolution in India's Panchayati Raj institutions exhibits variations among states, with some making substantial strides and others trailing behind.
• Therefore, there is a pressing need to scrutinize the fiscal devolution dimension, underscoring the pivotal role of state government commitment in enhancing the effectiveness of Panchayati Raj institutions at the grassroots level.

What is the Local Self Government?

• The system of local self-government, more commonly known as ‘panchayats’, had been established to empower the grassroots of democracy in India.
• Panchayats or local-self rule is a three-tier system in each state which has elected bodies at the village, taluk and district levels.
• The concept of panchayats has been present in Indian society since ancient times.
• Over the centuries the concept has undergone various changes and modifications and in the recent past has taken the form of panchayati raj institutions after decentralization reforms in the early 1990s.
• These institutions for grassroots-level democracy were formally included in the Constitution through the 73rd and 74th Amendments Act in 1993.
• The constitutional amendments also ensured the reservation of one-third of all elected positions for women in both rural and urban areas.
• Derived from the Central Act, various State Panchayati Raj Acts have incorporated provisions for taxation and revenue collection.
• The main idea of setting up local-self government institutions was to enable and empower the local people to manage their affairs by being a part of the decision-making process and participating in the implementation of policies in a more effective manner.

The Present State of Fiscal Devolution of Panchayats:

• Reliance on External Funds: The 73rd and 74th Constitutional Amendments Acts underscored the importance of fiscal devolution, urging Panchayati Raj institutions and urban local bodies to achieve financial self-sufficiency.
  • These amendments explicitly stated the necessity for local bodies to generate their own revenues to reduce reliance on grants from higher levels of government.
  • However, the current scenario indicates that Panchayati Raj institutions still heavily depend on external funding, with only 1% of their revenue originating from taxes.
• Panchayats' Struggle to Generate Revenue Through Taxation: The data highlights the challenge that, despite constitutional provisions, Panchayats are not effectively utilizing taxation as a primary revenue source.
  • Merely 1% of revenue is generated through taxes, while a significant 80% is sourced from the Central government and 15% from the States.
  • This disparity raises concerns about the commitment of state governments to decentralization and the overall efficacy of devolution initiatives implemented over the past three decades.
• Centralization of Financial Resources Despite Constitutional Emphasis on Fiscal Devolution: Despite the constitutional emphasis on fiscal devolution, the centralization of financial resources remains a persistent issue.
  • Panchayats are envisioned as self-governing entities with the authority to raise their own revenue, yet the reality paints a different picture.
  • The disproportionate distribution of revenue indicates a lack of fiscal empowerment at the grassroots level, undermining the fundamental principles of local self-government.

What are the Challenges Faced by Panchayati Raj Institutions in Revenue Generation?

• Dependency on Grants: The reliance on grants is exacerbated by the heightened allocations from Central Finance Commissions (CFC).
  • A comparative analysis reveals a significant increase in grants disbursed through the 14th and 15th CFCs, amounting to ?2,00,202 crore and ?2,80,733 crore, respectively.
  • This substantial influx of grants has inadvertently diminished incentives for generating own-source revenue.
  • Panchayats, buoyed by augmented financial assistance, have gradually shifted focus away from revenue generation, fostering a culture of dependence on external funds.
• The Culture of Entitlement: A prevalent cultural mindset fosters resistance to taxation, with individuals expecting a range of services and benefits without contributing financially to the sustenance of Panchayats.
  • This aversion to taxation arises from the belief that public services should be provided without imposing a direct financial burden on the local populace.
• Dilemma of Elected Representatives: Elected representatives, crucial to the functioning of Panchayati Raj institutions, grapple with their own set of challenges.
  • There exists a tangible apprehension among these representatives that levying taxes might adversely affect their popularity and electoral prospects.
  • This fear often results in hesitancy to take decisive steps towards revenue generation.
  • Addressing this challenge necessitates targeted efforts to educate elected representatives about the enduring benefits of financial self-sufficiency and its positive impact on local development endeavours.
• Decline in Tax Collection: Tax collection, which stood at ?3,12,075 lakh in 2018-19, dwindled to ?2,71,386 lakh by 2021-2022.
  • This downward trend raises concerns, signalling a waning commitment to financial autonomy at the local level.
  • Similarly, non-tax revenue also experienced a decline from ?2,33,863 lakh to ?2,09,864 lakh during the same period.
  • These patterns underscore the imperative for revitalized efforts in revenue generation and a departure from grant dependency.

Government's Efforts to Implement Constitutionally Mandated Fiscal Devolution:

• Establishment of an Expert Committee: To address this challenge, the Ministry of Panchayati Raj constituted an expert committee tasked with examining the own source of revenue (OSR) of rural local bodies.
  • The committee's findings delineate various revenue-generating avenues accessible to Panchayati Raj institutions through State Acts.
  • These mechanisms include property tax, land revenue cess, stamp duty surcharge, tolls, professional tax, advertisement tax, and user charges for essential services like water, sanitation, and lighting.
  • While these avenues exist, their effective implementation is imperative for Panchayats to attain financial autonomy.
• Focus on Effective Taxation Mechanisms: The report underscores the significance of establishing an enabling environment for taxation, encompassing decisions on tax and non-tax bases, enactment of robust tax management and enforcement laws, etc.
  • This strategic approach aims to empower Panchayats to fully leverage their revenue generation potential.
  • While taxation constitutes a vital aspect of fiscal devolution, the report also acknowledges the potential of non-tax revenue streams, including Fees, rent, income from investment sales and hire charges,
• Along with revenue from innovative initiatives such as rural business hubs, commercial ventures, renewable energy projects, carbon credits, CSR funds, and donations.
• Diversification of revenue sources can bolster the financial resilience of Panchayati Raj institutions, reducing their reliance on grants.

The Role of Gram Sabhas:

• Gram sabhas have a significant role in fostering self-sufficiency and sustainable development at the grass-roots level by leveraging local resources for revenue generation.
• They can be engaged in planning, decision-making, and implementation of revenue-generating initiatives that range from agriculture and tourism to small-scale industries.
• They have the authority to impose taxes, fees, and levies, directing the funds towards local development projects, public services, and social welfare programmes.
• Through transparent financial management and inclusive participation, gram sabhas ensure accountability and foster community trust, ultimately empowering villages to become economically independent and resilient.
• Thus, gram sabhas need to promote entrepreneurship, and foster partnerships with external stakeholders to enhance the effectiveness of revenue generation efforts.

Way Forward:

• Education and Awareness: There is a pressing need to raise awareness among elected representatives and the public about the importance of revenue generation for developing Panchayats as self-sustaining institutions.
  • Ultimately, the dependency syndrome for grants has to be minimised and in due course, panchayats will be able to survive on their own resources.
  • Achieving this goal requires concerted efforts at all levels of governance, including the state and central levels.
• Promotion of Entrepreneurship: Gram Sabhas plays a crucial role in promoting entrepreneurship and fostering partnerships with external stakeholders to bolster revenue generation efforts.
  • Encouraging entrepreneurial ventures within local communities can stimulate economic growth and reduce dependency on external funding.
• Collaboration and Support: Panchayats need to collaborate closely with higher tiers of governance and external stakeholders to enhance their revenue generation capabilities.
  • This collaborative approach can facilitate the implementation of innovative initiatives and the efficient utilization of resources, thereby fostering financial self-reliance among Panchayats.

Why is it in the News?

The state visit by Greek Prime Minister Kyriakos Mitsotakis to India will be another important step in building a strategic relationship between India and Greece — a process which began with the historic visit of the Indian Prime Minister, Narendra Modi, to Greece in August 2023.

Context:

• The upcoming state visit of Greek Prime Minister Kyriakos Mitsotakis to New Delhi signifies a pivotal milestone in the ongoing initiatives to forge a strategic partnership between Greece and India.
• This diplomatic initiative follows the landmark visit of the Indian Prime Minister to Greece in August 2023, which generated enthusiasm among Greek political and business circles.
• The anticipation surrounding the visit of the Greek Prime Minister underscores the mutual dedication to enhancing bilateral relations and collaboration across diverse sectors.

Historical Connections:

• India and Greece share a rich historical bond spanning more than 2500 years, characterized by cultural exchanges and a mutual embrace of democratic values.
• Presently, their bilateral relations are multifaceted, covering political, economic, and military cooperation.
• Trade Routes: Ancient maritime trade routes linked the Indus Valley Civilization with the Aegean region, facilitating the exchange of commodities such as spices, textiles, and intellectual ideas.
  • Archaeological evidence, including the discovery of Indus seals in Mesopotamia, suggests the existence of trade connections between the two civilizations.
• Alexander the Great (326 BCE): Alexander's conquest of parts of northwest India fostered cultural and diplomatic exchanges between Greece and India.
  • Greek philosophies and ideologies potentially influenced various aspects of Indian art, mathematics, and astronomy during this period.
• Indo-Greek Kingdoms (2nd century BCE – 1st century CE): Hellenistic kingdoms established in northwest India witnessed a fusion of Greek and Indian cultures.
  • This blending is evident in Gandhara art, which exhibits Greco-Buddhist influences and serves as a testament to the cultural interplay between the two civilizations.

The Current Status of Bilateral Relations between India and Greece:

• Steady Progress in Bilateral Relations: While India and Greece share a historical connection and mutual enthusiasm, the pace of their bilateral cooperation has been characterized by gradual progress.
  • In this context, it is essential to delve into the various facets of collaboration, recognizing both the positive developments and the need for enhanced momentum.
• Military Cooperation: Over time, military collaboration between the two nations has witnessed notable advancements.
  • Joint exercises involving the Indian Navy, Indian Air Force, and the Greek armed forces have been conducted, underscoring a shared commitment to fostering mutual understanding and coordination.
  • Reciprocal exercises are in the pipeline, illustrating an ongoing endeavour to deepen military bonds.
  • These joint military endeavours not only bolster regional security but also signify an increasing level of confidence and collaboration between the armed forces of Greece and India.
• Economic Engagement: On the economic front, there have been significant instances of collaboration signalling a burgeoning partnership.
  • For instance, an Indian construction company has joined forces with a prominent Greek construction firm to undertake a significant project: the construction of a new airport on the island of Crete.
  • Such initiatives highlight the potential for cross-border investments and partnerships that can contribute to economic development and diversification.

Advancing Economic Reforms And Greece's Role:

• Greece's proactive stance in promoting deeper EU-India relations adds another layer of importance to ongoing economic reforms.
• As Greece endeavours to swiftly finalize the EU-India bilateral trade and investment agreement (BTIA), it underscores its dedication to establishing a conducive environment for heightened economic cooperation.
  • The BTIA is poised to act as a catalyst, providing a structured framework for trade and investment, thereby nurturing closer economic bonds between the EU and India.

A Path to Closer Ties: Economic Reforms in Greece

• The economic facet of the Greece-India relationship assumes greater prominence as Greece, under the leadership of Prime Minister Kyriakos Mitsotakis, embarks on substantial economic reforms.
• Over the past half-decade, the Mitsotakis administration has implemented measures aimed at steering the Greek economy towards a more sustainable growth trajectory.
• This transformation positions Greece not only as a dependable eastern frontier of the European Union (EU) but also as a potential linchpin in broader geopolitical and economic strategies.

IMEEC Corridor: A Vision of Significance

• As Greece solidifies its role in the Eastern Mediterranean, the concept of establishing the India-Middle East-Europe Economic Corridor (IMEEC) emerges as a compelling vision.
• The IMEEC embodies a comprehensive economic initiative aimed at seamlessly connecting India, the Middle East, and Europe, thereby stimulating trade, investment, and economic collaboration.
• This ambitious proposition aligns with the shared vision of both nations to deepen their economic bonds and explore novel avenues for cooperation.

The Geopolitical Significance of the Indo-Greek Relationship:

• A Robust Foundation Rooted in Historical Bonds: The historical backdrop of the evolving ties between Greece and India (with diplomatic relations established in 1950) enriches their contemporary diplomatic endeavours.
  • Furthermore, these diplomatic exchanges acquire significance amidst India's ascent as a global power, being perceived not only as an enduring ally but also as a dynamic and influential player on the world stage.
• Contemporary Diplomacy: The momentous visit of the Indian Prime Minister to Greece in August 2023 served as a watershed, laying the groundwork for enhanced collaboration.
  • The enthusiasm witnessed in Greece, particularly among political and business circles, underscores the perceived opportunities in forging a strategic partnership with India.
• Strategic Importance of Both Nations' Locations: The geopolitical relevance of this burgeoning relationship is amplified by the strategic locations of Greece and India.
  • Situated in regions pivotal to the global system, both nations grapple with geopolitical complexities and volatility.
  • Recent events in the Red Sea highlight the interconnectedness of the East Mediterranean, where Greece is positioned, and the Indian Ocean region, accentuating the imperative for collaboration to promote security, stability, and prosperity.
• A Strategic Vision: Gateway to Europe and Asia: The Greek Prime Minister's assertion that "India will find no better gateway to Europe than my country, and for Greece, there is no better gateway to Asia than a close strategic relationship with India" encapsulates the acknowledgement of each nation's unique role in bridging the other's region.
  • This pragmatic understanding not only acknowledges geographical realities but also reflects a strategic vision to leverage mutual strengths for collective advancement.

