01 Apr 2021: UPSC Exam Comprehensive News Analysis

CNA 1st April 2021:- Download PDF Here

TABLE OF CONTENTS

A. GS 1 Related
B. GS 2 Related
POLITY AND GOVERNANCE
1. Plea in SC against uniform civil law on divorce and alimony
C. GS 3 Related
ECONOMY
1. Govt. sharply cuts rates on small savings instruments
2. Food sector incentive gets Cabinet nod
D. GS 4 Related
E. Editorials
INTERNATIONAL RELATIONS
1. Enter the peace process
POLITY
1. Still no recognition of the third tier
F. Prelims Facts
G. Tidbits
1. Pakistan allows import of cotton and sugar from India
2. Govt. retains 4% inflation target for RBI’s rate panel for 2021-26
3. Military farms shut down after 132 years
H. UPSC Prelims Practice Questions
I. UPSC Mains Practice Questions

2. Food sector incentive gets Cabinet nod

Context:

The Union Cabinet has approved a production-linked incentive scheme for the food processing industry with an outlay of ₹10,900 crores.

Read more on Production Linked Incentive Scheme.

Details:

• The scheme would cover ready-to-cook and ready-to-eat foods, processed fruits and vegetables, marine products and mozzarella cheese.
• Organic products, free-range eggs, poultry meat and egg products are also covered.
• The applicants selected for the scheme would be required to invest in plant and machinery in the first two years.
• The implementation of the scheme would facilitate the expansion of processing capacity to generate processed food output of ₹33,494 crores and create employment for nearly 2.5 lakh persons by the year 2026-27.

Objectives:

• To support the creation of global food manufacturing champions.
• To strengthen select Indian brand of food products for global visibility and wider acceptance in the international markets.
• To increase employment opportunities of off-farm jobs.
• Ensuring remunerative prices of farm produce and higher income to farmers.

Category: POLITY

1. Still no recognition of the third tier

Context

• The article critically analyses the recommendations of the Fifteenth Finance Commission with regard to local governments.

Primary task of the Union 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.
• After the passing of the 73rd and 74th Constitutional Amendments, the Finance Commission has allocated resources from the central divisive tax pool to local governments.

Recommendations of the Fifteenth Finance Commission

Higher vertical devolution

• The vertical devolution recommended to local governments is raised remarkably high. From a meagre share of 0.78% of the divisible pool with an absolute sum of ₹10,000 crore by the Eleventh Commission, the Fifteenth Finance Commission raised it to 4.23% with a reasonably estimated amount of ₹4,36,361 crore.
• Compared with the Fourteenth Finance Commission there is a 52% increase in the vertical share.

The 15th Finance Commission has recommended two types of grants – basic and tied

• Basic grants are untied and can be used by the local bodies for location-specific felt needs except for salary or other establishment expenditure.
• The tied grants can be used for the basic services of (a) sanitation and maintenance of open defecation free (ODF) status and (b) supply of drinking water, rainwater harvesting and water recycling.
  • Previously the finance commissions like the 11^th FC have tied specific items of expenditure to local grants and now the Fifteenth Finance Commission has raised this share to 60% and linked them to drinking water, rainwater harvesting, sanitation and other national priorities in the spirit of cooperative federalism.
  • However, it reduced the performance-based grant to just ₹8,000 crore — and that too for building new cities, leaving out the Panchayati Raj Institutions (PRIs) altogether.

Performance-Based Grants (PBGs)

13^th FC

• Performance-Based Grants (PBGs) link performance in pre-determined areas with access to and size of funding, applying clear and transparent allocation formulas.
• The performance-based grants which were introduced by the Thirteenth Finance Commission earmarked 35% of local grants specifying six conditions for panchayats and nine for urban local governments and covered a wide range of reforms: from the establishment of an independent ombudsman to notifying standards for service sectors such as drinking water and solid waste management.

14^th FC

• The Fourteenth Finance Commission, however, cut the performance grant share to 10% for gram panchayats and 20% to municipalities with the conditionality that all local governments will have to show improvements in own source revenue.
• Municipalities are additionally required to publish service level benchmarks for basic services.

