A carbon trading platform, also known as a carbon market or emissions trading platform, is a financial marketplace where organizations and entities can buy and sell carbon credits or emissions allowances. The primary goal of carbon trading platforms is to reduce greenhouse gas emissions and combat climate change by creating economic incentives for entities to reduce their carbon emissions.

Here's how a carbon trading platform typically works:

• Emissions Allowances: Governments or regulatory bodies set an overall cap on the total amount of greenhouse gas emissions that are allowed within a specific jurisdiction or sector. This cap is typically established to limit emissions and reduce environmental impact.
• Allocation of Allowances: Under the cap-and-trade system, emissions allowances are distributed or allocated to participating entities, often based on historical emissions or other criteria. These allowances represent the right to emit a specific amount of greenhouse gases.
• Buying and Selling: Entities that emit fewer greenhouse gases than their allocated allowances can sell their excess allowances to those who exceed their allocated limits. This creates a market for emissions allowances.
• Carbon Credits: In addition to emissions allowances, carbon trading platforms may also involve the trading of carbon credits. Carbon credits are typically generated by activities that result in emissions reductions or removals, such as reforestation, renewable energy projects, or energy efficiency initiatives. These credits can be sold to entities looking to offset their emissions.
• Price Determination: The price of emissions allowances or carbon credits is determined by supply and demand in the carbon market. As emissions reduction targets become stricter or as entities seek to voluntarily reduce their carbon footprint, the price of carbon credits can fluctuate.
• Compliance and Offset: Some carbon trading platforms are mandatory and designed to help entities comply with government emissions reduction targets or regulations. Others are voluntary and allow organizations to offset their emissions voluntarily.
• Transparency and Verification: To ensure the integrity of the carbon market, transactions are often subject to rigorous monitoring, reporting, and verification processes. Independent third parties may verify emissions reductions and the validity of carbon credits.
• Environmental Benefits: Carbon trading platforms aim to incentivize emissions reductions, promote the transition to cleaner technologies, and fund projects that have positive environmental impacts.

One of the most well-known carbon trading platforms is the European Union Emissions Trading System (EU ETS), which operates in the European Union and covers various industries, including energy production, manufacturing, and aviation. Other countries and regions have also established their own carbon trading systems to address emissions reduction goals.

Overall, carbon trading platforms play a crucial role in the global effort to combat climate change by putting a price on carbon emissions and encouraging businesses and governments to reduce their environmental impact.

3. What are Carbon Credits?

Carbon credits, also known as carbon offsets or emission reduction credits, are a key component of carbon trading and cap-and-trade systems aimed at mitigating climate change. They represent a measurable reduction in greenhouse gas emissions or the removal of carbon dioxide (CO2) equivalent from the atmosphere. Carbon credits are typically measured in metric tons of CO2 or its equivalent in other greenhouse gases, such as methane (CH4) or nitrous oxide (N2O).

Here's how carbon credits work:

• Emission Reduction or Removal: Carbon credits are generated through activities or projects that either reduce greenhouse gas emissions (e.g., by using cleaner energy sources or improving energy efficiency) or remove carbon dioxide from the atmosphere (e.g., through reforestation or afforestation projects).
• Measurement and Verification: The reduction or removal of emissions must be accurately measured and verified according to established standards and methodologies. Independent third-party organizations often perform this verification to ensure the credibility of the carbon credits.
• Issuance: Once the emissions reduction or removal has been verified, carbon credits are issued. Each carbon credit represents one metric ton of CO2 or its equivalent that has been prevented from entering the atmosphere or removed from it.
• Trading and Sale: Carbon credits can be bought and sold on carbon markets or through specialized trading platforms. Entities that have exceeded their emissions limits or wish to voluntarily offset their emissions can purchase these credits to compensate for their own emissions.
• Compliance and Voluntary Markets: Carbon credits serve different purposes in different markets. In compliance markets, entities purchase credits to comply with emissions reduction regulations or obligations set by governments or regulatory bodies. In voluntary markets, organizations and individuals purchase credits as a means of voluntarily offsetting their carbon footprint.
• Environmental Benefits: The purchase of carbon credits helps fund emissions reduction projects and activities that have positive environmental and climate benefits. These may include renewable energy projects, energy efficiency initiatives, afforestation, reforestation, methane capture from landfills, and more.
• Additionality: One key principle in carbon credit generation is "additionality," which means that the emissions reductions or removals achieved by a project must be above and beyond what would have occurred in the absence of the project. This ensures that credits represent real and additional climate action.
• Sustainability and Co-Benefits: Many carbon credit projects are designed not only to reduce emissions but also to provide social, economic, or environmental co-benefits to local communities, such as job creation, biodiversity conservation, or improved air and water quality.