Way Forward to Enhance Indo-Greek Relations:

• Promoting Cross-Cultural Understanding: By expanding university student exchange programs, deliberate steps will be taken to familiarize the younger generation with the cultures, traditions, and educational systems of both nations.
  • This fosters not only cross-cultural appreciation but also establishes a groundwork for future collaborations and friendships.
• Fostering Cultural Exchanges: Cultural exchanges serve as a cornerstone in fortifying the bonds between Greece and India.
  • Through the promotion of cultural events, exhibitions, and festivals, both countries create platforms for their citizens to immerse themselves in and celebrate the richness of each other's cultural heritage.
  • These initiatives act as bridges, connecting hearts and minds, and nurturing a sense of shared identity and mutual respect for cultural diversity.
• Media Collaboration: Bridging Information Gaps: Media collaboration emerges as a pivotal avenue to bridge geographical distances and keep the citizens of both nations abreast of developments, cultural nuances, and societal trends.
  • Joint efforts in media, including co-productions, cultural documentaries, and news coverage, facilitate a nuanced understanding of each other's realities.

Conclusion

The swift exchange of visits between the political leadership of Greece and India underscores their commitment and the urgency in advancing their strategic partnership. As the world navigates through a pivotal year in 2024, the onus lies on policymakers and businesses to capitalize on this momentum and fortify the strategic partnership between Greece and India.

Why is it in the News?

Regulatory panic could do more harm than good. Rather than poor risk management today, rules should anticipate the greater risks that lie ahead.

Context:

• The year 2024 will see 4.2 billion people go to the polls, which, in the era of artificial intelligence (AI), misinformation and disinformation may not be the democratic exercise intended.
• The Global Risks Report 2024 named misinformation and disinformation a top risk, which could destabilise society as the legitimacy of election results may be questioned.
• Therefore, it is crucial to scrutinise the possible drawbacks of swiftly formulated regulations to counter AI-driven disinformation during this crucial period.

What are the Major Challenges Arising from Hasty Regulatory Responses to AI?

Escalation of Disinformation: Unintended Ramifications of Resource Allocation

• The surge in disinformation, demonstrated by manipulated videos impacting political figures, presents a formidable obstacle.
  • For instance, consider the case of Tarique Rahman, a leader of the Bangladesh Nationalist Party, whose manipulated video suggested a reduction in support for Gaza's bombing victims—an action with potential electoral repercussions in a Muslim-majority country.
• Meta, the parent company of Facebook, exhibited delayed action in removing the fabricated video, raising concerns about the effectiveness of content moderation.
• Moreover, the reduction in content moderation staff due to widespread layoffs in 2023 exacerbates the challenge.
• The pressure to prioritize interventions in more influential markets may leave voters in less prominent regions, such as Bangladesh, vulnerable to disinformation, potentially leading to a global surge in disinformation due to the focus on catching misinformation from powerful governments.

Reinforcement of Industry Dominance: Amplifying Concentration and Ethical Concerns

• While well-intentioned, AI regulations risk bolstering industry concentration. Mandates such as watermarking (which are not foolproof) and red-teaming exercises (which are expensive) may inadvertently favour tech giants, as smaller companies encounter compliance obstacles.
• Such regulations could further entrench the power of already dominant players by erecting barriers to entry or rendering compliance unfeasible for startups.
• This concentration not only consolidates power but also raises apprehensions regarding ethical lapses, biases, and the centralization of consequential decisions within a select few entities.

Navigating Ethical Quagmires: Pitfalls of Sincere Guidelines

• The formulation of ethical frameworks and guidelines introduces its own complexities.
• The question of whose ethics and values should underpin these frameworks gains prominence in polarized times. Divergent perspectives on prioritizing regulation based on risk levels add layers of complexity, with some viewing AI risks as existential threats while others emphasize more immediate concerns.
• The absence of laws mandating audits of AI systems raises transparency issues, leaving voluntary mechanisms vulnerable to conflicts of interest.
• In the Indian context, members of the Prime Minister's Economic Advisory Council have even argued that the concept of risk management itself is precarious concerning AI, given its non-linear, evolving, and unpredictably complex nature.

Navigating the Complexity of AI Regulation: Strategies for Policymakers

• Acknowledge and Address Democracy's Inherent Challenges Alongside AI Threats:
  • Before delving into the intricacies of AI-related risks, policymakers must acknowledge the persistent challenges facing democracy globally.
  • Instances of unjust political imprisonments, threats to electoral processes, and disruptions to communication networks underscore the vulnerability of democratic systems.
  • Furthermore, the enduring issues of vote-buying and ballot-stuffing tarnish the integrity of elections.
  • These entrenched challenges within the democratic process provide context for evaluating the novelty of AI threats.
• Strike a Balance Between Addressing AI Risks and Implementing Sensible Regulation:
  • The rush among regulators to enact AI regulations ahead of the 2024 elections, following the AI fervour of 2023, underscores the need for caution.
  • While it is essential to confront the emerging threats posed by AI, hastily devised regulations may inadvertently worsen the situation.
  • Policymakers must carefully consider the potential for unintended consequences and the complexities inherent in regulating a swiftly evolving technological landscape.
  • It is crucial for regulators to appreciate the delicate balance required to manage AI risks without unintentionally creating new challenges or hindering democratic processes.
• Prepare for Future Challenges: Policymakers must adopt a forward-thinking approach to AI regulation, anticipating and formulating rules that not only address current risks but also proactively tackle future challenges.
  • Recognizing the rapid evolution of technology, regulatory frameworks must evolve accordingly.
  • By planning several steps ahead, regulators can contribute to the resilience of democratic processes, ensuring that voters in elections beyond 2024 benefit from an adaptive, proactive, and effective regulatory environment.

How Major Tech Companies Join Hands to Combat AI Misuse in Elections?

• On February 16th, 2024, a major step was taken in the fight against AI misuse in elections.
• 20 tech giants, including Microsoft, Google, Meta, and Adobe, signed a voluntary agreement called the "Tech Accord to Combat Deceptive Use of AI in 2024 Elections."
• This agreement marks a significant step towards collective action against the potential manipulation of democratic processes through deepfakes and other AI-generated content.

Key features of the Tech Accord:

• Collaborative detection and labelling: Companies pledge to develop tools and techniques for identifying and labelling deepfakes, fostering transparency and facilitating content removal.
• Transparency and user education: The accord emphasizes transparency in company policies regarding deepfakes and aims to educate users on identifying and avoiding them, raising public awareness about the technology's capabilities and limitations.
• Rapid response and information sharing: The signatories commit to sharing information and collaborating on takedown strategies for identified deepfakes, aiming for faster removal and a unified front against malicious actors.
• Additional measures: The agreement includes further commitments to invest in threat intelligence, empower candidates and officials with reporting tools, and collaborate on open standards and research.

However, critical analysis reveals potential limitations:

• Voluntary nature: The accord's voluntary character raises concerns about its enforceability and long-term effectiveness.
  • Companies may prioritize competing interests over their goals.
• Technical challenges: Deepfake detection remains an evolving field with limitations.
  • Continuous innovation by malicious actors can outpace detection capabilities.
• Potential for bias: Concerns exist about potential biases in detection algorithms, particularly regarding marginalized groups, further complicating the issue.
• Freedom of expression and censorship: Balancing the need for content moderation with upholding freedom of expression requires careful consideration and potential legal challenges.

Conclusion

Balancing immediate concerns with long-term implications, and addressing AI-related electoral risks requires careful regulatory foresight. While the Tech Accord offers promise in combatting AI-driven election interference, its effectiveness depends on rigorous implementation and continuous adaptation to evolving threats. Ongoing research and dialogue are crucial to address ethical concerns and ensure a balanced approach to safeguarding democracy and individual rights.

Why is it in the News?

Farmers have resumed protests without a specific trigger, unlike their previous march against contentious farm laws. Their main demand is a legal guarantee for Minimum Support Prices (MSP).

Context:

• The renewed protest by farmers, advocating for a legal assurance of Minimum Support Prices (MSP), underscores the enduring battle for agricultural sector stability.
• Amidst this, it's crucial to delve into the intricacies of MSP, address prevailing misconceptions, and explore the advantages of formalising this system.

What is the Minimum Support Price (MSP)?

• MSP (Minimum Support Price) is the cost at which the government buys crops from the farmers, to guarantee farmers against any sharp fall in agricultural income.
• It is declared by the Government based on the proposal of the Commission for Agricultural Cost and Prices (CACP), at the start of the planting season.
• This mechanism aims to protect small and marginal farmers from financial losses and ensure an adequate supply of food grains for public distribution across India.
• Since its inception in 1966-67 for wheat, the MSP framework has expanded to cover various essential food crops, facilitating their availability to the public through subsidized rates under the public distribution system.
  • However, only a small percentage, approximately 6% or less, of farmers are able to sell their produce at prices higher than the MSP.

Is the MSP Different in different states?

• Because of the variety in irrigation and wages, the expense of a similar yield changes from one state to another.
• However, there is no draft of the local Minimum Support Price, so there is one MSP for the whole country.

Significance of Minimum Support Price: 

• Fixed Remunerations: The farmers are financially insured against the impulses of price fall in the market.
  • It gives security to farmers from crop loss and price uncertainty.
• Help in Decision Making: MSPs are reported toward the start of the planting season, this assists farmers with settling on the best choices of crop that they should plant.
  • This development data assists the farmer with settling on the best choice with regards to which yield to plant for the most extreme monetary advantage inside the restrictions of his agricultural land size, environment, and irrigation framework.
• Crop Diversification: The MSP declared by the Government of India without precedent for 1966-67 for wheat has reached out to around 24 crops at the present.
  • This has urged the farmers to develop these different crops to maximize their agricultural income.
• Price Limitations for Private Purchasers: MSP conveys a value message to advertise that if vendors don’t offer higher than MSP costs the farmer may not sell them his produce.
  • In this manner, it goes about as an anchor or benchmark for agricultural produce.
  • It guarantees the market costs won’t be radically lower than the Minimum Support Price.
• Commercial Crops: MSP is utilized as an instrument to boost the creation of explicit food crops which is short in supply.
  • MSP spurs farmers to develop commercial crops and expand creation on a commercial basis.
• Purchasing Power Enhancement: MSP provides fixed amounts in framers’ hands which makes them financially stable.
  • It helps in upgrading the buying limit and updating the style of living of farmers and their families.

Challenges in Implementation of MSP:

• Selective Intervention and Limited Coverage: Despite the annual announcement of MSP for 23 crops, actual implementation tends to be selective, primarily focusing on major crops like rice and wheat.
  • This limited coverage undermines the broader objective of ensuring stability across various agricultural commodities.
• MSP Implementation Bias: The unequal application of MSP, favouring specific crops, marginalizes farmers cultivating other essential commodities.
  • This bias exacerbates regional disparities and impacts the economic well-being of farmers engaged in non-major crop cultivation.
• Disconnect Between Market Price and MSP: The disparity between market prices and MSP poses a significant challenge, as government intervention is triggered primarily when market prices fall below the MSP.
  • Inconsistent intervention exacerbates uncertainties for farmers, leading to financial distress during market downturns.
• Perceived Government Apathy: Farmers perceive a lack of genuine interest or urgency from the government in effectively implementing MSP.
  • This perceived apathy breeds distrust and frustration among farmers, fueling demands for a legal guarantee to ensure consistent and widespread implementation.
• Political Hesitation and Decision-Making Delays: While there is political consensus supporting a legal guarantee for MSP, successive governments have hesitated to formalize this mechanism.
  • Delayed decision-making perpetuates uncertainties in the agricultural sector, undermining the effectiveness of MSP as a stabilizing force.

What Does a Legal Guarantee of MSP Mean and What Obstacles in Legalising MSP?

• It means that anyone paying less than the price set by the government for crops could be criminally charged.
  • Currently, there is an MSP for 23 crops.
  • However, the highest procurement by the government is of wheat and rice.

