Context: The central government appointed Arvind Panagariya as the chairman of the 16th Finance Commission (SFC), a constitutional body.

About Finance Commission

• The Constitution of India (CoI) envisages the FC as the balancing wheel of fiscal federalism in India. The first Finance Commission was set up in 1951.
• Set up under Article 280 of the Constitution, FC is a constitutional body formed by the President of India to give suggestions on center-state financial relations. 
• Core Responsibility: 
  • To evaluate the state of finances of the Union and State Governments.
  • Recommend the sharing of taxes between them.
  • Lay down the principles determining the distribution of these taxes among States. 
• Working: It is characterized by consultations with all levels of government, thus strengthening the principle of cooperative federalism. 
• Composition: It consists of a chairman and 4 other members to be appointed by the President.
• Nature of Recommendations: Advisory in nature, not binding on the government. 
• 16th finance Commission Chairman: Arvind Panagariya as Chairman of 16th Finance Commission

What is the Terms Of Reference (TOR) for the 16th Finance Commission?

• ToR: It is the matters to which a study or report is limited.
• Make recommendations to the following matters:
  • Taxes Distribution: Distribution between the Union and the States of the net proceeds of taxes.
  • Grants-in-Aid to States: Principles governing the grants-in-aid of the States’ revenues out of the Consolidated Fund of India and sums to be paid to the States. 
  • Panchayats and Municipalities Resources: The measures needed to supplement the resources of the Panchayats and Municipalities are based on the recommendations made by the Finance Commission of the State.
• Financing Disaster Management: Review the present arrangements on financing Disaster Management initiatives and make appropriate recommendations.
• Report: Make its report available by 31st October 2025 covering a period of five years commencing on the 1st day of April 2026.

Why Were Some States Unhappy?

• Revenue Sharing: 
  • The parameters have to accommodate the interests of all states while factoring in their various stages of development. 
• Term of Referrence: When the Fifteenth Finance Commission was set up, one of the terms of reference was to use the population data of the 2011 census. 
  • Karnataka and Tamil Nadu complained saying that would reduce allocations for them as they had been successful in their population stabilisation initiatives. 
  • The panel then gave weight to population and ‘population performance’ for an equitable allocation.

Continue Reading: Terms Of Reference For 16th Finance Commission

What Challenges does the SFC Need to Address?

• The sustainability of debt at the Central and state levels. 
• The Centre maintains it is on track to achieve its fiscal deficit target below 4.5% of GDP by FY26, and that general government debt will decline in the medium to long term. 
• Expenditure reforms at the state level.

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Context: Recently, Japan witnessed a series of major earthquakes and issued its highest-level tsunami alert.

What is a Tsunami?

• It is a Japanese term meaning “harbour wave,” is a series of large ocean waves caused by underwater earthquakes or volcanic eruptions. 
  • The sudden displacement of a substantial water volume leads to the formation of tsunami waves.

Tsunami Formation Process

• Earthquakes can displace large sections of the seabed, sending shockwaves through the water and creating towering waves. 
• Similarly, underwater volcanic eruptions can displace water with explosive force, triggering tsunamis.

Characteristics of Tsunami Waves

• Tsunami waves can be hundreds of feet tall and travel as fast as jet planes over deep waters. However, they slow down upon reaching shallower waters.

Factors Influencing Tsunami Formation

• The formation of tsunamis depends on various factors, including the shape of the ocean floor, the distance, and direction of the earthquake or volcanic eruption.

Why is Japan Prone to Earthquakes and Tsunamis?

• Japan is situated along the ‘Pacific Ring of Fire,’ the most active earthquake tectonic belt globally, featuring the Pacific, Eurasian, and Indo-Australian Plates. 
• The continuous meshing and colliding of these plates result in frequent earthquakes, volcanic eruptions, and tsunamis.

Must Read: Largest Volcanoes In The World List, Distribution, Location

News Source: Indian Express

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Context: Recently, a team of researchers have discovered Eurasian otter in the Chinnar Wildlife Sanctuary in Idukki, a first in Kerala. 

Kerala Witnesses Rare Eurasian Otter

• This discovery from the Chinnar Wildlife Sanctuary is the first official record of Eurasian otter in Kerala.
• There are three species of otters found in Kerala, including smooth-coated otter and small-clawed otter.

