Context:

• Recently, the Union Minister of Tribal Affairs inaugurated the Adi Vyakhyan program at the National Tribal Research Institute (NTRI) in New Delhi as part of the week-long celebrations of Jan Jatiya Gaurav Diwas.

What is the Adi Vyakhyan Program?

• Multi-dimensional Event: The Adi Vyakhyan program explored various facets of tribal life, culture, language, and livelihood through the perspectives of tribal thinkers, leaders, and writers.
• Conference: The Two-day Conference Organized under the aegis of Janjatiya Gaurav Saptah, aims to bring together leaders, stakeholders, and artists of the tribal community to discuss on various topics including preservation of tribal language, digital technology, gender representation, and entrepreneurship.

Recent Government Initiatives for Tribal Welfare:

• Union Minister of Tribal Affairs outlines recent government initiatives, including the Rs 24,000 crore PVTG Mission, Aadi Adarsh Gram Yojana, Sickle Cell Mission, and the establishment of 740 Eklavya Model Schools. 

For more about the PM-JANMAN Mission Click Here

News Source: PIB

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Context:

• Recently, the Indian Prime Minister emphasizes zero tolerance for terrorism and condemns killings of innocents, especially children and women in his concluding remarks at the G20 Virtual summit.

More on News:

Truce Amidst Conflict:

• After a month-and-a-half of the Israel-Hamas war, Israel agrees to a four-day military pause (Humanitarian Pause) in Gaza. 
• Hostage Release Agreement: Israel and Hamas agree on the release of 50 hostages, with a promise to extend the truce for every 10 additional releases.

• Humanitarian Relief for Gaza: The truce provides relief to Gazans in need of aid supplies after enduring an Israeli anti-Hamas blitz.

Key Highlight of G20 Virtual Summit:

• Indian PM Address:
  • Prime Minister’s Focus on Israel-Hamas Conflict:
    • Prime Minister made these comments in the context of the Israel-Hamas conflict.
    • Stresses the need for regional peace and stability in West Asia.
    • Advocates diplomacy and dialogue as the only way to address territorial and political crises.
    • PM highlights agreement on a two-state solution for the Israel-Palestine issue.
  • Humanitarian Assistance to Gaza:
    • In an apparent reference to the humanitarian crisis in Gaza, the Prime Minister said human assistance should reach them quickly and safely. He welcomed the news about the release of Israeli hostages.
• G-20’s Consensus on Israel-Palestine Issue
  • PM highlights key points of agreement reached during the G20 virtual summit. This includes consensus on a two-state solution for addressing the Israel-Palestine issue permanently. 
• G-20 Welcomes Ceasefire and Hostage Release
  • G-20 leaders welcomed the temporary ceasefire agreed upon by Israel and Hamas earlier in the day that will allow the release of 50 hostages held by the militant group in Gaza in exchange for 150 Palestinian detainees apart from the entry of humanitarian aid into the besieged territory.

More Information: Israel- Palestine Conflict

Source: The Hindu

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Context:

• The Union Minister of Road Transport and Highways of India, inaugurated the 8th Edition of the India Water Impact Summit (IWIS).

More on News:

• In his address, the minister highlighted  three pivotal pillars of society—ethics, ecology and environment, and economics—underscoring their integral role in shaping a sustainable future.
• The 8th India Water Impact Summit (IWIS) will hold intensive expert discussions on the themes of “Samarth Ganga and Productive Land” (highlighting the inter-dependability of Land and Rivers), and “Lifestyle for Rivers” (in the context of the ongoing national initiative of Lifestyle for Environment.

About 8th India Water Impact Summit (IWIS):

• Origin: The India Water Impact Summit (IWIS) was first launched in 2012 during the evolution of the Ganga River Basin Management Plan (GRBMP) by the Consortium of 7 Indian Institutes of Technology (IITs).
• Organized by: the National Mission for Clean Ganga (NMCG) and the Center for Ganga River Basin Management and Studies (cGanga).
• The theme of India Water Impact Summit 2023 is –  ‘Development vis-à-vis Land, Water and Rivers’.
• Aim: It is aimed at uniting scientific experts, stakeholders, and government representatives to address dynamic challenges and opportunities in India’s water sector.

