TOPIC :GS 3 Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.
Oxygen for fiscal federalism
What is the news?
- Sir Ivor Jennings british lawyer viewed that India has a federation with a strong centralizing policy
- India maintained its federal characteristics for a division of power
Disregarding an obligation
- Introducing the new indirect tax regime, the GST law assured States a 14% increase in their annual revenue for five years .
- The Union government has deviated from the statutory promise and has been insisting that States avail themselves of loans.
Example : Kerala is entitled to a GST compensation of 4,041 crore for the financial year 2020-21. The Union government has been disregarding this obligation.
Various Prospects
- The borrowing limit of States, as per the Fiscal Responsibility and Budget Management Act, should not be built into these loans.
- The Union government increased the borrowing ceiling of the States from 3% to 5% for FY 2020- 21.
- The conditions are attached to 1.5% of the 2% of increased ceiling.
- It is the States which have to bear the burden of welfare and relief measures during the pandemic
Clip against Cooperative federalism
- The conditions for expenditure out of the borrowed amount be against of the States and goes against the principle of cooperative federalism.
- The Constitution One Hundred and First Amendment Act, compensation on account of the implementation of GST will be available for a period of five years.
- Compensation beyond five years requires a constitutional amendment.
- The GST Act says it is a law to provide for compensation to the States for the loss of revenue arising on account of the implementation of the GST for a period of five years or for such period as may be prescribed on the recommendation of the GST Council.
Urgent measures
- The present compensation period will end in 2021-22.
- The Union government to provide compensation as there is no constitutional obligation to do so to the States.
- This will create serious financial stress to the States, especially to those which require higher compensation.
Way Forward
- Article 279A deals with the Union government can consider introducing any special rate to raise additional resources during the pandemic any natural calamity or disaster.
- The same act details Goods and Services Tax Council shall make recommendations to the Union and the States on any special rate or rates for a specified period,
- The act also features to raise additional resources during any natural calamity or disaster”.
- Article 279A was inserted through the Constitution One Hundred and First Amendment Act.
- The special rate could be levied for a specified period in order to raise additional resources to meet the challenges posed by COVID-19 with the approval of the GST Council.
- These are some urgent necessary measures that are to be taken for pumping oxygen to fiscal federalism in India
Mains question
Explain how special rate could be levied to the States to enable them to raise more resources during the pandemic ?
Sources : https://www.thehindu.com/opinion/op-ed/oxygen-for-fiscal-federalism/article35595977.ece
PRELIMS PUNCHERS
- Dholavira
The archaeological site of a Harappan-era city, received the UNESCO world heritage site tag on . While Dholavira became the fourth site from Gujarat and 40th from India to make the list, it is the first site of the ancient Indus Valley Civilization (IVC) in India to get the tag.
The site has a fortified citadel, a middle town and a lower town with walls made of sandstone or limestone instead of mud bricks in many other Harappan sites. Unlike graves at other IVC sites, no mortal remains of humans have been discovered at Dholavira. It is believed that traders of Dholavira used to source copper ore from present-day Rajasthan and Oman and UAE and export finished products. It was also a hub of manufacturing jewellery made of shells and semi-precious stones, like agate and used to export timber
- Tunisia
It is officially the Republic of Tunisia, is the northernmost country in Africa. It is a part of the Maghreb region of North Africa, and is bordered by Algeria, Libya , and the Mediterranean Sea to the north. It contains the eastern end of the Atlas Mountains and the northern reaches of the Sahara desert, with much of its remaining territory arable land. Its coastline include the African conjunction of the western and eastern parts of the Mediterranean Basin. It is home to Africa’s northernmost point, Cape Angela and its capital and largest city is Tunis located on its northeastern coast.