About Eurasian Otter

• Scientific Name of Eurasian Otter: Lutra lutra.

• It  is a captivating semiaquatic mammal native to Eurasia.
• Habitat: The Eurasian otter lives in a wide variety of aquatic habitats, including highland and lowland lakes, rivers, streams, marshes, swamp forests and coastal areas.
• Distribution: It is distributed throughout three continents i.e., Europe, Asia and Africa. 
  • In India, it occurs in northern, northeast and southern India. 
• Conservation Status:
  • IUCN Red List of Threatened Species: Near Threatened
  • Convention on the International Trade in Endangered Species of Wild Fauna and Flora (CITES): Appendix I
  • Wildlife (Protection) Act, 1972: Schedule I
• They are shy and nocturnal and are found near small streams in the interior forests and hunt their prey during the night.

About Chinnar Wildlife Sanctuary

• Chinnar Wildlife Sanctuary is located in the rain shadow region of the Western Ghats in Idukki, Kerala.
• Year of formation: 1984
• Flora: 
  • The major portion of the area is covered with grasslands. There were also several patches of shoals.
  • The sanctuary has a unique thorny scrub forest with xerophytic species.
  • Acacia arabica, Acacia leucofolia, Acacia concinna, Prosporis juliflora, and Opuntia dillenii. 
• Fauna: Elephant, Gaur, panther, spotted deer, Sambar, Grizzled giant squirrel, Hanuman monkey etc are the common mammals.

Also Read: Rare Pelagic Birds on Karnataka’s Coast

News Source: The Hindu

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Context: The year 2022-23 saw a sharp rise of cas­­es referred to debt recovery tribunal (DRT) and the amount involved shot up to Rs 4.02 trillion in FY23 compared to Rs 69,000 crore. 

NPAs: Amount Recovery Via Debt Recovery Tribunal Falls to 9.2%

• Decline in Recovered Amount of NPAs (Non-Performing Assets):  The amount recovered via debt recovery tribunals (DRTs) fell to 9.2% in FY23 compared to 17.5% in FY22. 
  • Hence, recovery of non-performing assets fell to 15% in FY23 from 17.6% in FY22 .
  • Number of Cases referred to the recovery channel of SARFAESI Act decreases, while in case of others (Lok Adalats, DRTs and the Insolvency and Bankruptcy Code (IBC)), number of referred cases increase in FY23 in comparison to FY22. 
  • The amount recovered as percentage of the amount involved is decreased for Lok Adalats and debt recovery tribunal (DRTs), while increased for SARFAESI Act and IBC in FY23 in comparison to FY22.
• Improvement in Recovery through IBC: Recoveries via IBC were back to over 40% in FY23 after a gap of two years.   
  • Except for FY20, total recoveries via various channels as percentage of amount were around mid-teens levels.
  • For Resolution through IBC: 
    • In the last six Financial Years, the highest amount was recovered in 2018-19 (₹166,600 crore).
    • In the last six Financial Years, the highest amount that was recovered as percentage of the amount involved in 2017-18 (₹49.6 crore).
  • For Total Recovery via Various Channels: 
    • In the last six Financial Years, the highest amount was recovered in 2019-20 (₹152,597 crore).
    • In the last six Financial Years, the highest amount that was recovered as percentage of the amount involved in 2019-20 (₹22.6 crore).

Must Read: Asset Quality Of Indian Banks

News Source: Business Standard

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Context: Recently, the Himachal Pradesh government has issued a notification granting Scheduled Tribe (ST) status to the Hatti community in the Trans-Giri area of Sirmaur district.

Himachal Govt Issues Notification to Grant ST Status to Hatti Community

• Issue of Notification: On August 4, 2023, the Government of India had notified the Constitution (Schedule Tribes) Order (Second Amendment) Act, 2023 in the Gazette to give ST status to the Hatti community.
• Passing of the Bill: The Constitution (Scheduled Tribes) Order (Third Amendment) Bill, 2022 passed in the Lok Sabha on December 16, 2022 for the inclusion of Hattee community in the list of ST in relation to Himachal Pradesh.