It's important to note that the carbon credit market is subject to various standards and regulations to maintain transparency, integrity, and credibility. Independent organizations and registries play a role in verifying and tracking the issuance and retirement of carbon credits to prevent double counting and ensure that the emissions reductions are genuine.

Carbon credits are a tool for addressing climate change by incentivizing emissions reductions and supporting projects that contribute to a more sustainable and low-carbon future. They are used by governments, businesses, and individuals to take action against climate change and reduce their carbon footprint.

Carbon trading and carbon credits are closely related concepts within the broader framework of climate change mitigation strategies. They are instrumental in addressing the issue of greenhouse gas emissions and climate change. Here's a detailed explanation of both terms:

Carbon Trading:

• Definition: Carbon trading, also known as emissions trading or cap-and-trade, is a market-based approach to reduce greenhouse gas emissions. It allows entities, such as companies or countries, to buy and sell emissions allowances, effectively putting a price on carbon emissions.
• How It Works: Under a carbon trading system, a regulatory authority or government sets an overall cap on the total amount of greenhouse gas emissions allowed within a specific jurisdiction or sector. This cap is often progressively reduced over time to achieve emissions reduction targets.
• Emissions Allowances: Entities subject to the cap are allocated a certain number of emissions allowances, which represent the right to emit a specific amount of greenhouse gases. These allowances are often distributed based on historical emissions, with the goal of gradually reducing emissions over time.
• Trading of Allowances: Entities that emit less than their allocated allowances can sell their surplus allowances to entities that exceed their limits. This creates a market for emissions allowances, and the price of allowances is determined by supply and demand.
• Compliance and Penalties: Entities are required to surrender a number of allowances equal to their actual emissions at the end of a compliance period. Failure to do so results in penalties. Entities that reduce emissions below their allowances can profit by selling their excess allowances.
• Environmental Goals: Carbon trading aims to achieve emissions reduction goals cost-effectively by allowing entities to find the most efficient ways to reduce emissions, either by reducing emissions directly or by purchasing allowances from others.
• Types of Markets: Carbon trading can occur in both compliance markets, where entities are legally obligated to participate, and voluntary markets, where entities choose to offset their emissions voluntarily.

Carbon Credits:

• Definition: Carbon credits, also known as carbon offsets or emission reduction credits, represent a quantified reduction in greenhouse gas emissions or the removal of carbon dioxide (CO2) equivalent from the atmosphere.
• Generation: Carbon credits are generated through specific activities or projects that reduce emissions or remove carbon from the atmosphere. These activities can include renewable energy projects, energy efficiency initiatives, reforestation, methane capture from landfills, and more.
• Measurement and Verification: To ensure the credibility of carbon credits, the reduction or removal of emissions must be accurately measured and independently verified according to established standards and methodologies.
• Sale and Use: Carbon credits can be bought and sold on carbon markets. Entities that wish to offset their emissions can purchase these credits to compensate for their own emissions, effectively balancing their carbon footprint.
• Environmental Benefits: The purchase of carbon credits helps fund projects that have positive environmental and climate benefits. These projects contribute to emissions reduction, biodiversity conservation, sustainable development, and more

"Net Zero" and "Carbon Neutral" are related but distinct concepts in the context of addressing climate change and reducing greenhouse gas emissions. They both aim to achieve a balance between the amount of greenhouse gases emitted and the amount removed or offset, but they do so in slightly different ways. Here's the difference between the two terms:

SOUTHWEST MONSOON

 

 

1. Context

For the first time this season, the southwest monsoon is active over a large geographical area of India. At least 80% of the country last week reported widespread rainfall, with heavy to very heavy spells lashing Assam, West Bengal, Uttar Pradesh, Uttarakhand, Gujarat, coastal Maharashtra and Karnataka, Kerala, and Lakshadweep.