15th FC

• An important recommendation of the Fifteenth Finance Commission is the entry-level criterion to avail the union local grant (except health grant) by local governments which is performance-linked.
• For panchayats, the condition is online submission of annual accounts for the previous year and audited accounts for the year before.
• For urban local governments, two more conditions are specified: after 2021-22, fixation of the minimum floor for property tax rates by the relevant State followed by consistent improvement in the collection of property taxes in tandem with the State’s own Gross State Domestic Product.

Entry-level criteria a significant movie

• The Eleventh to the Fourteenth finance commissions had recommended measures to standardize the accounting system and update the auditing of accounts, but there was limited progress.
• Therefore, the entry-level criteria of the Fifteenth Finance Commission are timely.

Will it bring substantial change in the system?

• The Eleventh Finance Commission published the fiscal data of all tiers of panchayats and municipalities in its report. But the data proved defective.
• The Twelfth Finance Commission did not publish any local fiscal data.
• The Thirteenth Finance Commission published data online and some researchers did use them.
• Unlike the previous commissions, the Fourteenth Finance Commission conducted a sample survey covering 15% gram panchayats, 30% block panchayats and all the district panchayats besides 30% municipalities, presumably to ensure quality in canvassing data. The results too were not published.

Concerns

• The Fifteenth Finance Commission nor the earlier finance commissions have examined how and where the financial reporting system has failed.
  • Without reliable data ensuring good governance would not be successful.
• The Fifteenth Finance Commission claims that it seeks to achieve the “desirable objective of evenly balancing the union and the states”.
  • Recognition is not awarded to the third tier in this balancing act.
• Although the Fifteenth Finance Commission outlines nine guiding principles as the basis of its recommendation to local governments, there is no integrated approach (in contrast to the recommendations of the Thirteenth Finance Commission). It is forgotten that public finance is an integrated whole.
  • The Fifteenth Finance Commission though stresses the need to implement the equalisation principle, it is virtually silent when it comes to the local governments.
• Efficiency Compromised: In the criteria used by the Fifteenth Finance Commission for determining the distribution of grants to States for local governments, it employed population (2011 Census) 90% and area 10% weightage, the same criteria followed by the Fourteenth Finance Commission.
  • While this ensures continuity, equity and efficiency criteria are sidelined.

Conclusion

• If decentralization is meant to empower local people, the primary task is to fiscally empower local governments to deliver territorial equity.

2. Govt. retains 4% inflation target for RBI’s rate panel for 2021-26

What’s in News?

The Centre has decided to retain the inflation target of 4%, with a tolerance band of +/- 2 percentage points for the Monetary Policy Committee of the RBI for the coming five years.

• The inflation target has been kept at the same level as it was for the previous five years.
• The decision puts to rest speculation about the government considering a looser inflation target to enable a more growth-oriented focus in monetary policy.

3. Military farms shut down after 132 years

What’s in News?

Military farms have been closed after 132 years of service.

• In 2012, the Quarter Master General branch had recommended the closure of military farms.
• In 2016, the Lt. Gen. D.B. Shekatkar (retd.) committee, appointed to recommend measures to enhance combat capability and rebalance defence expenditure of the armed forces, had recommended the same.

Military Farms:

• The military farms were set up with the sole requirement of supplying hygienic cow milk to troops in garrisons across British India.
• The first military farm was raised in 1889 at Allahabad.
• Post-independence, they flourished with 30,000 heads of cattle in 130 farms all over India.
• For more than a century, the farms supplied 3.5 crore litres of milk and 25,000 tonnes of hay yearly.
• It is credited with pioneering the technique of artificial insemination of cattle and the introduction of organised dairying in India, providing yeoman service during the 1971 war, supplying milk at the Western and Eastern war fronts as well as during the Kargil operations to the Northern Command.

Q1. Consider the following statements:

Q2. Which of the following countries border Niger?

Q3. Consider the following statements with respect to Most Favored Nation (MFN) status:

Q4. Heart of Asia-Istanbul Process was established to:

Read the previous CNA here.

CNA 1st April 2021:- Download PDF Here