Today in History (September 6^th, 2018)

On September 6th, 2018 the five-judge Bench partially struck down Section 377 of the Indian Penal Code, decriminalising same-sex relations between consenting adults. LGBT individuals are now legally allowed to engage in consensual intercourse.

Let’s Revise

A)Recently Lothal was in news due to a study by IIT Ahmedabad, what it is?

1. It’s an ancient Airport
2. It’s an ancient granary
3. It’s was ancient dockyard
4. It was a worship place

Answer: C)
Rationale: Recently a new study by the Indian Institute of Technology-Gandhinagar has found evidence for Lothal dockyard of Harappan Civilization.
B) Lothal is located in which of the Indian state?

1. Maharashtra
2. Gujrat
3. Rajasthan
4. Uttar Pradesh

Answer: B)
Rationale: Lothal – It is situated approximately 30 km inland from the Gulf of Khambhat on the western coast of India in Gujarat. It served as a bustling port during the Bronze Age Harappan period (2600 BCE to 1900 BCE)
C) Lothal is associated with ____

1. Early Vedic Civilisation
2. Later Vedic Civilisation
3. Palaeolithic and prehistorical period
4. None of the above

Answer: D)
Rationale: None of the above option is correct because Lothal – It is situated approximately 30 km inland from the Gulf of Khambhat on the western coast of India in Gujarat. It served as a bustling port during the Bronze Age Harappan period (2600 BCE to 1900 BCE).
D) Mohanjodaro is famous for _____

1. Modern film industry in Pakistan
2. A harappan site in Pakistan
3. A Vedic age site in Uttar Pradesh
4. A Harappan site in India

Answer: B)
E) Dholavira is currently located in _____

1. India
2. Pakistan
3. Bangladesh
4. Afghanistan

Answer: A)
Rationale: The ancient city of Dholavira is an archaeological site at Kachchh District, in the state of Gujarat. In 2021 UNESCO has announced the Harappan city of Dholavira in Gujarat as India’s 40th world heritage site. It is the first site of Indus Valley Civilisation (IVC) in India to be included on the coveted list.
F) Indian PM visited Brunei which is located in which of the Ocean?

1. Indian Ocean
2. Atlantic Ocean
3. Pacific Ocean
4. Southern Ocean

Answer: C)
Rationale: Brunei is located in the Pacific Ocean. Brunei is bordered by the South China Sea in the north and on all other sides by Malaysia.
G) Which one is the capital city of Brunei?

1. Bandar Seri Begawan
2. Kuala Belait
3. Seria
4. Tutong

Answer: A)
Rationale: Bandar Seri Begawan is the capital city of Brunei and other options are the towns/cities/districts in Brunei.
H) Krishna river originates from ___

1. Easter Ghats
2. Western Ghats
3. Himalayas
4. None of the above

Answer: B)
Rationale: The origin of Krishna River is from Western Ghats just north of Mahabaleshwar (Maharashtra).
I) Krishna River empties its water in ____

1. Arabian Sea
2. Gulf of Kutch
3. Bay of Bengal
4. Sundarbans Delta

Answer: C)
Rationale: It (Krishna River) ultimately empties into the Bay of Bengal at Hamasaladeevi on the eastern coast of Andhra Pradesh.

Summary of Today’s News

Rajasthan Cabinet approves 33% reservation for women in police force

Earlier states like Bihar, Gujrat, Odisha, and Maharashtra have also provided for women quotas in the police force.
• In 2022, women made up about 12% of the state police. Chandigarh had the highest at 22%, while Jammu and Kashmir had the lowest at 3.3% (India Justice Report, 2022).
Need for more women in Police Force
• Legal Mandate: POCSO Act and major criminal laws now require every case of sexual assault to be recorded and investigated by a female police officer.
• The arrest of a woman and searching a woman must be done by a woman only.
• Better reporting of Crime Against Women: Presence of women can foster trust among female victims, encouraging them to report crimes.
• Improved police-community relations: This is because women’s use of excessive force is less common.
Challenges in increasing women representation in Police
• Stereotype: Women are seen to be unfit for long and unpredictable hours of the police system.
• Policy gap: Absence of reservation policy in many states (Police is a state subject under the 7th Schedule of the Constitution)
• Implementation gap: E.g., Bihar provides 35% reservation for women, but actual number in police force is about 17.4%.
Initiatives to increase women representation in Police force
• Ministry of Home Affairs (MHA) issued advisories to all the States/UTs to establish at least one all-women police station in each district.
• MHA issued advisories to all the States/UTs to increase representation of women police to 33% of the total strength.
• Creches and Day Care Centres have been provided by the CAPFs to women employees.
• All female candidates are exempted from payment of application fee in CAPFs exams.

