1. Subsidy Bill Reduction
CONTEXT: The central government’s expenditure on subsidies is projected to fall to a five-year low in 2024-25, both in absolute terms and as a percentage of GDP. This is despite no hikes in fertilizer or food grain prices.
Reasons for Reduction:
Food Subsidy:
- Discontinuation of free additional food grains under Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).
- Reduced grain off take through PDS and other schemes due to improved food security and lower buffer stock requirements.
- Lower FCI food procurement and carrying costs.
Fertilizer Subsidy:
- Decrease in global fertilizer prices after the peak reached following the Russia-Ukraine war.
- Food Subsidy Details: Food subsidy budgeted at Rs 205,250 crore for 2024-25 compared to an all-time high of Rs 541,330 crore in 2020-21.
- FCI economic cost for rice and wheat is significantly higher than the subsidized issue price to PDS beneficiaries.
- Fertilizer Subsidy Details: Subsidy budgeted at Rs 164,000 crore for 2024-25, down from Rs 251,339 crore in 2022-23 due to lower global fertilizer prices.
- Potential rise in DAP subsidy due to hardening prices.
- Comfortable fertilizer supply situation for the current Kharif season, but potential shortage of DAP in the upcoming Rabi season.
Additional Notes:
The government is bridging the gap between FCI’s economic cost and issue price through budgetary allocation.
Urea and natural gas prices are crucial factors for future fertilizer subsidy requirements.
2. Fiscal Consolidation Roadmap (Based on Budget 2024-25)
Key Message: The government has shifted its focus from just fiscal deficit to a debt-GDP ratio for achieving fiscal consolidation. This reflects a pragmatic approach considering India’s fast-growing economy.
Arguments for Debt-GDP Ratio Focus:
- Dynamic Nature of Fast-Growing Economies: A fixed deficit target might not be sustainable for a rapidly growing economy like India. A higher deficit can be accommodated due to the expansion of the GDP.
- Sustainable Debt Levels: The focus is on keeping the debt-to-GDP ratio at a sustainable level, even if it means a slightly higher deficit than the historical target of 3%.
Action Taken:
- Reduced Fiscal Deficit: The government has brought down the fiscal deficit target for FY25 to 4.9% from 5.1% in the interim budget. This trend is expected to continue.
- Commitment to Lower Debt: The government aims to bring the debt-GDP ratio on a declining path from FY26-27 onwards.
Measures for Deficit Reduction (FY24):
Compressed Revenue Expenditure: Revenue expenditure has been reduced by 1.3% compared to revised estimates.
Lower Capital Expenditure (Capex): Capex has seen a marginal decrease compared to revised estimates and a significant drop from the budget estimate.
Revenue Growth (FY24):
Tax Revenue Increase: Tax revenues have grown by a healthy 10.9% year-on-year.
Non-Tax Revenue Rise: Non-tax revenues have also witnessed a substantial increase of 40.8%.
FY25 Projections:
Steady Capex Growth: The government has maintained the FY25 capex target of Rs 11.11 lakh crore, reflecting a continued focus on infrastructure development.
Sustained Revenue Growth: Tax and non-tax revenue are projected to grow at 11% and 35.8% respectively in FY25.
Criticisms and Considerations:
Maintaining Expenditure Balance: While controlling expenditure is crucial, excessive cuts could hinder growth momentum. Striking a balance between fiscal consolidation and growth is essential.
Revenue Sustainability: The reliance on high non-tax revenue growth might not be sustainable in the long run. Diversification of tax revenue sources is necessary.
3. CASE STUDY: Bheemesha's Ropeway
Story:
Bheemesha’s village relied on an unsafe bridge made of areca palms. Seeking a solution, Bheemesha approached Professor Sunil of Vivekananda Engineering College (possibly indicating a lack of government initiative in addressing the issue). Together, they devised a cost-effective trolley ropeway (potentially highlighting a gap in government-provided infrastructure solutions). Built with Bheemesha’s collaboration and using local resources, the ropeway improved connectivity and transportation of agricultural produce.
