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1st February 2021 – Editorials/Opinions Analyses

Content

  1. Moving to a new city
  2. he problem of ageing dams

Editorial: Moving to a new city

Context:

  • The Fifteenth Finance Commission of India (XV FC) could fundamentally transform the financial governance of India’s municipalities, if its interim report is anything to go by.

Relevance:

  • GS Paper 2: Devolution of powers and finances to local levels; challenges therein.

Mains Questions:

  1. State governments need to ensure that state finance commissions are constituted on time, resourced right, and their recommendations taken seriously. Discuss. 15 Marks

Dimensions of the Article:

  • About the Finance commission in India
  • Criterion for Devolution:
  • Empowering Local Bodies:
  • Way Forward:

About the Finance commission in India

  • Article 280 of the Constitution provides for a Finance Commission as a quasi-judicial body.
  • It consists of a chairman and four other members to be appointed by the President every 5th year or at such earlier time as he considers necessary.
  • The Finance commission makes recommendations to the President on following matter so The distribution of the net proceeds of taxes between the centre and the states, and the allocation between the states of the respective shares of such proceeds.
    • The principle that should govern the grants-in-aid to the states by the centre (out of the Consolidated Fund of India).
    • The measures to augment the Consolidated Fund of a state to supplement the resources of local governments on the basis of recommendations made by the state finance commission.
    • Any other matter referred to it by the President.
  • Recommendations made by the Finance commission are only advisory in nature.
  • The Constitution empowers the FC to go beyond the core issues of how to divide taxes vertically between centre and the states on the one hand and horizontally between states on the other.
  • It also allows FC to make broader recommendations in the interests of sound finance.

Criterion for Devolution:

Vertical Devolution:

  • An aggregate share of 41 percent of the net proceeds of Union taxes (divisible pool) should be devolved to States in the year 2020-21.
  • The 1% decrease is to provide additional resources for the newly formed union territories of Jammu and Kashmir, and Ladakh.

Horizontal Devolution:

  • Need-based Criteria:
    • Population- As mentioned in the terms of reference (TOR) of the Commission, it has used the 2011 population data while making recommendations. It has been assigned a weight of 15%. o Area- The previous weight of 15% has been continued.
    • Forest and Ecology- This criterion has been arrived at by calculating the share of dense forest of each state in the aggregate dense forest of all the states. (The weight has been increased to 10%.)
  • Equity-based Criteria:
    • Income Distance- Income distance is the distance of the state’s income from the state with the highest income. A three-year average (2015-16 to 2017-18) per capita comparable GSDP has been taken for all the States. States with lower per capita income would be given a higher share to maintain equity among states. Its weight has been reduced to 45%.
  • Performance-based Criteria:
    • Demographic Performance- During the previous commission, many states, particularly the southern states had complained of being penalized with lower devolution for having good performance in population control. It has been introduced to reward efforts made by states in controlling their population. It will be computed by using the reciprocal of the total fertility rate (TFR) of each state, scaled by 1971 population data. States with a lower fertility ratio will be scored higher on this criterion.
    • Tax Effort- Many States had suggested inclusion of tax performance criteria to incentivize States with higher efficiency of tax collection. The commission has assigned a total weight of 2.5% to reward the states with higher tax collection efficiency.

Empowering Local Bodies:

  • First, the XV FC in its interim report has tried to significantly increase the overall outlay for municipalities. It has set aside Rs 29,000 crore for FY 2020-21 and indicated the intent to raise the share of municipalities in the total grants’ of local bodies (including panchayats) gradually over the medium term, from the existing 30 per cent to 40 per cent.
  • Second: Publication of audited annual accounts and notification of floor rates for property tax. These two entry conditions lay strong foundations for financial accountability of municipalities and own revenue enhancement respectively. There are other reforms, too, that are underway on these fronts. The Atmanirbhar Bharat Abhiyan links.
  • Third: the XV FC has adopted a nuanced approach of distinguishing between million-plus urban agglomerations, and other cities. For the first time, there is also an acknowledgement of the metropolitan area as a unified theatre of action to solve complex challenges of air quality, water and sanitation, with implicit emphasis on inter-agency coordination.
  • Last, with an emphatic recommendation for a common digital platform for municipal accounts, a consolidated view of municipal finances and sectoral outlays at the state level, and digital footprint of individual transactions at source, the FC has delightfully broken new ground and demonstrated farsightedness.

