13-03-2024 CARE mains practice

Topic- Fiscal federalism:

Introduction:

The Kerala government and the Centre are at loggerheads over the latter’s decision to limit the state’s borrowing limit. Kerala government has moved the Supreme Court alleging that the Centre’s move violates fiscal federalism and will prevent it from fulfilling the commitments it made in annual budgets.

Body :

• Background
• 15th Finance Commission
• Fiscal autonomy and fiscal responsibility
• Centre’s stand
• Kerala’s stand
• Supreme Court’s advise
• Way Ahead

Conclusion :                                                                                                                                                                                                                                       

Fiscal mismanagement of the states is an issue with which the Union must be concerned because ultimately it has its own impact on the nation’s economy. The Supreme Court has asked the Centre and Kerala government, which have been sparring over the state’s borrowing limit, to hold further discussions to sort out their differences.

UPSC Syllabus Fiscal Federalism:

 

Why was this question asked?

Q. The public expenditure management is a challenge to the Government of India in context of budget making during the post liberalization period. Clarify it. [UPSC Main 2019]

Introduction

The Kerala government and the Centre are at loggerheads over the latter’s decision to limit the state’s borrowing limit. Kerala government has moved the Supreme Court alleging that the Centre’s move violates fiscal federalism and will prevent it from fulfilling the commitments it made in annual budgets.

Body Status : 

Background

• Historically, the FRBM Act 2003 required states to limit their fiscal deficit to 3% of the GSDP.
• However, the Covid pandemic and the ensuing lockdowns required both state and Central governments to stretch their borrowings in order to meet the gap between falling revenues and rising expenditures.
• The Kerala government has challenged two letters issued by the Union finance ministry last year and certain amendments made to the Fiscal Responsibility and Budget Management Act in 2018 for “imposing a net borrowing ceiling (NBC) on the state by limiting borrowings from all sources, including open market borrowings.”

15^th Finance Commission

• The 15th Finance Commission designated Kerala to be a “highly debt stressed” state.
• Kerala is reeling under unhealthy levels of Revenue Deficit-Fiscal Deficit ratio (65% in 2018-19).
• A high RD-FD ratio implies that the state government is borrowing not to invest in productive schemes but to meet its day to day expenses such as salaries and pensions.
• Data revealed that Kerala had largely failed to limit its fiscal deficit to 3% of GSDP for almost all of the past decade.
• Based on the recommendation of the 15th Finance Commission, the normal Net Borrowing Ceiling (NBC) of the States including Kerala have been fixed at 3 per cent of the Gross State Domestic Product for the financial year 2023-24.
• Accordingly, the normal NBC of the State of Kerala has been arrived at Rs 32,442 crore for the Financial Year (FY) 2023-24”.
• The commission noted that Kerala had the second highest levels of salaries (as a percentage of total revenue expenditure), and worse, the trend growth of salaries was the highest — suggesting that this burden was continuing to rise.

Fiscal autonomy and fiscal responsibility

• Article 293 of the Constitution grants fiscal autonomy to states and mandates them to borrow only from within the territory of India on guarantee from the Consolidated Fund of the State.
• For the states, the extent of borrowing is defined in the fiscal responsibility Acts of each state.
• All transactions between the Centre and the state governments are carried out under the Fiscal Responsibility and Budget Management Act, 2003.

Centre’s stand

• The Centre, has claimed it has not curtailed the borrowing limit and the financial crisis in Kerala is a result of the state government’s “mismanagement and extravagance”.
• The Centre has argued that the financial edifice of the Kerala has several issues.
• It has given statistics to show the revenue deficit in Kerala as a percentage of gross state domestic product (GSDP) to be 3.17% for 2021-22, higher than the all-states average of 0.46%, and the fiscal deficit rate for Kerala to be 4.94% compared to an all-state average of 2.80%.
• If a one-time exception can be made for Kerala this time, the step would end up dividing states based on their approaching courts

Kerala’s stand

• The Kerala government has approached the Supreme Court accusing the Centre of interfering in the exercise of its “exclusive, autonomous and plenary powers” to regulate the state’s finances by imposing a ceiling on net borrowing.
• In an original suit filed under Article 131, the Kerala government has said the Constitution bestows fiscal autonomy upon states to regulate their finances under various articles, and the borrowing limits are regulated by a state legislation.
• Kerala government, claim that it has no money to clear outstanding arrears of salaries, pension, and provident fund for state employees and for other beneficiaries in the state under various welfare schemes.
• As per Kerala government, the Centre’s orders and amendment create unconstitutional limits and impediments on the state to borrow and regulate its own finances, therefore violating the provisions and principles of fiscal federalism under the Constitution.

Supreme Court’s advise

• The Supreme Court recently urged the Centre to consider rescuing Kerala from its severe financial crisis with a special package in the current fiscal year even as the Centre maintained that as a matter of principle, bailout packages were turned down for other states too.
• The Supreme court earlier advised Kerala to exercise prudence in fiscal matters while imploring the Centre to relax its norms to enable the state to tide over the crisis
• Supreme Court earlier had suggested that the Kerala state should accept the Centre’s proposal to borrow an additional ₹13,608 crore for the time being, subject to meeting certain stipulations.
• At the same time, it added the Centre should not put the withdrawal of the suit by Kerala as a precondition for allowing additional borrowing.

Way Ahead

• The fiscal war between the Centre and the Kerala government is not just restricted to borrowing limits but extends to many other fiscal issues such as GST collection and allocation of Central funds.
• Kerala is not the only state that has financial problem going on.
• The Centre has also slashed the borrowing limits of Punjab from Rs 39,000 crore to Rs 21,000 crore.
• It has reduced Himachal Pradesh’s limit from Rs 14,000 crore to Rs 9,000 crore while in Telangana, the state’s borrowing limit was cut by Rs 15,000 crore.

