20 July 2024

• Economy: Telangana announced a 31,000 crore rupee crop loan waiver for over 40 lakh farmers. RBI has historically cautioned against loan waivers.
• Polity: FRBM Act analysis shows India's fiscal deficit at 5.1 per cent of GDP in FY25, still above the 3 per cent target.
• Governance: International Centre for Audit of Local Governance (iCAL) inaugurated in Gujarat by the CAG. First such centre in India.
• International: First overseas Jan Aushadi Kendra opened in Mauritius.

GS area: Agriculture, Economy, Governance

The Telangana government released 31,000 crore rupees in crop loan waivers for over 40 lakh farmers. The scheme covers loans up to 1 lakh rupee per farmer.

• Historical scale: Across nine state schemes studied by SBI in 2022, only about 50 per cent of intended beneficiaries actually received their waivers, pointing to poor implementation.
• Fiscal impact: Telangana's annual state budget is approximately 2.9 lakh crore rupees. A 31,000 crore waiver represents roughly 10 per cent of the budget, crowding out development and capital expenditure.
• RBI's consistent position: Farm loan waivers create moral hazard (farmers who did not get waivers become reluctant to repay, expecting the next waiver), damage credit culture in rural areas, and strain state finances without addressing the structural causes of farm distress.
• Alternatives: Crop insurance (PMFBY), price deficiency payments (PM-AASHA), and direct income support (PM-KISAN at 6,000 rupees per year per family) are considered less distortionary.
• Political economy: Loan waivers are electorally popular because they provide immediate debt relief. The Telangana Congress government's waiver fulfilled a pre-election promise.

Static linkage: Agricultural distress (Economy), fiscal responsibility (Governance).

GS area: Economy, Governance

The Fiscal Responsibility and Budget Management Act 2003 set targets for reducing India's fiscal deficit to 3 per cent of GDP.

• Original target: Gross Fiscal Deficit below 3 per cent of GDP by FY2008. Achieved in FY2007-08 (GFD at 2.6 per cent).
• Crisis deviation: The global financial crisis of 2008-09 pushed GFD back up to 6.6 per cent in FY2009-10 as the government implemented fiscal stimulus.
• Revised targets (2018 amendment): Debt-to-GDP ratio of 40 per cent for the Centre (currently over 56 per cent), 20 per cent for states, and 60 per cent combined.
• FY25 status: Fiscal deficit estimated at 5.1 per cent of GDP (Union Budget 2024-25 revised estimate is 4.9 per cent). The path to 3 per cent has been repeatedly deferred.
• Tax-GDP ratio improvement: The central government's gross tax-to-GDP ratio improved from 9.1 per cent in 2002-03 to over 11 per cent by 2024. Direct taxes now constitute about 55 per cent of total tax collection.
• Criticism of FRBM compliance: India has often met FRBM targets through expenditure compression (cutting capital and social spending) rather than revenue expansion.

Static linkage: Fiscal policy (Economy), government budgeting.

GS area: Governance, Polity

The International Centre for Audit of Local Governance (iCAL) was inaugurated in Gujarat by the Comptroller and Auditor General of India.

• Purpose: First such centre in India. Aims to set global standards for auditing local bodies (panchayats, municipalities), build capacity among state auditors, and facilitate knowledge exchange among the 40 countries that have Supreme Audit Institutions focused on local governance.
• CAG's role: Article 148 to 151 of the Constitution establish the CAG. The CAG audits accounts of the Union and state governments. Local body audit is done by State Auditors under varying frameworks.
• Gap being addressed: Local bodies in India collect and spend funds from multiple sources (own revenues, state grants, central grants under Finance Commission recommendations, scheme funds). Audit quality and coverage are uneven across states.
• Governance link: Better audit of local bodies strengthens accountability at the grassroots level, directly relevant to Panchayati Raj.

Static linkage: Audit and accountability (Polity/Governance), local governance.

GS area: Polity, Social Justice

The Foreigners Tribunals in Assam, which determine citizenship, were in the news due to policy changes on which categories of persons are referred to them.

• Legal basis: Foreigners (Tribunals) Order 1964 under the Foreigners Act 1946.
• Function: Quasi-judicial bodies that determine whether a person is an Indian citizen or a foreigner. The burden of proof is reversed: the individual must prove citizenship.
• Current status: 100 of the 300 sanctioned Foreigners Tribunals are operational in Assam.
• Policy change: Non-Muslim entrants who arrived before 31 December 2014 are exempted from referral to Foreigners Tribunals (aligned with the Citizenship Amendment Act 2019, which grants citizenship to non-Muslim minorities from Bangladesh, Pakistan, and Afghanistan who entered before that date).
• NRC in Assam: The National Register of Citizens (NRC) exercise was completed in 2019. About 19 lakh people were excluded from the list. The NRC and the Foreigners Tribunals operate as parallel mechanisms in Assam.

Static linkage: Citizenship (Polity), Assam's NRC (Governance).

GS area: Governance, International Relations

The first overseas Jan Aushadi Kendra (Pradhan Mantri Bhartiya Janaushadhi Pariyojana outlet) was inaugurated in Mauritius.

• Scheme: Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) provides generic medicines at prices 50 to 90 per cent lower than branded equivalents.
• Implementing body: Bureau of Pharma PSUs of India (BPPI) under the Ministry of Chemicals and Fertilisers.
• Domestic expansion target: 10,500 Janaushadhi Kendras by March 2025.
• Mauritius significance: India-Mauritius ties are strong (historically large Indian-origin diaspora). The overseas Kendra demonstrates India's pharmaceutical sector's soft power.
• Medicines supplied: Over 1,900 generic formulations and 285 surgical items at PMBJP prices.

Static linkage: Public health (Governance), India-Mauritius relations.

• KIRTI Programme (Khelo India Rising Talent): Targets 9 to 18-year-old athletes. Plans to assess 20 lakh young athletes through Talent Assessment Centres across India. Phase 2 started with 20,000 students from Delhi Municipal Corporation schools. Uses AI-based analytics to predict athletic potential.
• Dual-tower solar thermal plant (China): China's Gansu province activated a dual-tower Concentrated Solar Power plant with 30,000 mirrors per tower achieving 94 per cent reflective efficiency. Molten salt storage enables night-time generation. 24 per cent efficiency gain over single-tower designs.
• Gevra and Kusmunda coal mines: South Eastern Coalfields Limited operates Gevra (2nd largest coal mine globally) and Kusmunda (4th largest) in Korba district, Chhattisgarh. Combined annual output exceeds 100 million tonnes, approximately 10 per cent of India's total coal production.