UPSC Daily Current Affairs: 6 September 2024 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly PDF Download

GS2/Governance

Vertical Fiscal Imbalance

Source: The Hindu

Why in news?

The financial dynamics between the Union government and the States in India are characterized by an asymmetrical relationship, which is a typical aspect of federal systems. States handle 61% of the revenue expenditure while they manage to collect only 38% of the revenue receipts, as noted by the 15th Finance Commission. This disparity leads to a significant dependence of States on transfers from the Union government to fulfill their financial obligations, resulting in a condition termed Vertical Fiscal Imbalance (VFI). This situation indicates that the decentralization of expenditure responsibilities surpasses the States' ability to generate revenue.

About

• The Finance Commissions propose the allocation of States’ share in the net tax revenue collected by the Union government.
• Article 280 mandates the President to form a Finance Commission (FC) every five years or sooner if necessary.
• According to Article 280(3)(a), the FC is responsible for recommending how to divide the net tax proceeds between the Union and the States.
• The discrepancy between gross and net tax revenue includes costs of collection, tax revenue allocated to Union territories, as well as cesses and surcharges.

Composition of Transfers

• The central taxes allocated to States are considered untied funds, allowing States to utilize them at their discretion.
• Over the years, the tax transferred to States has comprised more than 80% of total central transfers.
• Additionally, the Union government provides grants to States and local authorities for specific uses, which account for 12% to 19% of total transfers.

Tax Devolution to States

• The 14th Finance Commission significantly raised the tax devolution from the centre to States from 32% to 42%.
• In the recommendations of the 15th Finance Commission, the share of States in central taxes for the 2021-26 period is set at 41%, with a 1% adjustment made for the new Union territories of J&K and Ladakh.
• The Commission suggested that tax devolution should be the main source of funding transfers to States, enhancing the flow of unconditional resources and allowing greater flexibility in spending.

Formula Used to Distribute Funds Among States

• Population/Demography: This acts as a gauge for a State's expenditure needs.
• Demographic Performance: States are rewarded for controlling population growth, assessed through indicators like fertility rates, infant mortality rates, and sex ratios.
• Income Distance: This measures the difference between a State’s per capita income and the average per capita income of all States; poorer States may receive a larger share to ensure equity.
• Area: Larger States incur higher administrative costs, so area is considered a criterion for fund distribution.
• Forest & Ecology: States with extensive forest cover may receive a higher share due to the economic opportunities they forego.

Grant in Aid

• In addition to tax devolution, grants-in-aid serve as another transfer source from the centre to the States.
• According to the 15th Finance Commission, grants will be allocated to States for various purposes including:
• Revenue Deficit Grants
• Sector-specific Grants: These are provided for eight sectors such as health, school education, and higher education, with some being performance-linked.
• State-specific Grants: Targeted for social needs, governance, infrastructure, and sanitation.
• Grants to Local Bodies
• Disaster Risk Management

Constitutional Division of Financial Duties

• In India, the Union and State governments have specific roles in revenue collection and expenditure.
• The Union government collects taxes like Personal Income Tax and Corporation Tax for efficient tax collection.
• Conversely, local governments are better suited for delivering public goods and services to citizens efficiently.

Rising VFI in India

• India's Vertical Fiscal Imbalance is larger and on the rise compared to other federal systems, as per the 15th Finance Commission.
• Crises such as the COVID-19 pandemic have exacerbated the gap between revenue generation and expenditure responsibilities of State governments.

The Role of the Finance Commission

• The Finance Commission addresses VFI by determining tax distribution collected by the Union government to the States.
• This is based on the "Net Proceeds," which comprise the Union’s Gross Tax Revenue minus surcharges, cesses, and collection costs.
• The main challenge lies in the allocation of these proceeds to the States.
• The Finance Commission also recommends grants under Article 275 for financially needy States, although these are often temporary and purpose-specific.
• Additionally, the Union government provides tied transfers through centrally sponsored and central sector schemes, which include conditions, under Article 282.

Unconditional Transfers: A Key Solution

• Among various transfers, only tax devolution from net proceeds is unconditional, which is vital for addressing the fiscal needs of the States without added burdens or constraints.

Raising Tax Devolution to Address VFI

• Numerous States have requested the 16th Finance Commission to increase the share of tax devolution from net proceeds to 50%.
• This request arises from the exclusion of significant amounts of cesses and surcharges from net proceeds, which diminishes the total funds available for devolution.
• Analysts support this demand, indicating that States' actual expenditures align with their borrowing limits.
• To eliminate VFI, the share of net proceeds allocated to States should increase to around 49%, providing them with more untied resources to better address local needs, improve spending efficiency, and promote cooperative fiscal federalism.