 

2. What is the southwest monsoon?

 

• The southwest monsoon is a seasonal weather pattern that brings significant rainfall to large parts of South Asia, particularly India, between June and September
• The southwest monsoon typically begins in early June and lasts until late September. It starts with the arrival of the monsoon winds in the southern part of India, usually marked by the onset over the state of Kerala

• The southwest monsoon brings about 70-90% of India’s annual rainfall. The distribution of rainfall varies, with some regions receiving heavy rains, while others may experience scanty showers.
• The Western Ghats, the northeastern states, and the Himalayan foothills typically receive very heavy rainfall.
• The monsoon is critical for the Kharif crop season in India, which includes crops like rice, maize, pulses, and cotton. Adequate and timely monsoon rains are essential for a good harvest
• The monsoon starts retreating from northwestern India in early September and completely withdraws from the Indian subcontinent by mid-October. This phase is also known as the retreating or northeast monsoon

Mechanism:

• High-Pressure Area: During the summer, intense heating of the landmass in the Indian subcontinent creates a low-pressure area over northern India and the Tibetan Plateau.
• Low-Pressure Area: The Indian Ocean remains relatively cooler, creating a high-pressure area.
• Wind Movement: Air moves from the high-pressure area over the ocean to the low-pressure area over the land, carrying moisture from the ocean and resulting in rainfall.

The monsoon trough is an elongated area of low pressure extending from the heat low over Pakistan and northwestern India to the Bay of Bengal. It influences the distribution and intensity of the monsoon rains.

 

3. What are easterly and westerly winds?

 

Easterly Winds

 

• Easterly and westerly winds refer to the direction from which the winds originate
• Easterly winds are winds that blow from the east towards the west
• Easterly winds can affect weather patterns, including the development of tropical storms and cyclones. For instance, easterly waves in the tropics can lead to the formation of tropical cyclones in the Atlantic and Pacific Oceans

Characteristics:

• Trade Winds: One of the most well-known examples of easterly winds are the trade winds. These winds blow from the east towards the west in the tropics, from the subtropical high-pressure areas toward the equatorial low-pressure areas.
• Tropical Regions: In the tropical regions, particularly between 30 degrees north and south of the equator, easterly winds are prevalent. These are crucial for the weather patterns and climatic conditions in these regions.
• Monsoon Winds: During certain seasons, such as the northeast monsoon in India, easterly winds play a significant role. These winds bring dry air from the land towards the ocean during the winter months.

Westerly Winds

 

• Westerly winds are winds that blow from the west towards the east

• Westerly winds play a significant role in the weather of temperate regions, influencing the climate and the movement of storm systems.
• They are also responsible for carrying warm and moist air from the oceans inland, affecting precipitation patterns in coastal and inland regions.
• The westerlies can affect transoceanic travel and weather prediction due to their influence on the movement of high and low-pressure systems

Characteristics:

• Prevailing Westerlies: These winds are predominant in the mid-latitudes (between 30 and 60 degrees north and south of the equator). They blow from the subtropical high-pressure belts towards the poles.
• Jet Streams: High-altitude westerly winds known as jet streams are important in influencing weather patterns and the movement of weather systems across the globe. They are fast flowing and occur in the upper levels of the atmosphere.
• Polar Front: In the mid-latitudes, the westerlies interact with polar easterlies near the polar front, leading to the development of extratropical cyclones and storms

 

 

4.How does monsoon occur in India?