News Source: PIB

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Context:

• According to PRS legislative Research data, the average number of days the Assemblies meet has been shrinking across states in recent years.

Key findings:

• Shrinkage in average meeting days: Rajasthan, Madhya Pradesh (MP), Chhat­tis­garh, Mizoram and Telangana, where elections are underway, met for less than 30 days on average annually between 2019 and 2023.
• Fall in average sittings: Compared to the previous term (2014-18), average sittings fell for all except Rajasthan, which recorded a marginal increase, from 28 days to 29 in the current term.
  • The fall was the sharpest for MP, where the Assembly met for barely 16 days. In 2014-2018, it had met for 27 days. 
  • In Chhattisgarh, the legislature’s business days shrank from 29 to 23, and Telangana from 26 to 15 (see chart 1).

• Outlier: The Karnataka Legislative Assembly met for 45 days in 2022, the highest among the 28 states and Union Territories (UTs) for which data is available. 
• • West Bengal and Kerala followed with 42 days and 41 days, respectively

Other Findings:

• It also found that 48% of Bills were passed in the five poll-bound states within a day of their introduction.
  • This lack of scrutiny could lead to poorly drafted laws that harm citizens.
• Performance of Women Legislature: Women MLAs asked less than 20% of the questions in the five poll-bound states between 2018 and 2023.

• Attendance: The average MLA attendance in the five poll-bound states was below 90%.
• • This lack of participation could lead to a disconnect between the MLAs and their constituents.

Constitutional Provisions: 

• Article 174 of the Indian Constitution only specifies that the gap between two sittings of the state legislatures should not be more than six months.
• However, it does not prescribe any number of sitting days for the legislatures.​

Reasons For Decreasing Sittings Of Assemblies: 

• Legislature Has No Power Over Its Sittings: In India, the governor of the state convenes the assembly on the recommendation of the Cabinet, thereby giving the state government control over the legislature’s sittings. 
  • Since the legislature is expected to hold the government accountable, it must have the power to decide its sittings.​
• Disruptions: Even during the few days that the assemblies meet, disruptions further reduce the time spent on deliberation on important issues of the state.

Recommendation: 

• The National Commission to Review the Working of the Constitution recommended that the “Houses of state legislatures with less than 70 members should meet for at least 50 days a year and other Houses for at least 90 days”.
  • while the minimum number of days for sittings of Rajya Sabha and Lok Sabha should be fixed at 100 and 120 days respectively.
• Statutory Backing: The Rajya Sabha is deliberating on a private member bill making it mandatory for Parliament to sit for 100 days.​
• Fixed Calendar: This practice is followed in countries like the United Kingdom, Canada, and Australia. Hence, with fewer sittings, it becomes more important that the assembly remains productive whenever it is in session.
  • Moreover, it is useful to have a fixed calendar for sittings of the legislature so that other political developments do not affect its functioning.
• System of Standing Committee: Over the years Parliament sittings have also declined however, the Parliament also has an active standing committee system. 
  • These committees deliberate on various issues related to specific ministries and scrutinise legislation. Such a committee system is either absent in most state legislatures or inactive.

Source: Business Standards

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Context:

• Pakistan has filed an application to join the BRICS group of nations in 2024 and is counting on Russia’s assistance during the membership process.

More On News:

• Pakistan’s application came as the grouping of emerging economies was set for its biggest expansion with six new members under Russia’s rotating Presidency in 2024. 
  • New Members: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE) as new members formally admitted to the BRICS summit-2023 held in South Africa. However, they will formally join during the 2024 summit in Kazan, Russia.

Why BRICS matters for Pakistan?

• Economic Opportunities: Pakistan, is currently facing its worst economic and political crisis Joining BRICS could open up economic opportunities for Pakistan.