GS2/Polity

Law Commission’s Role, Members & Recommendations

Source: Indian Express

Why in news?

The Union government has announced the establishment of the 23rd Law Commission of India, effective from September 1. The chairperson and members of this new commission are yet to be appointed by the Appointments Committee of Cabinet, which is led by the Prime Minister.

About Law Commission: Historical Context, Functions, Formation, Structure, Reports

• About Law Commission of India:
  • The Law Commission is a non-statutory body formed by the Union government.
  • It is tasked with ensuring that laws are fair and just, and facilitating their proper implementation.
  • This commission is often described as an ad hoc body, created for a specific purpose.
  • It serves as an advisory body to the Ministry of Law and Justice.
  • While it is not defined in the Indian Constitution, its establishment aligns with Article 39A.

History of Law Commission in India:

• The first Law Commission was set up in 1834 during British rule, established via the Charter Act of 1833 and led by Lord Macaulay.
• Post-independence, the first Law Commission was constituted in 1955, chaired by M.C. Setalvad.
• Since independence, there have been 22 Law Commissions, with the current (22nd) chaired by Justice Ritu Raj Awasthi.

How is the Law Commission Created?

• A new Law Commission is formed when the Union government passes a resolution after the previous commission's term ends.
• Following the resolution, the President's assent is required, after which the government selects the chairperson.

Composition of Law Commission:

• The Commission is typically led by a Chairperson, usually a retired Supreme Court judge.
• It includes legal experts, academicians, and senior advocates.
• Members serve a term of three years, focusing on various areas of legal reform during that period.

Functions & Role:

• The primary function of the Law Commission is to recommend reforms based on thorough research and public consultations.
• Key responsibilities include:
  • Reviewing existing laws to identify those that are outdated or irrelevant, recommending repeal or amendment.
  • Proposing new laws to address emerging legal challenges or gaps in the current legal framework.
  • Simplifying legal processes to make laws more understandable and accessible to the public.
  • Studying judicial reforms to suggest improvements in efficiency, reduce delays, and enhance justice delivery.

Important Recommendations of the Commission:

• The Law Commission has addressed various subjects based on references from the Department of Legal Affairs, Supreme Court, and High Courts, submitting a total of 277 reports.
• It has provided significant insights and valuable critiques of existing laws in India.
• Noteworthy recommendations include:
  • The 170th report on electoral reforms suggested conducting simultaneous Lok Sabha and State Assembly elections to improve governance and stability.
  • In its 262nd report, the Commission recommended abolishing the death penalty for all offenses except those related to terrorism and waging war against the state.
  • Recently, the Commission has dealt with sensitive topics such as hate speech, uniform civil code, and data protection laws.
  • Its reports have sparked significant public debate and contributed to the creation of new legislation.

GS3/Environment

What is Loss and Damage Fund (LDF)?

Why in News?

Following the devastating landslides that recently hit Kerala's Wayanad district, an important discussion has arisen on the possibility of subnational entities seeking compensation via the UNFCCC's Loss and Damage Fund (LDF). Although this demand is reasonable, it is not as simple as it seems to obtain climate funding.

Establishment:

• The Loss and Damage Fund was established at the 2022 United Nations Framework Convention on Climate Change (UNFCCC) Conference (COP27) in Egypt.

• Loss and Damage refers to the negative effects caused by climate change, leading to various impacts, including:
  • Loss of human lives.
  • Damage to infrastructure.
  • Loss of property and agricultural produce.
  • Deterioration of ecosystems.
• These impacts encompass a wide range of economic and non-economic losses, extending beyond mere financial implications.

Objective of the LDF:

• The LDF aims to provide financial assistance to regions experiencing both economic and non-economic losses due to climate change.
• This includes support for extreme weather events and slow-onset processes like rising sea levels.
• Financial support will be offered in the form of grants and concessional financing available to eligible countries.

Administration of the LDF:

• The World Bank (WB) will oversee the fund's coordination, ensuring efficient resource allocation and aiding nations in recovery from natural disasters.
• A Governing Board will decide how the fund's resources are disbursed, with the WB serving as the interim trustee.
• Currently, the Board is working on mechanisms to facilitate access to the fund’s resources, including direct access, small grants, and rapid disbursement options.

