8 FEBRAURY 2024

Increase in Gender Budgeting 

Syllabus: GS1/Society, GS3/Economy

Context

• The Interim Budget 2024-25 has increased the Gender Budget.

About

• The quantum of Gender Budget reported in 2024-25 is 38.6% more than budget estimates of 2023-24.
• The share of Gender Budget in the total Union Budget increased to 6.5% in 2024-25 from 5% in 2023-24.

What is Gender Budgeting?

• Gender Budgeting is a strategy with gender responsive formulation of legislation, policies, plans, programmes, and schemes; resource allocation; implementation; tracking of expenditure, audit, and impact assessment. 
• It aims to ensure that public resources are collected and spent efficiently based on differing gender needs and priorities. 
• Gender Budgets are not separate budgets for women; neither do they imply that funds be divided into half for men and women or that budgets should be divided into half.
  • They are attempts to disaggregate the government’s budget according to its differential impact on different Genders, and reprioritize allocations to bridge gender gaps. 
• Gender-responsive budgeting in India was adopted in 2005. It comprises two parts: 
  • Part A: It encompasses schemes that allot 100 percent of the funds for women (such as maternity benefits). 
  • Part B: It consists of schemes that allocate at least 30 percent of funds for women (such as the Mid-Day Meal scheme).

Need for Gender budgeting

• Addressing Gender Inequality:  The Gender Gap Report 2023 ranked India at 127 out of 146 countries.
  • Gender budgeting provides a systematic framework for addressing these inequalities by allocating resources towards programs and initiatives that promote gender equality.
• Enhancing Development Outcomes: Gender equality yields significant development benefits, including poverty reduction, improved health outcomes, and enhanced economic growth.
  • Gender budgeting helps in mainstreaming gender considerations across all sectors of the economy, thereby contributing to more inclusive and sustainable development outcomes.
• International Commitments: India is a signatory to various international agreements and conventions that mandate the promotion of gender equality and women’s rights, including the Sustainable Development Goals (SDGs) and the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW). Gender budgeting is necessary to fulfill these commitments.
• Ensuring Targeted Interventions: Gender budgeting helps in identifying and prioritizing the specific needs and priorities of women and girls.

Challenges

• Data Availability and Quality: Gender budgeting relies on accurate gender-disaggregated data to identify specific needs and assess the effectiveness of interventions.
  • However, data collection mechanisms lack gender disaggregation, making it challenging to formulate evidence-based policies and allocate resources efficiently.
• Fragmentation of Initiatives: Gender-related initiatives in India are fragmented across different ministries and departments, leading to duplication of efforts, inefficiencies, and gaps in service delivery.
• Regular monitoring: Absence of robust monitoring mechanisms to evaluate the accountability and progress of gender budgeting initiatives reduces its effectiveness.

Way Forward

• Gender budgeting is a critical tool for advancing gender equality, promoting women’s empowerment, and achieving inclusive and sustainable development in India. 
• By addressing the challenges in implementation of gender budgeting  India can address the root causes of gender disparities and work towards creating a more equitable and just society.

Source: TH

Dealing With the High Government Debt

Syllabus: GS3/Indian Economy

Context:

• Dealing with the huge public debt seems to be a challenge for the government.

About the Public Debt

• It is also known as Sovereign Debt, and sometimes National Debt, an important way for governments to finance investments in growth and development.
• It is usually the amount of debt that a government has accumulated over many years of running fiscal deficits and borrowing to bridge the deficits.
  • It includes the budgetary central government, state and local government, extrabudgetary units, and social security funds etc plus other liabilities, including against small savings schemes, provident funds and special securities issued to the Food Corporation of India, fertiliser firms and oil marketing companies.
• Public debt is considered when the government’s expenditure exceeds its revenues, leading to borrowing or selling assets to fund the deficit.
  • The fiscal deficit target (gap between the government’s revenue and expenses) is often expressed as a percentage of the gross domestic product (GDP).