• According to experts, if MSP is legally guaranteed, the government will have to pay it regardless of supply and demand dynamics.
  • At the moment, about 60 per cent of the total field crop production in India comes from wheat and paddy.
• Fiscal Concerns: Misconceptions regarding the fiscal implications of guaranteeing MSP have posed obstacles to its legalization.
  • Despite the political consensus, concerns over perceived excessive fiscal burdens have deterred governments from formalizing MSP.
• Prevalent Misconceptions: There is a prevalent misconception that legalizing MSP necessitates government procurement of all agricultural produce, which is inaccurate.
  • Government intervention is required only when market prices dip below MSP, and it does not entail the procurement of the entire marketable surplus.
• Misunderstanding of Procurement Costs and Subsidies: The cost of procuring rice and wheat is often misconstrued as the cost of the MSP program, whereas it primarily serves as a subsidy to consumers rather than farmers.
  • For other crops, government procurement is not a cost unless sold with a subsidy, with the actual cost being the difference between economic cost and issue price.

Potential Advantages of Legalising MSP:

• Ensuring Uniform Implementation: Formalizing Minimum Support Prices (MSP) establishes a clear legal framework, ensuring consistent application across all crops.
  • This move addresses current issues of selective intervention, providing farmers with a dependable safety net.
• Promoting Inclusive Agricultural Growth: Expanding MSP coverage to various crops ensures that price stability benefits all segments of the farming community.
  • Small and marginal farmers cultivating diverse crops can access MSP protection, fostering inclusive agricultural development.
• Reducing Farmer Vulnerability: Formalizing MSP reduces farmers' susceptibility to market fluctuations by guaranteeing a minimum income for their produce.
  • This assurance enables farmers to navigate uncertainties with confidence, knowing that government intervention is assured during price downturns.
• Boosting the Rural Economy: A secured MSP contributes to farmers' economic well-being, leading to increased rural income.
  • This upliftment stimulates the rural economy by generating demand for goods and services, fostering growth across multiple sectors.
• Clarifying Consumer Subsidies: Formalization helps distinguish between procurement costs and consumer subsidies, often conflated as MSP program expenses.
  • This clarity aids policy discussions and ensures targeted subsidy allocation, benefiting both farmers and consumers.
• Facilitating Strategic Government Operations: A legal framework empowers the government to conduct strategic operations in domestic and international markets.
  • Through controlled sales during periods of high market prices, the government can manage inflation, ensuring price stability for consumers.

Conclusion

The legalization of MSP presents a holistic remedy to the agricultural sector's woes.

Beyond ensuring uniform application, it fosters diversification, inclusivity, and economic robustness, ultimately benefiting farmers and bolstering rural prosperity. By dispelling misconceptions and tackling apprehensions, policymakers can pave the way toward a more secure and prosperous future for our farmers.

Why is it in the News?

A five-judge Constitution Bench of the Supreme Court on Thursday unanimously struck down the Centre’s electoral bond scheme which facilitates anonymous political donations for being unconstitutional.

Context:

• A five-judge Constitution Bench of the Supreme Court on Thursday unanimously struck down the Centre’s electoral bond scheme which facilitates anonymous political donations for being unconstitutional.
• It underscored that the scheme violates the right to information under Article 19(1)(a) of the Constitution.
• Additionally, the Apex Court nullified several amendments introduced by the government in vital laws to streamline corporate donations to political parties.
  • These amendments were incorporated through The Finance Act, 2016, and The Finance Act, 2017, preceding the implementation of the EBS in January 2018.
• The decision followed petitions from the Communist Party of India (Marxist) and NGOs Common Cause and ADR.

Key Highlights of the SC Judgement:

• Protection of Voters' Right to Information: The court emphasized that access to information regarding political party funding is crucial for informed voting.
  • It argued that economic disparities lead to political inequalities, as financial resources often translate into greater political influence and access to policymakers.
  • Thus, the Electoral Bonds Scheme (EBS) was deemed to violate Article 19(1)(a) of the Constitution, safeguarding freedom of speech and expression.
• Disproportionate Restrictions on Curbing Black Money: While acknowledging the importance of curbing black money, the court found the restrictions imposed by the EBS disproportionate.
  • It clarified that restrictions on the Right to Information (RTI) should align with Article 19(2) of the Constitution, which outlines reasonable restrictions on freedom of speech and expression.
  • Curbing black money was not deemed a valid reason for such restrictions.
• Right to Donor Privacy: The judgement delved into the notion of donor privacy, particularly regarding political contributions.
  • It affirmed that the right to informational privacy encompasses political affiliation.
  • However, it clarified that privacy does not extend to contributions aimed at influencing policies, emphasizing genuine political support over attempts to obscure motives, especially those of corporate entities.
• Limits on Corporate Political Contributions: The court declared unlimited political contributions by companies unconstitutional.
  • It highlighted the disproportionate influence of corporations on the political process compared to individuals.
  • Contributions from companies were viewed as business transactions aimed at securing benefits, which undermined the democratic process and equality in political participation.

What was the Existing System Before the Introduction of EBS?

• Before the enactment of The Finance Act 2016 and The Finance Act 2017, political funding operated under a different framework:
• Contribution Declarations: Political parties were mandated to declare all contributions exceeding Rs 20,000 without any exceptions.
  • Detailed records of donations exceeding Rs 20,000 were required for taxation purposes.
• Limits on Corporate Donations: Companies were subject to a cap on their political contributions, restricted to a maximum of 7.5% of their average net profits from the preceding three years.
• Amendments through The Finance Act 2017: The Finance Act of 2017 brought significant changes to political funding regulations by amending key legislations like the Representation of the People Act, 1951, the Income-tax Act, 1961, and the Companies Act, 2013.
  • These amendments introduced electoral bonds, altering the landscape of political party funding:
• Introduction of Electoral Bonds: Electoral bonds were introduced, effectively removing donation limits for companies.
  • The requirement to declare and maintain records of donations made through electoral bonds was eliminated, streamlining the process of political contributions.

Supreme Court Verdict:

• The recent Supreme Court verdict has reinstated the legal framework that existed before the enactment of the Finance Act, 2017, impacting various statutes:
• Representation of the People Act, 1951: The original Section 29C of the Act mandated political parties to report all donations exceeding Rs 20,000, specifying whether they were from individuals or companies.
  • Amendments introduced by the Finance Act, 2017 exempted donations via Electoral Bonds from this reporting requirement.
  • The Supreme Court overturned this amendment, asserting that the original provision effectively balanced voters' right to information with donors' right to privacy.
• Companies Act, 2013: Section 182(1) previously limited corporate donations to political parties to 7.5% of average net profits over three years.
  • Section 182(3) requires disclosure of all political contributions made by companies.
  • Amendments removed the donation cap and reduced disclosure requirements.
  • The Supreme Court struck down these changes, citing concerns about unchecked corporate influence in electoral processes.
• Income-tax Act, 1961: Section 13A(b) mandated political parties to maintain records of donations above Rs 20,000, including donor details.
  • Amendments exempted Electoral Bond contributions from these reporting requirements and introduced new donation methods.
  • The Supreme Court ruled that exempting Electoral Bond donations from record-keeping violated voters' right to information and struck down both amendments.

Supreme Court's Directives:

• Instructions to SBI: SBI is instructed to immediately halt the issuance of any further electoral bonds.
  • Provide detailed information on electoral bonds purchased by political parties since April 12, 2019, to the Election Commission of India (ECI) by March 6.
  • Furnish specifics including the purchase date, purchaser's name, and bond denomination for each transaction.
• Election Commission's Obligations: The ECI is directed to publish all received data from SBI on its official website by March 13, 2024.
• Return of Electoral Bonds: Electoral bonds within the 15-day validity period, yet to be encashed by political parties, must be returned.
  • The issuing bank will then reimburse the amount to the purchaser's account.

Evaluation of the Latest Ruling:

• The recent Supreme Court ruling establishes a rigorous standard for the state to justify its interference with fundamental rights, even when pursuing a conflicting right.
• It mandates that the state must prove that its action is the "least restrictive" and that no other methods of equal effectiveness exist to achieve its goal.
• Traditionally, the judicial balance between two fundamental rights has often favoured one right over the other.
• In numerous instances, the court has prioritized public interest over individual fundamental rights, thereby granting the state considerable authority.
• For instance, in 2018, the Supreme Court curtailed the right to protest near Delhi’s Jantar Mantar to uphold the right to a peaceful residence and the state's regulatory power over such activities.

What are Electoral Bonds and Why Were They Introduced?

• An electoral Bond is a type of financial instrument that functions like a Promissory Note and an interest-free banking tool.
• Any Indian citizen or organisation registered in India can buy these bonds after fulfilling the Know Your Customer (KYC) norms laid down by the Reserve Bank of India (RBI).
  • Before the introduction of Electoral Bonds, political parties in India relied heavily on donations from individuals and corporate entities to fund their election campaigns and day-to-day activities.
• The need for electoral reforms to address these concerns was highlighted by various stakeholders, including civil society organisations, electoral watchdogs, and the judiciary.
• In response, the government initiated efforts to reform the electoral system and enhance transparency in political funding.
• Electoral Bonds were introduced in India through the Finance Act, of 2017, as a means of reforming political funding and promoting transparency.

Key Features of Electoral Bonds:

• Anonymity: One of the key features of Electoral Bonds is the anonymity of the donor.
  • Unlike traditional forms of political donations, where the identity of the donor is disclosed to the public and the receiving political party, Electoral Bonds allow donors to remain anonymous.
  • This was intended to protect the privacy and security of donors and shield them from potential retribution or harassment.
• Denominations: Electoral Bonds are available in various denominations ranging from ?1,000 to ?1 crore (10 million).
  • Donors can purchase these bonds from notified banks in India, with the State Bank of India (SBI), the largest public sector lender in the country, being the only authorised institution to issue Electoral Bonds.
• Validity: Electoral Bonds have a validity period within which they must be redeemed.
  • As per the existing regulations, the bonds have a validity of 15 days from the date of issuance.
  • This timeframe is designed to ensure that the bonds are promptly encashed by the receiving political parties.
• Transparency: While the identity of the donor remains anonymous, the sale and redemption of Electoral Bonds are recorded electronically by the issuing bank.
  • This electronic tracking system is intended to enhance transparency in the overall process of political funding and enable regulatory authorities to monitor the flow of funds.

Why is it in the News?

During his two-day visit to UAE, Prime Minister Modi will inaugurate the BAPS Swaminarayan temple in Abu Dhabi, the first Hindu temple in the Gulf nation.

Context:

• Prime Minister Modi on Wednesday inaugurated the (BAPS) temple, the first-ever Hindu temple in the United Arab Emirates (UAE).
• The iconic stone temple is located in Abu Mureikhah, near Al Rahba off the Dubai-Abu Dhabi Sheikh Zayed Highway.
• The inauguration of the 108-ft high temple marks a significant moment for the Hindu community in UAE and the two countries’ bilateral ties.

What is BAPS?

• Bochasanwasi Shri Akshar Purushottam Swaminarayan Sanstha (BAPS) is a socio-spiritual Hindu organisation founded on the principles of practical spirituality.
• The temple was built by the organisation, a denomination of the Swaminarayan Sampradaya, a Vaishnav sect of Hinduism.
• With over 3,850 centres globally, BAPS has garnered national and international recognition, including affiliation with the United Nations.
• Through vows of abstinence and purity, BAPS fosters a foundation for humanitarian endeavours, caring for societies, families, and individuals.

What Does BAPS Do?

• The BAPS Swaminarayan Sanstha views spirituality as its core mission. Through gradual steps, it strives to draw individuals closer to God.
• In collaboration with BAPS Charities, the organization extends its outreach globally, addressing diverse humanitarian needs.
  • From education to healthcare and environmental concerns, practical solutions are offered to real-world problems, impacting lives on both macro and micro scales.
• BAPS has a network of around 1,550 temples across the world, including the Akshardham temples in New Delhi and Gandhinagar, and Swaminarayan temples in London, Houston, Chicago, Atlanta, Toronto, Los Angeles, and Nairobi.

Who is Swami Narayan?

• Bhagwan Swaminarayan’s life and work have not only influenced communities in Gujarat, India but have affected change throughout the world. 
• He reestablished Hindu Sanatan Dharma, cleansing traditions and rituals of the impurities that had seeped in over time. 
• His contributions have been hailed by Hindus and dignitaries of other faiths as truly transforming the lives of millions of individuals. 
• He improved societal standards and, most importantly, the innate nature of people, eradicating them from lust, anger, greed, and envy. 
• Bhagwan Swaminarayan’s teachings transcended borders, rejuvenating Hindu traditions worldwide.

