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DAILY CURRENT AFFAIRS, 30 DECEMBER 2023

DIRECTORATE OF ENFORCEMENT (ED)

1. Context

A special court in New Delhi on December 22 took cognisance of a prosecution complaint filed by the Enforcement Directorate (ED) against CC Thampi, an alleged aide of Sonia Gandhi’s son-in-law Robert Vadra, in connection with its money laundering probe against fugitive arms dealer Sanjay Bhandari.

2. About the Directorate of Enforcement 

  • The Directorate of Enforcement (ED) is an agency in India that primarily deals with the enforcement of economic laws and regulations to combat money laundering, foreign exchange violations, and financial fraud.
  • The ED is part of the Department of Revenue under the Ministry of Finance, Government of India.

3. Establishment and History

  • The Directorate of Enforcement was established on 1st May 1956, as the "Enforcement Unit" within the Department of Economic Affairs.
  • Its primary focus was on preventing and detecting violations of the Foreign Exchange Regulation Act (FERA) of 1947.
  • Over the years, the agency's role expanded, and in 1999, the Enforcement Directorate was established as a separate entity under the Ministry of Finance.
  • The enactment of the Prevention of Money Laundering Act (PMLA) in 2002 further broadened its jurisdiction, giving it the power to investigate cases related to money laundering.
  • Since its establishment, the ED has played a crucial role in combating economic offences and ensuring compliance with economic laws in India.
  • It has been involved in several high-profile cases, including those related to financial scams, money laundering by influential individuals, and cross-border financial crimes.
  • The ED collaborates with various domestic and international agencies, including financial intelligence units, law enforcement agencies, and Interpol, to gather information, share intelligence, and effectively coordinate efforts to combat economic offences.

4. Functions and Roles of ED

4.1. Enforcing Economic Laws

  • The primary function of the ED is to enforce two key economic laws in India: the Prevention of Money Laundering Act (PMLA) and the Foreign Exchange Management Act (FEMA).
  • It ensures compliance with these laws and investigates money laundering, foreign exchange violations, and economic fraud cases.

4.2. Money Laundering Investigations

  • The ED investigates cases involving money laundering, which is the process of concealing the origins of illegally obtained money to make it appear legitimate.
  • It identifies and seizes properties and assets derived from illicit activities and prevents their further use.

4.3. Foreign Exchange Violations

  •  The ED is responsible for investigating cases related to violations of foreign exchange laws and regulations.
  • It monitors and controls foreign exchange transactions to maintain the stability of the Indian rupee and prevent illegal activities such as smuggling and illegal money transfers.

4.4 Financial Frauds

  • The ED also investigates and takes action against financial frauds, including bank frauds, Ponzi schemes, and other fraudulent activities affecting the Indian financial system.
  • It works closely with other law enforcement agencies, such as the Central Bureau of Investigation (CBI), to tackle complex financial crimes.

5.  Challenges

5.1. The complexity of economic crimes.

  • Economic crimes are often complex and involve a variety of financial transactions.
  • This can make it difficult for the ED to trace the proceeds of crime and to build a case against the perpetrators.

5.2. The difficulty of tracing the proceeds of crime

  • The proceeds of crime are often hidden in complex financial structures, making it difficult for the ED to track them down.
  • The ED also faces challenges in obtaining information from foreign jurisdictions, where the proceeds of crime may have been transferred.

5.3. The lack of international cooperation

  • Economic crime is often transnational, making it difficult for the ED to cooperate with foreign law enforcement agencies.
  • This is due to differences in legal systems, as well as political and economic considerations.

5.4. Political interference

  • The ED has been accused of being used as a political tool by the ruling party to target its opponents and critics.
  • This has raised questions about the independence and impartiality of the ED.

5.5. Lack of transparency

  • The ED has been criticized for its lack of transparency.
  • The agency does not publish its annual reports, and it is difficult to obtain information about its investigations.
  • This has made it difficult for the public to hold the ED accountable.

5.6. Human rights violations

  •  The ED has been accused of violating the human rights of those it investigates.
  • The agency has been accused of using coercive tactics, such as prolonged detention and interrogation, to extract confessions from suspects.

5.7. The limited resources

  • The ED is a relatively small agency with limited resources.
  • This can make it difficult for the ED to investigate complex economic crimes and prosecute the perpetrators.

6. Conclusion

  • The Directorate of Enforcement in India plays a crucial role in enforcing economic laws, preventing money laundering, and combating financial crimes.
  • With its specialized expertise, investigative capabilities, and coordination with domestic and international partners, the ED contributes to the integrity of the financial system, national security, and the country's overall socio-economic development.
For Prelims: Directorate of Enforcement, Financial Action Task Force, Prevention of Money Laundering Act (PMLA), the Foreign Exchange Management Act (FEMA), Supreme Court, Foreign Exchange Regulation Act (FERA) of 1947, Central Bureau of Investigation, 
For Mains: 
1. Discuss the establishment and evolution of the Directorate of Enforcement in India. Explain its key functions and roles in combating economic offences. (250 Words)
 
 

Previous Year Questions

1. Which one of the following is not correct in respect of Directorate of Enforcement ? (CDS  2021)
A. It is a specialized financial investigation agency under the Department of Revenue, Ministry of Finance.
B. It enforces the Foreign Exchange Management Act, 1999.
C. It enforces the Prevention of Money Laundering Act, 2002.
D. It enforces the Prohibition of Benami Property Transaction Act, 1988.
 
Answer: D
 
2. The Prevention of Money Laundering Act, 2002 become effective since which one of the following dates? (UKPSC RO/ARO 2012)
 
A. July 2002          B. August 2003        C. July 2004         D. July 2005
 
Answer: D
 
3. FEMA (Foreign Exchange Management Act) was finally implemented in the year (UPPSC  2013)
A. 1991         B. 1997         C. 2000             D. 2007
 
Answer: C
 
4. The Foreign Exchange Regulation Act was replaced by the ______ in India. (SSC Steno 2020) 
A. Foreign Exchange Currency Act
B. Foreign Exchange Finances Act
C. Foreign Exchange Funds Act
D. Foreign Exchange Management Act
 
Answer: D
 
5. "Central Bureau of Intelligence and Investigation" is listed in the __________ list given in the Seventh Schedule of the Constitution of India. (SSC CGL 2017) 
A. Union             B. State             C. Global          D. Concurrent
 
Answer: A
 
Source: The Indian Express
 

INDIAN NATIONAL CONGRESS (INC)

 
 
1. Context

The Indian National Congress (INC) was founded on December 28, 1885.