About Hatti Community

• The Hatti Community is a close-knit community who got their name from their tradition of selling homegrown vegetables, crops, meat and wool etc., at small markets called ‘haat’ in towns.
• Follow a Rigid Caste System: The Bhat and Khash are upper castes, and the Badhois are below them, and they discouraged inter-caste marriages.
• Khumbli for Decision: The Hattis are governed by a traditional council called Khumbli, which like the Khaps of Haryana, decide community matters. 
  • The Khumbli’s power has remained unchallenged despite the establishment of the Panchayati Raj System.

Demand by Hatti Community for Scheduled Tribe (ST) Status:

• On the Lines of the Jaunsar-Bawar area of Uttarakhand: There are two Hatti clans, in Trans-Giri and Jaunsar Bawar, both had remained the part of erstwhile Sirmaur princely state and both areas have unique similarity in social, cultural as well as geographical aspects. 
  • Residents of the Trans-Giri area were demanding ST status similar to the Jaunsar-Bawar area, which received ST status in 1967 itself. 

About the Process of Inclusion of Communities under List of STs:

• Origin of Proposal: According to the modalities for inclusion first framed in 1999, the proposal for inclusion must originate from the respective State or Union Territory government. 
• Processing by Office of the Registrar General of India: The proposal is sent to the Union Tribal Affairs Ministry, which sends it to the Office of the Registrar General of India (ORGI).
• Role of National Commission for Scheduled Tribes: If the ORGI approves the inclusion, the proposal is forwarded to the National Commission for Scheduled Tribes. 
• Approval by Cabinet: Only after the concurrence of these institutions, the proposal goes forward to the Cabinet to bring in the appropriate amendment to the Constitution (Scheduled Tribes) Order, 1950. 
• Final Decision:The final decision rests with the President’s office issuing a notification specifying the changes under powers vested in it from Articles 342.

Benefits of Inclusion of Communities under List of STs:

• Reservation: In educational institutions under Article 15(4) of the Indian Constitution.
  • In posts and services under Article 16(4), 16(4A) and 16(4B) of the Indian Constitution.
• Representation: Reservation of seats for STs in the Lok Sabha under Article 330.
  • Reservation of Seats for STs in Panchayats Article 243D.

About Scheduled Tribes in India:

• Article 366 (25): It defined scheduled tribes as “such tribes or tribal communities or parts of or groups within such tribes or tribal communities as are deemed under Article 342 to be Scheduled Tribes for the purposes of this constitution”. 
• Article 342: It prescribes procedure to be followed in the matter of specification of scheduled tribes.
• The Essential Characteristics of STs: Primitive Traits, Geographical Isolation, Distinct Culture, Shy of Contact with Community at large and Economically Backward.
• Associated Committees:
  • Lokur Committee (1965)
  • Bhuria Commission (2002-2004)
  • Xaxa Committee (2013)
• Particularly Vulnerable Tribal Groups (PVTGs): These are 75 in number, which are characterized by:
  • Pre-agriculture level of technology
  • Stagnant or declining population
  • Extremely low literacy
  • Subsistence level of economy

Must Read: Scheduled Areas In India, here.

News Source: The Hindu/ The Times of India

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Context: Recently, ISRO has successfully launched its maiden X-ray Polarimeter Satellite (XPoSat) from Satish Dhawan Space Centre in Sriharikota, Andhra Pradesh.  

India Launches XPoSat: Third Space Observatory in Orbit

• XPoSat is India’s third space-based observatory after the solar mission Aditya-L1 and AstroSat.
• After injection of XPOSAT, the PSLV Orbital Experimental Module-3 (POEM-3) experiment will be executed. 

About XPoSat Mission

• Key Objectives: 
  • To measure polarisation of X-rays emanating from about 50 potential cosmic sources through Thomson Scattering by POLIX payload.
  • To carry out long term spectral and temporal studies of cosmic X-ray sources by XSPECT payload.To carry out polarisation and spectroscopic measurements of X-ray emissions from cosmic sources by POLIX and XSPECT payloads respectively in the common energy band.
  • To study black holes and neutron stars in Space.

• Payloads: It comprises two payloads: 
  • X-ray Polarimeter (POLIX): POLIX is expected to observe about 40 bright astronomical sources of different categories during the planned lifetime of XPoSat mission of about 5 years. 
  • X-ray Spectroscopy and Timing (XSPECT): It can provide fast timing and good spectroscopic resolution in soft X-rays.
    • XSPECT would observe several types of sources viz X-ray pulsars, blackhole binaries, low-magnetic field neutron star (NS) in LMXBs, AGNs and Magnetars.
• Significance of Mission: India has become the 2nd country in the world after the United States to send a specialized astronomy observatory to study black holes and neutron stars in our galaxy. 
  • NASA launched Imaging X-ray Polarimetry Explorer (IXPE) in 2021.