Monsoons in India occur due to seasonal changes in wind patterns and temperature differences between land and sea.

Here's a concise explanation of the process:

• Differential heating: During summer, the Indian landmass heats up more quickly than the surrounding Indian Ocean.
• Low pressure system: The heated land creates a low-pressure area over the Indian subcontinent.
• Wind direction shift: This low pressure draws in moisture-laden winds from the cooler Indian Ocean towards the land.
• Orographic lift: As these winds encounter geographical features like the Western Ghats or the Himalayas, they are forced to rise.
• Condensation and precipitation: The rising air cools, causing water vapor to condense and form clouds, leading to heavy rainfall.
• Duration: This pattern typically lasts from June to September, bringing the majority of India's annual rainfall.

 

5.What are the conditions that determine the onset of monsoon?

 

• The primary driver is the temperature difference between the land and the surrounding sea. During summer, the land heats up faster than the ocean, creating a low-pressure area over the land and a high-pressure area over the ocean. This pressure difference leads to the movement of moist air from the ocean to the land
• Warm sea surface temperatures are crucial as they increase the evaporation rate, contributing to the formation of moist air masses that drive the monsoon rains.
• The monsoon winds, which are part of the larger atmospheric circulation, shift according to the seasonal temperature differences. The southwest monsoon, for instance, is driven by the southwest winds that carry moisture from the Indian Ocean to the Indian subcontinent.
• The geographical features, such as mountain ranges, play a significant role. For example, the Western Ghats in India force moist air to rise, cool, and condense, leading to heavy rainfall on the windward side
• The movement and strength of the high-pressure systems over the oceans and low-pressure systems over the land influence the intensity and timing of the monsoon.
• Phenomena such as El Niño and La Niña can affect the strength and timing of the monsoon. For example, El Niño can lead to weaker monsoons due to altered wind patterns and sea surface temperatures

6.What is the impact of La-Nina and El Nino on monsoon?

 

La Niña and El Niño, both phases of the El Niño-Southern Oscillation (ENSO) phenomenon, have significant impacts on the monsoon patterns around the world.

 

Here’s how each affects the monsoon:

El Niño

• El Niño is generally associated with a weaker Indian monsoon. The warming of the central and eastern Pacific Ocean during El Niño tends to disrupt the normal atmospheric circulation patterns, leading to reduced rainfall over the Indian subcontinent.
• The onset of the monsoon can be delayed, and the overall intensity of the rainfall during the monsoon season might be lower than usual
•  El Niño often brings drier conditions to Southeast Asia and northern Australia, leading to droughts and reduced rainfall
• Eastern and southern Africa may experience drier conditions as well

La Niña

• La Niña, characterized by cooler-than-average sea surface temperatures in the central and eastern Pacific Ocean, is typically associated with a stronger Indian monsoon. It often leads to increased rainfall over the Indian subcontinent
• The enhanced monsoon can lead to heavier rains and potentially more frequent and intense flooding
• La Niña tends to bring wetter conditions to Southeast Asia and northern Australia, potentially causing heavy rains and flooding
• La Niña can lead to wetter conditions in parts of northern South America

 

7.Way Forward

 

The intermittent development of a wind shear zone — where winds move with different velocities and directions — along latitudes 20 ° N between central and peninsular India

 

 

 

For Prelims: Indian and World Geography For Mains: GS-I, GS-III: Important Geophysical phenomena and environment

 

FOREIGNERS TRIBUNALS (FT)

 

 

1. Context

 

On July 5, the Assam government asked the Border wing of the State’s police not to forward cases of non-Muslims who entered India illegally before 2014 to the Foreigners Tribunals (FTs). This was in keeping with the Citizenship (Amendment) Act of 2019 that provides a citizenship application window for non-Muslims — Hindus, Sikhs, Christians, Parsis, Jains, and Buddhists — who allegedly fled persecution in Afghanistan, Bangladesh, and Pakistan

 

2. What are Foreigners Tribunals(FT)?

 

Foreigners Tribunals (FTs) are quasi-judicial bodies in India established under the Foreigners Act, 1946. Their primary purpose is to determine whether a person residing in India is a foreigner or an Indian citizen.