It began as a party which simply wanted to influence British policy in India, then transformed to be at the helm of India’s nationalist movement, before becoming a hegemonic force in post-independence India, and finally seeing a decline that is still ongoing today.

On the 139th Congress Foundation Day, we take a brief look at the history of the INC, and its evolution to becoming the party it is today

 

2. Founding of Indian National Congress (INC)

  • The Indian National Congress (INC) was established by English bureaucrat Allan Octavian Hume, advocating for increased self-governance rather than outright independence for the Indian populace.
  • On December 28, 1885, the inaugural session of the INC took place at Gokuldas Tejpal Sanskrit College, Bombay, where 72 social reformers, journalists, and lawyers assembled.
  • During its inception, the INC's primary goal was not the termination of colonial rule but rather influencing British policies in favor of Indians.
  • Its purpose is often depicted as providing a means for Indians to voice their grievances and discontent, acting as a "safety valve."
  • William Wedderburn, another founding member of the INC, articulated the movement's core objectives in his 1913 biography of Hume, emphasizing the amalgamation of India's diverse elements into a unified national entity, gradual rejuvenation across spiritual, moral, social, and political dimensions, and the strengthening of ties between England and India.
Allan_Octavian_Hume,_C._B.;_Father_of_the_Indian_National_Congress_-_Frontispiece
 
3. Important Indian National Congress Sessions with Presidents
 
Year Session Location President
1885 First Session Bombay (Gokuldas Tejpal Sanskrit College) Womesh Chunder Bonnerjee
1886 Second Session Calcutta Dadabhai Naoroji
1887 Third Session Madras Badruddin Tyabji
1888 Fourth Session Allahabad George Yule
1889 Fifth Session Bombay Sir William Wedderburn
1890 Sixth Session Calcutta Sir Dadabhai Naoroji
1891 Seventh Session Nagpur Pherozeshah Mehta
1892 Eighth Session Allahabad Womesh Chunder Bonnerjee
1893 Ninth Session Lahore Dadabhai Naoroji
1894 Tenth Session Madras Alfred Webb
1895 Eleventh Session Poona Surendranath Banerjee
1896 Twelfth Session Calcutta Rahimtulla M. Sayani
1897 Thirteenth Session Amraoti C. Sankaran Nair
1898 Fourteenth Session Madras Ananda Mohan Bose
1899 Fifteenth Session Lucknow Ramesh Chunder Dutt
1900 Sixteenth Session Lahore N.G. Chandavarkar
 
 
4. Indian National Congress and National Movement
  • Despite achieving some victories, the Congress faced a challenging situation. While its members frequently protested against the unjust treatment of Indians by the British, these protests were typically confined to prayers and formal requests.
  • Consequently, the party encountered criticism from the British for disrupting the established order, while simultaneously receiving backlash from Indians who believed their efforts fell short.
  • Notably, the Congress primarily comprised educated individuals from the upper class, many of whom had received education abroad. As British rule persisted and the party expanded into different regions, significant disagreements arose regarding its objectives and operational methods.
  • These differences became evident in 1906, leading to a division between the moderates, led by Gopal Krishna Gokhale and Surendranath Banerjea, and the extremists, led by Bal Gangadhar Tilak.
  • As their titles suggest, these groups held contrasting views on how to respond to the Bengal Partition of 1905. The moderates advocated maintaining a cordial relationship with the British, while the extremists endorsed boycotts and demonstrations.
  • The party eventually reunited in 1915, coinciding with Mahatma Gandhi's emergence. Gandhi swiftly became the most influential figure, reshaping the party's politics entirely: from socializing with the British elite, the Congress transitioned into leading the most extensive mass movement in history.
  • Under Gandhi's leadership, it evolved into a social movement addressing issues like abolishing caste discrimination, poverty, and ethnic divides. Although predominantly composed of upper-caste Hindu men, it included influential members from various ethnic and religious backgrounds, enhancing its appeal among the masses.
  • During the 1929 Lahore session under Jawaharlal Nehru's presidency, a protege of Gandhi, the Congress declared "Purna Swaraj" (complete independence) as its ultimate objective.
  • Nehru proclaimed, "The British government in India has not only deprived the Indian people of their freedom but has based itself on the exploitation of the masses, and has ruined India economically, politically, culturally, and spiritually…. Therefore…India must sever the British connection and attain Purna Swaraj or complete independence."
  • This aspiration was eventually realized in 1947, albeit alongside the challenging reality of Partition
 
5. Indian National Congress role Post Independent India
  • The inheritance of the national movement's legacy and the Congress' robust organizational prowess secured its dominant position in early India, reflected in its consecutive victories in the initial six general elections.
  • Led by Nehru, the party embraced secularism, adopted socialistic economic policies centered on state-driven industrialization, and pursued a non-aligned, non-confrontational foreign policy.
  • However, despite its supremacy, internal party dynamics persisted. Nehru was succeeded by Shastri, whose sudden passing in 1966 led to a power struggle between the old guard of the Congress and Indira Gandhi.
  • Indira, relatively inexperienced, was appointed Prime Minister by the old guard, including figures like Morarji Desai and K Kamaraj, initially with expectations of exerting significant influence. Nevertheless, Indira had her own vision, resulting in a division within the party — Congress (R) under Indira's leadership and Congress (O) led by Desai.
  • Despite this rift, Indira's government endured and secured a resounding mandate, returning to power emphatically in 1971
6. Decline of Indian National Congress(INC)
  • Following the period of the Emergency (1975-77), the Congress faced defeat in the 1977 general elections, marking its first national electoral setback.
  • It reclaimed power within three years, retaining control until 1989, led initially by Indira (assassinated in 1984) and subsequently by her son Rajiv.
  • The unexpected electoral defeat in 1989 was a significant blow to the party. Although remaining the largest single political entity, it fell short by 68 seats of securing a majority, resulting in a coalition government taking charge instead.
  • This coalition persisted for a brief period, succeeded by another 5-year Congress administration under PV Narasimha Rao.
  • However, the era of its dominance concluded. In the 1990s, the Bharatiya Janata Party emerged as a national alternative to the Congress. Under the leadership of Atal Bihari Vajpayee, this non-Congress government marked the first time in Indian history that a non-Congress administration lasted a full five-year term.
  • Subsequently, the Congress returned to power from 2004 to 2014, but faced a significant decline, securing fewer than 50 seats in the 2014 and 2016 elections
7. Way forward
 