About Polarization

• It refers to the orientation of oscillation of electromagnetic waves. 
• For X-rays, it describes the direction in which the electric field associated with the X-ray wave oscillates.

Polarization of Astronomical X-Rays

• It is a method of imaging and studying astronomical phenomena, studying the fluctuations in light from a source, and the energy radiated by the celestial bodies.

Applications

• X-Ray polarization serves as a crucial diagnostic tool for examining the radiation mechanism and geometry of celestial sources. 
  • The radiation mechanism from various astronomical sources such as black holes, neutron stars, active galactic nuclei, pulsar wind nebulae etc. originates from complex physical processes and are challenging to understand. 
• Analyzing X-Ray polarization signatures enables measurements of the mass and spin of accreting black holes.

Continue Reading: PSLV-C58 / XPoSat Mission

News Source: Newsonair

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Context: Sri Lanka has imposed a one-year ban on Chinese “research vessels” operating in its Exclusive Economic Zone (EEZ).

Why Has Sri Lanka Banned Chinese Research Vessels From Its Ports?

• The move will reportedly bar the “deep water exploration” by China’s Xiang Yang Hong 3 vessel, scheduled for January 5, in the south Indian Ocean. 
• Response to US and India Concerns: Earlier, India and the United States expressed concerns over Sri Lanka’s accommodation of Chinese scientific research vessels and ballistic missile trackers in the Indian Ocean, along with providing them logistical support.

Why Does India Object to Chinese Vessels Docking in Sri Lanka?

• India considers Chinese ships docked so close to its mainland a security threat, and suspects they could be used for snooping, even when their stated aim is scientific research.

Significance:

• Diplomatically, it would mean a major win for India’s efforts to stall China’s maritime expansion in the Indian Ocean.

Importance of Indian Ocean: 

• Geographical relevance: The Indian Ocean is the third largest Ocean covering about 20% of the earth’s surface. 
  • It is nearly 10,000 km wide at the southern tips of Africa and Australia and extends nearly 13,500 km from the Persian Gulf to Antarctica.
  • IOR stretches from the Suez Canal to the Strait of Malacca with its entry and exit constrained by choke points. 
• Economic Significance:  The Indian Ocean Region(IOR) has 40 per cent of the world’s energy reserves, 65 per cent of strategic raw material reserves and the largest producers of rubber, tea, spices and jute. 
  • More than 65% of the world’s Uranium and oil reserves exist on the ocean bed.
•  Strategic Significance: The Indian Ocean is the focal point of all the major shipping routes of the world. Major sea routes passing through IOR connecting the Middle East, Africa, Europe and the Americas. 
  • The IOR is also the lifeline of international trade and economy, with half of the global cargo trade, two-third of the energy supplies and one-third of the bulk cargo trade passing through the Indian Ocean. 

To read more about India-Sri Lanka Ties, refer India Sri Lanka

News Source: Live Mint

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Context: The newly elected far-right President of Argentina, Javier Milei, pulled out of plans to join the BRICS bloc.

• Former centre-left President Alberto Fernandez had promoted Argentina’s inclusion in BRICS.
• Argentina had been set to join on January 1, 2024.

Why Argentina Withdraws From BRICS? 

• Need to Review: As per the new Argentina’s President, the decision to join BRICS had been taken by the previous administration and the new dispensation was reviewing such policies.
• Geopolitical Alignment: Argentina’s new President cited  China’s communist ideology as a pivotal factor in Argentina’s decision to disengage from BRICS.

Continue Reading: Argentina Formally Rejects BRICS Membership: Reasons, and Consequences

News Source: Financial Express

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Context: India and Pakistan exchanged the list of nuclear installations, covered under the Agreement on the Prohibition of Attack against Nuclear Installations and Facilities.

India Pakistan Exchange List of Nuclear Installations Under 1988 Agreement

• Bilateral Pact Governing Atomic Facility Security: The India Pakistan Exchange list of Nuclear Installations took place under a bilateral pact that prohibits the two sides from attacking each other’s atomic facilities.
• 33rd Consecutive Exchange: This is the 33rd consecutive exchange of such lists between the two countries, the first one having taken place on January 1, 1992.

