1 Jan 2024 : PIB 

1. Government of India constitutes Sixteenth Finance Commission with Dr. Arvind Panagariya as its Chairman.

Topic: GS2 – Indian Polity – Constitutional Bodies Crucial for UPSC as it involves constitutional finance matters, tax distribution, and grants, assessing economic policies and disaster management.

Context:

The Sixteenth Finance Commission in India, headed by Dr. Arvind Panagariya, aims to recommend tax proceeds distribution, grants to states, and financing for Disaster Management, with a report due by October 31, 2025.

More information on this news:

• The Government of India, approved by the President, has established the Sixteenth Finance Commission in accordance with Article 280(1) of the Constitution.
• Arvind Panagariya, former Vice-Chairman of NITI Aayog and Professor at Columbia University, has been appointed as the Chairman of the Sixteenth Finance Commission.
• Shri Ritvik Ranjanam Pandey has been designated as the Secretary to the Commission.
• The terms of reference for the Sixteenth Finance Commission, as detailed in the notification, include

1. Making recommendations on the distribution of net proceeds of taxes between the Union and States
2. Allocation of shares among the States
3. Principles governing grants-in-aid to States from the Consolidated Fund of India
4. Measures to augment the Consolidated Fund of a State for local bodies.

• The Commission is also tasked with reviewing the financing arrangements for Disaster Management initiatives under the Disaster Management Act, 2005, and providing appropriate recommendations.
• The report of the Sixteenth Finance Commission is expected to be available by October 31, 2025, covering a five-year period starting from April 1, 2026.

Finance Commission

Establishment: It was set up under Article 280 of the Constitution. Independent Body: Established by the Indian Constitution, it assesses the financial needs of the Union and states every five years. Resource Sharing: Recommends the distribution of central taxes and other revenues between the Union and states, ensuring fiscal equity. Vertical Devolution: Determines the share of central taxes to be devolved to states, influencing state budgets and public spending. Horizontal Equity: Promotes balanced development across states by considering factors like population, income, infrastructure needs, and fiscal discipline. Grant Recommendations: Advises on grants-in-aid and other transfers from the Union to states for specific welfare schemes and development projects. Fiscal Reforms: Recommends measures to improve financial management, fiscal discipline, and transparency at both Union and state levels. Advisory Role: The government is not bound by the Commission’s recommendations, but they carry significant weight and influence fiscal policy decisions.

PYQ: How have the recommendations of the 14th Finance Commission of India enabled the States to improve their fiscal position?(UPSC CSE (M) GS-2 2021) (150 words/10m)

Practice Question: Critically evaluate the recent Finance Commission’s recommendations. Do they adequately address the evolving challenges of fiscal federalism in the post-GST era, particularly with regards to vertical devolution and inter-state equity? (250 words/15 m)

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2. Ministry of Cooperation: Year End Review 2023

Topic: GS2 – Governance – Government Policies – Interventions for development in various sectors Crucial for UPSC: Focus on India’s cooperative sector reforms, reflecting economic development, rural empowerment, and diverse governance policies.

Context:

The article outlines the initiatives of India’s Ministry of Cooperation to strengthen the cooperative sector. It highlights 54 key measures, including economic empowerment of primary cooperative societies and diverse roles for PACS in areas like agriculture, healthcare, and energy.

Establishment of Ministry of Cooperation: The Ministry of Cooperation was established on July 6, 2021, under the guidance of Prime Minister, with a vision of “Prosperity through Cooperation.”

Economic Strengthening of Primary Co-operative Societies (PACS):

• Introduction of Model Bye-Laws for PACS: Multipurpose PACS empowered through model bye-laws, enhancing economic viability and expanding into sectors like dairy, fisheries, storage, etc.
• Strengthening PACS through Computerization: Computerization of PACS/LAMPS to enhance efficiency, linking 62,318 functional PACS/LAMPS with NABARD.
• Establishment of Multipurpose PACS/Dairy/Fisheries Cooperative Societies: Scheme approved to set up new cooperative societies in Panchayats/Villages for economic development.

World’s Largest Decentralized Grain Storage Program:

• Approved by the Cabinet on May 31, 2023, to create agricultural infrastructure at PACS level for food security and reduced wastage.

PACS as Common Service Centres (CSCs):

• MoU signed on February 2, 2023, for providing CSC services through PACS, enabling access to over 300 e-services.

Formation of New Farmer Producer Organizations (FPOs) by PACS:

• Allotment of 1100 additional FPOs to NCDC to empower PACS in various economic activities related to agriculture.

PACS as Jan Aushadhi Kendra and Pradhan Mantri Kisan Samridhi Kendra (PMKSK):

• Decision to open Jan Aushadhi Kendras at identified PACS for access to generic medicines.
• Upgrading PACS functioning as fertilizer distribution centers to PMKSK, involving them in drone entrepreneurship.

Micro-ATMs and RuPay Kisan Credit Card:

• Distribution of Micro-ATMs to Dairy and Fisheries cooperative societies to provide doorstep financial services.
• Launch of RuPay-Kisan Credit Card pilot project to expand the reach and capacity of Rural Co-operative Banks.

PACS as Paani Samiti and Convergence of PM-KUSUM Scheme:

• PACS made eligible as ‘Paani Samiti’ for the operation and maintenance of piped water supply schemes.
• Discussions with the Ministry of New and Renewable Energy on leveraging PACS for decentralized solar power plants.

Conclusion:

• The Ministry of Cooperation’s multifaceted initiatives signal a transformative approach towards economic development, rural empowerment, and governance, aligning with Government’s vision for a prosperous and cooperative India.