While the Congress has retained influence and remains a major political entity, its electoral fortunes have fluctuated in recent years, reflecting the changing political landscape of India. The party continues to be an integral part of India's political discourse, contributing to national debates and policies
 
Source: Indianexpress

FINANCIAL STABILITY REPORT 

 
 
1. Context
The Indian economy and the domestic financial system remain resilient, supported by strong macroeconomic fundamentals, healthy balance sheets of financial institutions, moderating inflation, an improving external sector position and continuing fiscal consolidation, the Reserve Bank of India (RBI) has said in a report.
 
2.What is a financial stability report?

A financial stability report is a document published by a central bank, financial regulatory authority, or a related institution that assesses and analyzes the overall stability of the financial system within a particular country or region. It provides insights into potential risks, vulnerabilities, and developments in the financial sector.

Here are some key components and purposes of a financial stability report:

  • It evaluates the potential risks and vulnerabilities present in the financial system, including risks associated with banking, non-banking financial institutions, capital markets, and other financial intermediaries
  • The report often includes an analysis of macroeconomic factors such as GDP growth, inflation, interest rates, exchange rates, and their potential impact on the stability of the financial system
  • It assesses the health and resilience of financial institutions, including banks, insurance companies, and other entities, analyzing their capital adequacy, asset quality, liquidity, and risk management practices
  • The report identifies emerging threats or trends that might pose risks to financial stability, such as excessive credit growth, asset bubbles, high levels of debt, or external vulnerabilities
  • Based on the assessment, it may suggest policy measures, regulatory changes, or interventions aimed at safeguarding financial stability and addressing identified risks
  • These reports contribute to enhancing transparency within the financial system by providing stakeholders, including policymakers, investors, and the public, with information about the health and potential challenges facing the financial sector
  • Financial stability reports are usually published at regular intervals, allowing for ongoing monitoring of the financial system's health and trends over time
3. Financial stability report-What are the key takeaways?
  • As per the Financial Stability Report (FSR), stress tests evaluating credit risk indicate that banks are expected to meet the minimum capital requirements. The system-level capital to risk-weighted assets ratio (CRAR) by September 2024 is forecasted at 14.8 percent, 13.5 percent, and 12.2 percent under baseline, medium, and severe stress scenarios, respectively.
  • The report projects a potential improvement in the GNPA (Gross Non-Performing Assets) ratio of all banks from 3.2 percent currently to 3.1 percent by September 2024 in the baseline scenario. However, in a medium or severe stress scenario, this ratio might escalate to 3.6 percent and 4.4 percent, respectively.
  • Regarding bank groups, PSU banks might experience an increase in the GNPA ratio from 4.4 percent in September 2023 to 5.1 percent in September 2024 under severe stress. Similarly, for PVBs (Private Banks), the ratio could rise from 2.1 percent to 3.6 percent, and for FBs (Foreign Banks), it might increase from 1.6 percent to 1.8 percent under the severe stress scenario.
  • The Governor highlighted India's position as one of the world's fastest-growing major economies, attributing this to robust domestic demand, solid macroeconomic fundamentals, and prudent public policies.
  • However, he noted key policy priorities such as ensuring durable price stability, enhancing financial sector resilience, promoting inclusive and sustainable growth, and creating new growth avenues. Despite India's positive trajectory, global challenges like slowing growth, high public debt, economic fragmentation, and geopolitical conflicts persist.
  • The FSR also mentioned a consistent improvement in the health of the Indian financial system owing to strong capital and liquidity buffers, low stressed assets, and multiyear high earnings. The Governor emphasized the need to build upon the gains made during the pandemic to propel the economy toward sustained growth and stability.
  • The report highlighted an overall enhancement in bank asset quality, but the agriculture sector's GNPA ratio remains high at 7 percent. Despite improvements in most industrial sub-sectors, asset quality in infrastructure (except electricity) and petroleum segments showed some impairment, while personal loans witnessed an overall improvement with slight credit card receivables degradation
4.Significance of Financial Stability report
 
The Financial Stability Report (FSR) holds significant importance in the realm of economic and financial management for various reasons:
  • FSRs assess the health and vulnerabilities of the financial system, offering an early warning system for potential risks and vulnerabilities. It helps policymakers and regulators identify emerging threats and take proactive measures to mitigate them
  • These reports provide critical inputs for policymakers in shaping monetary, fiscal, and regulatory policies. Understanding the risks and challenges in the financial system guides the formulation of appropriate policies to maintain stability.
  • FSRs enhance transparency by providing comprehensive insights into the financial sector's health. This information aids investors and stakeholders in making informed decisions, thus boosting confidence in the stability of the financial system
  • Regulators use FSRs to assess the effectiveness of existing regulations and identify areas that require further oversight or adjustments. It assists in refining regulatory frameworks to ensure a more resilient financial system
  • Monitoring financial stability is crucial for maintaining overall market stability. FSRs help in understanding how risks might impact markets, allowing for measures to prevent systemic disruptions
  • In an interconnected world, FSRs also provide insights into how global economic and financial developments might impact the local financial system. This helps in devising strategies to navigate through global challenges
  • Publishing FSRs contributes to public awareness by disseminating information about the financial system's health and risks. It promotes accountability among regulatory bodies and policymakers to address identified issues.
  • By identifying potential weaknesses and vulnerabilities, FSRs assist in preventing or minimizing the impact of financial crises. Timely intervention based on these reports can avert systemic disruptions
5. Way forward
 