• Access to Contingent Reserve Arrangement (CRA): Pakistan if allowed in BRICS, can easily access the USD 100 billion CRA and the comparatively lenient loan conditions of the New Development Bank(NDB), without improving the functioning of the Pakistani state.
• Dissatisfaction with West-led Institutions: This inclination toward BRICS is rooted in developing nations’ dissatisfaction with the stringent conditions imposed by Western-dominated institutions. 
  • Additionally, there is skepticism among these countries about Western values, viewing them as a façade to advance self-serving agendas.
• Geopolitical Leverage: The BRICS membership could boost Pakistan’s geopolitical leverage by providing a platform to collaborate with other emerging powers on global issues.
• Pakistan as a terror sponsor state: By joining BRICS, Pakistan could divert its security-oriented approach to foreign policy in line with the BRICS manifesto.
• About BRICS:  It consists of Brazil, Russia, India, China, and South Africa, which was previously known as BRIC before South Africa’s inclusion in 2010.
• For More information: BRICS Expansion

Source: Indian Express

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Context:

• Climate talks often revolve around reducing the most dangerous greenhouse gas CO2. But other powerful heat-trapping methane emissions are also likely to be discussed in the 28th Edition of the Conference of Parties (COP28 – Dubai Climate Conference).

COP28 Global Methane Pledge 

• Strengthen Global Methane Pledge: Scientists at EASAC have called for COP28 to agree on a “substantial strengthening” of the methane pledge, with a formalised reduction target of around 60% in the energy sector, in line with recent EU regulations.

• Data Uncertainity: The amount of methane released in the atmosphere remains subject to “significant uncertainty,” despite progress in the monitoring of emissions through the use of satellites.
• Methane Concentration: There is a steady increase of methane in the atmosphere, with concentrations currently over two-and-a-half times greater than pre-industrial levels.
• A recent International Energy Agency report estimates that rapid cuts in methane emissions linked to the fossil fuel sector could prevent up to 0.1 degrees Celsius of warming by mid-century.

What is methane?

• Atmospheric methane (CH4) occurs abundantly in nature as the primary component of natural gas.
• It is the second largest contributor to climate change, accounting for around 16% of the warming effect.
• Methane remains in the atmosphere for only about 10 years but has a much more powerful warming impact than CO2.
• Global Warming Potential: Its warming effect is 28 times greater than CO2 over a 100-year timescale (80 times over 20 years).

What are the major sources of methane emissions?

• According to IEA,  around 60% of methane emissions are linked to human activity, while 40% are from natural sources, mainly wetlands.
• Agriculture and Livestock: The biggest source responsible for roughly a quarter of emissions.
  • Cow burp: Livestock cows and sheep release methane during digestion and in their manure.
  • Rice cultivation: Flooded fields create ideal conditions for methane-emitting bacteria.
• Energy sector and Gas leak: Methane leaks from energy infrastructure  such as gas pipelines.
• Decomposition of Waste: Discarded household waste also releases large quantities of methane when it decomposes if left to rot in landfills.

Source: The Hindu

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Context:

• Recently, the Supreme Court of the United Kingdom (UK) has ruled out the government policy of creating a mechanism for the transfer of asylum seekers not considered by the U.K. to Rwanda as unlawful.

What is the UK-Rwanda deal?

• The Migration and Economic Development Partnership (MEDP) was announced in April 2022 for the transfer of asylum seekers not recognised by the UK into Rwanda.
• Memorandum of Understanding (MoU): According to the MoU between the two nations, the U.K. will screen asylum seeker applications and arrange for safe transport to Rwanda. 
• Obligation of Rwanda: It is obliged to provide accommodation for every individual and protect them from ill-treatment and refoulement. 
• Obligation of UK:  It will bear the accommodation and transit costs. The U.K. has, in the past, moved refugees to colonised countries under the guise of development and economic growth.
• Discretion of Rwanda: Rwanda will be the sole authority to recognise or not recognise the refugee status of an individual. If an individual is not recognised, they will be moved to their country of origin.