 

Here are some key aspects of Foreigners Tribunals:

• FTs are set up by the central government in consultation with state governments. They operate in states with significant concerns about illegal immigration, notably Assam
• The tribunals evaluate cases referred to them by the authorities, such as the Border Police, who suspect individuals of being illegal immigrants. These cases can also arise from the National Register of Citizens (NRC) updates or voter list verifications
• Individuals suspected of being foreigners are issued notices to prove their citizenship. They must present documentary evidence and witnesses to support their claim. The tribunal examines the evidence and makes a determination
• FTs function like civil courts. They follow procedures akin to those of a civil court, allowing individuals the right to present evidence, call witnesses, and have legal representation
• If a tribunal declares a person to be a foreigner, they may face detention and deportation. Conversely, if the individual is declared an Indian citizen, they are entitled to all rights and protections under the law
• FTs have been criticized for various reasons, including alleged biases, inconsistencies in decisions, and the difficulties faced by individuals in producing documentary evidence. Concerns have also been raised about the treatment of those declared foreigners, including issues related to human rights and detention conditions
• In Assam, FTs play a crucial role due to the state's unique history and concerns about illegal immigration from neighboring Bangladesh. The NRC update in Assam, aimed at identifying genuine Indian citizens, has led to numerous cases being referred to FTs for final determination

 

How does an FT function?   According to the 1964 order, a Foreigners Tribunal (FT) holds the authority of a civil court in specific matters, such as summoning individuals, enforcing their attendance, examining them under oath, and demanding the production of documents. The tribunal must issue a notice in English or the state's official language to a person suspected of being a foreigner within 10 days of receiving the reference from the relevant authority. The individual then has 10 days to respond to the notice and another 10 days to present evidence supporting their case. The FT is required to resolve the case within 60 days of the reference. If the person cannot provide proof of citizenship, the FT can order their detention in a transit camp, formerly known as a detention center, pending deportation

 

3.Foreigners Tribunal Member

 

A Foreigners Tribunal (FT) member in India plays a crucial role in determining the citizenship status of individuals suspected of being illegal immigrants.

 

Here are some key points about the role and responsibilities of an FT member:

 

• FT members are appointed by the central government in consultation with the state governments. They are typically retired judicial officers or individuals with legal expertise, ensuring that they have the necessary knowledge and experience to handle such cases.
• According to the 1964 order, FT members have powers akin to those of a civil court. This includes the authority to summon individuals, enforce attendance, examine witnesses under oath, and require the production of documents.

Role and Responsibilities:

• Case Evaluation: FT members review cases referred to them by authorities, such as the Border Police or from the National Register of Citizens (NRC) processes.
• Hearing Proceedings: They conduct hearings where individuals suspected of being foreigners are required to present evidence proving their citizenship. This involves examining documents, hearing testimonies, and considering any other relevant evidence.
• Decision Making: Based on the evidence presented, FT members decide whether the individual is an Indian citizen or a foreigner. Their decisions can have significant implications, including the possibility of detention and deportation for those declared foreigners.

 

Amnesty International   Amnesty International is a global non-governmental organization focused on human rights. Founded in 1961 by British lawyer Peter Benenson, its mission is to conduct research and take action to prevent and end grave abuses of human rights.   Here are some key aspects of Amnesty International: Amnesty International campaigns against various human rights violations, including torture, political repression, and unjust imprisonment. It works to uphold freedoms related to speech, expression, and assembly, among others. The organization conducts detailed investigations and publishes reports on human rights abuses worldwide. These reports help bring international attention to issues and pressure governments and organizations to make changes With millions of members and supporters across over 150 countries, Amnesty International operates on a global scale, addressing human rights issues in diverse regions A key aspect of its work involves advocating for individuals who are imprisoned or persecuted for their beliefs, identity, or activism. The organization’s "Write for Rights" campaign, for example, mobilizes global support for such individuals Amnesty International engages in legal advocacy, working to influence national and international laws and policies to better protect human rights. It also provides legal aid and support to victims of human rights abuses The organization runs human rights education programs aimed at raising awareness and understanding of human rights issues among the public Over the years, Amnesty International has received various accolades, including the Nobel Peace Prize in 1977, recognizing its efforts to protect human rights globally