These reports serve as critical tools for policymakers, regulators, and market participants to understand the overall health of the financial system, make informed decisions, and take appropriate actions to maintain or enhance financial stability. They also play a role in fostering confidence and trust in the financial system by promoting transparency and accountability
Overall, the significance of FSRs lies in their role as a diagnostic tool that aids in understanding, monitoring, and safeguarding the stability of the financial system. Their insights and analyses help in fostering a robust, resilient, and sustainable financial environment
 
 
For Prelims: Economic and Social Development-Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc
For Mains: General Studies III: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment
 
Source: indianexpress

PRESS AND PERIODICALS BILL 2023

 
 
 
1. Context
 
 
After being passed in the Rajya Sabha on August 3, 2023, amid uproar from the opposition, the Press and Registration of Periodicals Bill, of 2023, was passed in the Lok Sabha recently.

Seeking to repeal the Press and Registration of Books Act 1867, the Bill contains a unique provision disallowing persons convicted of terrorist acts or unlawful activities or those who have acted against state security, by publishing periodicals. A periodical means any publication, barring books or journals, that is printed at regular intervals and contains public news or comments on public news.
 
 

2. Objectives of the Press and Registration of Periodicals Bill, 2023

 

  • Promotion of Ease of Doing Business: The primary objective of introducing the Press and Registration of Periodicals Bill, 2023, is to enhance the ease of doing business in the publishing industry. The Bill aims to streamline and simplify regulatory processes, making it more conducive for publishers and printing press owners to operate efficiently.
  • Removal of Unnecessary Procedural Obstacles: Another key goal of the Bill is to eliminate unnecessary procedural obstacles that publishers often face under the existing regulatory framework. By doing so, the legislation seeks to create a more business-friendly environment, allowing publishers to focus on their core activities without being encumbered by cumbersome procedures.
  • Unburdening Publishers and Printing Press Owners: The Bill intends to relieve publishers and printing press owners from the burdensome requirement of furnishing declarations before the District Magistrate (DM) and filing revised declarations for any changes in particulars. This is aimed at reducing administrative complexities and providing more flexibility to the publishing industry.
  • Decriminalization of the Colonial-era Statute: The Bill represents a significant effort to decriminalize the existing colonial-era statute, the Press and Registration of Books Act, 1867. Instead of relying on criminal convictions, the Bill proposes the imposition of financial penalties for certain violations. This shift aligns with contemporary approaches to regulation and aims to foster a more progressive legal environment.
  • Acceleration of Title Registration Process: Emphasizing the urgency of business processes, Minister for Information and Broadcasting Anurag Thakur highlighted that the title registration process, which previously consumed 2-3 years, will now be expedited and completed within 60 days. This acceleration is designed to enhance operational efficiency for publishers and reduce unnecessary delays.

 

3. Key Differences Between Press and Registration of Periodicals Bill, 2023 and 1867 Act
 
 
 
Features 1867 Act 2023 Bill
Content Scope Books, Magazines, Newspapers Magazines & Newspapers (Books under HRD Ministry)
Penalties Jail Terms for most offenses Fines for most offenses, Decriminalization
Fines Upper Limit Rs 2,000 Rs 5 lakh
Regulatory Power Limited, with Press Registrar Press Registrar General with wider powers
Appellate Mechanism Not specific Press and Registration Appellate Board
Registration Timeframe 2-3 years 60 days
Declarations Mandatory to District Magistrate
Not required, Online intimation for printers
 
 
 
 
 
 
 
4. What is the process of declarations and registration?

 

Under the Press and Registration of Periodicals Bill, of 2023, the declaration and registration process has undergone significant simplification and modernization compared to the provisions of the 1867 Act. The aim is to reduce administrative complexities and enhance efficiency for publishers and printing presses. 

  • Declaration Process Simplification: Publishers are no longer obliged to file a declaration with the DM or local authorities. Instead, a simplified online "intimation" is now sufficient.
  • Intimation for Printing Presses:  Printing presses, instead of filing declarations, can provide an online "intimation" to the concerned authorities. This eliminates the need for a time-consuming and paperwork-intensive declaration process.
  • Simultaneous Processing of Applications: Publishers and printers can now process title allotment and registration applications simultaneously. This change reduces the need for separate applications and streamlines the overall process.
  • No-Objection Requirement: After filing a registration application, a "specified authority" must furnish a no-objection or comments within 60 days. This ensures a timely response.  Importantly, the requirement for a no-objection from the specified authority has been waived for the registration of periodicals proposed to be published by the government. This expedites the process for government publications.
  • Decision by Press Registrar General (PRG): The Press Registrar General (PRG), a newly created position with enhanced powers, ultimately decides the grant of registration based on the application and any received objections or comments. This centralizes the decision-making process.

5. Unlawful Activities (Prevention) Act (UAPA) Provision in the Press and Registration of Periodicals Bill, 2023

 

  • Restrictions on Publishing Periodicals: The proviso to Section 4 of the Bill imposes restrictions on any person who has been convicted of specific offences under the UAPA.
  • Defined Terms from UAPA: The terms "terrorist act" and "unlawful activity" referred to in the proviso are explicitly defined in clauses (k) and (o) of Section 2(1) of the Unlawful Activities (Prevention) Act, 1967.
  • Meaning of "Terrorist Act": The term "terrorist act" pertains to any action carried out with the intent to threaten or likely to threaten the unity, integrity, security, economic security, or sovereignty of India. Additionally, it includes acts intended to strike terror or likely to strike terror among the people.
  • Meaning of "Unlawful Activity": The term "unlawful activity" encompasses actions by individuals or associations that support any claim for secession, separatism, disruption of sovereignty, or integrity, among other specified activities.
  • Prohibition on Publishing: In essence, the proviso prohibits individuals with convictions related to "terrorist acts," "unlawful activities," or actions against the security of the state, as defined under the UAPA, from being allowed to publish a periodical.