What are the Features of the (BAPS) Temple?

• The Abu Dhabi temple is a traditional stone Hindu temple with seven shikhars.
• Built in the traditional Nagar style, the temple’s front panel depicts universal values, stories of harmony from different cultures, Hindu spiritual leaders and avatars.
• Spread over 27 acres, the temple complex is on 13.5 acres
  • The 13.5 acres of land was gifted by Sheikh Mohammed Bin Zayed Al Nahyan, the President of the UAE in 2019.
• The height of the temple is 108 ft, its length 262 ft and its width 180 ft.
• While the external facade uses pink sandstone from Rajasthan, the interior uses Italian marble.
• A total of 20,000 tonnes of stones and marble were shipped in 700 containers for the temple.
  • More than Rs 700 crore was spent on the temple’s construction.
• The temple has two central domes, Dome of Harmony and Dome of Peace, emphasizing human coexistence through the carvings of earth, water, fire, air, and plants.
• A Wall of Harmony, one of the largest 3D-printed walls in the UAE, features a video showcasing key milestones of the temple’s construction.
  • The word ‘harmony’ has been written in 30 different ancient and modern languages.
• The seven shikhars (spires) are representative of the seven Emirates of the UAE.
• Other amenities include an assembly hall with a capacity of 3,000 people, a community centre, exhibitions, classrooms, and a majlis venue.

What are the Key Architectural Features?

• The temple was judged the Best Mechanical Project of the Year 2019 at the MEP Middle East Awards, and the Best Interior Design Concept of the Year 2020.
• Among the key architectural features are 96 bells and galumphs installed around the path leading to the temple.
  • These 96 bells are a tribute to Pramukh Swami Maharaj’s 96 years of life.
  • Nano tiles have been used, which will be comfortable for visitors to walk on even in the hot weather.
• On the top left of the temple is a stone carving of the scene of Pramukh Swami Maharaj envisioning the temple in Abu Dhabi in 1997.
• Non ferrous material (which is more vulnerable to corrosion) has been used in the temple.
• While many different types of pillars can be seen in the temple, such as circular and hexagonal, there is a special pillar, called the ‘Pillar of Pillars’, which has around 1,400 small pillars carved into it.
• Buildings surrounding the temple are modern and monolithic, with their colour resembling sand dunes.
• Deities from all four corners of India have been featured in the temple.
  • These include Lord Ram, Sita, Lakshman and Hanuman, Lord Shiv, Parvati, Ganpati, Kartikeya, Lord Jagannath, Lord Radha-Krishna, Akshar-Purushottam Maharaj (Bhagwan Swaminarayan and Gunatitanand Swami), Tirupati Balaji and Padmavati and Lord Ayappa.
• The temple also has some special features, like a ‘holy river’ surrounding it, for which waters from Ganga and Yamuna have been brought in.
  • The river Saraswati has been depicted in the form of white light.
  • A Varanasi-like ghat has been created where the ‘Ganga’ passes.
• Apart from 15 value tales from Indian civilisation, stories from the Maya civilisation, Aztec civilisation, Egyptian civilisation, Arabic civilisation, European civilisation, Chinese civilisation and African civilisation have been depicted.

What is the Significance of the Temple?

• A Muslim king donated land for a Hindu Mandir, where the lead architect is a Catholic Christian, the project manager a Sikh, the foundational designer a Buddhist, the construction company a Parsi group, and the director comes from the Jain tradition.

Religious Significance:

• First Hindu stone temple in Abu Dhabi: This marks a historic milestone for the Hindu community in the UAE, providing them with a dedicated place of worship and cultural centre.
• Symbol of religious tolerance: The temple's inauguration signifies the UAE's growing acceptance and appreciation of religious diversity, fostering interfaith dialogue and understanding.

Cultural Significance:

• Strengthens India-UAE ties: The temple stands as a symbol of the strong cultural and diplomatic relations between India and the UAE, promoting mutual understanding and cooperation.
• Promotes Indian culture: The temple serves as a platform to educate the UAE community about Indian art, architecture, and traditions, fostering cultural exchange and appreciation.

Social Significance:

• Provides a sense of belonging: The temple offers a space for the Hindu community to gather, celebrate festivals, and connect with their cultural roots, fostering a sense of belonging and identity.
• Promotes social integration: The temple's open-door policy welcomes people of all faiths, encouraging social interaction and understanding between different communities in the UAE.
• Strengthens social fabric: The temple's emphasis on values like compassion, service, and community engagement contributes to strengthening the social fabric of UAE society.

Overall, the BAPS Swaminarayan Mandir in Abu Dhabi represents a significant step forward in religious tolerance, cultural exchange, and community building in the UAE. It serves as a testament to the growing understanding and appreciation between India and the UAE, and its impact will be felt for generations to come.

Why is it in the News?

PM Modi is scheduled to pay an official visit to the United Arab Emirates (UAE) from February 13-14, 2024 which will include inaugurating a temple built by the Bochasanwasi Shri Akshar Purushottam Swaminarayan Sanstha in Abu Dhabi.

Background:

• The upcoming official visit of the Indian Prime Minister to the United Arab Emirates (UAE) scheduled for February 13-14, 2024, signifies a pivotal moment in the evolving rapport between the two countries.
• This visit offers an opportunity to examine the diverse dimensions of the strategic partnership between India and the UAE, encompassing diplomatic, economic, cultural, and geopolitical connections that have matured over time.
• The Prime Minister will address the World Government Summit in Dubai as the ‘Guest of Honour’.

The Nature of India-UAE Special Diplomatic Relations:

• Elevated Diplomatic Engagements and Mutual Gestures: The essence of the India-UAE strategic partnership in diplomacy is marked by a sequence of notable visits, reciprocal actions, and joint endeavours, underscoring the depth of their association.
  • The forthcoming seventh visit of the Indian Prime Minister to the UAE, scheduled for February 13-14, 2024, reinforces the diplomatic bonds between the two countries.
• Personal Connection: The close and amicable bond between Prime Minister Modi and UAE President Sheikh Mohamed bin Zayed Al Nahyan serves as a cornerstone in diplomatic interactions.
  • This personal connection has evolved through frequent encounters, discussions, and collaborative initiatives across various domains.
  • Their shared vision acts as a catalyst for expanding cooperation across diverse sectors.
• Special Collaborative Ventures: The diplomatic cooperation extends beyond regular interactions to encompass special events and joint initiatives that highlight the importance of their partnership.
  • For instance, the felicitation of the UAE President in Gandhinagar during the Vibrant Gujarat Summit is a notable instance.
  • This reciprocal gesture underscores the mutual respect and camaraderie between the leaders.
• Global Environmental Endeavours: Both nations actively contribute to global endeavours addressing climate change.
  • Their joint involvement in the Global Green Credit Initiative underscores their dedication to environmental sustainability.
  • This shared commitment to global issues demonstrates a diplomatic convergence that transcends bilateral interests, positioning India and the UAE as responsible global participants.
• Strategic Partnerships: The strategic alignment between India and the UAE is evident in their engagement in various international forums and alliances.
  • Their participation in the West Asian Quad (I2U2) and the India-Middle East-Europe Economic Corridor highlights a shared commitment to regional stability and economic progress.
  • These partnerships further solidify their diplomatic collaboration in shaping geopolitical dynamics.
• Crisis Management: The diplomatic ties between India and the UAE are tested during critical junctures, such as the ongoing conflict in Gaza.
  • The scheduled visit presents an opportunity for both leaders to discuss pressing regional issues, showcasing their dedication to addressing challenges and preserving regional stability.
• People-Centric Diplomacy: Cultural exchanges and people-to-people connections significantly contribute to diplomatic relations.
  • Instances like the UAE conferring the Order of Zayed on Prime Minister Modi and India's role as the 'Guest of Honour' at the Abu Dhabi Festival underscore the cultural aspects of the partnership.
  • Such gestures foster mutual understanding and goodwill among the citizens of both nations.

Additional Highlights of the UAE-India Strategic Partnership:

• Energy Security: The UAE's role as a vital partner in India's energy security is underscored by agreements on strategic oil reserves stored in India and collaborations on crude oil storage facilities.
  • The partnership between Indian Strategic Petroleum Reserves Ltd and the Abu Dhabi National Oil Company reflects a shared commitment to securing energy resources.
• Defence and Security Collaboration: Both nations actively engage in defence and security cooperation, demonstrating mutual trust and a dedication to regional stability.
  • Instances such as India's special invitation to the OIC Foreign Ministers’ Meeting and the UAE's participation in the G-20 summit under India’s presidency exemplify a unique level of diplomatic understanding.
• Cultural and People-to-People Connections: Cultural exchanges, exemplified by India's role as the 'Guest of Honour' at the Abu Dhabi Festival and the conferral of the Order of Zayed on PM Modi, strengthen people-to-people bonds.
  • Initiatives like the establishment of the IIT Delhi Abu Dhabi campus and the opening of a UAE consulate in Hyderabad further enrich the cultural and educational facets of the partnership.
• The BAPS temple: Constructed on a generous donation of a 27-acre land parcel by the UAE President
  • It stands as the UAE's second prominent Hindu temple, following the inauguration of the Hindu Temple in Dubai in 2022.
• Geopolitical Alignment: Both countries' participation in significant groupings like I2U2 and the India-Middle East-Europe Economic Corridor underscores their shared geopolitical interests.
  • The UAE's involvement in the corridor, aimed at linking India to Europe, presents a potential alternative to China’s Belt and Road Initiative.
• Fintech: The RuPay card, an integral part of India’s Digital Public Infrastructure (DPI), has been operational in the UAE since 2019.           Starting from July 2023, transactions using the Indian rupee have been facilitated at Dubai’s airports.
• Regional Dynamics: The ongoing conflict in Gaza introduces an additional layer of complexity to regional dynamics, offering an opportunity for leaders to address pressing issues.

Way Forward:

• Both nations maintain close coordination within the region and participate in several significant groupings, including the I2U2.
• The UAE's involvement in the India-Middle East-Europe Economic Corridor (IMEEC) infrastructure project, established during the G-20 summit in Delhi, aims to link India to Europe via the Arabian peninsula.
  • This corridor presents a potential alternative to China’s Belt and Road Initiative.
• India boasts numerous strategic partnership agreements globally, yet none exhibit the depth of convergence and mutual respect as the one with the UAE.
• While India acknowledges and appreciates the UAE’s regional role, the UAE also acknowledges India's forthcoming 'global leadership' role.
• Both nations anticipate the continued strengthening of this privileged strategic partnership in the years to come.

Conclusion

The India-UAE strategic partnership exemplifies the extensive and varied connections that have developed over time. Spanning diplomatic, economic, and cultural spheres, as well as shared geopolitical goals, this relationship serves as a paradigm of harmony and mutual regard.

With a shared vision for continued advancement, the privileged strategic partnership is positioned for further enhancement in the future.

Why is it in the News?

While presenting the interim Union budget, Finance Minister Nirmala Sitharaman stated that India will be negotiating Bilateral Investment Treaties (BITs) with its trade partners to boost the inflow of foreign direct investment.

Background:

• India's economic terrain is undergoing a significant shift following the Finance Minister's announcement of plans to negotiate Bilateral Investment Treaties (BITs) during the interim Union budget presentation.
• This decision arrives at a critical juncture, coinciding with India's struggle to address declining levels of foreign direct investment (FDI) and the aftermath of adopting the 2016 Model BIT.
• Given these circumstances, it becomes imperative to explore the evolution of India's BITs, assess the implications of the 2016 model, and analyze the recent policy shift to gauge its potential impact on FDI.

Evolution of Bilateral Investment Treaties (BITs) in India:

• Origins of BITs in India (1990s): During the mid-1990s, India embarked on a significant economic policy shift by initiating Bilateral Investment Treaties (BITs) to attract foreign direct investment (FDI) and create an enabling environment for economic growth.
  • The primary aim was to demonstrate India's commitment to protecting investments made by individuals and companies from partner countries.
  • The signing of the first BIT between India and the UK in 1994 laid the groundwork for a series of agreements that would play a pivotal role in India's global economic integration.
• Expansion of BITs as Economic Diplomacy (Late 90s to 2000s): BITs in India evolved into strategic tools to mutually encourage and safeguard investments in each other's territories.
  • As India sought to position itself as a premier investment destination, these treaties became instrumental in signaling its dedication to safeguarding the rights and interests of foreign investors.
  • This period witnessed a proliferation of BITs, reflecting India's acknowledgement of the importance of foreign capital in stimulating domestic industries and infrastructure development.
• Emerging Challenges and Disputes (2010s): The significance of BITs became evident in 2010 with the settlement of the first-ever investor treaty claim in India.
  • Subsequent events, including the unfavorable award in the Australia-India BIT dispute (White Industries v Republic of India) in 2011, underscored the complexities and challenges associated with managing disputes arising from these agreements.
  • By 2015, India found itself embroiled in 17 known BIT claims, with the Cairn Energy Plc case being particularly notable.
  • These challenges prompted a critical reassessment of India's approach, leading to the adoption of the 2016 model BIT.
• Adoption of the 2016 Model BIT and Policy Shift: The adoption of the 2016 model BIT signalled a significant shift in India's approach to BITs.
  • It was viewed as a protective measure, resulting in the termination of numerous existing treaties.
  • However, the 2016 model BIT faced criticism for its exclusion of key international law principles, such as 'fair and equitable treatment' and 'most favoured nation.'
• Additionally, it introduced a requirement for investors to exhaust local remedies before resorting to international arbitration, potentially delaying the dispute resolution process.

