26 August 2023 : The Hindu Editorial Notes PDF

The Hindu Editorial

26-August-2023

Daily Current Affairs For UPSC ,The Hindu Editorial Summary

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1. Rethink the dynamics of India’s fiscal federalism

Topic: GS2 – federalism

Emergence of Indian Fiscal Federalism:

• The Indian Constitution was crafted as a ‘holding together federation’ that carried a unitary bias, responding to centrifugal forces and fissiparous tendencies during the pre-Independence period.
• Over the course of 73 years, the Constitution has demonstrated remarkable resilience. However, the ever-evolving dynamics of India’s fiscal federalism require a fresh reconsideration.

Paradigm Shifts in Fiscal Landscape:

• The shift from a planned economy to a market-mediated economic system signifies a profound transformation.
• The 73rd and 74th Constitutional Amendments have restructured the federation from a two-tier model to a multi-tier fiscal system.
• Notable changes include the abolition of the Planning Commission, succeeded by NITI Aayog, along with the introduction of the Fiscal Responsibility and Budget Management (FRBM) Act, the Goods and Services (GST) Act, and the extensive application of cess and surcharges. These alterations have induced various effects on India’s federal structure.

Key Issues Raised:

1. Equity-oriented Intergovernmental Transfers:
   • The present intergovernmental transfer system should be fundamentally centered on equity.
   • The trends in India have shown that despite the typical inclination of market-mediated growth benefiting the wealthy class, the outcomes have been strikingly different.
2. Equity as Focus for 16th Finance Commission:
   • A proposed emphasis for the 16th Finance Commission is to place equity at the forefront.
   • A study tracking the convergence trajectory of per capita income (PCI) across 16 major states from 1970-71 through 2020-21 using Economic and Political Weekly Research Foundation (EPWRF) data demonstrates a rising divergence.
   • Conversely, according to Oommen and Parma – HDI might be a potent contender in the horizontal distribution of tax devolution.
3. Revisiting Article 246 and Seventh Schedule:
   • A case emerges for reconsidering Article 246 and the Seventh Schedule of the Constitution.
   • The transition from one-party governance of the post-Independence era to a genuinely multi-party system has fundamentally altered the polity, society, technology, demographic structure, and developmental approach.
   • The changing landscape has also placed added burdens on states due to central legislation such as the Mahatma Gandhi National Rural Employment Guarantee Act 2005, the Right of Children to Free and Compulsory Education Act 2009, and the National Food Security Act 2013.
4. Operationalizing Functional Responsibilities:
   • An imperative to operationalize functional responsibilities within the division of functions and finance.
   • The introduction of Schedule XI and XII, outlining subject matters for panchayat raj institutions and municipalities, lacks operational clarity.
5. Empowering the Third Tier:
   • The recurring challenge of integrating local governments effectively within India’s fiscal federal map remains unresolved.
   • The absence of a uniform financial reporting system and a lack of clear delineation of roles has hindered progress.
6. Reviewing Off-Budget Borrowing:
   • A pressing need to evaluate and rectify the off-budget borrowing practices adopted by both Union and State governments.
   • Off-budget borrowings are those not incorporated into the budget but eventually affect the budget’s repayment liabilities.
   • Both levels of government partake in unscrutinized and unreported borrowings, necessitating transparency, accountability, and public awareness of all financial transactions.

Conclusion and Implications for 16th Finance Commission:

• The intricate and evolving nature of India’s fiscal federalism necessitates comprehensive reevaluation.
• The forthcoming 16th Finance Commission needs to consider equity, functional responsibilities, transparency, and empowerment of local governments as key principles.
• The dynamic fiscal landscape presents a critical juncture for rethinking fiscal federalism, and the 16th Finance Commission plays a pivotal role in shaping the nation’s fiscal framework.

2. BRICS found new purpose with expansion; but contradictions too

Topic: GS2 – International relations

BRICS Summit and Global Interest:

• The 15th BRICS Summit held in Johannesburg garnered substantial global attention.
• Interest in joining BRICS surged after the coalition of emerging economies expressed openness to new members.
• Around 40 countries from the global south showed interest, with 22 formal applications.

Expansion of Membership:

• BRICS decided to expand its membership from 5 to 11 countries.
• Egypt, Iran, Saudi Arabia, United Arab Emirates, Ethiopia, and Argentina are set to join.
• This move signifies BRICS’s evolving importance on the global stage.

BRICS’s Role and Achievements:

• BRICS has emerged as a counter-narrative to the western-led G-7 club on various issues.
• It has addressed climate change, UN reform, and opposed unilateral western sanctions.
• The establishment of the New Development Bank and other mechanisms showcased its practical initiatives.

Economic and Population Representation:

• BRICS countries together hold approximately 30% of global GDP.
• They represent 40% of the world’s population, a more equitable distribution than the G-7.

Challenges and Contradictions:

• Intra-group rivalries like India-China competition and possible tensions from inducting arch rivals (Iran, Saudi Arabia-UAE) pose challenges.
• BRICS members have differing political alignments and relationships with global powers.
• Russia’s actions (e.g., Ukraine) created unease within the group.

Maintaining Autonomy and Unity:

• China’s dominance within BRICS requires checks to preserve members’ strategic autonomy.
• BRICS’s core idea of asserting members’ autonomy must be upheld.
• The promise of shared prosperity and democratic global governance attracts global south nations to BRICS.

Mains question: Discuss the significance of the BRICS grouping in the global geopolitical landscape. Examine the challenges and opportunities presented by its expansion to include new members.

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