 

6. The Way Forward

 

The Press and Registration of Periodicals Bill 2023 aims to modernize and simplify the registration process for periodicals while introducing stricter regulations on publishers convicted of certain offences. While the Bill promises positive changes for the industry, the UAPA provision requires careful monitoring to ensure it doesn't unduly restrict legitimate journalistic activities and diverse viewpoints.

 

For Prelims: Press and Registration of Periodicals Act 1867, Unlawful Activities Prevention Act

For Mains: 

1. Discuss the implications of the Unlawful Activities (Prevention) Act provision barring individuals convicted of specific offences from publishing periodicals. Does it strike a balance between national security and freedom of expression? (250 Words)
 
 
Previous Year Questions
 
1. Indian government has recently strengthed the anti-terrorism laws by amending the Unlawful Activities(Prevention) Act, (UAPA), 1967 and the NIA Act. Analyze the changes in the context of prevailing security environment while discussing scope and reasons for opposing the UAPA by human rights organizations. (upsc 2019)
 
 
Source: The Indian Express

URBAN LOCAL BODIES

 
 
 
 
 
1. Context
 
 
Over The Past three years, a silent grassroots finance reform has been taking shape with at least 70 per cent of the total 4,900 urban local bodies in the country reporting an increase in property tax collection.
 
 
2. About Urban Local Bodies (ULBs)
 

Urban Local Bodies (ULBs) in India are institutions of local self-government that are responsible for the administration of urban areas. These bodies play a crucial role in local governance and are instrumental in the development and management of cities and towns.

The Evolution of Urban Local Bodies in India
 
  • Ancient Roots: The seeds of ULBs were sown in India's ancient past. Cities like Pataliputra and Mohenjo-daro thrived under councils or committees of citizens who oversaw public order, trade, and essential services like water and sanitation. These early forms of local governance laid the foundation for future ULBs.
  • Colonial Legacy: The British Raj brought a formal system of local self-government to India, with elected municipal councils established in major cities. Madras (now Chennai) became the first with its municipal corporation in 1688. While this system offered a framework, it often lacked autonomy and true democratic representation.
  • Post-Independence Evolution: After India's independence, the ULB system continued, but with significant modifications. The Constitution, through the 74th Amendment in 1992, cemented their status as a distinct tier of government, empowering them with greater autonomy and mandating their establishment through state-specific laws.
  • Modern-Day ULBs: Today, ULBs play a multifaceted role in urban India. Their functions encompass crucial areas like urban planning and development, waste management, ensuring clean water supply, and managing efficient transportation systems. This diverse portfolio underscores the importance of ULBs in driving sustainable urban growth and enhancing citizen well-being.

 

The structure of ULBs

 

The structure of ULBs may vary across states, but they generally fall into three main categories:

  • Municipal Corporation: Municipal Corporations are established in larger urban areas. They have a mayor-council form of governance. The mayor is the elected head of the corporation, and the council consists of elected members representing different wards. Municipal Corporations have a wide range of functions, including urban planning, public health, water supply, waste management, education, and infrastructure development.
  • Municipal Council: Municipal Councils are established in smaller urban areas. They have elected members, including a chairperson. The structure may vary, with some councils having a municipal commissioner as an executive head. Municipal Councils perform functions similar to Municipal Corporations but are tailored to the scale and needs of smaller urban areas.
  • Nagar Panchayat: Nagar Panchayats are established for transitional areas, emerging towns, or areas in transition from rural to urban. They have elected members and a chairperson. Nagar Panchayats focus on basic civic amenities and services, and their functions may include sanitation, water supply, and street lighting.
 

3. Constitutional and Legal Provisions Governing Urban Local Bodies (ULBs) in India

 

Constitution of India: Part IXA and 12th Schedule

  • Article 243-P: Deals with the composition of municipalities at the district and metropolitan levels.
  • Article 243-Q: Addresses the reservation of seats for scheduled castes and scheduled tribes in municipalities.
  • Article 243-R: Specifies the duration of municipalities.
  • Article 243-S: Discusses the dissolution of municipalities.
  • Article 243-T: Outlines the powers, authority, and responsibilities of municipalities.
  • Article 243-U: Enlists the functions that municipalities are authorized to perform.
  • Article 243-V: Pertains to the constitution of state finance commissions responsible for reviewing the financial position of municipalities.

State Municipal Acts: Each state in India has its own Municipal Act, providing a comprehensive legal framework for the functioning of ULBs within that state. These acts define the structure, composition, powers, functions, administration, and financing mechanisms of ULBs.

The Metro Railways (Construction of Works) Act, 1978: This Act addresses the construction and maintenance of rapid transit systems in metropolitan cities across India. It establishes provisions for the creation of a Metro Railways Administration tasked with overseeing the construction and operation of these transit systems.

 

4. Functions of Urban Local Bodies in India

 

Basic Amenities and Services

  • Water Supply and Sanitation: Ensuring access to clean drinking water and proper sanitation facilities is a top priority for ULBs. They handle water treatment and distribution, sewerage systems, drainage, and waste management.
  • Public Health: ULBs are responsible for maintaining public health standards through initiatives like immunization programs, healthcare infrastructure development, and disease prevention measures.
  • Street Lighting and Maintenance: ULBs ensure proper lighting and cleanliness of streets, roads, and public spaces for safety and aesthetics.
  • Public Transportation: ULBs may manage public bus systems, rickshaws, and other forms of local transport to provide efficient and affordable mobility options.

Urban Planning and Development

  • Land Use Planning: ULBs prepare and implement master plans for urban development, including zoning regulations, land use allocation, and infrastructure development plans.
  • Building Permits and Construction: ULBs grant building permits, regulate construction activities, and ensure adherence to building codes for safe and sustainable urban development.
  • Parks and Recreation: ULBs create and maintain parks, gardens, playgrounds, and other recreational spaces for the well-being of citizens.
  • Slum Improvement and Redevelopment: ULBs address challenges like slums and urban poverty through improvement programs, infrastructure upgrades, and relocation projects.