Issues with the 2016 Model of BIT and their Consequences:

• Protective Nature: The introduction of the 2016 Model BIT marked a significant shift in India's approach to bilateral investment treaties, aiming for greater protection.
  • Positioned as a response to past disputes, it led to the termination of numerous existing treaties, signalling a desire to recalibrate engagement terms with foreign investors.
  • However, concerns arose about its potential impact on India's attractiveness as an investment destination.
• Absence of Key International Law Doctrines: Criticism was directed at the 2016 model BIT for deviating from established international law doctrines.
  • Notably, it lacked principles like "fair and equitable treatment" and "most favoured nation," raising doubts about fairness and protection for foreign investors.
  • This omission complicated the interpretation and enforcement of investment agreements, adding uncertainty for investors.
• Requirement for Exhausting Local Remedies: The 2016 model BIT introduced a requirement for investors to exhaust local remedies before pursuing international arbitration.
  • While this aimed to promote domestic dispute resolution, it created delays and challenges.
  • Investors found navigating local legal systems time-consuming and ineffective, potentially discouraging investment.
• Adverse Impact on FDI and Renegotiation Challenges: The consequences of the 2016 model BIT were evident in declining FDI in India.
  • FDI equity inflows dropped by 24% to $20.48 billion in April-September 2023, reflecting investor concerns.
  • The termination of existing treaties and challenges with the new model hindered India's ability to renegotiate terms, affecting its attractiveness to foreign investors.
  • The Cairn Energy Plc case, resulting in a significant award against India, highlighted the difficulties under the 2016 model BIT.

Government Recommendations and Policy Reforms Following Challenges with the 2016 BIT Model:

• Acknowledgement of Limitations and Policy Adjustment: Recognizing the constraints and hurdles posed by the 2016 Model BIT, the Indian government has signalled a shift towards more adaptable and practical strategies.
  • The announcement during the presentation of the interim Union budget, highlighting the negotiation of Bilateral Investment Treaties with trading partners, signifies a departure from rigid approaches.
  • This acknowledgement underscores the necessity for a nuanced approach that considers evolving international investment dynamics and global economic shifts.
• Parliamentary Standing Committee Proposals: In 2021, the Parliamentary Standing Committee on External Affairs proposed several key recommendations to reevaluate the existing BIT framework.
  • These recommendations aimed to tackle challenges associated with the 2016 model BIT and foster a more investor-friendly environment.
  • One notable recommendation emphasized the importance of timely dispute resolution through pre-arbitration consultations and negotiations.
  • This proactive stance aims to streamline the dispute-resolution process and alleviate pressure on both foreign investors and the Indian legal system.
• Addressing India's Contract Enforcement Ranking: India's low ranking in contract enforcement, currently at 163 out of 190, remains a significant concern.
  • Recognizing the link between an efficient legal framework and foreign investment attractiveness, recommendations from the Parliamentary Standing Committee serve as a call to action.
  • A timely review of treaties and alignment with global best practices becomes crucial to improving the ease of doing business, reinforcing India's commitment to fostering an investment-friendly climate.
• Free Trade Agreement (FTA) with the UK: As part of ongoing policy reforms, India is working towards finalizing a free trade agreement (FTA) with the UK.
  • This strategic endeavour has undergone over 14 rounds of negotiations, with disputes being a major obstacle.
  • The proposed FTA is expected to eliminate the requirement for exhausting local remedies, offering a mechanism for swift dispute resolution through international arbitration.
• This pragmatic approach acknowledges the importance of rapid dispute resolution in nurturing international trade relationships.

Conclusion

Achieving a $5 trillion economy hinges on robust international trade and secure investments in India. A forward-looking strategy for BITs is essential to attract and maintain long-term foreign investments, and the government's recent initiative is a positive move. Nevertheless, adopting a more tailored approach, rather than a one-size-fits-all model, is necessary to facilitate rapid yet sustainable growth in cross-border flows.

Why is it in the News?

Recently, Prime Minister Modi announced that the agriculture scientist M S Swaminathan will be honoured with the Bharat Ratna.

Who was MS Swaminathan?

• Monkomb Sambasivan Swaminathan (MS Swaminathan) was born on August 7, 1925, in Kumbakonam, Madras Presidency (now Tamil Nadu).
• He was an agronomist, agricultural scientist, plant geneticist, administrator, and humanitarian.
• He was known as the ‘father of the Green Revolution’ in India.
• Swaminathan began his career in 1949 researching the genetics of potatoes, wheat, rice, and jute.
  • He played a crucial role in developing high-yielding varieties of paddy that helped ensure India’s low-income farmers produced more yield.
• Also known as the ‘father of economic ecology’ by the United Nations Environment Programme, he worked with agriculture ministers including C Subramaniam and Jagjivan Ram during the 1960s and 70s for the success of the ‘Green Revolution’ in India.
  • An initiative that paved the way for an exponential rise in the productivity of wheat and rice through the adaptation of chemical-biological technology.
• Career: Swaminathan also held administration positions in various agricultural research laboratories.
  • He served as the director general of the Indian Council of Agricultural Research and International Rice Research Institute.
  • He also worked as the principal secretary of the Ministry of Agriculture in 1979.
  • Later, he also served as the President of the International Union of the Conservation of Nature and Natural Resources.
  • In 2004, Swaminathan was appointed as chairman of the National Commission on Farmers.
• Awards and Recognition: He was awarded with the Ramon Magsaysay Award in 1971 and the Albert Einstein World Science Award in 1986.
  • He was awarded the first World Food Prize in 1987, following which he set up the MS Swaminathan Research Foundation in Chennai.
  • Swaminathan has also been conferred with the Padma Shri, Padma Bhushan, and Padma Vibhushan - the three most prestigious awards.
  • Apart from these, he was also given the H K Firodia Award, the Lal Bahadur Shastri National Award, and the Indira Gandhi Prize.
• Swaminathan also contributed to various agricultural and environmental initiatives globally.
  • He was named one of the 20 most influential Asians of the 20th century by Time magazine.
• He also served as a Member of Parliament in the Rajya Sabha from 2007 to 2013.
• MS Swaminathan passed away in September 2023 at the age of 98.
• His decision to focus on ensuring India's food security led him to become a key figure in the Green Revolution of the 1960s, which transformed India from a food-deficient nation to one of the world's leading agricultural producers.
  • His collaboration with Nobel laureate Norman Borlaug introduced high-yielding varieties of wheat and rice, saving millions from starvation.
• Dr Swaminathan's transformative influence on Indian agriculture began to emerge when he championed the introduction of high-yielding crop varieties.
  • His visionary approach was instrumental in pioneering the Green Revolution in India when the country was still grappling with poverty and a lack of social security.
• The impact of Dr. Swaminathan's efforts was nothing short of revolutionary.
• India's food production skyrocketed, and the nation moved from a state of food scarcity to food self-sufficiency.
• His work not only averted potential famines but also elevated the economic conditions of countless farming communities.

How MS Swaminathan Contributed to the Green Revolution?

• MS Swaminathan was greatly influenced by Mahatma Gandhi's teachings of selfless service to the poor and the nation.
• He was very much influenced by the 1943 Bengal famine, which killed up to three million people and realised the need to improve agriculture and food security in India.
• After Swaminathan’s work on rice, he and other scientists worked on doing the same to enhance productivity for the wheat crop.
• India had to get Norin dwarfing genes from Norman Borlaug in Mexico to enhance the productivity and adaptability of its wheat crops.
  • These genes, known for their ability to produce shorter wheat plants, were instrumental in the Green Revolution, as they helped increase yield potential and improve resistance to lodging (falling over) in wheat plants.
  • By acquiring these genes, India aimed to replicate the success of the Green Revolution and address food security challenges by boosting wheat production.
• Norman Borlaug was an American scientist who was working on developing more productive crop varieties.
  • It led to him winning the Nobel Peace Prize in 1970 for his work in developing High Yielding Varieties (HYVs) of wheat.
• Many researchers and scientists were involved in this work but there isn’t any doubt that the basic strategic vision underpinning the Green Revolution in India, introducing a new genetic strain or ‘plant type’ responsive to increased fertiliser and water application came from MS Swaminathan.
• The problem with the traditional wheat and rice varieties was that they were tall and slender.
  • These ‘lodged’ – fell flat on the ground — when they grew and their heads were heavy with well-filled grains produced in response to high fertiliser doses.
  • Through Swaminathan’s research on rice, a reduction in plant height was sought to make them less lodging-prone but this was not easy to do.
• His strategy of developing semi-dwarf wheat varieties using mutagenesis exposing plants to chemicals or radiation to introduce desirable modifications in their DNA did not, however, work.
  • The lowering of plant heights led to a simultaneous reduction in the size of the grain-bearing panicles or earheads.
• The search for an ideal variety led him to contact American scientist Orville Vogel.
  • He played a role in developing a ‘dwarf wheat’ called Gaines, which had a high yield.
  • It contained dwarfing genes from a dwarf wheat called the Norin-10.
• Vogel agreed but was unsure of the wheat’s potential in the Indian climate and thus advised Swaminathan to approach Norman Borlaug, who had incorporated the same dwarfing genes through Vogel’s lines into his spring wheat varieties in Mexico that were better suited for India.
  • Borlaug also later visited India, after Swaminathan proposed so to the Indian Agricultural Research Institute, allowing for the wheat breeding programme to commence.
• In 1963, they began a serious effort to breed dwarf wheat and within five years, this initiative led to what became known as the "Wheat Revolution."
  • Indira Gandhi, the then Prime Minister of India, released a special stamp to mark the achievement.

The Side Effects of the Green Revolution:

• Despite its landmark role in achieving food sufficient in India, the Green Revolution has been criticised on multiple counts, such as:
  • Benefiting the already prosperous farmers as it was introduced in states with higher productivity.
• Swaminathan recognised such issues as early as January 1968, addressing the Indian Science Congress at Varanasi.
• He highlighted concerns about the rapid spread of a few high-yielding crop varieties replacing diverse local ones, leading to potential problems like soil degradation, desertification, excessive pesticide use, and unsustainable groundwater extraction.
  • Unfortunately, many of these concerns have materialised today.
• He also lent his support to farmers as the head of the National Commission on Farmers from 2004-06, he recommended that the Minimum Support Price at which farmers sell their crops to the government should be at least 50 per cent more than the weighted average cost of production.
• For his contributions, Swaminathan was awarded the first World Food Prize Laureate in 1987, for “developing and spearheading the introduction of high-yielding wheat and rice varieties into India during the 1960s when that country faced the prospect of widespread famine.
• Wheat production doubled in just a few years, making the country self-sufficient and saving millions from extreme food deprivation.

Why is it in the News?

In her Interim Budget speech, Finance Minister Nirmala Sitharaman announced a Rs 1 lakh crore fund to provide long-term, low-cost or zero-interest loans for research and development.

Context:

• Finance Minister, Nirmala Sitharaman in her Interim Budget speech, announced a Rs 1 lakh crore fund to provide long-term, low-cost, or zero-interest loans for research and development.
• A new scheme to strengthen deep-tech capabilities in the defence sector that is likely to be followed up later was also announced.
• The separate announcements on the fund and defence deep tech are intricately linked and must be seen together with the government’s other plans for the R&D sector.

What is Deep Tech?

• Deep tech refers to advanced and disruptive technologies, many of which are still under development, that have the potential to trigger transformative change and provide solutions for the future.
• The term is used to describe cutting-edge research in nanotechnology, biotechnology, material sciences, quantum technologies, semiconductors, artificial intelligence, data sciences, robotics, 3D printing, etc.

What are the Advantages of Deep Tech?