It is situated on the Mediterranean coast of Northwest Africa, midway between the Atlantic Ocean and the Nile Delta. It is bordered by Algeria on the west and southwest and Libya on the south east. The Sahel, a broadening coastal plain along Tunisia’s eastern Mediterranean coast, is among the world’s premier areas of olive cultivation. Inland from the Sahel, between the Dorsal and a range of hills south of Gafsa, are the Steppes. Much of the southern region is semi-arid and desert
- The Marshall Plan
It is officially the European Recovery Program, ERP was an American initiative passed in 1948 for foreign aid to Western Europe. The United States transferred over $13 billion equivalent of about $114 billion in 2020 in economic recovery programs to Western European economies after the end of World War II. Replacing an earlier proposal for a Morgenthau Plan, it operated for four years beginning on April 3, 1948.The goals of the United States were to rebuild war-torn regions, remove trade barriers, modernize industry, improve European prosperity, and prevent the spread of communism. The Marshall Plan required a reduction of interstate barriers, a dropping of many regulations, and encouraged an increase in productivity, as well as the adoption of modern business procedures. With counter measures Truman Administration considered the possibility of forming a European-American alliance. In 1948 Great Britain, France, Belgium, the Netherlands and Luxembourg- signed the Brussels Treaty.
- Academic Bank of Credits
All the universities in India will now have an Academic Bank of Credits (ABC) which will hold students’ academic accounts or credits. The concept of ABC was recommended under the New Education Policy (NEP) 2020 which allows students to leave a course and join it after a certain time from where they have left it
The University Grants Commission (UGC) had constituted a committee to develop a detailed scheme along with implementation strategy on an innovative concept of ABC. It is on the pattern of a commercial bank for financial purposes with students as account holders to whom, the ABC shall provide a variety of services including credit verification, credit accumulation, credit transfer/redemption and degree authentication
PRELIMS QUESTIONS
- Consider the following statement with regard to Tunisia
- It is the southernmost country in Africa.
- It bordered by Algeria, Libya , and Aral Mountains
Select the correct statement using code given below.
(a). 1only (b) 2 only
(c).Both (d). None of above
Answer: D
It is officially the Republic of Tunisia, is the northernmost country in Africa. It is a part of the Maghreb region of North Africa, and is bordered by Algeria, Libya , and the Mediterranean Sea to the north. It contains the eastern end of the Atlas Mountains and the northern reaches of the Sahara desert, with much of its remaining territory arable land. Its coastline include the African conjunction of the western and eastern parts of the Mediterranean Basin. It is home to Africa’s northernmost point, Cape Angela and its capital and largest city is Tunis located on its northeastern coast.
It is situated on the Mediterranean coast of Northwest Africa, midway between the Atlantic Ocean and the Nile Delta. It is bordered by Algeria on the west and southwest and Libya on the south east. The Sahel, a broadening coastal plain along Tunisia’s eastern Mediterranean coast, is among the world’s premier areas of olive cultivation. Inland from the Sahel, between the Dorsal and a range of hills south of Gafsa, are the Steppes. Much of the southern region is semi-arid and desert
- Consider the following statement with regard to Dholavira
- Dholavira became the fifth site from Gujarat and 40th from India to make the list
- There is no mortal remains of humans have been discovered at Dholavira
Select the correct statement using code given below.
(a). 1only (b) 2 only
(c).Both (d). None of above
Answer: B
The archaeological site of a Harappan-era city, received the UNESCO world heritage site tag on . While Dholavira became the fourth site from Gujarat and 40th from India to make the list, it is the first site of the ancient Indus Valley Civilization (IVC) in India to get the tag.
The site has a fortified citadel, a middle town and a lower town with walls made of sandstone or limestone instead of mud bricks in many other Harappan sites. Unlike graves at other IVC sites, no mortal remains of humans have been discovered at Dholavira. It is believed that traders of Dholavira used to source copper ore from present-day Rajasthan and Oman and UAE and export finished products. It was also a hub of manufacturing jewellery made of shells and semi-precious stones, like agate and used to export timber