Social Welfare and Education

  • Primary Education: ULBs may manage primary schools, libraries, and other educational facilities within their jurisdiction.
  • Social Welfare Programs: ULBs implement government programs for poverty alleviation, social welfare schemes for marginalized groups, and support for vulnerable populations.
  • Community Development: ULBs promote community engagement through initiatives like cultural events, sports activities, and citizen participation programs.
  • Disaster Management: ULBs prepare for and respond to natural disasters and emergencies, ensuring public safety and minimizing damage.

Financial Management and Revenue Generation

  • Local Taxes and Fees: ULBs levy property taxes, user charges for services like water and sanitation, and other fees to generate revenue for their operations.
  • Government Grants and Funding: ULBs receive grants from central and state governments for specific development projects and programs.
  • Public-Private Partnerships: ULBs may collaborate with private companies to develop infrastructure, manage services, and attract investments for urban development.

Transparency and Accountability

  • Public Meetings and Grievance Redressal: ULBs hold public meetings, maintain transparency in their decision-making processes, and establish grievance redressal mechanisms for citizen concerns.
  • Right to Information Act: ULBs are obligated to provide information to citizens under the Right to Information Act, promoting transparency and accountability.
  • E-Governance Initiatives: ULBs are increasingly adopting e-governance solutions for online service delivery, permit applications, and citizen engagement to enhance efficiency and accessibility.

 

5. Sources of Revenue for Urban Local Bodies

 

  • Property Tax: A tax on the value of properties within the jurisdiction of the ULB.
  • User Charges: Fees for services such as water supply, sewerage, and solid waste management.
  • Professional Tax: A tax on the income earned by individuals engaged in various professions.
  • Grant-in-Aid: Financial assistance provided by the state and central governments.
  • Development Charges: Fees levied for allowing construction and development activities.
  • License Fees: Charges for licenses issued for various commercial activities.

 

6. Challenges Faced by Urban Local Bodies (ULBs) in India

 
  • Limited Financial Resources: ULBs often grapple with limited revenue-raising powers, resulting in insufficient funds for essential services and infrastructure development. Low levels of tax collection and revenue generation contribute to financial constraints.
  • Lack of Autonomy: ULBs frequently lack autonomy in decision-making processes, relying on state governments for financial and administrative support. Dependence on higher authorities can hinder prompt responses to local needs and demands.
  • Ambiguity of Functional Domain: Some states witness ambiguity in defining the functional domain of ULBs and parastatal bodies, creating confusion and hindering effective municipal governance.
  • Limited Human Resources: Shortages of skilled and qualified personnel within ULBs impact their ability to efficiently execute tasks and deliver services. Insufficient manpower can be a barrier to effective urban governance.
  • Poor Infrastructure: Many ULBs face challenges related to inadequate infrastructure, including deficient road networks, water supply systems, and sewage facilities. Insufficient infrastructure hampers the provision of basic services to urban residents.
  • Political Interference: Political interference in the functioning of ULBs can compromise their independence and impartiality in decision-making processes. Political considerations may influence administrative and developmental activities.
  • Limited Public Participation: ULBs often struggle with a lack of public participation in decision-making, diminishing their effectiveness and accountability. Inadequate citizen engagement can result in policies that do not align with community needs.
  • Lack of Capacity: Many ULBs cannot plan, implement, and monitor development projects and programs effectively. Insufficient capacity can lead to inefficiencies and the misallocation of resources.

 

7. Successful Urban Local Bodies (ULBs) in India

 

  • Ahmedabad Municipal Corporation (AMC) Implemented innovative initiatives to enhance citizens' quality of life.  Ahmedabad Janmarg Limited (AJL) is a successful public-private partnership operating bus rapid transit corridors.
  • Pune Municipal Corporation (PMC) Recognized for effective waste management practices.  Implemented door-to-door waste collection, waste segregation, and processing facilities.
  • Surat Municipal Corporation (SMC) Successfully used technology to monitor infrastructure projects and manage emergencies. Developed pedestrian-friendly streets, public parks, and other civic amenities.
  • Indore Municipal Corporation: Consistently ranked as one of the cleanest cities in India.  Focus on cleanliness, waste management, and sustainable urban development.
  • Chandigarh Municipal Corporation: Known for well-planned urban infrastructure and green spaces. Efforts to preserve the architectural heritage of the city.
  • Bhubaneswar Municipal Corporation (BMC) Implemented various smart city projects for urban development. Emphasis on improving public services and infrastructure.
  • Hyderabad Municipal Corporation focuses on enhancing urban infrastructure and connectivity. Initiatives for the restoration of lakes and water bodies.
  • Thiruvananthapuram Municipal Corporation Emphasizes sustainable development and eco-friendly initiatives. Encourages citizen participation in civic activities.

 

 

 

8. What is property tax?

 

Property tax is a form of direct tax imposed by local governments on the owners of real estate, such as land and buildings. It is a recurring tax that property owners are required to pay, and the amount is typically determined based on the assessed value of the property. The tax collected from property owners is used to fund local public services and infrastructure projects.

Key features of property tax include:

  • The local government assesses the value of the property to determine the amount of tax owed. This assessment is often conducted periodically to account for changes in property values.
  • Property tax is levied on the owner of the property rather than the occupant. Even if the property is rented out, the owner is responsible for paying the property tax.
  • Property tax is a significant source of revenue for local governments, including municipal corporations, municipal councils, and other urban or rural local bodies.
  • The revenue generated from property tax is used to finance various public services and community development projects, such as road maintenance, sanitation, education, and other essential municipal services.
  • In some jurisdictions, property tax is designed to be progressive, meaning that properties with higher values pay proportionally more in taxes. This is often achieved by applying higher tax rates to properties with higher assessed values.
 