• These technologies are expected to play a key role in addressing complex global challenges like climate change, hunger, epidemics, energy access, mobility, physical and digital infrastructure, and cyber security including:
• Economic Implications: Advanced capabilities in deep tech are also likely to enhance productivity drive economic growth create jobs in coming years, and offer a competitive advantage to countries with strong foundations in these areas.
• Opportunities for India: With its large base of relatively high-quality science and engineering manpower and a fairly well-established technology culture, India feels it is well-placed to be one of the frontrunners in these areas.
• Potential Benefits: There is scope to contribute to the development of these technologies, which can ensure early adoption, shares in intellectual property, indigenous know-how, and self-reliance.
  • Major associated benefits in terms of spin-off technologies, trained manpower, entrepreneurship and technology exports can accrue as well.

Initiatives by the GOI to Build a Deep Tech Ecosystem

• Over the past few years, the government has tried to incentivise research in some of these areas by setting up a National Mission on Transformative Mobility and Battery Storage and, more recently, a National Quantum Mission.

National Mission on Transformative Mobility and Battery Storage:

• This mission is aimed at fostering innovation in the mobility and energy storage sectors.
  • The government encourages research and development in electric vehicles, advanced battery technologies, and sustainable mobility solutions through focused platforms and financial incentives.
  • It targets challenges related to environmental sustainability and energy efficiency.

National Quantum Mission:

• Recognizing the transformative potential of quantum technologies, the government has initiated the National Quantum Mission.
  • This effort concentrates on promoting research and development in quantum computing, communication, and sensing.
  • Quantum technologies hold promise for revolutionizing various industries, and the mission aims to position India as a leader in global quantum advancements.

National Deep Tech Startup Policy (NDTSP):

• In addition to mission-oriented strategies, the government has devised a policy framework to create a conducive environment for deep tech companies.
  • The NDTSP addresses specific challenges faced by technology startups and aims to nurture a thriving ecosystem for their growth.
  • Currently awaiting government approval, it embodies a comprehensive approach to cultivating a vibrant deep-tech startup ecosystem in India.
• Objectives and Key Components of NDTSP: The NDTSP is designed to achieve several objectives, including:
  • Competitiveness: Fostering innovation to enable startups to compete globally.
  • Collaboration: Facilitating partnerships between startups and international counterparts.
  • Incentives: Providing appropriate incentives for companies investing in innovation and research.

The policy outlines key components to achieve its goals, such as:

• Funding Opportunities: Creating avenues for long-term funding to support sustained innovation.
• Intellectual Property Rights: Establishing a simplified yet robust intellectual property rights regime.
• Tax Incentives: Offering tax incentives to encourage investment in deep tech startups.
• Regulatory Framework: Developing a conducive regulatory environment to streamline operations.
• Standards and Certifications: Establishing standards and certifications to ensure quality and reliability.
• Talent Nurturing: Focusing on nurturing talent through skill development and educational initiatives.
• Industry-Academia Collaboration: Facilitating linkages between industry, research centres, and educational institutions to promote knowledge exchange.

The Challenge of Funding in Deep Tech Research:

• Challenges in Research Funding Landscape: There's a persistent concern within the scientific community regarding the need for more research funding.
  • India's investment in research lags behind the global average, particularly in comparison to scientifically advanced nations that serve as direct competitors.
• Disparity Between Targets and Actual Spending: For more than two decades, the Indian government has set a target of allocating at least 2% of the GDP for research and development.
  • Despite an increase in absolute spending, the proportion of GDP dedicated to research has dwindled in recent years.
  • Currently, India allocates a mere 0.65% of its national GDP to research and development activities, significantly below the global average of approximately 1.8%.

Government's Initiatives to Address the Funding Challenges:

• Harnessing Public-Private Collaboration: Recent governmental directives reflect a recognition that significant boosts in research and development expenditure may only be attainable through effective partnerships with the private sector.
  • Initiatives are underway to forge synergies among industry, research laboratories, and educational institutions, aimed at bolstering both research activities and the financial resources available to support them.
• Introduction of the National Research Foundation (NRF): The establishment of the National Research Foundation (NRF), operational in recent times, stands as a key component of this strategy.
  • With an objective to tackle the funding hurdle, the NRF is set to procure approximately 70% of its Rs 50,000 crore allocation over the next five years from the private industry.
  • This collaborative model is envisioned to cultivate a more sustainable and resilient ecosystem for deep tech research and development in India.

The 1 Lakh Crore Fund: Anticipations, Enthusiasm, and Doubts:

• Anticipations: The provision of a Rs 1 lakh crore fund for financing research and development is deemed crucial in fortifying the research landscape.
  • This fund holds particular promise for startups and private sector ventures in need of initial funding to kickstart their projects.
  • Anticipations are high that these initiatives will gain momentum with the injection of funds.
• Enthusiasm and Doubts: While the government expresses optimism regarding the potential impact of this substantial fund, there exists scepticism within the scientific community.
  • Past expectations of significant private sector contributions to research have not materialized, leading to uncertainties and reservations among researchers.
  • Scientists argue that there's an imbalance in expectations, with excessive reliance on the private sector without a corresponding increase in government funding.
  • The unpredictability and inadequacy of private-sector financing present significant challenges.
  • Currently, the government appears to heavily rely on the success of its new funding initiatives for research.
• However, the budgetary allocations for science and research departments in the Interim Budget show only nominal increases.

Conclusion

• The recent initiative promises startups and other private sector ventures access to seed funding, offering potential benefits for their projects, yet, to boost R&D expenditure, fostering deeper partnerships with the private sector is essential. Initiatives are underway to enhance collaboration among industry, research laboratories, and educational institutions, aiming to diversify research activities and amplify available funding.

Why is it in the News

The Union government’s moves, which reduce the aggregate financial transfers to States, are weakening cooperative federalism.

Background:

• The fiscal dynamics between the Union government and the states in India have experienced notable shifts since the tenure of the 14th Finance Commission (FC) award period (2015-16).
• Official data indicates a trend of diminishing financial transfers from the Union government to the states.
• Thus, it becomes imperative to analyze the nuances of these financial transfers, delving into the deviations from the recommendations of FCs, their repercussions on states, and the potential ramifications for federal fiscal policies.

An Evaluation of Deviation from Finance Commission Recommendations:

• Recommendation of Substantial Shift in Devolution by 14th FC: Recognising the imperative of empowering the States, the 14th FC recommended a significant increase in the devolution of Union tax revenues.
  • Specifically, the recommendation was to devolve 42% of Union tax revenues to the States, marking a substantial 10 percentage points increase from the preceding 13th FC's suggestion.
  • This ambitious shift was intended to enhance the financial autonomy of the States, aligning with the principles of cooperative federalism.
• Deviation from FC Recommendations by the Union Government: Instead of adhering to the recommended increase, there has been a consistent reduction in financial transfers to the States.
  • This deviation is particularly perplexing given that the 15th FC retained the recommendation of 41%.
  • It excluded the devolution to Jammu and Kashmir (J&K) and Ladakh, which were reorganized as Union Territories.
  • If the shares of J&K and Ladakh are included, the recommended devolution should stand at 42%.
• The Dynamics of Financial Transfers of Tax Revenue: The analysis of tax revenue provides a critical understanding of dynamics of financial transfers between the Union government and the States.
  • The Finance Commissions recommend the States' share based on the net tax revenue of the Union government.
  • It is derived after accounting for various factors such as collection costs, revenue assigned to Union territories, and the impact of cess and surcharge.

Analysis of Tax Revenue Disparities:

• Contrasting Trends in States' Share: A Departure from FC Guidelines: The Fourteenth and Fifteenth Finance Commissions recommended states' shares of 42% and 41%, respectively, of the net tax revenue.
  • However, the actual share of gross tax revenue stood at only 35% in 2015-16, dwindling further to 30% in the 2023-24 Budget Estimate.
  • This discrepancy assumes significance, particularly against the backdrop of a significant surge in the Union government's gross tax revenue, soaring from ?14.6 lakh crore in 2015-16 to ?33.6 lakh crore in 2023-24.
• Disparities in Revenue Growth: The more than two-fold increase in the Union government's gross tax revenue over this period starkly contrasts with the doubling of states' share in Union tax revenue.
  • This discrepancy raises concerns regarding equitable resource distribution.
  • Essentially, the widening gap between the Union government's revenue generation and states' share indicates a disproportionate augmentation in the former's fiscal capacity.
• Declining Grants-in-Aid: The disparity becomes more evident when analyzing grants-in-aid to states, another statutory grant recommended by the Finance Commission.
  • The absolute amount of grants-in-aid declined from ?1.95 lakh crore in 2015-16 to ?1.65 lakh crore in 2023-24.
  • Consequently, the collective share of statutory financial transfers in the Union government's gross tax revenue witnessed a notable decline, plummeting from 48.2% to 35.32%.

Potential Factors Contributing to Decreasing States’ Share:

• Calculation Methodology: One of the primary factors behind the dwindling share of states in gross revenue lies in the calculation method.
  • The net tax revenue, used to determine states' share, excludes revenue collections under cess and surcharge, revenue from Union Territories, and tax administration expenditure.
• Role of Cess and Surcharge: In 2015-16, revenue collection through cess and surcharge accounted for 5.9% (?85,638 crore) of gross tax revenue, increasing to 10.8% (?3.63 lakh crore) by 2023-24.
  • This notable surge underscores the Union government's strategic utilization of cess and surcharge to channel funds for specific sectoral schemes, enhancing its financial autonomy.
• Exclusion of States from Cess and Surcharge Revenues: The revenues generated through these additional levies are not shared with states, highlighting a more centralized control over financial resources by the Union government.
  • This selective exclusion limits resources available for devolution to states, potentially impacting their financial autonomy.

Centralization of Public Expenditure and Its Implications:

• Union Government’s Routes of Financial Transfer: Apart from traditional financial transfers like tax devolution and grants-in-aid, the Union government employs Centrally Sponsored Schemes (CSS) and Central Sector Schemes (CSec Schemes) for direct financial transfers to states.
• Influencing State Priorities Through CSS: Under CSS, the Union government proposes schemes and provides partial funding, compelling states to align their priorities with those proposed by the Union government.
  • The allocation for CSS has substantially increased from ?2.04 lakh crore to ?4.76 lakh crore between 2015-16 and 2023-24, although actual financial transfers to states under CSS remain lower than allocated funds.
• CSec Schemes and Exclusive Control: Fully funded by the Union government, CSec Schemes operate in sectors where the Union government holds exclusive legislative or institutional controls.
  • The significant increase in allocation for CSec Schemes from ?5.21 lakh crore to ?14.68 lakh crore between 2015-16 and 2023-24 underscores the Union government's preference for such schemes.
• Potential Bias in Resource Allocation: The decentralized implementation of CSec Schemes grants the Union government considerable latitude in allocating financial resources, raising concerns about potential bias in resource distribution.
• Challenges for Cooperative Federalism: The downward revision of states' share in Union tax revenue from 42% to 41%, despite recommendations by the 15th Finance Commission, poses challenges to cooperative federalism.
  • Future discussions before the 16th Finance Commission might continue to address such challenges, potentially impacting collaborative federalism.

Conclusion

The evolving financial landscape between the Union government and states in India underscores the imperative for a comprehensive review of the fiscal architecture. Deviations from Finance Commission recommendations, increasing reliance on non-statutory transfers, and potential biases in resource allocation challenge the principles of cooperative federalism. Addressing these issues is essential to ensure equitable distribution of resources and foster collaborative governance between the Union and states, thus reinforcing the foundation of cooperative federalism for inclusive and sustainable development across the nation.

Why is it in the News

The Public Examinations (Prevention of Unfair Means) Bill, 2024, was introduced in Lok Sabha on 5th Feb which aims to prevent “unfair means” in order to “bring greater transparency, fairness and credibility to the public examinations system”.

Context:

• The Centre recently tabled the draft of the Public Examinations (Prevention of Unfair Means) Bill, 2024 in Parliament.
• This legislative proposal aims to prevent unfair means in public examinations and common entrance tests held across the country.
• In a bid to tighten the noose on public examinations, the proposed law provides for punishment, including imprisonment, in instances of malpractice in these tests.
• The Bill serves as a model draft for states to adopt at their discretion, aiding them in preventing criminal elements from disrupting the conduct of their state-level public examinations.
• At present, there is no specific substantive law to deal with unfair means adopted or offenses committed by various entities involved in the conduct of public examinations by the Central Government and its agencies.
• Therefore, it is imperative that elements that exploit vulnerabilities of the examination system are identified and effectively dealt with by a comprehensive Central legislation.

Which Exams are “Public Examinations” as Defined in the Bill?