Solutions offered by  Rwanda:

• Rwanda offers three solutions for those sent out by the U.K.
  • It facilitates returning them to their country of origin; 
  • Helps in moving them to a third country; 
  • Helps them settle in Rwanda with decent housing, access to universal health insurance and the right to work. 

Why was it ruled unlawful?

The ruling was based on two major issues.

• The Supreme Court of U. K  found the High Court decision to be “erred” due to its failure to consider the evidence of the risk of refoulement. Under the European Court, it is the U.K.s responsibility as to protect the refugees from refoulement and ensure asylum. 
• The Supreme Court found evidence that asylum seekers face a real risk of ill-treatment from refoulement. 
• • Rwanda’s track record on human rights and its non-compliance with international human rights laws have been criticized by human rights organizations and the United Nations (The 1994 genocide against the Tutsi in Rwanda). 

Domestic responses:

• The reason behind different perceptions is the uncertainty over the legality of the arrangement and treatment of the refugees in Rwanda.
• Views of Civil Society: They feel that double voluntarism from the U.K. and Rwanda to create a safe transit or guaranteeing rights is impossible.
• The UNHCR clearly states that once a refugee enters a territory via land or sea it becomes the responsibility of the respective country to ensure the safety of the refugee. 
  • In this case, the U.K. cannot be relieved from this duty even after the transfer of the refugee to Rwanda. 
• Implications to other EU countries: The doubts over refoulement do not seem to end. This might trigger other EU nations to consider such deportation schemes leading to a decline in humanitarian standards and creating risks for refugees in third-party countries.

Source: The Hindu

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Context:

• A new study revealed that sturgeon products sold in the international market were from illegal trade and flouting wildlife protection norms.

More On News: 

• Sturgeon is a fish native to lower Danube countries such as Bulgaria, Romania, Serbia, and Ukraine that produces caviar. 
• According to researchers, sturgeon has been fished illegally.

About Sturgeon: 

• Sturgeon is the common name for the 28 species of fish belonging to the family Acipenseridae.

About the Danube River: 

• The Danube River is the second-longest river in Europe, after the Volga in Russia. 
• It flows from the Black Forest south into the Black Sea through much of Central and Southeastern Europe.
• Originating in Germany, the Danube River flows southeast for around 2,850 km, passing through or bordering Austria, Slovakia, Hungary, Croatia, Serbia, Romania, Bulgaria, Moldova, and Ukraine. 

• Among the many cities on the river are four national capitals: Vienna (Austria), Bratislava (Slovakia), Budapest (Hungary), and Belgrade (Serbia).
• The Danube is linked to the North Sea via the Rhine–Main–Danube Canal, connecting the Danube at Kelheim with the Main at Bamberg.

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Context:

• According to experts, East Africa is experiencing a surge in El Nino-related malaria infections. 

More on News: 

• El Nino rains and widespread flooding: The ongoing heavy El Nino rains and widespread flooding are likely to trigger an outbreak of new malaria infections across the Horn of Africa.

• • Flooding will also provide ideal conditions for mosquito multiplication and malaria’s emergence and/or exacerbation.
• Risk Of Other Diseases: At the same time, displacement, crowding and lack of access to vaccination are likely to increase the risk of diseases such as measles and meningitis,” said the UN Office for the Coordination of Humanitarian Affairs (OCHA) in an alert.
• WHO Warning: While acknowledging that El Nino conditions are likely to trigger an outbreak of multiple diseases, WHO has warned that malaria remains a major threat and a leading public health concern in East Africa. 
  • According to WHO, the region accounts for a quarter of global malaria cases, making it a critical area of focus in the fight against the deadly disease.
• Cholera Outbreak: East Africa is already facing one of the worst cholera outbreaks in years, one of the longest ever recorded in the region.
  • Heavy rainfall and flooding, often leading to increased water contamination, will likely exacerbate and further prolong Cholera outbreaks.

Devastations due to El Nino floods:

• The El Nino conditions have triggered flooding in most parts of the region, including Somalia, Kenya, Burundi, Ethiopia, Rwanda, South Sudan, Sudan, Tanzania, and Uganda, leading to loss of lives and livelihoods and human displacement.