What is the 1988 Agreement Between India and Pakistan?

• The agreement on the Prohibition of Attack against Nuclear Installations and Facilities was signed on December 31, 1988, by the then Pakistani Prime Minister Benazir Bhutto and Indian PM Rajiv Gandhi. 
  • The treaty came into force on January 27, 1991.
• The agreement mandates both countries to inform each other about any nuclear installations and facilities to be covered under the agreement on the first of January of every calendar year, providing a confidence-building security measure environment.

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Context: This article is based on the news “Tata Steel’s Jamshedpur Model: A Blueprint for Indian City Governance” which was published in the Live Mint. The Jharkhand government decided to involve Tata Steel in the administration of Jamshedpur city.

About Tata Steel’s Jamshedpur Model For Urban Governance

• Inclusion of Tata Steel for City Administration: Jamshedpur will be transformed into an industrial township under special constitutional provisions. 
  • It will create a municipal council including Tata Steel representatives, government nominees, and local residents.
• Difference with State run Industrial Townships:  This will differ from the industrial townships of the past, which were state-run but had limited local representation, with company officials predominantly occupying administrative roles. 
  • While the model successfully led to the development of cities like Rourkela and Salem, it is evidently no longer effective.
• Accountability and Modern Accounting Issues: Jamshedpur Model holds the promise of a significant improvement over the current scenario, where only three cities employ an accrual-based accounting system. 
• • This limitation has hindered rating agencies from issuing municipal bonds. 
  • Without an accrual-based system, assessing a municipal system’s revenue stream for securitization becomes challenging. 
  • The government’s Smart Cities initiative also faces accountability and modern accounting issues. 
• Significance of  Jamshedpur Model: If successful, and with other state governments willing, more companies may also follow the model leading to corporate efficiency and democratic accountability.

What is Urban Governance?

• Urban Governance is the process by which governments and stakeholders collectively decide how to plan, finance and manage urban areas.  
• Urban governance refers to how individuals and institutions, both public and private, plan and manage the common affairs of the city in a continuing process.

Need for Urban Governance

• Burgeoning Urban Population: According to the UN’s projections, Indian cities will house 870 million people by 2050 from a population of 377 million in 2011.
  • Delhi will likely become the world’s most populous urban agglomeration by 2030, surpassing Tokyo. 
• Addressing Urban Challenges:  Rising urban population has led to inadequate affordable housing such that almost one-sixth of the urban population lives in slums. 
  • Other issues include unreliable water supply, inadequate solid waste management, poor drainage, congested roads and deteriorating air quality.
  • 70 to 80 percent of the infrastructure needed by 2050 has not been built yet, and the estimated investment gap amounts to approximately 827 billion US dollars.
• Driving Economic Growth: As India undergoes urbanization, it is crucial to ensure that its cities provide a satisfactory quality of life and promote job creation.

Status of Urban Governance in India

• As per Census 2011, the urban system of India consists of 7933 settlements, classified broadly as statutory (4041) and census (3892) towns.
• Statutory Towns: These are settlements that are notified under law by the concerned State/UT government and with local bodies such as municipal corporations, municipalities, municipal committees, etc., irrespective of their demographic characteristics.
• Census Towns:  These are governed as villages and do not necessarily have urban local bodies. These are settlements that are classified as urban in the census after they have met the following criteria: 
  • A minimum population of 5,000
  • At least 75% of the male ‘main workers’ engaged in non-agricultural pursuits
  • A density of population of at least 400 persons per sq. km. 
• Outgrowths: These are viable units, such as a village, clearly identifiable in terms of their boundaries and locations. 
  • Outgrowths possess urban features in terms of infrastructure and amenities, such as pucca roads, electricity, etc., and are physically contiguous with the core town of the urban agglomeration.

What Are the Challenges Associated with India’s Urban Governance System?