8.1. Is property tax collected by the central government?

 

  • No, property tax is typically not collected by the central government. Instead, property tax is a local tax, and its collection falls under the jurisdiction of local or municipal governments. In most countries, including India, the United States, and many others, property tax is assessed and collected by local authorities such as municipal corporations, municipal councils, or other urban and rural local bodies.
  • Local governments use property tax revenue to fund essential services and local infrastructure projects. The tax amount is generally based on the assessed value of the property, and the rates may vary depending on the local government's policies and regulations.
  • While the central government may play a role in setting broad guidelines or frameworks for property taxation, the actual assessment, collection, and utilization of property tax revenue are carried out at the local level. It is a decentralized form of taxation that allows local authorities to have control over their revenue sources and make decisions based on the specific needs of their communities.

 

For Prelims: Property Tax, Urban Local bodies, municipal Corporation, Municipal Council, Nagar Panchayats

For Mains: 

1. Discuss the significance of property tax as a source of revenue for Urban Local Bodies (ULBs). What are the challenges in efficient property tax assessment and collection, and how can they be addressed? (250 Words)
 
 
Source: The Indian Express

PARTICULARLY VULNERABLE GROUPS (PVTG)

 
 
1. Context
On November 29 2023, the Union Cabinet approved the Pradhan Mantri Janjati Adivasi Nyaya Maha Abhiyan (PM JANMAN), aimed at providing PVTG households and habitations with basic facilities such as safe housing, clean drinking water and sanitation, improved access to education, health and nutrition, road and telecom connectivity, and sustainable livelihood opportunities
 
2.Who are Particularly Vulnerable Tribal Groups (PVTG)?
 
  • Particularly Vulnerable Tribal Groups (PVTGs) are specific indigenous communities in India that face an exceptionally high risk of vulnerability and marginalization due to various factors like geographic isolation, social and economic deprivation, and historical injustices.
  • These groups are identified based on criteria set by the Indian government, considering their unique cultural practices, distinct languages, and social customs that set them apart from the larger population.
  • PVTGs receive special attention and support from government agencies and NGOs to protect their distinct identities, preserve their cultural heritage, improve their living conditions, and ensure their socio-economic development. Various welfare schemes and initiatives are directed towards these groups to address their specific needs, including access to healthcare, education, livelihood opportunities, land rights, and basic amenities. The aim is to empower these communities while respecting their traditions and way of life
  • The actual number of PVTGs is around 63, accounting for overlaps and repetitions, as per the publication ‘The Particularly Vulnerable Tribal Groups of India — Privileges and Predicaments’ by the Anthropological Survey of India
  • Baseline surveys have only been conducted for about 40 PVTG groups, emphasising the need for targeted development planning.
  • In India, the identification and declaration of Particularly Vulnerable Tribal Groups (PVTGs) is done by the Ministry of Tribal Affairs at the national level, in collaboration with state governments. The identification process involves specific criteria and guidelines set by the government to assess the vulnerability and distinctiveness of tribal communities
  • Odisha (formerly Orissa) in India is known to have the highest number of Primitive Tribal Groups (PTGs). This state is home to a significant population of indigenous or tribal communities, some of which are categorized as Primitive Tribal Groups due to their isolated lifestyle, unique cultural practices, and historical marginalisation.
 
3. What are the challenges in PVTG development?

The development of Particularly Vulnerable Tribal Groups (PVTGs) faces several challenges, primarily due to their unique circumstances, cultural isolation, historical marginalization, and specific vulnerabilities.

Some of the key challenges include:

  • Many PVTGs reside in remote and geographically isolated areas, which pose challenges in terms of accessibility for delivering essential services like healthcare, education, and infrastructure development
  • PVTGs often face economic deprivation, lack of livelihood opportunities, and limited access to resources. Poverty and inadequate infrastructure exacerbate their challenges
  • Balancing the preservation of their distinct cultural identities and traditions with the need for socio-economic development poses a challenge. Development interventions must be culturally sensitive and respect their traditional practices
  • PVTGs frequently experience health disparities and inadequate access to healthcare facilities. Malnutrition and lack of awareness about modern healthcare practices are common concerns
  • Limited access to quality education due to factors like language barriers, lack of schools in remote areas, and cultural differences hampers educational development among PVTGs
  • Disputes over land rights and lack of secure land tenure affect their livelihoods. Encroachment on their traditional lands and displacement due to development projects further exacerbate these challenges
  • PVTGs are vulnerable to exploitation due to their marginalized status. They often face social discrimination, human rights violations, and exploitation in labor and other spheres

4.Government's Approach in addressing the Issues

 

  • Participatory approach from the grassroots level: Rather than a standardized approach, the program tailors strategies to suit the unique requirements of PVTGs, actively engaging them in decision-making related to land rights, social integration, and cultural conservation. This method, rooted in community involvement, embraces their customs, beliefs, and traditions, ensuring their active involvement in the planning, execution, and oversight of development endeavors.
  • Enhancing livelihoods: Empowering through skill-building programs and providing resources such as land and credit facilitates sustainable livelihoods. Implementation of the Forest Rights Act, specifically Section 3(1)(e) for the rights of primitive tribal groups and pre-agricultural communities, secures their access to forest resources. Encouraging traditional techniques and skill enhancement via partnerships with industries contributes to preserving cultural heritage alongside sustainable progress.
  • Health, nutrition, and education focus: Deploying outreach methods like Mobile Medical Health Units becomes imperative in remote regions. Tailoring these strategies to address specific health concerns like teenage pregnancies and dental health, and bridging language and cultural gaps through trained healthcare personnel or recruiting community members is vital. Collaborating with trusted traditional healers can also assist in addressing intricate health challenges.
  • Incorporating their language and culture into educational curricula, offering transportation services, and training educators about PVTG cultural contexts enhance educational accessibility. Additionally, incentivizing staff working in PVTG areas and establishing specialized educational institutions catering to PVTG needs can augment opportunities for these communities.
  • Infrastructure development challenges: The settlements of PVTGs often fail to meet requirements for schemes like the Pradhan Mantri Grameen Sadak Yojana, Pradhan Mantri Awas Yojana, and Jal Jeevan Mission due to factors like population thresholds or insufficient surveys
5.What schemes have been floated for PVTG?
 