Source: Down To Earth

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Context:

• The Gujarat Government chose the Black-spotted croaker or the ‘ghol fish’ as state fish.

About Ghol Fish

• Habitat: The Ghol fish is usually found in the Indo-Pacific region that stretches from the Persian Gulf to the Pacific Ocean. 
  • The fish is found in the marine areas of Gujarat and Maharashtra in a golden-brown color.
  • It is found in coastal waters over muddy bottoms off the seabed. 
  • It ascends tidal rivers and estuaries and feeds on crustaceans and small fishes.

• IUCN Red List Assessment:  Near Threatened (2020)
• Importance: The fish is considered a delicacy in many countries. 
  • While the meat of the fish is exported as frozen fillet or whole fish to European and Middle-Eastern countries.
• It is used for medicinal purposes. 
  • Its air bladder — which is cut open from the stomach and dried — is mainly exported to China, Hong Kong, and other Asian countries where it is in high demand for its medicinal values.

Significance:

• The declaration will enable Gujarat to be a part of its conservation efforts. 
• Concerns: This species is threatened by overexploitation in parts of its range and forms spawning aggregations which are targeted by subsistence, recreational, and commercial fisheries.               

News Source: The Indian Express

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Context:

• This article is based on the news  “We need an education system that Isn’t held hostage by exams” Which was published in the Live Mint. 
• Board exams are one of the main issues being faced by the Indian education system.

More about the news

• The National Curriculum Framework for School Education 2023 (NCF) addresses the issues by acknowledging current challenges being faced by the examination in India.

What are the challenges associated with board exams in India?

• Flawed test design: Most test instruments are poorly designed, which focus on facts and memorization, rather than on real learning and curricular goals.
  • It ends up undermining all aspects of school education, from teaching and classroom or school practices to textbooks.
• Misguiding school education: The majority of board exams fail to fulfill their intended objectives by misdirecting education in schools. 
  • These tests are meant to. certify competencies attained by students at the end of grades 10 and 12.
  • Rather, most of them primarily test memorization of a huge range of facts displaying a partial picture of student learning results. 
• Social Perception: As Exam marks are seen socially as a measure of ‘intrinsic worth’ having life-altering effects.
  • The results of these examinations are used for college admissions or sometimes even for jobs.
• Focus on rote learning vs real learning: Ignorance of  real learning and focus on ‘cracking’ entrance tests for college admissions undermines the fundamental purpose of school education.
• Mental stress: The pressure to perform well, meet parental expectations, and secure a spot in a competitive university creates an environment of immense stress.
• • According to NCRB Data, the Share of Students Among Suicide Victims in India Grew 70% Over the Past Decade.
• Shortage of Higher education institution (HEI): There is intense competition among the students chasing the limited number of HEI seats. This makes admission at that level a process of selection through elimination. 
• Promote Culture of commercial coaching and tutoring: Commercial interests create artificial competitive pressures so as to make money from coaching and tuition.
• Lack of Adaptive thinking: The rote learning based education faces challenges in dealing with evolving exam patterns that focus on application-based questions.
  • It becomes a challenge for students to think critically and solve real-world problems for which adaptability and innovative thinking skills are needed.

What measures does the National Curriculum Framework (NCF) propose to address the concerns related to board exams?

• Modification of exam: Adjustments should relate to learning standards, content, textbooks, and pedagogical techniques.
• Relieving the burden:  Exams can be made “lighter and easier,” with a focus on competencies rather than reciting facts. 
  • The amount of content required for each subject would be greatly decreased.
  • Every board exam will be available at least twice a year, allowing students to retake and get better on the test. The mark sheet will only display the highest score. 
• Switching to “on-demand” tests: These may be given whenever the student is prepared. 
• • This action will greatly lessen stress as the students won’t be held accountable for their performance on a given day.
• Shifting the focus to real learning and competency: Board examinations would assess the competencies for the secondary stage, as stated in the Curriculum which will include:
  • Improvement in the test development process.
  • Periodic review of the efficacy, validity, and reliability of the redesigned exams.
  • Rigorous selection of test developers and evaluators, and their appropriate training; 

Other Measures:

• Digital transformation: As exams become more technology-dependent, students have the opportunity to develop digital literacy skills, which are invaluable in today’s digital age. Bridging the digital divide can lead to more equitable educational outcomes.