• Unacknowledged and Unaddressed Urbanization: Almost half of the 7933 ‘urban’ settlements are census towns.  Thus, they are governed as ‘rural’ entities. 
  • Small and medium are vulnerable due to rapid growth and inadequate planning. 
  • Moreover, several studies have indicated that the current definitions of ‘urban’ are not reflective of the extent of urbanization that the country has already witnessed. 
• Lack of Power Devolution to urban local Governments: The urban planning function has not been transferred from States/UTs to elected urban local bodies (ULB) as was envisaged through the Constitutional (Seventy-Fourth amendment) Act 1992. 
  • Resistance among state-level politicians to effectively delegate resources and power to local government has made them weak.
  • The resources allocated to municipal corporations, in terms of both finances and personnel, are  limited. Thus, no city government can fully take charge of all functions listed in the XIIth Schedule.

• Concerns with Municipal Regime: Also known as the “Commissioner System, it confers executive powers to an Indian Administrative Services (IAS) official nominated by the state government sidelining the mayor, who is usually indirectly elected and holds a ceremonial role. 
  • The mayor has limited executive responsibilities, except for Madhya Pradesh and West Bengal. 
• Parastatal Agencies/bodies: The Weakness of ULBs due to  inadequate staffing, limited finances, and technical constraints led to the establishment of numerous parastatal bodies for planning, infrastructure development, and service delivery.
• • Ex- development authorities, water supply and sewerage boards, slum housing and development boards, PWD, etc
  • These state-owned parastatal bodies created as nodal agencies have undertaken various functions that should have been assigned to ULBs by the provisions under the Constitution (Seventy-Fourth) Amendment Act 1992.
• Lack of Master Plans: Master plans are statutory instruments to guide and regulate the development of cities and are critical for managing urbanization and ‘spatial sustainability’. 
• • As per the data compiled by the Town and Country Planning Organisation (TCPO), about two-thirds of the census towns do not have master plans to guide their spatial growth.
  • The census towns continue to be governed as villages and  do not have master plans to guide their spatial growth.
  • This results in fragmented interventions, unplanned constructions, urban sprawl, and environmental pollution, further exacerbating traffic congestion and flooding.
• Lack of Upgradation of the Town and Country Planning Act: These acts have been enacted by the states, enabling them to prepare and notify master plans for implementation and providing a fundamental basis to transform cities, regions, and their character. 
  • However, these have not been reviewed and upgraded to the latest technological advancements, urban and regional planning approaches and policies. 
• Lack of Urban Planners: A study conducted by TCPO for NITI Aayog indicates that over 12,000 posts for town planners are required in the State town and country planning departments. 
• • There are less than 4000 sanctioned positions for ‘town planners’ in these departments, half of which are vacant. 
  • In several states, a qualification in town planning is not even an essential criterion for such jobs.

Way Forward

• Implementing Mayor-in-Council System:  This regime vests executive authority in the hands of the Mayor. 
  • Under this, the Municipal Commissioner, nominated by the state, is responsible to the Mayor-in-Council, not the state government.
• Direct Election of Mayor: The Mayor should be elected directly by voters, for a five year tenure. Direct election as well as a concurrent tenure with the municipal corporation/council will ensure the visibility of the Mayor for voters, and reinforce his/her status as a representative of local self-government. 
  • Ex- As done in Tamil Nadu.
• Training of Councillors: Councillors should be provided with well-designed, efficient training, just after the election. 
  • This is essential considering the fact that many of them are newcomers, and effective training would empower councilors to make the best of their prerogatives.
• Re-engineering of Urban Governance: A high powered committee needs to be constituted to re-engineer the present urban-planning governance structure.  It should address issues like;
  • Clear division of roles and responsibilities among various authorities
  • Appropriate revision of rules and regulations, etc.
  • Creation of a more dynamic organizational structure
  • Standardisation of the job descriptions of town planners and other experts.
• Optimum Utilization of Urban Land: All the cities/towns should strengthen development control regulations based on scientific evidence to maximize the efficiency of urban land (or planning area). 
• Ramping up of Human Resources: The public sector must have an adequate workforce in terms of quantity and quality to tackle the challenges of urbanization. 
  • The States/UTs should expedite the filling up of vacant positions of town planners, and sanction 8268 town planners’ posts as lateral entry positions for a minimum period of 3 years and a maximum of 5 years to close the gaps. 
• Ensuring Qualified Professionals for Undertaking Urban Planning: The States need to make amendments in their recruitment rules to ensure the entry of qualified candidates into town planning positions. 
  • The urban planning discipline has a dedicated course curriculum with graduates acquiring a multi-sectoral overview and skillset to address such challenges. 
• Upgrading Planning Legislations: An apex committee needs to be formed at the State level to undertake a regular review of planning acts.
• Strengthening Human Resource and Match Demand–Supply:  A ‘National Council of Town and Country Planners’  needs to be constituted as a statutory body of the Government of India. 
  • A National Digital Platform of Town and Country Planners needs to be created to enable the self-registration of all planners and evolve as for potential employers and urban planners.
• Intervention for Planning of Healthy Cities: Efforts must be made towards a ‘healthy city for all’ by 2030. 
  • This would need convergence of multi-sectoral efforts at the intersections of spatial planning, public health, and socio-economic development. 
  • The focus of planning urban development should encompass the million-plus cities as well as small- and medium-sized towns. 