Several schemes and initiatives have been introduced by the Indian government to address the needs and uplift the living standards of Particularly Vulnerable Tribal Groups (PVTGs). Some of these schemes include:

  • Vanbandhu Kalyan Yojana: Launched by the Ministry of Tribal Affairs, this scheme aims to improve the socio-economic status of tribal communities, including PVTGs, by focusing on areas like education, healthcare, livelihood, and infrastructure development.

  • Scheduled Tribes Component (STC): Under this scheme, funds are allocated to states to implement various development programs for tribal communities, including PVTGs. These funds support initiatives related to education, health, housing, and skill development.

  • Special Central Assistance to Tribal Sub-Schemes (SCA to TSS): This scheme provides financial assistance to tribal development projects, including those focused on PVTGs, aimed at their socio-economic empowerment.

  • Forest Rights Act (FRA): Implementation of the Forest Rights Act is crucial for securing land and resource rights for tribal communities, including PVTGs, allowing them access to forest resources and improving their livelihoods.

  • Eklavya Model Residential Schools (EMRS): EMRS aims to provide quality education to tribal children, including those from PVTGs, by establishing residential schools with modern facilities and educational resources.

  • Integrated Tribal Development Agencies (ITDAs): These agencies work on comprehensive development plans for tribal areas, including PVTG regions, focusing on education, healthcare, infrastructure, and livelihood promotion.

  • Tribal Sub-Plan (TSP) and Tribal Development Blocks (TDBs): These plans and blocks are dedicated to tribal development, including PVTGs, ensuring targeted allocation of funds for their socio-economic upliftment

6. Way forward
 
A 2014 report by Dr. Hrusikesh Panda, Secretary of the Ministry of Tribal Affairs, and a 2015 report by Virginius Xaxa highlighted these concerns. The actual number of PVTGs is around 63, accounting for overlaps and repetitions, as per the publication ‘The Particularly Vulnerable Tribal Groups of India — Privileges and Predicaments’ by the Anthropological Survey of India
 
 
For Prelims: Indian Polity and Governance-Constitution, Political System, Panchayati Raj, Public Policy, Rights Issues, etc.
For Mains: General Studies II: Government policies and interventions for development in various sectors and issues arising out of their design and implementation
 

Previous Year Questions

1. Consider the following statements about Particularly Vulnerable Tribal Groups (PVTGs) in India:  (UPSC 2019)
1. PVTGs reside in 18 States and one Union Territory.
2. A stagnant or declining population is one of the criteria for determining PVTG status.
3. There are 95 PVTGs officially notified in the country so far.
4. Irular and Konda Reddi tribes are included in the list of PVTGs.
Which of the statements given above are correct?
A. 1, 2 and 3             B.  2, 3 and 4               C. 1, 2 and 4               D. 1, 3 and 4

Answer: C

2. With reference to the history of India, "Ulgulan" or the Great Tumult is the description of which of the following events? (UPSC 2020)

A. The Revolt of 1857
B. The Mappila Rebellion of 1921
C. The Indigo Revolt of 1859 - 60
D. Birsa Munda's Revolt of 1899 - 1900

Answer: D

3. When did the Tana’ Bhagat Movement start?  (Jharkhand Civil Service 2015) 
A. April 1912             B. April 1913     C.  April 1914          D.  April 1915
 
Answer: C
 
4. Consider the following statements about the Santhal Hool of 1855 - 56: (UPSC CAPF)
1. The Santhals were in a desperate situation as tribal lands were leased out
2. The Santhal rebels were treated very leniently by British officials
3. Santhal inhabited areas were eventually constituted separate administrative units called Santhal parganas
4. The Santhal rebellion was the only major rebellion in mid-19th century India.
Which of the statements given above is/are correct? 
A. 1 only         B. 2 and 3    C. 1, 3 and 4     D. 1 and 3 only
 
Answer: D
 
 
5. After the Santhal Uprising subsided, what was/were the measure/measures taken by the colonial government? (UPSC 2018)
1. The territories called 'Santhal Paraganas' were created.
2. It became illegal for a Santhal to transfer land to a non-Santhal.
Select the correct answer using the code given below:
A. 1 only          B.  2 only             C. Both 1 and 2         D. Neither 1 nor 2
 
Answer: C
 
6. The National Commission for Backward Classes (NCBC) was formed by insertion of Article ______ in the Constitution of India. (SSC CGL 2020) 
A. 328B         B.  338A            C. 338B            D. 328A
 
Answer: B
 
 
7. With reference to the Parliament of India, which of the following Parliamentary Committees scrutinizes and reports to the House whether the powers to make regulations, rules, sub-rules, by-laws, etc. conferred by the Constitution or delegated by the Parliament are being properly exercised by the Executive within the scope of such delegation? (UPSC  2018)
 
A. Committee on Government Assurances
B. Committee on Subordinate Legislation
C. Rules Committee
D. Business Advisory Committee
 
Answer: B
 
8. Justice Madan B Lokur committee was set up to take steps to (Haryana Civil Services 2021)
A. Look into violation of environment rules.
B. Prevent stubble burning
C. Draft new water policy
D. Regulate digital lending
 
Answer: B
 
9. Match the pairs -  (Committees on Media) (MPSC 2019)
(A) (Name)                                    (B) (Year)
(a) Chanda Committee                   (i) 1982
(b) Kuldip Nayar Committee        (ii) August, 1977
(c) Verghese Committee               (iii) March, 1977
(d) P.C. Joshi Committee              (iv) 1964
 
1. (a) – (i), (b) – (ii), (c – (iii), (d) – (iv)
2. (a) – (i), (b) – (iii), (c – (ii), (d) – (iv)
3. (a) – (iv), (b) – (iii), (c – (ii), (d) – (i)
4. (a) – (iv), (b) – (ii), (c – (iii), (d) – (i)
 
Answer: 3
 
10. Consider the formation of the following States and arrange these in chronological order :  (UPPSC Combined State Exam 2021)
1. Goa
2. Telangana
3. Jharkhand
4. Haryana
Select the correct answer from the codes given below.
A. 1, 2, 3, 4       B. 4, 1, 3, 2       C. 3, 2, 4, 1          D. 4, 3, 1, 2
 
Answer: 2
 
Source: Indianexpress
 
 
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