Current Status (India)

• India’s public debt-to-GDP ratio has barely increased from 81% in 2005-06 to 84% in 2021-22, and is back to 81% in 2022-23.
  • It was at 75% in 2019-20 and peaked at 88.5% in 2020-21.
• As per the Fiscal Responsibility and Budget Management (FRBM) Act 2003, the general government debt was supposed to be brought down to 60% of GDP by 2024-25.
  • The Centre’s own total outstanding liabilities were not to exceed 40% within that time schedule.
• The IMF states that India’s general government debt, including the Centre and States, could be 100% of GDP under adverse circumstances by fiscal 2028.
  • It has projected the ratio at 82% in the current fiscal and 82.4% for 2024-25.

Global Status of Debt

• Global public debt tripled since the mid-1970s to reach 92% of GDP (or just above $91 trillion) by end-2022.
• Private debt also tripled to 146% of GDP (or close to $144 trillion), but over a longer time span between 1960 and 2022.
• Over the past decade, the rise in the external debt stock of low- and middle-income countries has outpaced economic growth.

Reasons for High Public Debt

• High Borrowings: Governments borrow to meet various expenditures that they are unable to meet through tax and other revenues.
  • Governments may also borrow to pay interest on the money that they have already borrowed to fund past expenditures.
  • Public debt in India is primarily contracted at fixed interest rates, with floating internal debt constituting only 1.9% of GDP at end-March 2022.
• Expenditure related to Public Health and Social Safety: The most obvious reason is the Covid-induced disruptions that forced governments to borrow more – to fund additional public health and social safety net expenditure requirements – amid a drying up of revenues.
• High Inflation: Despite the economic growth rebound from 2020 and much higher-than-expected inflation, public debt remained high.
  • Fiscal deficits kept public debt levels elevated, as many governments spent more to boost growth and respond to food and energy price spikes even as they ended pandemic-related fiscal support.
• Declining Tax Revenue: A major chunk of expenses (interest payments, pensions, administrative expenses etc.,) and rising subsidy burdens meant that States were overly dependent on Central transfers.
  • A decline in revenue and an increase in spending meant a sharp rise in debt.

Impacts

• On economic development: High public debt can act as a drag on development due to limited access to financing, rising borrowing costs, currency devaluations, and sluggish growth.
  • Government debt exceeding threshold levels exert upward pressures on the term premium and dampen growth.
  • According to the United Nations, countries are facing the impossible choice of servicing their debt or serving their people.
• Low quality of expenditure: In 2022, 3.3 billion people live in countries that spend more on interest payments than on education or health.
  • High public debt can reduce investment and capital accumulation due to pressure on long-term interest rates.

Fiscal Responsibility Budget Management (FRBM) Act, 2003: – It sets targets for the government to achieve fiscal stability. – It proposed that revenue deficit, fiscal deficit, tax revenue and the total outstanding liabilities be projected as a percentage of gross domestic product (GDP) in the medium-term fiscal policy statement. – It provides the provisions for required flexibility for RBI to: A. deal with inflation; B. improve the management of public funds; C. strengthen fiscal prudence and reduce fiscal deficits; – It made mandatory to place annually: A. Union Budget documents; B. Medium Term Fiscal Policy Statement;  C. Macroeconomic Framework Statement; and  D. Fiscal Policy Strategy Statement in the Parliament.  – It requires the Union government to contain its fiscal deficit to just 3% of the nominal GDP. A. However, barring 2007-08, India has never met this target.

Efforts for Minimizing the High Public Debt

• Fiscal consolidation: This involves reducing the fiscal deficit and public debt. The government can achieve this by increasing revenues or decreasing spending.
  • The government has opted for a new broad ‘glide path’ of fiscal consolidation. It aims to attain a fiscal deficit-to-GDP ratio of ‘below 4.5%’ by 2025-26.
  • But given the high post-pandemic starting points in 2020-21 and 2021-22, the deficit ratios of 6.4%, 5.8%, 5.1% (Budget Estimate), and ‘below 4.5%’ for the following four years amount to fairly sharp reductions.
• Structural reforms: These are changes in fiscal, financial, or trade policies to improve the functioning of the economy. They can help increase economic growth and reduce public debt.
• Monetary policy: The central bank can use monetary policy to manage inflation and stabilise the economy, which can indirectly help reduce public debt.
• The IMF suggested that India needs more prudent management of debt in the medium term.
  • It also suggested that new and preferably concessional sources of financing are needed, as well as greater private sector investment and carbon pricing or equivalent mechanism.
• Public Debt Management: It is a key function of the Department of Economic Affairs, Ministry of Finance.
  • The division handles coordination, compilation, and printing of the Detailed Demands for Grants and the Outcome Budget.