Significance of the LDF:

• The establishment of the LDF marks a crucial step towards implementing financial instruments aimed at addressing the consequences of climate change and promoting recovery from climate-induced disasters.

Concerns related to LDF:

• Despite its intentions, there are concerns that climate funds can be slow to access, particularly for local communities at the sub-national level.
• The LDF is expected to encounter similar challenges.
• India has incurred over $56 billion in damages from weather-related disasters between 2019 and 2023.
• India's National Climate Action Policy and budgets prioritize mitigation efforts over adaptation, leading to limited participation in Loss and Damage discussions at COP meetings.
• Considering the vulnerability of certain regions in India to climate change, there is a need for India to advocate for more decentralized funding allocation from the LDF during international climate negotiations.

Need for More Decentralised Funding from the LDF:

• Adaptation and loss and damage needs are felt more acutely at the ground level, particularly by state governments.
• For instance, in Kerala, the state government bore the majority of the financial burden for disaster recovery.
• A significant example of this is the Rebuild Kerala Development Programme, launched after the floods in August 2018.
• The World Bank's provision of loans for this program underscores the importance of international climate finance in post-disaster recovery efforts.

Challenges and Way Ahead Towards Utilising LDF:

• There is currently an absence of a systematic approach to thoroughly evaluate losses from disasters, which means significant loss and damage needs may remain unassessed, hindering India's ability to access the LDF in the future.
• Moving forward, India requires a clear legal and policy framework that prioritizes locally led adaptation and offers a more precise method for assessing loss and damage.

GS2/International Relations

PM Narendra Modi’s visit to Singapore

Source: The Hindu

Why in news?

Prime Minister Modi visited Singapore during the second leg of a two-nation trip to South-East Asia, having travelled to Brunei Darussalam in the first leg.

India – Singapore relation

Key highlights of the visit

• In 1819, Sir Stamford Raffles established a trading station in Singapore, which became a crown colony governed from Kolkata until 1867.
• The colonial history has shaped many institutions and practices, including the use of English and the presence of a significant Indian community.
• India was among the first countries to recognize Singapore as an independent nation in 1965.
• During PM Modi's 2015 visit to Singapore, the relationship was upgraded to a Strategic Partnership.
• The inaugural India-Singapore Ministerial Roundtable (ISMR) took place in September 2022 in New Delhi.
• The second ISMR occurred in Singapore in August 2024, focusing on the progress of the Strategic Partnership under various pillars.
• Two new pillars—Advanced Manufacturing and Connectivity—were added to enhance bilateral cooperation.

Trade and economic cooperation

• Singapore is recognized as India’s largest trade partner within the ASEAN region.
• The nation is a major source of Foreign Direct Investment (FDI) and plays a significant role in External Commercial Borrowings and Foreign Portfolio Investment.
• Bilateral trade surged from USD 6.7 billion in FY 2004-05 to USD 35.6 billion in 2023-24 after the conclusion of the Comprehensive Economic Cooperation Agreement (CECA).
• As of 2023-24, Singapore ranks as India’s 6th largest trade partner, accounting for 3.2% of India’s total trade.
• In FY 2023-24, India imported goods worth USD 21.2 billion from Singapore and exported goods totaling USD 14.4 billion.

Investments

• Singapore emerged as the largest source of FDI into India in FY 2023-24, with equity inflows amounting to USD 11.774 billion.
• From April 2000 to March 2024, cumulative FDI inflows from Singapore to India reached USD 159.9 billion, making up 24% of total FDI into India.
• Indian investments in Singapore totaled USD 4.8 billion in FY 2023-24.

Fintech cooperation

• Commercial and technical agreements have been established to facilitate the acceptance of the RuPay card in Singapore.
• UPI-Paynow Linkage represents a significant development in cross-border Fintech collaboration, marking Singapore as the first country to implement this Person-to-Person (P2P) payment system with India.

S&T Cooperation

• Over the past decade, 17 satellites from Singapore have been launched from Indian territory.
• Singapore co-hosted the inaugural ASEAN – India Women Scientists Conclave in April 2024.
• An e-workshop focused on digital health and medical technologies took place between India and Singapore in July 2024.

Multilateral cooperation

• Singapore joined the International Solar Alliance in June 2023 and the Global Bio-fuel Alliance in September 2023.
• During the 2021-24 period, Singapore served as the ASEAN Country Coordinator for India, enhancing India-ASEAN relations to a Comprehensive Strategic Partnership.
• Both nations participate in multilateral organizations such as IORA, NAM, and the Commonwealth.