• Under Section 2(k) of the Bill, a “public examination” is defined as any examination conducted by a “public examination authority” listed in the Schedule of the Bill, or any “such other authority as may be notified by the Central Government”.
• The schedule lists five public examination authorities:
  • (i) the Union Public Service Commission (UPSC), which conducts the Civil Services Examination, Combined Defence Services Examinations, Combined Medical Services Examination, Engineering Services Examination, etc.;
  • (ii) the Staff Selection Commission (SSC), which recruits for Group C (non-technical) and Group B (non-gazetted) jobs in the central government;
  • (iii) the Railway Recruitment Boards (RRBs), which recruit Groups C and D staff in the Indian Railways;
  • (iv) the Institute of Banking Personnel Selection (IBPS), which hires at all levels for nationalized banks and regional rural banks (RRBs); and
  • (v) National Testing Agency (NTA), which conducts the JEE (Main), NEET-UG, UGC-NET, the Common University Entrance Test (CUET), etc.
• Apart from these designated public examination authorities, all “Ministries or Departments of the Central Government and their attached and subordinate offices for recruitment of staff” will also come under the purview of the new law.
• The central government can add new authorities in the schedule through a notification as and when required.

What is Meant by the Use of “Unfair Means” in an Examination?

• Section 3 of the Bill lists at least 15 actions that amount to using unfair means in public examinations “for monetary or wrongful gain”.
• These acts include:
  • Leakage of question paper or answer key or part thereof and colluding in such leakage;
  • Accessing or taking possession of question paper or an Optical Mark Recognition response sheet without authority”;
  • Tampering with answer sheets including Optical Mark Recognition response sheets.
  • Providing solution to one or more questions by any unauthorized person during a public examination, and
  • Directly or indirectly assisting the candidate” in a public examination.
• The section also lists:
  • Tampering with any document necessary for short-listing of candidates or finalizing the merit or rank of a candidate.
  • Tampering with the computer network or a computer resource or a computer system.
  • Creation of a fake website” and “conduct of fake examination, issuance of fake admit cards or offer letters to cheat or for monetary gain” as illegal acts.

What Punishment does the Proposed Law Provide for Violations?

• Section 9 of the Bill states that all offenses shall be cognizable, non-bailable, and non-compoundable — which means that an arrest can be made without a warrant and bail will not be a matter of right; rather, a magistrate will determine whether the accused is fit to be released on bail.
  • A non-compoundable offense is one in which the case cannot be withdrawn by the complainant even when the complainant and the accused have reached a compromise, and a trial must necessarily follow.
• Punishment for “any person or persons resorting to unfair means and offenses” can be three to five years in prison, and a fine up to Rs 10 lakh.
  • If the convict fails to pay the fine, “an additional punishment of imprisonment shall be imposed, as per the provisions of the Bharatiya Nyaya Sanhita, 2023,” Section 10(1) of the Bill says.
• Under Section 10(2), a service provider who is engaged to provide “support of any computer resource or any material, by whatever name it may be called” for the conduct of the examination can be fined up to Rs 1 crore, along with other penalties.
• The Bill provides for harsher punishment in cases of organized paper leaks, where “organized crime” is defined as unlawful activity by a group of persons colluding in a conspiracy “to pursue or promote a shared interest for wrongful gain in respect of a public examination”.
• Section 11(1) says the punishment for organized crime will be “imprisonment for a term not less than five years but which may extend to ten years” and a fine “which shall not be less than one crore rupees”.

Why has the Government Brought this Bill?

• In recent years, there has been a significant rise in cases of question paper leaks during recruitment exams nationwide.
  • An investigation uncovered at least 48 instances of paper leaks across 16 states over the past five years, disrupting the hiring process for government jobs and affecting approximately 1.51 crore applicants for about 1.2 lakh posts.
• The Statement of Objects and Reasons of the Bill highlights that malpractices in public examinations lead to delays and cancellations, adversely affecting millions of youth.
  • Currently, there is no specific substantive law addressing unfair means or offenses committed during these examinations.
  • It is crucial to identify and effectively deal with elements exploiting vulnerabilities in the examination system through comprehensive Central legislation.
• The primary objective of the Bill is to enhance transparency, fairness, and credibility in public examination systems, ensuring that sincere efforts of youth are duly rewarded and their future is secure.
  • It aims to deter individuals, organized groups, or institutions from engaging in unfair practices that undermine the integrity of public examinations for monetary or wrongful gains.
• The Bill explicitly states that candidates, as defined within its scope, will not be subject to its provisions and will continue to be governed by existing administrative provisions of the relevant public examination authority.
• Once enacted, the Bill will also serve as a model draft for states to adopt at their discretion.
  • This provision is expected to assist states in preventing criminal elements from disrupting the conduct of their state-level public examinations.

Why is it in the News?

Finance Minister Nirmala Sitharaman presented her sixth Union Budget for the next financial year (2024-25), which differed from previous budgets as it was an interim budget.

What is the Interim Budget?

• The Interim Budget serves as a transitional financial plan presented by the incumbent government in an election year, bridging the period between the dissolution of the Parliament and the formation of a new government.
• This budgetary measure is necessitated by constitutional requirements outlined in Article 112 of the Indian Constitution, which mandates the submission of an annual financial statement to both Houses of Parliament.
• This statement outlines the anticipated receipts and expenditures of the Government of India for the upcoming fiscal year and requires approval from both Houses.
• However, in an election year, the prospect of a change in government following the polls prevents the presentation of a full-fledged budget by the incumbent administration.
• Consequently, the need arises for an interim budget to address the financial requirements during the transitional period.
• While there is no specific constitutional provision for an interim budget, the government seeks approval from the Lower House for the funds necessary for the transition period (April - July) through the votes on account provision.

Features and Components of Interim Budget:

• During the presentation of an interim budget, the Finance Minister provides an overview of the current state of the Indian economy, including its fiscal status and revised estimated growth for the upcoming year.
• This presentation encompasses details of both planned and non-planned government expenditures and revenues.
• While the government refrains from introducing major schemes that could sway voters or presenting an Economic Survey, it retains the authority to revise tax rates within the framework of the interim budget.
• Similar to the Union budget, the interim budget is presented to both Houses of Parliament on February 1 by the Finance Minister, subjected to debate and voting in the Lok Sabha, and subsequently forwarded for Presidential approval.
• Despite its interim nature, the interim budget remains valid for the entire fiscal year, serving as a crucial transitional arrangement until the presentation of a full-fledged budget by the new government.

What is Vote on Account?

• Article 116 of the Constitution empowers the Lower House to authorize advance grants for estimated expenditures during a portion of a financial year through legislative approval.
  • This mechanism, known as a vote on account, facilitates the continuity of government operations during transitional periods.
• A typical vote on account encompasses the allocation of funds for essential expenses such as salaries, ongoing projects, and other necessary expenditures of the Central government.
• Notably, it does not entail modifications to tax rates.
• Additionally, a standard vote on account remains effective for a period of two months, with the possibility of extension for up to four months as required.

Major Takeaways from the Interim Budget (2024-25) - Part I:

• No Change in Taxation: The Interim Budget maintains existing tax rates without proposing any changes to direct or indirect taxes, including import duties.
• Withdrawal of Outstanding Direct Tax Demands: A significant initiative in the Interim Budget is the proposal to withdraw outstanding direct tax demands, benefiting taxpayers with demands up to Rs. 25,000 for the period up to the financial year 2009-10, and up to Rs. 10,000 for financial years 2010-11 to 2014-15.
  • This measure is expected to benefit approximately one crore taxpayers.
• Tripled Direct Tax Collections: Over the past decade, direct tax collections have more than tripled, accompanied by a substantial increase in the number of return filers.
  • The new tax regime ensures no tax liability for taxpayers with income up to Rs. 7 lakh.
  • Additionally, corporate tax rates for existing domestic companies have been reduced from 30% to 22%, and for certain new manufacturing companies to 15%.
• Improvements in Taxpayer Services: The government's focus on enhancing taxpayer services has led to a transformation in the assessment system and simplified tax return filing processes.
  • The average processing time for returns has been significantly reduced from 93 days to just 10 days.
• GST Compliance Relief: The implementation of GST has streamlined compliance for trade and industry, resulting in a reduction in logistics costs and taxes, and ultimately lowering prices for consumers.
  • The GST base has doubled, with monthly gross GST collections nearly doubling to Rs. 1.66 lakh crore.
• Customs Facilitation Measures: Several steps have been taken in customs to facilitate international trade, including a substantial decrease in import release times at Inland Container Depots, air cargo complexes, and seaports over the last four years.
• White Paper Announcement: The government will release a white paper to provide insights into the period until 2014, aiming to draw lessons from past challenges and policy decisions.

Interim Budget (2024-25)- Part II:

• Increased Capital Expenditure: The Interim Budget allocates an 11.1% increase in capital expenditure for the upcoming year, amounting to Rs. 11,11,111 crore, representing 3.4% of the GDP.
  • This investment aims to build on previous capital expenditure growth and stimulate economic growth and employment.
• Projected Real GDP Growth: India's Real GDP is projected to grow at 7.3% in FY 2023-24, reflecting the economy's resilience and healthy macroeconomic fundamentals despite global challenges.
  • International agencies forecast India's continued growth between 6.1% and 6.7% in 2024-25.
• Robust GST Collection and Revenue Outlook: Strong economic activity has bolstered revenue collections, with gross GST revenues surpassing the Rs. 1.6 lakh crore mark for the seventh time.
  • Total receipts, excluding borrowings, are estimated at Rs. 30.80 lakh crore, reflecting strong growth momentum and formalization in the economy.
• Support for State Governments: The Interim Budget extends support to state governments through schemes such as interest-free loans for capital expenditure and provisions for milestone-linked reforms.
• Fiscal Consolidation and FDI Inflow: Efforts towards fiscal consolidation aim to reduce the fiscal deficit to below 4.5% by 2025-26, with market borrowings estimated to be lower than the previous fiscal year.

Additionally, the government highlights a significant increase in FDI inflows over the past decade.

• Developmental Achievements: The Interim Budget underscores various developmental initiatives, including poverty alleviation programs, support for entrepreneurs through schemes like PM Mudra Yojana, housing initiatives, and promotion of startups through financial assistance.
• Infrastructure Development in Railways and Aviation: The budget outlines plans for major economic railway corridor programs and enhancements in aviation infrastructure, reflecting the government's commitment to improving transportation and connectivity.
• Committee on Population Growth Challenges: A high-powered committee will be formed to address challenges arising from rapid population growth and demographic changes, aligning with the goal of 'Viksit Bharat' (Developed India).

What are Other Announcements and Strategies in the Budget?

• During the presentation of the Interim Budget, Union Finance Minister Smt. Nirmala Sitharaman unveiled plans to increase the capital expenditure outlay for the next year by 11.1 percent to approximately Rs. 11 lakh crore, constituting 3.4 percent of the GDP.
• The Interim Budget introduces a range of announcements and strategies, signaling the trajectory and developmental approach aimed at realizing the vision of a 'Viksit Bharat' (Developed India) by 2047.
• In a series of announcements, Smt. Nirmala Sitharaman underscored the government's commitment to empowering the eastern region and its populace, positioning it as a significant catalyst for India's overall economic growth which includes:

• Boost in the Technology Sector: A corpus of Rs 1 lakh crore will be established through a fifty-year interest-free loan to facilitate long-term financing or refinancing for research and innovation in emerging technology domains.
  • This initiative aims to incentivize the private sector to significantly enhance research and innovation efforts.
• Railway Infrastructure Development: The budget outlines plans for three major economic railway corridor programs focusing on energy, mineral, and cement corridors, port connectivity corridors, and high-traffic density corridors.
  • Additionally, the conversion of forty thousand normal rail bogies to Vande Bharat standards will enhance safety, convenience, and passenger comfort.
• Aviation Sector Expansion: With the number of airports doubling to 149, and five hundred and seventeen new routes serving 1.3 crore passengers, the aviation sector demonstrates significant growth.
  • Indian carriers have proactively placed orders for over 1000 new aircraft, indicating a robust expansion in the aviation industry.
• MGNREGA Allocation: A substantial increase in allocation for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme is proposed in the Interim Budget for 2024-25, with Rs. 86,000 crore allocated compared to Rs. 60,000 crore in the previous fiscal year.
• Subsidy Rationalization: The interim budget aims to reduce the subsidy bill on essential commodities like food, fertilizer, and fuel, with the projected subsidy falling to a five-year low of approximately Rs. 3.8 lakh crore in 2024-25.
  • Notably, the fertilizer subsidy is being reduced with expectations of improvements in the global situation and increased domestic production.
• Demographic Challenges Addressed: Recognizing the challenges posed by rapid population growth and demographic changes, the government announces the formation of a high-powered committee.
  • Tasked with comprehensive consideration and recommendations, this committee aligns with the goal of 'Viksit Bharat' (Developed India) by addressing demographic challenges effectively.