Way Forward

• For restoring and recreating a policy environment conducive for private sector-led growth post-COVID, timely rebalancing of monetary and fiscal policies may become necessary given the current configurations of debt and liquidity.
• India probably needs a combination of both fiscal consolidation and growth (from output more than inflation) to deal with its current debt burden.

Source: IE

Global launch of UPI in France

Syllabus: GS2/International Relations, GS3/Economy

Context

• India launched UPI at the iconic Eiffel Tower in France.

About

• NPCI International Payments (NIPL), a subsidiary of NPCI, partnered with French e-commerce and proximity payments provider, Lyra to ensure the acceptance of the UPI payment mechanism in France, starting with the Eiffel Tower.

What is Unified Payments Interface (UPI)?

• UPI was designed and launched by the National Payments Corporation of India (NPCI) in 2016.
• It is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood. 
• It also caters to the “Peer to Peer” collect request which can be scheduled and paid as per requirement and convenience.

Internationalization of UPI

• Countries like UAE, Singapore, Bhutan, and Nepal have adopted UPI in the past.
  • In 2023, UPI and Singapore’s PayNow signed an agreement, allowing users in either country to make cross-border transactions.
  • To enable cross-border transactions, the NIPL and Al Etihad Payments of UAE inked a Memorandum of Understanding in 2023.

Significance 

• Global Financial Inclusion: The internationalization of UPI will provide access to fast, convenient, and low-cost payment services. This can help reduce the reliance on traditional banking infrastructure and facilitate economic participation for underserved populations.
• Remittances: It will streamline the process of sending and receiving remittances across borders, offering a faster, affordable, and secure alternative to traditional remittance channels. 
• Diplomatic and Strategic Relations:  It will foster closer economic ties and cooperation between countries by promoting interoperability and collaboration in the realm of digital payments.

National Payments Corporation of India – It is an umbrella organization for operating retail payments and settlement systems in India, established by Reserve Bank of India (RBI) and Indian Banks Association (IBA) in 2008 under the provisions of the Payment and Settlement Systems Act, 2007. – It has been incorporated as a “Not for Profit” Company under the provisions of Section 25 of Companies Act 1956 (now Section 8 of Companies Act 2013), with an intention to provide infrastructure to the entire Banking system in India for physical as well as electronic payment and settlement systems.

Source: TH

India- U.S. Nuclear Cooperation 

Syllabus: GS2/India and Major Power Relations

In News

• The U.S. Assistant Secretary of State for Energy Resources recently said, India-U.S. nuclear cooperation envisaged under the nuclear deal two decades ago is “an important piece of unfinished business”.

More about the News

• Speaking on clean energy and climate change,  he stressed on getting away from Chinese domination of clean technology supply chains. 
• He also emphasises using India’s capacities in manufacturing and labour costs to build up a real alternative supply chain.

India-U.S. Nuclear Cooperation 

History and Milestones:

• 1974: India conducts its first nuclear test, leading to U.S. sanctions and limited cooperation.
• 2005: The landmark U.S.-India Civil Nuclear Agreement is signed, paving the way for civil nuclear trade and cooperation.
• 2008: The U.S. Congress approves the agreement, allowing nuclear fuel and technology transfers to India.
• 2010: The first U.S.-built nuclear power plant in India begins construction in Kudankulam.
• 2015: The Westinghouse Electric Company signs an agreement to build six nuclear reactors in India in Kovvada, Andhra Pradesh.

The U.S.-India Civil Nuclear Agreement

• The U.S.-India Civil Nuclear Agreement, also known as the 123 Agreement, is a landmark agreement signed in 2005 that marked a significant shift in the nuclear relationship between the two countries.