Government Role:
- Infrastructure Gap: The case highlights a potential gap in government-funded rural infrastructure projects, particularly small bridges crucial for villages.
- Community Participation: Bheemesha’s initiative demonstrates the importance of community participation in addressing local needs, possibly in collaboration with the government for future projects.
UPSC Takeaways:
- Rural Infrastructure Development: This case underscores the need for robust rural infrastructure, including bridges, to improve connectivity and economic activity. (GS Paper II & III)
- Community-Driven Solutions: Bheemesha’s story exemplifies the success of community participation in finding innovative solutions for local problems. (GS Paper II)
- Importance of Collaboration: Collaboration between villagers, academic institutions, and potentially the government can bridge the gap in rural infrastructure. (GS Paper II)
- Cost-Effective Technologies: The trolley ropeway showcases the potential of exploring affordable and sustainable technologies for rural development. (GS Paper III)
Note: You can use this case study to discuss:
- The need for increased government investment in rural infrastructure development.
- The importance of encouraging community participation in identifying and addressing local challenges.
- The potential of collaboration between government, academic institutions, and local communities for sustainable development solutions.
4. GM Mustard and need for national policy
CONTEXT: Supreme Court gave split verdict on validity of centre’s approval on GM-mustard
GM Mustard (Dhara Mustard Hybrid-11 or DMH-11): India’s first indigenously developed GM food crop.
Developed by: Centre for Genetic Manipulation of Crop Plants (CGMCP), Delhi University (India)
Key Characteristics:
- Genetically Modified Organism (GMO): DNA is modified to introduce specific traits.
- Herbicide Tolerance: Resistant to specific herbicides, potentially reducing weeding costs.
- Hybrid: Created by crossing two different parental lines, aiming for increased yield compared to traditional varieties (claimed 28-37% increase).
- Male Sterility System: Uses a gene system to control pollination for hybrid seed production.
Reduce imports: Developed for increased edible oil production and reduced dependence on imports.
The Genetic Engineering Appraisal Committee (GEAC) is the regulatory body for genetically modified organisms in India. Established as a statutory body under the Environment Protection Act (1986) |
Concerns:
- Safety for human consumption and environment
- Impact on traditional mustard varieties (cross-pollination)
- Seed monopoly by corporations
Current Status:
Split Supreme Court Verdict (July 2024):
- Validity of 2022 approval for release challenged.
- Need for national policy on GM crops emphasized.
- Commercial release on hold.
National Policy Formulation:
- National Policy Needed: The Court unanimously directed the Central Government to formulate a national policy on GM crops. This policy will address research, cultivation, trade, and commerce of GM crops.
- Stakeholder Consultation: The policy formulation should involve consultations with experts (agriculture, biotechnology), state governments, and farmers.
5. High court power related to death sentence
CONTEXT: The Kerala High Court commuted the death sentence awarded by a Pathanamthitta court to Chacko (alias Shibu) for murdering his brother’s two children.
- Chacko’s sentence was reduced to 30 years rigorous imprisonment without remission.
- The Kerala High Court exercised its power to review the death sentence and commuted it to life imprisonment.
- Note: This decision doesn’t involve the President’s pardoning power.
Pardoning Power:
This is the authority vested in the President of India under Article 72 (or Governor in some cases under Article 161) to grant clemency in criminal cases. Clemency can take various forms:
- Pardon: Completely erases the conviction and punishment.
- Commutation: Reduces the severity of the punishment (as happened in the passage – death sentence to life imprisonment).
- Reprieve: Temporary postponement of the execution.
- Respite: Postponement of the sentence of the punishment.
- Remission: Reduction of the amount of sentence without changing its character.
- The decision to grant clemency is discretionary and not guaranteed.
- There are usually processes for filing petitions for clemency.
High Court’s Power related to Death Sentence:
High Courts in India have the authority to review death sentences passed by lower courts. They can:
- Confirm the death sentence.
- Commute the death sentence to a lesser punishment (like in the passage).
- Acquit the accused if new evidence or legal errors are found.