 

 

Source: The Hindu

FINANCE COMMISSION OF INDIA

 

 

 

1. Context

 

The sixteenth Finance Commission headed by former Niti Aayog Vice-Chairman Arvind Panagariya has begun its work by inviting suggestions from the public on the mandate set for it by the Centre. The latest Finance Commission, which consists of five members including the chairman, was constituted in December last year and is expected to submit its recommendations by October, 2025. Its recommendations will be valid for five years starting from April 1, 2026

 

2. What is the Finance Commission?

The Finance Commission is a constitutional body in India, established under Article 280 of the Indian Constitution. Its primary purpose is to define the financial relations between the central government and the individual state governments.

Here are some key functions and roles of the Finance Commission:

• Distribution of Taxes: It recommends how the net proceeds of taxes should be divided between the Centre and the States, and among the States themselves.

• Grants-in-Aid: It determines the principles governing Grants-in-Aid to the States from the Consolidated Fund of India.

• Augmenting State Finances: It suggests measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities in the State, based on the recommendations made by the State Finance Commissions.

• Financial Performance Review: It evaluates the financial performance of both the central and state governments and suggests corrective measures for better fiscal management.

• Any Other Matter: The Commission may also address any other matter referred to it by the President of India in the interest of sound finance.

The Finance Commission is reconstituted every five years and comprises a chairman and four other members, who are appointed by the President of India. The recommendations of the Finance Commission are advisory in nature, meaning they are not binding but are generally followed by the government

 

3. How does the Commission decide?

 

• The Finance Commission determines the percentage of the central government's net tax revenue allocated to the States overall (vertical devolution) and how this share is distributed among the individual States (horizontal devolution).
• The horizontal distribution is typically based on a formula devised by the Commission, which considers factors such as a State's population, fertility rate, income level, and geography.
• In contrast, vertical devolution does not follow a specific objective formula. Recent Finance Commissions have recommended increasing the share of tax revenues allocated to States. For instance, the 13th, 14th, and 15th Finance Commissions proposed that the Centre share 32%, 42%, and 41% of the divisible pool of funds, respectively, with the States. Additionally, the Centre may provide extra grants to States for certain jointly funded schemes.
• The 16th Finance Commission is anticipated to suggest ways to boost the revenues of local bodies, such as panchayats and municipalities. It is worth noting that, as of 2015, only about 3% of public spending in India occurred at the local body level, in contrast to countries like China, where over half of public spending happened at the local level

 

4. Friction between the Centre and States

 

Friction between the Centre and States in India arises from several factors related to the distribution of powers, financial resources, and political differences.

 

Here are some key reasons for this friction:

 

• Disagreements over the allocation of financial resources and the share of tax revenue. States often feel that they do not receive an adequate share of central taxes and grants, impacting their ability to fund local projects and services
• The central government sometimes makes decisions unilaterally, leading to perceptions of overreach and undermining the autonomy of state governments. This centralization can be seen in policy decisions, imposition of centrally sponsored schemes, and emergency provisions
• Conflicts often arise when different political parties govern the Centre and the States. Political rivalries can lead to tensions and lack of cooperation, impacting the implementation of policies and schemes
• The Constitution divides subjects into Union, State, and Concurrent Lists. Disputes can arise over subjects in the Concurrent List, where both the Centre and States have legislative powers. The Centre’s laws can sometimes override state laws, causing friction
• States may resist the implementation of central policies and reforms that they believe do not align with local needs and priorities. This resistance can lead to conflicts over policy implementation
• Disputes over the control and distribution of natural resources like water, minerals, and forests can create tensions. States often demand a greater say in the management and revenue from these resources
• Conditional grants and loans from the Centre can be a point of contention. States may feel that conditions imposed are restrictive and interfere with their autonomy
• Issues related to the appointment and control of key administrative positions, such as governors, can lead to conflicts. Governors are appointed by the Centre but play a crucial role in state administration