Conclusion:

The Tata Steel’s Jamshedpur Model presents a promising shift in urban governance, addressing accountability and modern accounting issues, and serves as a potential blueprint for efficient and democratic city administration in India’s evolving urban landscape.

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Context: This article is based on the news “Farm and Food Policy: How Modi government has swung from pro-producer to pro-consumer in the last two years” which was published in the Indian Express. From 2014, the Indian government focused on pro-producer policies, emphasizing agricultural growth and farmer welfare. However, in recent years, a policy shift occurred, transforming the approach to pro-consumer measures.

Impact of Farm and Food Policy Shift: Export Boost and Import Reduction

• In the last decade, India witnessed surplus agricultural production leading to low commodity prices and government stockpiles of rice, wheat, and sugar reached record levels. 
• To address this, initiatives were taken to boost exports, promote alternative uses of agricultural commodities, and reduce import reliance. 
• However, the Indian government responded to shifting economic dynamics by prioritizing consumer interests over producers. 
  • Post Russia’s invasion of Ukraine in 2022, rising food inflation compelled a change in focus. 
  • During the COVID-induced lockdown, the government doubled monthly food grain allocations under the public distribution system. 

Must Read: State Of Food And Agriculture Report 2023 

Relation Between Farm and Food Policy and Inflation in India

• Inflation: It is the general rise in prices of goods and services within a particular economy wherein, the purchasing power of consumers decreases, and the value of the cash holdings erodes.
• The government’s policies, from 2014 to 2019, were marked by low inflation. 
  • During this period, the general consumer price index (CPI) rose by an average of 4.3% per year. 
  • The consumer food price index (CFPI) was 3.3%.
• The government’s policies, from 2019 to 2023, have seen CPI inflation average 5.8% and  6.4%, for CFPI inflation.

Farm and Food Policy Response During Food Surpluses and Low Prices

• Surplus Production & Low Prices: India experienced a significant surplus in agricultural production, leading to excess supply. This surplus, coupled with inadequate storage and distribution infrastructure, contributed to low prices for various agricultural commodities.
• This period witnessed a record rice and wheat procurement at minimum support prices (MSP), resulting in their stocks in government godowns peaking at 109.5 million tonnes (mt) on July 1, 2021. 
• Increasing Exports: The surplus production created an opportunity for increased agricultural exports as lower prices made Indian agricultural products more competitive in the global market, resulting in a boost in exports. 
  • The government also took initiatives to promote overseas trade. For instance, to enable sugar mills to liquidate their excess stocks, an incentive of up to Rs 10,448 per tonne was given on exports and India shipped out unprecedented quantities of 5.9 mt, 7.2 mt and 11 mt during the 2019-20, 2020-21 and 2021-22 seasons.
• Promoting Alternative Uses: Industries like biofuels, textiles, and pharmaceuticals began to leverage surplus crops, promoting diversification. Government initiatives also encouraged innovation in utilizing agricultural produce for non-traditional purposes.
  • For instance, mills were incentivized to produce less sugar from their cane and more ethanol for blending with petrol. Government encouraged this by pushing oil companies to pay more for ethanol made from direct sugarcane juice or intermediate stage (B-heavy) molasses, as against the final residual (C-heavy) molasses.
• Reducing Import Reliance: Lower commodity prices made Indian agricultural products economically competitive, further reducing dependence on external sources, which highlighted the potential for increased self-reliance.
  • Further, the government raised import duties on pulses and edible oils to protect domestic growers suffering low realizations.
  • For instance, prior to June 30, 2017, pulses imports attracted zero duty and by the end of 2017, there was a 30% duty on masoor and chana (chickpea), 50% on yellow/white peas, and annual import quantity restrictions of 0.2 mt on arhar and 0.3 mt on urad/moong (black/green gram). 
  • In edible oils, the basic customs duty was increased from 12.5% to 35% on imported crude soyabean and sunflower oil, and from 7.5% to 44% on crude palm oil, between September 2016 and June 2018.
• Introduction of Farm Reform Laws in 2020: The surpluses of this period lead to the  government’s enactment of its three farm reform laws in June 2020 which freed the trade in agricultural produce. 
  • For instance, private agri-businesses could bypass government-regulated markets and buy directly from farmers, with no barriers to movement or limits to how much produce they could purchase and stock. 

