TOPIC: GS 2Â Functions and Responsibilities of the Union and the States, Issues and Challenges Pertaining to the Federal Structure, Devolution of Powers and Finances up to Local Levels and Challenges Therein.
Towards a more federal structure
What is the news?
- Preserving the unity of India was a great concern at the time of independence. The rulers of Travancore, Hyderabad, Jodhpur, Bhopal and Junagadh wanted their own separate countries.
- In October 1947, Kashmir was invaded with the backing of a very young Pakistan government.
- Goa was liberated from the Portuguese only in 1961.
- It was natural that India opted to be a Union unlike the U.S. and many other countries which have federal governments.
- The essential difference is that the Central government has more authority and power in a Union government.
Revenue distribution
- Direct taxes are income tax and corporate tax.
- In the U.S both the federal and State governments collect such taxes from individuals and corporations.
- In India direct taxes go entirely to the Central government.
- The Central government is supposed to distribute 41% of its gross tax revenues reduced from 42% after the formation of new Union Territories in Jammu and Kashmir to the State governments.
- State governments get funds from the Central government according to the Finance Commission’s recommendations.
- Often politics intervenes and some States get less and some more.
- Usually the Central government does not meet the 41% target.
- The Central government has added cess on various items which adds up to over 5 lakh crore and not shared with the State governments.
- State governments also raise their own funds largely through taxes on liquor, property, road and vehicles.
- At an allÂIndia level, the States get 26% of their total revenue from the Central government. Some of the so called poorer States get up to 50% of their total revenue from the Central government, making them even more dependent.
- This gives more economic power to the Central government and allows ruling parties at the Centre to use these funds to their advantage.
Regional disparity
- Maharashtra, Delhi and Karnataka contribute the lion’s share of taxes to the government.
- These three regions along with Tamil Nadu and Gujarat contribute 72% of the tax revenue.
- Uttar Pradesh, which has the largest population in India, contributes only 3.12% but gets over 17% of the revenue distributed by the Central government.
- The population growth rates in the south have come down to near zero, whereas the population in central and north India continues to grow.
- The cross subsidy from the south to the north will therefore grow.
- Job seekers and those looking for higher quality education are flocking to the south.
Beyond the current framework
- Provide greater economic power to the States so that they can directly collect more taxes and be less dependent on the Central government.
- For poorer States a period of transition is perhaps required.
- An extended pandemic, negative economic growth and loss of crores of jobs, the situation is becoming ripe for rabbleÂrousing politics
Way Forward
- India’s hardÂwon independence and unity needs to be preserved.
- There are threats from China for defence security
- Threats from Afghanistan after the U.S. withdraws its troops with affecting India’s internal security
- A transition to a more federal structure will allow the Centre to focus on external threats instead of internal dissensions.
Mains Question
If States directly collect more tax, they will become less dependent on the Central government. Explain
Sources : https://www.thehindu.com/opinion/op-ed/towards-a-more-federal-structure/article34893800.ece
PRELIMS PUNCHERS
- The Collective Security Treaty Organization
It is an intergovernmental military alliance in Eurasia that consists of selected post-Soviet states. The treaty had its origins to the Soviet Armed Forces which was gradually replaced by the United Armed Forces of the Commonwealth of Independent States. Six post-Soviet states belonging to the Commonwealth of Independent States Russia, Armenia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan—signed the Collective Security Treaty. It is also referred to as the “Tashkent Pact” or “Tashkent Treaty”
The CSTO charter reaffirmed the desire of all participating states to abstain from the use or threat of force. Signatories would not be able to join other military alliances or other groups of states, while aggression against one signatory would be perceived as an aggression against all. To this end, the CSTO holds yearly military command exercises for the CSTO nations to have an opportunity to improve inter-organization cooperation.