Conclusion

The Interim Budget serves as a transitional financial plan presented by the government during an election year, addressing various sectors such as railways, tourism, healthcare, technology, aviation, green energy, aquaculture, and housing. However, it is important to note that the incoming government will present its comprehensive budget after the newly elected Lok Sabha, delineating the government's financial strategy for the entire fiscal year.

Why is it in the News?

There is a serious underestimation of the risks involved in the internationalisation of bond markets and currencies of emerging economies.

Context:

• In recent times, there have been noticeable changes in the global financial landscape, specifically regarding the inclusion of government bonds from emerging economies in global indices.
• It is crucial to evaluate the actions taken by J.P. Morgan, Bloomberg, and FTSE Russell in incorporating Indian local currency government bonds (LCGBs) into global indices amidst these developments.
• Exploring the reasons behind these moves and understanding the potential advantages and risks associated with such initiatives is essential.

J.P. Morgan's Influence on India's Financial Landscape:

• The inclusion of Indian local currency government bonds (LCGBs) in J.P. Morgan's Government Bond Index-Emerging Markets (GBI-EM) Global index suite in September 2023 marked a significant milestone.
• This step not only underscored India's financial stature but also raised expectations within the Indian financial sector.
• It spurred interest from other major index providers such as Bloomberg-Barclays and FTSE Russell.
• Subsequently, Bloomberg Index Services announced in January 2024 that India's fully accessible route (FAR) bonds would be incorporated into the Bloomberg Emerging Market Local Currency Index, further bolstering this trend.
• All eyes are now on FTSE Russell, highlighting the increasing influence and anticipation of reforms in India's government bond market.

What is the Process of Opening Local Bond Markets?

• Opening local bond markets to foreign investors is a strategic move by emerging economies to bolster their global financial integration.
• In India, this journey began in 2019 and gained momentum by 2020 with the introduction of the fully accessible route (FAR).
• Despite facing challenges like delays due to government policies on capital gains taxes and local settlement, the core policy remained unchanged, showcasing a dedication to promoting global financial inclusivity.

Advantages of Internationalising Bond Markets:

• Reduced Reliance on Domestic Institutions: By integrating local currency government bonds into global indices, emerging economies like India aim to lessen their dependence on domestic financial institutions.
  • This diversified funding base can contribute to financial stability.
• Stability in Funds Tracking Indices: Inclusion in global indices can result in a more stable inflow of funds, as funds tracking indices typically have a longer investment horizon compared to short-term speculative flows.
  • This stability can help mitigate volatility in local financial markets, providing a secure environment for both domestic and foreign investors.
• Lower Cost of Public Borrowing: Increased demand for local currency government bonds from global investors may lead to a decrease in domestic interest rates.
  • As a result, the cost of public borrowing for the government can decline.
• Relief for Local Financial Institutions: Higher participation by foreign investors in local bond markets can alleviate the balance sheets of local financial institutions holding these bonds.
  • This increased liquidity may encourage more lending and private investment.
• Mitigation of "Original Sin": Bond market internationalization helps mitigate the "original sin" problem faced by emerging economies, where they are unable to borrow internationally in their currencies.
  • By issuing bonds in their currencies, these countries shift the exchange rate risk onto international lenders, potentially avoiding widespread private insolvencies during sharp currency declines.

Risks Involved with Internationalising Bond Markets:

• Loss of Control and Heightened Interest Rate Risks: Internationalizing bond markets poses the risk of losing control over long-term interest rates, leaving emerging economies more vulnerable to global interest rate fluctuations.
  • This can negatively impact domestic bond markets and overall economic stability.
• Exchange Rate Volatility and Spillover Effects: Increased participation by foreign investors exposes local currency bond markets to exchange rate volatility.
  • During periods of global risk aversion or liquidity challenges, adverse spillover effects can occur, as seen in events like the Lehman collapse in 2008 and recent shifts in U.S. monetary policy.
• Volatility in Inflows of Local Currency Bonds: Instances such as the rapid exit of investors from local currency assets in Malaysia during 2014-15 and the total withdrawal of foreigners from the bond market in Türkiye since Spring 2018 underscore the unpredictability of capital flows.
  • These sudden stops and exits can lead to large reserve losses and currency declines, highlighting the potential for rapid market fluctuations.

Efforts by the Inter-Departmental Group (IDG) and RBI to Integrate Government Bonds into Global Indices:

• Indian LCGBs Integration into Global Indices: The RBI's journey towards internationalization commenced in October 2022 with an Inter-Departmental Group (IDG) report outlining efforts to integrate Indian local currency government bonds (LCGBs) into global indices.
• Diversification of Funding Channels: The inclusion of Indian LCGBs in global indices aims not only to attract foreign capital but also to diversify funding sources, reducing reliance on domestic institutions and tapping into large international resources.
• Stability Enhancement and Investment Allocation: The IDG report highlights the potential benefits of LCGB inclusion in global indices, such as enhancing the stability of funds tracking these indices.
  • This stability can foster a more predictable investment environment, attracting long-term investors and improving investment allocation within the Indian financial market.
• Rupee Internationalization Beyond Bonds: Integrating LCGBs into global indices is just one aspect of a broader effort to internationalize the Indian rupee, as outlined in the IDG report.
  • Another crucial component involves allowing banking services in the rupee (INR) outside the country.

Moving Forward:

• Striking a Delicate Balance: While the opening of local bond markets presents abundant opportunities, it necessitates careful balancing.
  • Countries must balance the attraction of foreign capital with the management of potential risks.
• Drawing from Past Experiences: The experiences of Malaysia and Türkiye offer valuable lessons, emphasizing proactive management of offshore markets to prevent excessive speculation and maintain currency stability.
  • These lessons underscore the importance of regulatory vigilance, timely interventions, and a balanced approach to fostering internationalization while preserving macroeconomic stability.

Conclusion

The process of opening local bond markets marks a crucial stride for emerging economies aiming for deeper integration into the global financial realm.

Recent developments involving J.P. Morgan, Bloomberg, and FTSE Russell underscore the growing recognition of India's financial market potential.

As India embarks on this journey, it must adeptly navigate complexities, carefully weigh risks and benefits, and adapt to the evolving global financial landscape for enduring success and stability.

Why is it in the News?

Currently, there are 26 deputy CMs across 14 states. The post, not mentioned in the Constitution, is nevertheless a long-standing feature of Indian politics.

Context:

• The tradition of appointing a deputy CM in Indian politics is a well-established practice, typically arising from political negotiations, especially in coalition governments or situations where a single leader lacks undisputed authority within the ruling party or support across key interest groups in the state.
• This trend is gaining prominence, evident in the four out of five states that underwent elections in November—Madhya Pradesh, Rajasthan, Telangana, and Chhattisgarh—all currently having deputy CMs.
• With the exception of Tamil Nadu and Kerala, most major states also feature the position of deputy CM.

What is the Post of Deputy CM?

• Article 163(1) of the Constitution says “There shall be a Council of Ministers with the Chief Minister at the head to aid and advise the Governor in the exercise of his functions”.
• Neither Article 163 nor Article 164 mentions the post of Deputy Chief Minister.
• The post of Deputy CM is understood as being equivalent in rank to that of Cabinet Minister (in the state).
• The Deputy CM enjoys the same pay and perks as a Cabinet Minister.

Across Various States:

• At least 13 other states in the country apart from Bihar currently have Deputy CMs.
• The other states include:
  • Maharashtra, Haryana, UP, Karnataka, Rajasthan, Madhya Pradesh, Chhattisgarh, Telangana, Himachal Pradesh, Meghalaya, Nagaland, Arunachal Pradesh and Andhra Pradesh
• The highest of these is in Andhra Pradesh, with Chief Minister Y S Jagan Mohan Reddy having five Deputy CMs.

A Brief History of the Deputy CM Post:

• Perhaps the first Deputy CM in India was Anugrah Narayan Sinha, who was the most important leader of the Congress in Bihar after the first Chief Minister of the state, Dr Srikrishna Singh (Sinha).
• Deputy CMs were seen in more states, especially after the reduction of Congress’s near-total dominance in national politics after 1967.
• Bihar: Anugrah Narayan Sinha remained Deputy CM until his death in 1957.
  • Karpoori Thakur became the second Deputy CM of Bihar in 1967, in the state’s first non-Congress government led by Mahamaya Prasad Sinha.
• Uttar Pradesh: Ram Prakash Gupta of the Bharatiya Jana Sangh (BJS) became Deputy Chief Minister in the Samyukta Vidhayak Dal (SVD) government that came to power in 1967 with Chaudhary Charan Singh as Chief Minister.
  • This experiment was repeated in the next government under Chief Minister Chandra Bhanu Gupta of the Congress — when Kamalapati Tripathi was sworn in as Deputy CM in February 1969.
  • Both Ram Prakash Gupta and Tripathi went on to become CMs themselves.
• Madhya Pradesh: Virendra Kumar Saklecha of the BJS became Deputy CM in the SVD government led by Govind Narain Singh who came to power in July 1967.
• Haryana: Haryana has had a tradition of Deputy CMs; Chaudhary Chand Ram, a Jat leader from Rohtak, was the first to hold this position in the short-lived government led by Rao Birender Singh.

What are the Powers of the Deputy CM?

• More than the post of deputy chief minister, it is the nature of portfolios allocated to a deputy chief minister that decides how much weight the person carries in the cabinet.
• Chief ministers are often seen to keep most of the important portfolios like home and vigilance with themselves.
  • If it's a coalition government, then senior leaders of the largest coalition partner usually get finance and revenue.
• The chief minister is also the sole authority on the transfer and posting of Class-I officers in the state.
  • The deputy chief minister does not have a say in this matter.
• The deputy chief minister gets the same pay and perks as enjoyed by other cabinet-rank ministers in the government.
  • They, however, enjoy tax-free pay and perks.
• In the matters of administration, the deputy chief minister holds no authority to see the files earmarked for the chief minister.
  • In fact, the deputy chief minister is required to route all files pertaining to the portfolios allocated to her to the chief minister for clearance.
• The deputy chief minister cannot claim to preside over a cabinet meeting on her own or issue directions to other departments than allocated to her by the chief minister.
• The deputy chief minister, like any other minister, needs to seek clearance from the chief minister for expenditure over and above the budget allocated to her departments.
• Yet, deputy chief ministers are politically significant.
• It conveys the political weight the party - in the case of the coalition government - or the leader carries in the ruling dispensation.
  • This is virtually a declaration that the leader who is appointed as deputy chief minister is Number 2 in the government.
• This aside, the number of deputy chief ministers in a government reflects factions in the ruling dispensation that need to be balanced for survival or the government's hitch-free run.
• Even in oath-taking, the Constitution does not provide for a separate oath for the deputy chief minister or deputy minister.

What are the Concerns?

• Lack of constitutional backing and unclear roles can allow the Chief Minister to exploit the position arbitrarily.
• Unlimited appointments of Deputy CMs may lead to excessive appeasement of coalition partners.
• Duplication of roles with Cabinet ministers could create governance and administrative challenges.

What Lies Ahead?

• There's a need to clearly define the roles and responsibilities of Deputy CMs.
• Implementing a limit on the number of Deputy CMs per Chief Minister could streamline the role.
• It's essential to raise political awareness among Indian citizens about this position.

Deputy Prime Ministers:

• India has also seen several Deputy Prime Ministers — a post that was first held by Sardar Vallabhbhai Patel when Jawaharlal Nehru was Prime Minister.
  • Nehru and Patel were the two tallest leaders of the Congress at the time and were also seen as representing two different streams of thinking within the party.
• Among those who held the position subsequently were Morarji Desai, Charan Singh, Chaudhary Devi Lal, and Lal Krishna Advani.
• Devi Lal’s appointment as Deputy PM in VP Singh’s government in 1989 was challenged in court on the ground that “the oath administered to him as such was not…in accordance with the prescription of the Constitution”.
  • In K M Sharma vs Devi Lal and Ors (1990), the Supreme Court upheld Devi Lal’s appointment “in view of the clear statement made by the learned Attorney General that Respondent No. 1 (Devi Lal) is just a Minister like other members of the Council of Ministers, though he has been described as Deputy Prime Minister.
  • The description of him as Deputy Prime Minister does not confer on him any powers of the Prime Minister”.