Government Measure to reform exams in India:

• Common University Entrance Test (CUET): It has been introduced in pursuance of the National Education Policy, 2020.
  • CUET exams shall test conceptual understanding and the ability to apply knowledge and aim to eliminate the need for taking coaching for these exams.
• National Testing Agency (NTA): It  has been established as a premier, specialist, autonomous, and self-sustained testing organization to conduct entrance examinations for admission/fellowship in higher educational institutions.
• National Education Policy, 2020: key features include: It seeks to address the shortcomings of the previous education policy and proposes a comprehensive framework to make education more inclusive, flexible, and multidisciplinary. Its Key features include:
  • 5+3+3+4 School Structure: The policy introduces a new school structure, dividing the pre-school and primary stages into a 5+3+3+4 format. 
  • Mother Tongue as Medium of Instruction: NEP 2020 encourages the use of the mother tongue or regional language as the medium of instruction until at least grade 5.
  • National Academic Credit Bank (NACB): It is proposed to facilitate seamless credit transfers among institutions and promote multidisciplinary learning.
  • Setting Up of the National Research Foundation (NRF): It should foster research and innovation in all disciplines, providing grants and promoting a culture of research in educational institutions.
  • Multiple Entry and Exit Points in Higher Education: It introduces a flexible approach to higher education, allowing students to enter and exit degree programs as per their preferences.

Way Forward: 

• Shift from rote learning to real learning: Changes need to be made to the Central Board of Secondary Education (CBSE) which allow a shift from testing memorisation to testing understanding.
• It should provide better distinguishing learning levels across the entire continuum of student levels. For this, 
  • The CBSE should generate questions that test conceptual understanding rather than textbook memorisation. 
  • CBSE should gradually increase the share of these new questions in exam papers so that students and teachers have time to adjust to the change. 
  • The National Council of Educational Research and Training (NCERT) and others should create and share sample questions to help students become familiar with the new question type.
• Flexibility to use scores:  At the board level, the University Grants Commission (UGC) should grant universities flexibility in how they use board scores in admissions.
  • Ex-scores from the Tamil Nadu State Board as equivalent to scores from the Haryana State Board. 
  • If (and only if) successful, the Centre should push other states to adopt similar changes to their own boards. 
• Expansion of the Number of high-quality HEIs: As per the report titled ‘Beyond the Top 200 – Effective International Collaboration for Indian Higher Education’, by 2030, India will have a college-going population of a staggering 140 million. 
  • To meet this demand, India will need at least another 1,500 institutions by 2030. 
• Accreditation of institutions:  The accreditation of HEIs needs to be at the core of the regulatory arrangement in higher education.  
  • Quality assurance agencies should guarantee basic minimum standards of technical education to meet the industry demand for quality manpower.  
  • The National Board of Accreditation should act as a catalyst for quality enhancement and quality assurance of higher technical education.
  • Credit rating agencies, reputed industry associations, media houses, and professional bodies should be encouraged to carry forward the process of rating of Indian universities and institutions. 
• Regular updation of curriculum: The government should encourage the development of a more flexible and modern curriculum that focuses on practical skills and competencies rather than just theoretical knowledge. 
  • The curriculum should be updated regularly to ensure that it is relevant to the changing needs of society and the job market. 

Conclusion:

The transformation of the Indian education system requires a comprehensive shift from rote learning to real learning, emphasizing conceptual understanding, reducing exam stress, and fostering a culture of innovation. 

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Context:

• This article is based on the news  “India’s Fiscal Future: Lots done, more to do” Which was published in the Live Mint. The robust performance of the Indian economy in recent times has revived the aspirations of the country to emerge as a developed economy by 2047. 