Changes Brought:

  • Grants should be given to all tiers of the Panchayati raj so as to enable pooling of resources across villages and blocks to create durable community assets and improve their functional viability.
  • Grants to the Fifth and Sixth Schedule areas and Cantonment Boards.
  • Tied grants in the critical sectors of sanitation and drinking water.
  • Share of urban local bodies in the grants to local bodies should be gradually increased to 40 per cent over the medium term.
  • The fifty Million-Plus cities in the country need differentiated treatment, with special emphasis on meeting the challenges of bad ambient air quality, ground water depletion and sanitation.

Grants in aid:

  • The total grants to local bodies for 2020-21 has been fixed at Rs 90,000 crore which is equivalent to 4.31% of the divisible pool for 2020-21, up from the 3.54% (2019-20), of the divisible pool.
  • The proportion of grants between rural and urban local bodies will be in the ratio of 67.5: 32.5.
  • The grants will be divided between states based on population and area in the ratio 90:10.

Way Forward:

The complex political economy around devolution of funds from state governments to municipalities should further strengthen rather than deter the advocacy for it. State finance commissions would need to emulate the XV FC and its predecessors, and emerge as credible institutions. State governments need to ensure that state finance commissions are constituted on time, resourced right, and their recommendations taken seriously.


Editorial: The problem of ageing dams

Context:

  • Dams and reservoirs are believed to secure our water needs for the future. However, data and studies show that they can threaten our water security.

Relevance:

  • GS Paper 3: Infrastructure (Dams)

Mains Questions:

  1. India’s ageing dams can threaten water security, affect farmers’ income, and increase flooding. Discuss. 15 Marks

Dimensions of the Article:

  • Status of dams in India.
  • Consequences of poor status of dams.
  • Way forward.

Status of dams in India:

  • The report, titled ‘Ageing water infrastructure: An emerging global risk’ and compiled by United Nations University’s Canadian-based Institute for Water, Environment and Health, says most of the 58,700 large dams worldwide were constructed between 1930 and 1970 with a design life of 50 to 100 years.
  • India is ranked third in the world in terms of building large dams. Of the over 5,200 large dams built so far, about 1,100 large dams have already reached 50 years of age and some are older than 120 years.
  • The number of such dams will increase to 4,400 by 2050. This means that 80% of the nation’s large dams face the prospect of becoming obsolete as they will be 50 years to over 150 years old.
  • The situation with hundreds of thousands of medium and minor dams is even more precarious as their shelf life is even lower than that of large dams.
  • Krishna Raja Sagar dam was built in 1931 and is now 90 years old. Similarly, Mettur dam was constructed in 1934 and is now 87 years old. Both these reservoirs are located in the water-scarce Cauvery river basin.
  • In a paper, ‘Supply-side Hydrology: The observed siltation rate in India’s iconic Bhakra dam is 139.86% higher than originally assumed. At this rate, he wrote, “the Bhakra dam is now expected to function for merely 47 years, virtually halved from the original estimate of 88 years”.
    • Similarly, the actual siltation rate observed for the Hirakud, Maithan and Ghod dams are way higher at 141.67%, 808.64% and 426.59%, respectively. Studies in later years showed similar findings.
  • Almost every scholarly study on reservoir sedimentation shows that Indian reservoirs are designed with a poor understanding of sedimentation science. The designs underestimate the rate of siltation and overestimate live storage capacity created.

Consequences of poor status of dams:

  • Threat to people: The report said that approximately 3.5 million people are at risk if India’s Mullaperiyar dam in Kerala, built over 100 years ago.
  • Inducing earthquake: The dam, in a seismically active area, shows significant structural flaws and its management is a contentious issue between Kerala and Tamil Nadu States.
  • Increasing Flood: The flawed siltation rates demonstrated by a number of scholarly studies reinforce the argument that the designed flood cushion within several reservoirs across many river basins may have already depleted substantially due to which floods have become more frequent downstream of dams. The flooding of Bharuch in 2020, Kerala in 2018 and Chennai in 2015 are a few examples attributed to downstream releases from reservoirs..
  • Reducing crops yields: When soil replaces the water in reservoirs, supply gets choked. The cropped area begins receiving less and less water as time progresses. The net sown water area either shrinks in size or depends on rains or groundwater, which is over-exploited.

Way forward:

The Dam Safety Bill 2019 aims to deal with the risks of India’s ageing dams, with the help of a comprehensive federal institutional framework comprising committees and authorities for dam safety at national and state levels. The Bill provides for the surveillance, inspection, operation, and maintenance of all specified dams across the country. This will help to address the issues related to dam safety in India.

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October 2022
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