- The Eurasian Economic Union (EAEU)
It is an economic union of states located in Eastern Europe, Western Asia, and Central Asia. Treaties aiming for Armenia’s and Kyrgyzstan’s accession to the Eurasian Economic Union. The Supreme Eurasian Economic Council is the supreme body of the Union, consisting of the Heads of the Member States. The second level of intergovernmental institutions is represented by the Eurasian Intergovernmental Council consisting of the Heads of the governments of member states. The day-to-day work of the EAEU is done through the Eurasian Economic Commission, the executive body of the Union. There is also a judicial body – the Court of the EAEU
The EAEU encourages the free movement of goods and services, and provides for common policies in the macroeconomic sphere, transport, industry and agriculture, energy, foreign trade and investment, customs, technical regulation, competition and antitrust regulation. Provisions for a single currency and greater integration are envisioned for the future. The union operates through supranational and intergovernmental institutions.
- The Ganges
It is a trans-boundary river of Asia which flows through India and Bangladesh. The river rises in the western Himalayas in the Indian state of Uttarakhand, and flows south and east through the Gangetic Plain of North India into Bangladesh, where it empties into the Bay of Bengal. It is the third largest river on Earth by discharge
Major left-bank tributaries include the Gomti River, Ghaghara River, Gandaki River, and Kosi River; major right-bank tributaries include the Yamuna River, Son River, Punpun and Damodar. The hydrology of the Ganges River is very complicated, especially in the Ganges Delta region. One result is different ways to determine the river’s length, its discharge, and the size of its drainage basin. The basin covers parts of four countries, India, Nepal, China, and Bangladesh eleven Indian states, Himachal Pradesh, Uttarakhand, Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Bihar, Jharkhand, Punjab, Haryana, Rajasthan, West Bengal, and the Union Territory of Delhi.
- The Global Competitiveness Index
It is released by the World Economic Forum. It was launched in 1979.It ranks the competitiveness landscape of 141 economies through 103 indicators organised into 12 pillars.
Top Rankers is Singapore has topped the index followed by Denmark and Switzerland .India has been ranked at 43rd in the index .BRICS Countries: India is ranked second after China(20th) followed by Russia (50th), Brazil (56th) and South Africa (59th). With some traditional weaknesses like poor infrastructure and insufficient education investment keeping its ranking low.
PRELIMS QUESTIONS
- Consider the following statement with reference to Ganga
- The basin covers parts of three countries, India, Nepal and Bangladesh
- In India the basin covers around 11 states
Select the correct statement using code given below.
(a). 1only                                (b) 2 only
(c). Both of them                (d). None of the above
Answer : B
It is a trans-boundary river of Asia which flows through India and Bangladesh. The river rises in the western Himalayas in the Indian state of Uttarakhand, and flows south and east through the Gangetic Plain of North India into Bangladesh, where it empties into the Bay of Bengal. It is the third largest river on Earth by discharge
Major left-bank tributaries include the Gomti River, Ghaghara River, Gandaki River, and Kosi River; major right-bank tributaries include the Yamuna River, Son River, Punpun and Damodar. The hydrology of the Ganges River is very complicated, especially in the Ganges Delta region. One result is different ways to determine the river’s length, its discharge, and the size of its drainage basin. The basin covers parts of four countries, India, Nepal, China, and Bangladesh eleven Indian states, Himachal Pradesh, Uttarakhand, Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Bihar, Jharkhand, Punjab, Haryana, Rajasthan, West Bengal, and the Union Territory of Delhi
- The Global Competitiveness Index is released by
- World Economic Forum
- World Bank
- World Trade Organization
- UNESCO
Answer: A
It is released by the World Economic Forum. It was launched in 1979.It ranks the competitiveness landscape of 141 economies through 103 indicators organised into 12 pillars.
Top Rankers is Singapore has topped the index followed by Denmark and Switzerland .India has been ranked at 43rd in the index .BRICS Countries: India is ranked second after China(20th) followed by Russia (50th), Brazil (56th) and South Africa (59th). With some traditional weaknesses like poor infrastructure and insufficient education investment keeping its ranking low.