India’s Current Fiscal Progress

• Decreasing Global Growth: The World Economic Outlook update of July 2023 by the International Monetary Fund (IMF) projects that global growth is estimated to fall from 3.5% in 2022 to 3% in 2023. 
  • Global Headline Inflation: It is expected to fall from 8.7% in 2022 to 6.8% in 2023. 
  • The report further notes that for most economies, the priority is to achieve the twin goals of sustained disinflation and financial stability.

• India’s Central Government’s Debt: It stood at 57.1% of the GDP at the end of March 2023, which has reduced from 61.5% of GDP in 2020-21. General government debt is the total gross debt of the government at the end of a quarter or year.
  • The N.K. Singh Committee recommended setting a limit of 60% for India’s public debt to GDP ratio (consisting of 40% for the Central Government and 20% for the state government’s debt).

Also Read: Government Preparing to Release Vision India 2047 Document

Current Status of Indian Economy 

• High Central Expenditure: Capital expenditure has risen by 1.1% of GDP, and current expenditure has increased by almost double from 2018-19 to 2023-24. 
  • For instance, the effective capital expenditure of the Centre is budgeted at Rs 13.7 lakh crore, which will be around 4.5% of GDP.

• Limited States Deficit: States deficit hasn’t widened very much since the pandemic. Although revenues of the states fell sharply, they cut expenditure and thereby limited any fiscal slippage.
• Growing Tax Revenue: Tax revenue has been growing at a faster rate than national income this year.  For instance, direct Tax collections up to 10th August 2023 show that gross collections are at Rs. 6.53 lakh crore which is 15.73% higher than the gross collections for the corresponding period of last year.

• • This may have come from falling commodity prices, which have lowered production costs and raised corporate profits. High Subsidy Burden: India traditionally provided price subsidies for food, fertilizer, and kerosene oil. 
  • For instance, the Union Budget for 2023-24 allocated ₹1.75 trillion towards the fertiliser subsidy.
  • In more recent years, it ventured into direct cash transfers, but this income support was added on to price support, rather than replacing it. As a result, overall subsidies are higher today than they were in 2018-19.
• Other Current Expenditures: After a careful reduction in the number of central government-sponsored schemes, these expenditures have been raised in recent years. 
  • The Centre has recently made a rule that if the states do not spend the money quickly, they will have to pay an interest penalty. 
  • With rapidly changing economic conditions, the Indian economy has remained resilient.

What are the reasons for resilience in the Indian economy?

• Sensible Management of Macroeconomic Conditions: At a time when unprecedented inflationary conditions necessitated significant monetary tightening in many large economies. 
  • India has been able to manage its price rise while ensuring that domestic demand did not collapse and infrastructure construction was escalated through a spike in public capital expenditure. 
• Fiscal Consolidation: According to the Controller General of Accounts (CGA), India’s fiscal deficit for April- May 2023 stood at 11.8% of budget estimates as against 12.3% reported in the comparable period last year.
  • In the Union Budget 2023-24, the Government has adhered to its fiscal deficit target of 6.4% of GDP for FY23 to promote resilience and macroeconomic stability. 
  • Once economic recovery strengthens, the Government may go for a large fiscal consolidation of about 1.5% over FY25 and FY26 to meet its medium-term fiscal deficit target of 4.5% by FY26.
• Improving Spending Quality: India’s fiscal finances are in better shape in terms of spending quality as capital spending, like on roads and rails by the central government has risen appreciably. 
  • At the same time, the state’s fiscal deficit is at pre-pandemic levels and the spending quality by states has also improved this year.
• Controlled Total Expenditure: It touched a lower 13.9% of the budget target in April- May 2023 as against 14.8% in the same period of the last fiscal.

Despite this resilience, it’s essential to note that challenges exist, and the impact of domestic policies and external factors can influence the economic scenario.

What challenges does the Indian economy face?