Key Provisions:

• Separation of Programs: India agreed to separate its civilian and military nuclear facilities, placing civilian facilities under International Atomic Energy Agency (IAEA) safeguards.
• Nuclear Trade: The agreement allowed the U.S. to supply nuclear fuel and technology to India for its civilian nuclear program.
• Non-proliferation Commitments: India reaffirmed its commitment to non-proliferation and agreed to additional safeguards against transferring sensitive nuclear technology or materials.

Expected benefits for India:

• Energy Security: Reduced dependence on fossil fuels for electricity generation, which is crucial for a growing economy. Cleaner energy source with lower greenhouse gas emissions.
• Economic Growth: Creation of jobs in the nuclear power sector, potential for attracting investments and technology transfers.
• Strategic Partnership: Stronger relationship with the U.S., with implications for regional security and global non-proliferation efforts.
• Access to Advanced Technology: Acquisition of modern nuclear reactors and fuel, promoting technological advancements and improved safety standards.
• Environmental protection: Reduced reliance on coal-fired power plants, contributing to lower air pollution and greenhouse gas emissions.
• Regional stability: Cooperation on nuclear energy could foster trust and collaboration between India and neighboring countries.
• Global leadership: Demonstrating responsible nuclear cooperation could set a positive example for other countries.

Current Status:

• Even after eight years of announcing that the nuclear deal was done in 2015, there is still no techno-commercial offer.
• The progress has been slower than initially expected due to various Challenges.
  • Domestic challenges in India: Complex regulatory procedures, limited infrastructure, and liability concerns.
  • Geopolitical considerations: Evolving global nuclear landscape and concerns about technology transfer.
  • U.S. domestic politics: Concerns about non-proliferation and Congressional approval processes.

Measures/Suggestions:

• India and the U.S. needs to make fresh efforts for practical cooperation in the civil nuclear energy sector.
• Also, India needs to revise laws to enable private companies to participate in the civil nuclear sector.
• Further, there is a “shared interest” to move forward, both on the large traditional reactors which were foreseen as part of the nuclear deal and also on Small and Modular Reactor (SMR) technology.

Way Ahead:

• Despite the challenges, both countries remain committed to the agreement and continue to work towards expanding cooperation.
• The success of the agreement will depend on addressing outstanding challenges and building mutual trust to unlock its full potential.

Source: TH

The Water (Prevention and Control of Pollution) Amendment Bill, 2024

Syllabus: GS3/Natural Resources; Conservation

Context

• Recently, the Water (Prevention and Control of Pollution) Amendment Bill, 2024 was introduced in the Rajya Sabha aiming to amend the Water (Prevention and Control of Pollution) Act, 1974.

Key Features of the Bill

• Appointment of Adjudication Officers: The bill proposes the appointment of an ‘adjudication officer’ who will decide on the penalty in cases of environmental violations.
• Uniformity in appointment of Chairman of SPCBs: The 1974 Act states the Chairman of the State Pollution Control Board was nominated by the State government, to which the Bill adds ‘in such a manner as may be prescribed by the Central Government’.
• Applicability: The Bill would be applicable to Himachal Pradesh and Rajasthan, and any other state that passes a resolution under the Water (Prevention and Control of Pollution) Act, 1974.
• Decriminalisation of Minor Offences: The bill aims to decriminalise the existing provisions of the Water (Prevention and Control of Pollution) Act, 1974, which means that instead of imprisonment, violators would be required to pay a fine.
• Changes in Punishment: The 1974 Act currently prescribes imprisonment of up to three months for not informing the State Board about abstraction of water from a stream or well in a substantial volume and not providing information about construction, installation, or operation of disposal system.
  • The Bill amends it to a fine between Rs 10,000 and Rs 15 lakh.
• Exemption for Certain Industrial Units: The Bill enables the Centre to ‘exempt certain categories of industrial plants’ from the restrictions on new outlets and discharges.
• Guidelines for Grant and Establishment of Industries: The Bill also enables the Centre to ‘issue guidelines’ on matters relating to grant, establishment of any industry, etc.