10 Jan 2023: UPSC Exam Comprehensive News Analysis

E. Editorials

Category: GOVERNANCE

1. A step towards fighting corruption

Syllabus: Important aspects of governance, transparency, and accountability; Role of Civil Services in Democracy.

Mains: Corruption in Public services.

Context: Supreme Court’s judgment of December 2022 on the matter of corruption.

Background Details:

• In the Neeraj Dutta v. State (Govt. of NCT of Delhi) judgment (December 2022), the Constitution bench of the Supreme Court (SC) condemned corruption among public servants. It also lowered the amount of evidence required to convict persons charged with corruption.
• The judgment was appreciated by many, who desire probity in public administration and demand deterrent penalties for criminal activities. 
• The SC in several decisions of the past have given equally strong decisions, but still, the extent of corruption in public life stands undiminished.

Details on the ruling of the case:

• The apex court has debunked the myth that absolute proof of guilt alone would be required to convict an offender. 
• The court has further ruled that in case of prosecution witnesses turning hostile, a conviction would be ordered if all the circumstantial evidence marshalled by the prosecution and produced before the court points to the guilt of the accused. This step would help in ensuring integrity in public services, specifically in the ‘superior’ services like the Indian Administrative Service and Indian Police Service.
• There are two crucial aspects to getting rid of corruption in bureaucracy: 
  • The severity of the law and its efficient application
  • The strength of public opinion, which is required to carry forward the campaign for a clean public life
• There is always a demand for strict penalties like the death sentence. It should be noted that deterrence also works only up to a point. Moreover, it is a disregarded fact that the stricter the penalties, the higher will be the quantum of proof required by the courts. This reality probably convinced the SC to lower the bar for the quantum of evidence required to convict persons charged with corruption.
• The Court has also set the standard of ‘preponderance of probability’ in effect. It should be noted that it is usually not acceptable in criminal trials. The requirement of only conclusive proof (proof that does not leave an iota of doubt) has now been diluted. This implies that infirmities like the non-availability of the complainant (due to death or non-traceability) would not be absolutely rejected.
• This will also apply to cases where prosecution witnesses turn hostile, either due to inducement or intimidation.

Concerns associated with corruption:

• The nexus between offender and victim has become a part of the ethos. In several instances, general citizens themselves are willing to offer bribes to the public servant.
• It is also argued that the misdeeds of public servants are partly attributable to political corruption. In many states, acute unemployment has also resulted in the involvement of the applicant, the public servant, and politicians in illegal rackets that demand bribes in return for job positions.
• Moreover, in certain places, the fundamental rights of the citizens and services like construction and registration of property cannot be availed without bribing the administrative and political hierarchy.

Also read: Accountability of Public Servants

Way Ahead:

There is a need for enlightened leaders who are not scared of powerful elements in bureaucracy and politics.

Also read: Corruption Perceptions Index 2021

Nut Graf: The issue of corruption in Indian bureaucracy and politics is still persisting. The Supreme Court’s recent decision to lower the quantum of evidence in fixing charges of corruption is praiseworthy. However, there is a need for more such efforts from all stakeholders including the general public and the leaders.

Category: INDIAN POLITY AND GOVERNANCE

1. Municipal corporations in India are gasping for funds

Syllabus: Local self-governance.

Mains: Tax Collection by local bodies.

Prelims: Report on Municipal Finances.

Context: The Report on municipal finances was released by the Reserve Bank of India.

Details:

• It was found in the Reserve Bank of India’s (RBI) analysis of the finances of urban local bodies that the combined budget of all the municipal corporations in the country is much smaller than that of the Central and State governments. 
• The RBI’s “Report on municipal finances” revealed the increasing dependence of municipal bodies on fund transfers from the State and the Centre, reflecting its limited revenue-earning capacity. 
• Around 70% of the municipal bodies’ funds are spent on salaries, pensions, and administrative expenses with the rest left for capital expenditure.

Also read: Municipalities (Article 243P- 243ZG)

Inadequate Taxes:

• The taxes earned by municipal corporations in India are extremely inadequate. 
• The overall tax revenue of municipal corporations consisting of property tax, water tax, toll tax, and other local taxes, formed 31-34% of the total revenue in the FY18-FY20 period, which is very low in comparison to other countries.
• Moreover, the overall share of own revenue (both tax and non-tax) in the total revenue of urban local bodies in India has significantly declined (during FY18-FY20). However, the government transfers increased.
• The RBI studied the budgetary data of 201 municipal corporations in India. It was found that:
  • In the year 2017-18, the cumulative budget of Municipal Corporations was estimated to be 0.61% of the GDP. 
  • As per the budget estimates for 2019-20, it improved marginally to 0.72% of the GDP. 
  • It was noted that this share is much smaller than in various countries like Brazil (7%) and South Africa (6%).

Figure: Share of revenue of Urban Local Bodies

State-wise distribution of taxes:

• The study observed large variations in the state-wise analysis of the municipal corporations’ own tax revenue. For instance, 
  • In 2017-18, the own tax revenue of municipal corporations as a share of the State’s GDP was above the 1% mark in Chandigarh, Delhi, Chhattisgarh, Gujarat, and  Maharashtra. 
  • However, it was just 0.1% or less in Assam, Goa, Karnataka, and Sikkim. 

Figure: Municipal Corporations’ own tax revenue

Property tax-collection:

• Property taxes constituted more than 40% of the municipal corporations’ own tax revenue in the year 2017-18. 
• Even though property tax is dominant in the overall share, it is much lower in India when compared to OECD countries. This is majorly because of undervaluation and poor administration.
• The low number of property taxpayers is another issue plaguing the local bodies’ tax collection. For instance, out of the total 13.27 lakh assessees in Chennai, only 6.94 lakhs paid the property tax. 
• Furthermore, the lack of tax collectors has also impacted the revenues.
• Notably many major cities of India managed to increase their property taxes in FY18, FY19, and FY20, on the backdrop of increasing urbanization rates and rising population density.

Figure: Percentage of the total expenditure of Municipal Corporations in India in 2017-18

Also read: Taxation in India – Direct taxes & Indirect Taxes, Features of Taxation System

Nut Graf: The Reserve Bank of India’s report suggests that the majority of taxes collected by municipal corporations in India are spent on revenue expenditure, leaving little room for capital expenditure. The need of the hour is to review the tax collection of the local bodies and increase their share on par with countries like Brazil and South Africa.