Indian Community

• Ethnic Indians make up approximately 9.1%, or about 3.5 lakh individuals, of Singapore’s total population of 3.9 million.
• Tamil is one of the four official languages in Singapore, with Hindi, Gujarati, Urdu, Bengali, and Punjabi also taught in schools.

Bilateral ties elevated to a comprehensive strategic partnership

• During the visit, India and Singapore upgraded their bilateral relationship to a “comprehensive strategic partnership.”
• Four Memorandums of Understanding (MoUs) were signed covering areas such as:
  • Cooperation in Digital Technologies
  • India-Singapore Semiconductor Ecosystem Partnership
  • Cooperation in Health and Medicine
  • Educational Cooperation and Skills Development
• Leaders from both nations emphasized the need to enhance trade and investment flows.
• PM Modi noted that Singapore, with an investment of approximately USD 160 billion in India, is a vital economic partner.
• The outcomes of the second ISMR held in August 2024 were discussed, emphasizing six pillars of cooperation: advanced manufacturing, connectivity, digitalization, healthcare & medicine, skills development, and sustainability.

Boost to cultural connectivity

• Leaders addressed the upcoming celebration of the 60th anniversary of bilateral relations in 2025.
• PM Modi announced the establishment of India’s first Thiruvalluvar Cultural Centre in Singapore.

GS3/Science and Technology

Valley Fever

Source: India Today

Why in News?

Valley fever, a fungal disease endemic to the western United States, is seeing a significant rise in cases across California, prompting concerns among health officials and researchers.

About Valley Fever

Valley Fever, also known as coccidioidomycosis, is an illness caused by a fungus called Coccidioides.

• This fungus is found in the soil in specific regions, particularly in:
  • the southwestern United States
  • south-central Washington
  • certain areas of Mexico
  • parts of Central and South America
• Transmission:
  • Both people and animals can contract Valley Fever by inhaling spores from dust or disturbed soil in areas where the fungus exists.
  • Most individuals who breathe in these spores do not become ill, but some may experience mild to severe symptoms.
  • Valley Fever is not usually contagious, meaning it typically does not spread from person to person or from animals to humans, with a few rare exceptions like organ transplants or contact with infected wounds.
• Symptoms:
  • In many cases, Valley Fever causes no symptoms or the symptoms resolve on their own.
  • However, in rare instances, individuals may face ongoing lung problems or serious health issues.
  • About 1% of those who show symptoms may go on to develop severe illness. Serious complications can include:
    • Pneumonia
    • Fluid or pus buildup in the lungs, known as pleural effusion or empyema
    • Acute respiratory distress syndrome, abbreviated as ARDS
    • Ruptured fluid or air pockets in the lungs, referred to as hydropneumothorax
    • Spread of the disease beyond the lungs, termed disseminated coccidioidomycosis. If it reaches the brain, it can lead to a severe condition called coccidioidal meningitis.
• Treatment:
  • Mild cases of Valley Fever often improve without treatment.
  • In more severe cases, healthcare providers may prescribe antifungal medications to treat the infection.

GS2/International Relations

Interpol

Source:The Hindu

Why in News?

The Central Bureau of Investigation (CBI) chief recently announced that Interpol had issued a record 100 Red Notices last year, the highest ever, on India's request.

About Interpol:

• INTERPOL, short for the International Criminal Police Organization, is a global organization that helps police forces collaborate on issues like terrorism, trafficking, and other crimes across borders.
• It is the largest international police organization, with 195 member countries.
• The main office is located in Lyon, France.
• Official Languages: The languages used are Arabic, English, French, and Spanish.
• Status: INTERPOL is not part of the United Nations; it operates independently as its own organization.
• It is often the first contact point for countries involved in international investigations, but it does not directly investigate crimes.

Governance

• The General Assembly is made up of one representative from each member country and is the main decision-making body.
• Day-to-day operations are run by a General Secretariat, led by a Secretary General who is chosen for a five-year term by the General Assembly.
• An Executive Committee of 13 members, each from different regions, is also appointed during the General Assembly's annual meeting.
• This committee ensures that the General Assembly's decisions are carried out and oversees the work of the Secretary General.