5.Disagreements and Agreements between States

 

• The States and Centre often clash over the percentage of total tax proceeds that should be allocated to the States and the actual disbursement of these funds.
• States contend that they deserve a larger share than what the Finance Commission recommends, arguing that their responsibilities are greater than those of the Centre.
• They also criticize the Centre for not even allocating the recommended amounts, which they believe are already insufficient.
• For instance, analysts note that the Centre has transferred an average of only 38% of funds from the divisible pool to the States under the current Fifteenth Finance Commission, compared to the Commission’s recommendation of 41%.
• Additionally, States dispute what portion of the Centre’s total tax revenues should be included in the divisible pool from which they are funded. It is believed that cesses and surcharges, which are not included in the divisible pool and thus not shared with the States, can account for as much as 28% of the Centre’s total tax revenues in some years, significantly reducing States' revenues.
• Consequently, the increased devolution of funds from the divisible pool recommended by successive Finance Commissions may be offset by rising cess and surcharge collections. In fact, estimates suggest that if these cesses and surcharges are considered, the States' share of the Centre’s overall tax revenues could drop to as low as 32% under the 15th Finance Commission.
• More developed States like Karnataka and Tamil Nadu have also complained that they receive less money from the Centre than they contribute in taxes. For example, Tamil Nadu received only 29 paise for each rupee it contributed to the Centre’s exchequer, while Bihar gets more than ₹7 for each rupee it contributes.
• Critics argue that more developed States with better governance are being penalized by the Centre to support States with poorer governance. Some also believe that the Finance Commission, whose members are appointed by the Centre, may not be entirely independent and free from political influence

6. Way Forward

 

Friction between the Centre and States over the distribution of tax proceeds and financial resources is a complex and ongoing issue. States argue for a larger share of the divisible pool to meet their greater responsibilities, while they also express concerns over the Centre's retention of significant revenue through cesses and surcharges. The perceived inequity in financial allocations, where more developed States feel penalized in favor of less developed ones, adds to the tension. Additionally, questions about the independence of the Finance Commission, given its appointments by the Centre, further complicate the trust and cooperation required for equitable fiscal federalism. Addressing these concerns is crucial for fostering a balanced and harmonious Centre-State financial relationship in India

 

 

For Prelims: Finance Commission, Article 280, Fiscal Consolidation, Fiscal Federalism, and Alternative Dispute Resolution (ADR) mechanism. For Mains: 1. Discuss the Role and Challenges of the Finance Commission in Promoting Fiscal Federalism and Ensuring Equitable Resource Distribution in India. (250 words).

 

Previous year Question 1. With reference to the Finance Commission of India, which of the following statements is correct? (UPSC 2011) A. It encourages the inflow of foreign capital for infrastructure development. B. It facilitates the proper distribution of finances among the Public Sector Undertaking. C. It ensures transparency in financial administration. D. None of the statements (a), (b), and (c) given above is correct in this context. Answer: D   2. With reference to the Fourteenth Finance Commission, which of the following statements is/are correct? (UPSC 2015) 1. It has increased the share of States in the central divisible pool from 32 percent to 42 percent. 2. It has made recommendations concerning sector-specific grants. 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: A   3. Which of the following is/are among the noticeable features of the recommendations of the Thirteenth Finance Commission? (UPSC 2012) 1. A design for the Goods and Services Tax, and a compensation package linked to adherence to the proposed design. 2. A design for the creation of lakhs of jobs in the next ten years in consonance with India's demographic dividend. 3. Devolution of a specified share of central taxes to local bodies as grants Select the correct answer using the codes given below:  A. 1 only B. 2 and 3 only C. 1 and 3 only D. 1, 2 and 3 Answer: C

 

Source: The Hindu