• Higher Fiscal Deficit Target: India’s GDP growth has been robust and it is forecasted by the Reserve Bank of India (RBI) to be 6.5% for the current year. However, despite GDP growth being back at pre-pandemic levels, the central government fiscal deficit at 5.9% target for 2023-24 is much higher.
• High-Interest Payment: India stands out for its high-interest bill, deficit, and debt, despite its annual growth being much higher than the world average. 
  • For instance, India’s interest bill exhausts 45-50% of its annual net tax revenue. The fiscal excesses will be more noticeable when a new private capex cycle begins and competes for funding.
• IMF Decreases India’s Estimated Growth: The IMF has marked down India’s estimated growth rate to 5.9 per cent for FY24. 
  • Softening global growth is already impacting India in terms of faltering exports and slowing foreign direct investment flows. At the same time declining consumption demand in the domestic market is a concern. 
• Declining Tax and Other Revenues: Slower growth is anticipated to impact tax collections resulting in lower fiscal resources to support the economy as visible in a contraction of 9.6% in tax revenues in April-May 2023. 
  • The total receipts stood at 15.3% of budget estimates in April-May 2023 as against 16.7% in April-May 2022. 
• Public Sector Borrowing: Some spending commitments have risen, for instance the extension of the free food scheme. This can negatively impact economic growth and fiscal stability and lead to crowding-out effect of government borrowing on private investment due to higher interest rates.
• External Factors like escalation of geopolitical stress (viz. Israel- Palestine conflict), global inflation, enhanced volatility in global financial systems, sharp price correction in global stock markets, and FDI inflows, etc. may constrain India’s pace of economic growth in the ongoing fiscal.

Way Forward:

• Lowering Fiscal Deficit: A useful goal is to get the fiscal deficit back to the last normal pre-pandemic year’s level of 3.4% of GDP. This would mean almost 2.5% of GDP consolidation from 2023-24 levels.
• Raising Additional Resources from Tax Collections: According to the 15th Finance Commission’s estimates, there is over a 4% gap in tax to GDP ratio between India’s tax collection potential and actual collections. 
  • For this, the Government could avoid large increases in income tax thresholds which would allow for a broadening of the income tax base further.
  • Further, it is important to rationalize multiple GST rates into a simple three-rate GST structure viz. low (for essentials), standard (for most of the products), and high (for demerit and luxury goods) and lower the peak rate of 28%. This will help boost tax buoyancy and improve tax compliance. 
• Increasing Non-Tax Revenue: By making renewed efforts to achieve the targets set under disinvestment, asset monetization, and diluting stakes in public sector banks, etc..
  • For instance, the Government should fast-track disinvestment of public sector units and meet the revenue target of Rs. 51,000 crore for the current fiscal. 
  • Monetising idle government assets by the National Monetisation Pipeline (NMP) is yet another avenue for collecting non-tax revenues which can be used for capital creation. 
• Expenditure Rationalisation: It would act to free funds available for investment. For this, non-merit subsidies which comprise 5.7% of GDP should be rationalised. 
  • Further, the Aadhaar-enabled direct benefit transfer for food and fertilizers should be continued so that the subsidy is delivered directly to farmers.
  • The Fifteenth Finance Commission suggested to cease funding of Centrally Sponsored Schemes where allocation is small, below a certain threshold. 
• Avoiding New Subsidies: Introducing any new subsidy scheme, apart from production-linked incentives, should be avoided unless it is an absolute imperative justified by social and economic considerations. 
  • A new subsidy scheme would lead to a substantial outgo of revenue expenditure and put further pressure on the fiscal deficit. 
• Continue With Capital Expenditure: The Government should continue to focus on augmenting capital expenditure plans to kick-start the virtuous cycle of investment and growth.
  • Besides, the targets under NIP and Gati Shakti should be completed on time. 
• Independent Fiscal Council: India could also consider setting up an independent fiscal council to strengthen the fiscal responsibility framework, as suggested by the IMF. 

Conclusion:

While India’s economy has demonstrated resilience through prudent fiscal management and strategic reforms, addressing challenges such as high fiscal deficit, interest payments, and external uncertainties remains crucial for sustained economic growth and stability.

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