Reasons for Shifting Farm and Food Policy Dynamics

• Changes in Inflation Trends: The food inflation rose, especially post Russia’s invasion of Ukraine in February 2022, pushed the transformation of the government’s policy approach, to privilege the interests of consumers over producers.
• Covid- Induced Lockdown: The surpluses, amid the Covid-induced economic shock, led the  government to double the monthly allocation of foodgrains under the public distribution system to 10 kg per person during April 2020-December 2022, with the additional 5 kg being given free of cost.
• Liberalisation of Imports: From around November 2020, the customs duty on crude palm, soya bean and sunflower oil was reduced in stages to nil, the same on refined oils was reduced to 12.5%. 
  • In pulses, the quantity restrictions on imports of arhar and urad were lifted and their imports, including masoor, have been made duty-free. 
• Exports Restrictions: Agricultural exports from India faced curbs, which include export duties, minimum export price, and even outright bans.  
  • For instance, the government has banned exports of wheat and sugar since May 2022 and May 2023 respectively. Only basmati and parboiled non-basmati shipments are permitted in rice, subject to a $950/tonne minimum export price stipulation and 20% duty respectively.
• Prioritising Essential Usage: Recently, sugar mills have been allowed to use cane juice and B-molasses for making ethanol only to the extent that 1.7 mt of sugar gets diverted during the current 2023-24 season, down from 4.5 mt in 2022-23. Thus, the government is prioritizing to ensure that more cane goes for food (sugar) than for fuel (ethanol).

Changing Farm and Food Policy Dynamics and Current Challenges

• Supply Situation: The supply situation changed from surplus to tight with public warehouses having only 62.8 mt of rice and wheat as of December 1, 2023, while sugar mills ended the 2022-23 season with a six-year-low stocks of 5.7 mt. 
• Inflation Remains a Challenge: The latest annual retail food inflation number for November 2023 stood at 8.7%, which is even higher at 10.3% for cereals and 20.2% for pulses. Thus, the above restrictions are likely to remain.
• Hampers Agri-Exports: Restrictive export policy hampers the dream of doubling India’s agri exports, a target set out by the government. Further, these restrictions have expanded to wheat export bans, an export duty of 40% on onions, etc.

Way Forward 

• Mitigation of Inflation: Indian agriculture has reached a stage where management of surplus production and exports are essential to maintain domestic prices and enhance farmers’ income. 
  • Further, implement measures to mitigate inflationary pressures, such as judiciously addressing supply chain bottlenecks and using monetary tools.
• Long-Term Vision: A long-term strategy focusing on  global market and competitiveness, infrastructure modernization, etc. The Government has taken steps in this direction, but prioritization of the markets and products by agencies like APEDA is necessary for immediate gains.
• Re-thinking Farm and Food Policy in the Digital Age: Breakthrough digital technologies can potentially deliver significant positive impacts for producers, consumers, and the environment, across food value chains. 
• • Further, applying digital technology to manage the supply chains and trace the origin should be in place. 
• Reorienting Consumer Welfare Programs: Subsidies to the agricultural sector should be reoriented to focus on productivity and sustainability. 
• • For instance, Direct Benefits Transfer (DBT) programs should be linked to improve resource-use efficiency, economize the cost, and promote conservation of natural resources. 

Conclusion:

The shift in Indian farm and food policy, from pro-producer to pro-consumer, aimed at addressing surplus production and low prices. however, it has resulted in challenges in supply, inflation, and agri-exports, emphasizing the need for a balanced and adaptable approach.

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