What is vertical fiscal imbalance?

• The role of the 16th Finance Commission should be to eliminate vertical fiscal imbalance in federal relations. What should it do when revenues are concentrated with the Union government, and the States are burdened with expenditure responsibilities?
• The financial relationship between the Union government and the States in India is asymmetrical, as in many other countries with a federal constitutional framework.
• As the 15th Finance Commission noted, States incur 61% of the revenue expenditure but collect only 38% of the revenue receipts.
• In short, the ability of the States to incur expenditures is dependent on transfers from the Union government.
• Consequently, there is the problem of Vertical Fiscal Imbalance (VFI) in Indian fiscal federalism where expenditure decentralisation overwhelms the revenue raising powers of the States.

Why should VFI be reduced?

• Constitutionally, the financial duties of the Union government and the States are divided.
• On the revenue front,
• to maximise the efficiency of tax collection, the Personal Income Tax, the Corporation Tax and a part of indirect taxes are best collected by the Union government.
• But on the expenditure front, to maximise the efficiency of spending,
• publicly provided goods and services are best supplied by the tier of the government closest to its users.
• It is in this context that the extent of VFI merits attention.
• The 15th Finance Commission had noted that India has had a larger, and rising, vertical imbalance than most other federations.
• These imbalances were further magnified during periods of crises, such as the COVID-19 pandemic, which drove a large wedge between one’s own revenues and expenditure responsibilities at the sub-national level.
• The problem of VFI falls under the purview of the Finance Commission, and it deals with broadly two questions.
• The first question is how to distribute the taxes collected by the Union government to the States as a whole. These transfers are made as a prescribed share of the “Net Proceeds” (Gross Tax Revenue of the Union less surcharges, cesses and costs of collection).
• The second question is how to distribute taxes across States. The matter of VFI arises as part of the first question.
• Apart from devolving taxes, the Finance Commissions also recommend grants to States in need of assistance under Article 275 of the Constitution.
• But these are generally for short periods and for specific purposes.
• There are also transfers to the States that fall outside the Finance Commission’s ambit. For example, the Union government spends substantial amounts — under Article 282 of the Constitution — on subjects falling in the State and Concurrent lists through centrally sponsored schemes and central sector schemes.
• But such grants are tied transfers that include conditionalities. In sum, the devolution of taxes from the net proceeds is the only transfer to the States that is untied or unconditional.

Calculating VFI in India
• Here we try to estimate the VFI in India after the devolution of taxes to the States.
• We measure VFI at the level of “all States”, and not separately for each State.
• For this, we use a globally accepted method.
• We first estimate a ratio where the numerator is the sum of the Own Revenue Receipts (ORR) and the tax devolution from the Union government for all States.
• The denominator is the Own Revenue Expenditure (ORE) for all States.
• If this ratio is less than 1, it implies that the sum of own revenue receipts and tax devolution of the States is inadequate to meet the ORE of the States.
• If we subtract this ratio from 1, we get the deficit in receipts. It is this deficit that we use as a proxy for VFI after devolution.
• We can then ask the simple question: how much should tax devolution rise over and above that recommended by the past Finance Commissions to equalise the ratio to 1?
• Equating the ratio to 1 would eliminate VFI. The average share of net proceeds devolved to the States between 2015-16 and 2022-23 should have been 48.94% to eliminate the VFI.
• But the shares of tax devolution recommended by the 14th and 15th Finance Commissions were only 42% and 41%, respectively, of the net proceeds.

Raising tax devolution
• Many States have raised the demand that the share of tax devolution from the net proceeds must be fixed at 50% by the 16th Finance Commission.
• They add force to this demand by pointing to the exclusion from the net proceeds of the substantial amounts of cesses and surcharges, which truncates the net proceeds within the gross tax revenue.

Way Forward
• The share of net proceeds devolved to the States must rise to about 49% to eliminate VFI.
• Such an increase in devolution would place more resources in the hands of the States to spend on their citizens.
• It would also ensure that States’ expenditures better respond to jurisdictional needs and priorities, and that the efficiency of expenditures is enhanced.
• Overall, it will be a move towards a healthy system of cooperative fiscal federalism.

Conclusion

• As the 15th Finance Commission noted, States incur 61% of the revenue expenditure but collect only 38% of the revenue receipts. In short, the ability of the States to incur expenditures is dependent on transfers from the Union government.
• The problem of VFI falls under the purview of the Finance Commission.
• Many States have raised the demand that the share of tax devolution from the net proceeds must be fixed at 50% by the 16th Finance Commission.