National Central Bureau (NCB)

• Each member country has a National Central Bureau (NCB), which serves as the main point of contact for the General Secretariat and other NCBs globally.
• NCBs are managed by police officials and are usually located within the government ministry responsible for policing, such as the Union Home Ministry in India.
• In India, the Central Bureau of Investigation (CBI) acts as the NCB for INTERPOL.

Types of Notices Issued by INTERPOL

• INTERPOL issues 8 types of notices (7 of which are color-coded) to help police in member countries share important crime-related information.
• Red Notice: Used to find and arrest a person wanted by a court or international tribunal for extradition. It is the closest thing to an international arrest warrant.
• Blue Notice: Aims to find, identify, or gather information about a person of interest in a criminal case.
• Green Notice: Alerts about someone's criminal activities if that person could pose a threat to public safety.
• Yellow Notice: Helps locate missing people or identify those who cannot identify themselves.
• Black Notice: Seeks information about unidentified deceased individuals.
• Orange Notice: Warns about an event, person, object, or process that poses an immediate threat to people or property.
• Purple Notice: Provides details on the methods, procedures, objects, devices, or hiding places used by criminals.
• Interpol-UNSC Special Notice: Informs members that an individual or entity is under United Nations sanctions.

GS2/Polity and Governance

Public Accounts Committee (PAC)

Source: The Hindu

Why in News?

The Public Accounts Committee (PAC) will hold a performance review of “regulatory bodies established by Act of Parliament”, such as the Securities and Exchange Board of India (SEBI).

About Public Accounts Committee (PAC):

• Objective:
  • This committee is made up of selected members of parliament from India.
  • Its main job is to check the money coming in and going out of the Government of India.
  • It reviews the government’s spending, especially the spending bills.
  • The committee looks at the audit report from the Comptroller and Auditor General (C&AG) after it is presented in Parliament.
  • The C&AG supports the committee during its investigations.
  • The committee checks if the money given by Parliament has been spent properly by the government.
• Genesis of the Committee:
  • This is one of the oldest parliamentary committees in India.
  • From when it started in 1921 until the early 1950s, the Finance Member was the Chairperson, and the Finance Department managed its secretarial tasks.
  • When the Constitution of India came into effect on January 26, 1950, the committee became a parliamentary committee under the Speaker's control.
  • Its secretarial duties were moved to the Parliament Secretariat, now known as the Lok Sabha Secretariat.
• Membership:
  • The Public Accounts Committee (PAC) has a maximum of twenty-two members.
  • Fifteen members are elected by the Lok Sabha, and up to seven are from the Rajya Sabha.
  • Members are elected each year based on proportional representation through a single transferable vote.
  • Each member serves a term of one year.
  • The Speaker selects the Chairperson from the Lok Sabha members of the committee.
  • Since the 1967-68 term, an Opposition Member has been appointed as Chairperson.
  • A Minister cannot be a committee member, and if a member becomes a Minister, they lose their position in the committee.
• Functions:
  • The committee examines accounts that show how Parliament's money is spent by the Government of India.
  • It looks at annual financial accounts and other relevant documents presented to the House.
  • While reviewing the government’s appropriation accounts and the C&AG's report, the committee ensures:
  • 
    
    • The money spent was legally available and used for the right purpose.
    • The spending follows the relevant laws and regulations.
    • Any re-appropriation of funds was done according to the rules set by the authority.
  • The committee's role goes beyond just checking spending; it examines the effectiveness, honesty, and cost-efficiency of expenditures.
  • It also investigates cases of financial losses, unnecessary spending, and irregularities in finances.

GS2/International Relations

Forum on China-Africa Cooperation (FOCAC)

Source: Indian Express

Why in News?

China is hosting the ninth Forum on China-Africa Cooperation (FOCAC) Summit, a diplomatic event aimed at strengthening ties with African nations.

About Forum on China-Africa Cooperation:

• Established in 2000 to strengthen the partnership between China and African countries.
• A summit is held every three years, alternating between China and an African nation as the host.
• Member countries: There are 53 African nations in the FOCAC, covering almost the entire continent except for Eswatini, which has diplomatic relations with Taiwan and opposes Beijing’s “One China” policy.
• The African Union Commission, responsible for promoting cooperation and economic integration among its members, is also part of the FOCAC.
• This year’s theme is “Joining Hands to Advance Modernization and Build a High-Level China-Africa Community with a Shared Future.”
• The current summit aims to discuss topics such as state governance, industrialization, agricultural development, and better collaboration on infrastructure financing through China’s Belt and Road Initiative (BRI).