20 June 2023

MAINS DAILY QUESTIONS & MODEL ANSWERS

Q1. Consider the Finance Commission’s contribution to the development of fiscal federalism in India. What challenges must the new finance commission face if it wants to guarantee long-term fiscal sustainability?

Paper & Topic: GS III – Statutory and Non-Statutory Bodies

Model Answer:

• The Finance Commission has a crucial role to play in India’s overall government system. The Finance Commission was constituted in accordance with Article 280 of the Constitution to outline the financial relations between the central government of India and the individual state governments. The Indian president creates this quasi-judicial committee every five years, or sooner if he sees fit. Its primary responsibility is to provide guidelines and practises for how money should be distributed between the Centre and States.

The Finance Commission encourages fiscal federalism in the following ways:

• It establishes the ratio of each state’s share to the federal government and the states, as well as how the net tax proceeds will be distributed between the federal and state governments.
• Before deciding how to divide the corpus in the net divisible pool, the Finance Commission discusses with all subnational governments. The remaining share of the net divisible pool is left up to the central government after the Commission decides how much of it should be distributed to the subnational governments in consideration of their needs.
• the rules under which the Centre should distribute funds from the Consolidated Fund of India to the states as grants in aid.
• the steps necessary to raise a state’s consolidated fund in order to supplement the resources of the panchayats and municipalities according to the recommendations made by the state finance commission.
• In order to ensure sound financial management, the president refers to it while deciding on any other matter.

The incoming finance commission will face the following challenges in order to maintain long-term fiscal sustainability:

Horizontal distribution worries

• Demand for a bigger, more evenly distributed pool: The Centre currently gives the States 41% of their tax pool. States will demand an increase in this percentage, but given the Centre’s spending requirements and the ceiling on its borrowing, there isn’t much room for that.
• States raised concerns about the terms of reference when the last finance commission was requested to take the 2011 population projections into account when determining a State’s expenditure requirements. This deviated from the usual practise of using demographic data from 1971. The southern states, which had historically been successful in stabilising population growth rates, opposed to this change in the base year, calling it a “penalty for good performance.”
• A state’s deficit may be somewhat attributed to fiscal responsibility and partially to incompetence, but in the past Finance Commissions have had difficulty differentiating the two. They tried to alter the distribution formula to boost deficit states without penalising responsible nations, but this was technically impossible because you cannot give more to one State without giving less to another. As a result, criticism has been levelled at each and every horizontal distribution formula for being either unfair, ineffective, or both.
• The pool that is divided between the central and the states does not include cess and surcharge payments. When the Constitution was modified in 2000 to give States a share of the whole tax pool, it was implied that the Centre would utilise cesses and surcharges sparingly rather than frequently as has become the custom. States feel as though they have been cheated out of their fair share of federal tax revenue because of this misconception.
• Restrict Freebies: In light of the populist spending tactics employed by political parties prior to elections, the incoming finance commission should concentrate on resolving this issue. The Fiscal Responsibility and Budget Management (FRBM) Act’s limitations ought, in theory, to have provided a brake on such populist spending, but governments have come up with cunning ways to raise debt that don’t appear in the budget books.
• Public finance management (PFM) system reform is an ongoing effort. Prior Finance Commissions have made recommendations about the PFM systems of the union and the states, with an emphasis on budgetary and accounting practises, financial reporting, etc. The ensuing finance commission must create a long-term fiscal sustainability plan and address many new fiscal issues.

Q2. Do you believe the 1857 rebellion signalled the beginning of the American Revolution against the British or was it merely a small-scale mutiny? What elements played a part in the revolt’s failure?

Paper & Topic: GS I – Modern Indian History

Model Answer:

• In 1857, the first serious rebellion against British rule in parts of central and northern India took place, almost bringing an end to British administration in these regions. Many observers considered the 1857 revolt to be a little sepoy mutiny due to the major involvement of Indian sepoys. However, because a disaffected rural society in north India supported the revolt, patriotic and nationalist Indian authors and historians have referred to it as the First War of Indian Independence.

How did the Revolt of 1857 lead to the founding of Independent India?

• All socioeconomic classes, including farmers, nobility, renters, and landlords, mobilised in significant numbers.
• Muslims and Hindus joined forces for the first time in the rebellion against the British. The mutineers’ proclamation in Delhi made it clear that they had no religious preconceptions. This coexistence of Hindus and Muslims shows that the revolt meets the criteria for a national war of independence.
• The Mughal Emperor Bahadur Shah Zafar spearheaded the uprising, giving it a sense of national identity.
• Restoring the politically decentralised system that existed in the 18th century during Mughal rule was a shared objective. For example, many rebel leaders proclaimed Bahadur Shah Zafar to be the ruler of India.

In what ways was the revolt of 1857 a localised sepoy mutiny?

• The insurrection had only spread to one area in Northern India. It had not reached southern India in many parts of North India, especially Punjab.
• The rebellion started in the military cantonment area, and military bases were where it spread.
• Peasants and other locals hardly took part in the rebellion in 1857.
• Short-term objectives and motivations for the uprising included, in some cases, the aristocratic leadership’s desire to restore feudal privileges.

The following are some causes of the 1857 uprising’s failure:

• The 1857 uprising, which started in Meerut, was confined to northern cities like Kanpur, Banaras, Lucknow, Jhansi, and others rather than spreading throughout all of India. Even in the north, neither Kashmir, Punjab, Sind, nor Rajputana supported the movement. The regions beyond the Narmada River, as well as eastern and southern India, were largely unscathed.
• Lack of Unity: The rebels were not united; the Bombay and Punjabi soldiers allied with the East India Company against the Bengali sepoys, who rose against the company. But as a result of these problems, the rebels themselves lacked unity.
• The British army was excessive and superior in many areas when it arrived in India in large numbers from other parts of the world. The British had superior armaments to the insurgents. The British also possessed a more powerful navy.
• Lack of leadership: The Rebels’ lack of leadership was a crucial contributor to the mutiny’s defeat. The Rani of Jhansi, Tatya Tope, and Nana Sahib were the only effective mutineers’ leaders. Most of the rebel commanders fought because they were personally motivated to do so. Prior to the British government’s strategy hurting their own interests, they didn’t rebel against the British.
• The ruling class opposed the rebellion because they benefited from British policies and preferred to support the British government over the rebels. For instance, the British were backed by individuals like the Sang Bahadur of Nepal, Sir Dinkar Rao, the minister of Gwalior, Sir Salar Jung, the minister of Hyderabad, and others.
• Spirit of Nationalism: The revolts lacked a sense of nationalism. Modern nationalism was still unheard of in India. Patriotism was characterised as having a deep love for one’s small town, region, or, at most, state. Interests shared by all Indians and a shared awareness have not yet materialised.
• The fundamental reasons for the rebellion were the people’s accumulated grudges against the social order, their animosity towards the foreign ruler, and the character and practises of colonial rule. The 1857 uprising is seen as a significant historical turning point that changed the path of British rule in India and created the conditions for a successful national uprising.