Conclusion

Fiscal mismanagement of the states is an issue with which the Union must be concerned because ultimately it has its own impact on the nation’s economy. The Supreme Court has asked the Centre and Kerala government, which have been sparring over the state’s borrowing limit, to hold further discussions to sort out their differences.

Topic- Nuclear energy:

Introduction

Recently, India loaded the core of its long-delayed prototype fast breeder reactor (PFBR) vessel, bringing it to the cusp of stage II — powered by uranium and plutonium — of its three-stage nuclear programme. But the large-scale use of nuclear power is accompanied by a problem of waste management. There have been few nuclear accidents in the world that brings the focus on international safeguards on spent nuclear fuel that should be followed rigorously.

Body

• • • What is nuclear waste?
    • Handling of nuclear waste globally
    • Other Waste treatment methods
    • Reprocessing
    • Challenges of nuclear waste
    • Indian scenario

Conclusion

A major environmental concern related to nuclear power is the creation of radioactive wastes. These materials can remain radioactive and dangerous to human health for thousands of years. There are always safety concerns with regard to storage and reprocessing in case of any mishappening, following the Chernobyl accident in 1986. There is need to increase international co-operation and accelerate moves to harmonise global nuclear safety standards to ensure that all countries had confidence in the safety of their neighbours’ nuclear installations.

 

UPSC Syllabus Nuclear energy:

 

Why was this question asked?

Q. With growing energy needs should India keep on expanding its nuclear energy programme? Discuss the facts and fears associated with nuclear energy. (UPSC Main 2018)

Introduction:

Recently, India loaded the core of its long-delayed prototype fast breeder reactor (PFBR) vessel, bringing it to the cusp of stage II — powered by uranium and plutonium — of its three-stage nuclear programme. But the large-scale use of nuclear power is accompanied by a problem of waste management. There have been few nuclear accidents in the world that brings the focus on international safeguards on spent nuclear fuel that should be followed rigorously.

Body Status

What is nuclear waste?

• In a fission reactor, neutrons bombard the nuclei of atoms of certain elements.
• When one such nucleus absorbs a neutron, it destabilises and breaks up, yielding some energy and the nuclei of different elements.
• For example, when the uranium-235 (U-235) nucleus absorbs a neutron, it can fission to barium-144, krypton-89, and three neutrons.
• If the ‘debris’ (barium-144 and krypton-89) constitute elements that can’t undergo fission, they become nuclear waste.
• Fuel that is loaded into a nuclear reactor will become irradiated and will eventually have to be unloaded. At this stage it is called spent fuel.

Handling of nuclear waste globally

• Handling the spent fuel is the main challenge: it is hot and radioactive, and needs to be kept underwater for up to a few decades.
• All countries with longstanding nuclear power programmes have accumulated a considerable inventory of spent fuel.
• Once spent fuel has been cooled in the spent-fuel pool for at least a year, it can be moved to dry-cask storage, and is placed inside large steel cylinders and surrounded by an inert gas.
• The cylinders are sealed shut and placed inside larger steel or concrete chambers.

Other Waste treatment methods

• Nuclear power plants have liquid waste treatment facilities.
• Small quantities of aqueous wastes containing short-lived radionuclides may be discharged into the environment.
• Japan is currently discharging, after treatment, such water from the Fukushima nuclear power plant into the Pacific Ocean.
• Other such waste, depending on their hazard, can be evaporated or “chemically precipitated” to yield a sludge to be treated and stored, “absorbed on solid matrices” or incinerated.

Reprocessing

• Reprocessing is another way to deal with the spent fuel.
• It involves technologies that separate fissile from non-fissile material in spent fuel.
• Here, the material is chemically treated to separate fissile material left behind from the non-fissile material.
• Because spent fuel is so hazardous, reprocessing facilities need specialised protections and personnel of their own.

Challenges of nuclear waste

• Nuclear waste is highly radioactive and needs to be stored in facilities reinforced to prevent leakage into and/or contamination of the local environment.
• Depending on radioactivity levels, the storage period can run up to a few millennia, meaning they have to be isolated from human contact for long periods of time.
• Liquid high-level waste contains “almost all of the fission products produced in the fuel”. It is vitrified to form a storable glass.
• Some experts have also rooted for geological disposal: the waste is sealed in “special containers”, and buried underground in granite or clay.
• Some studies have pointed to the risk of radioactive material becoming exposed to humans if the containers are disturbed, such as by nearby digging activity.
• Reprocessing facilities present the advantage of higher fuel efficiency but are also expensive.
• Importantly, reprocessing also yields weapons-usable (different from weapons-grade) plutonium.

Indian scenario

• According to a 2015 report of the International Panel on Fissile Materials (IPFM), India has reprocessing plants in Trombay, Tarapur, and Kalpakkam.
• The wastes generated at the nuclear power stations during the operation are of low and intermediate activity level and are managed at the site itself and surrounding area “is monitored for radioactivity” as per government.
• The vast majority of the radioactivity in the waste from pressurised heavy-water reactors of stage I which cannot be used to fuel the PFBR as per scientists. Only uranium and plutonium can be used as fuel.
• Because India reprocesses its spent fuel, these fission products will have to be stored, at least for a while, in the form of liquid waste, which poses accident hazards.

Conclusion

A major environmental concern related to nuclear power is the creation of radioactive wastes. These materials can remain radioactive and dangerous to human health for thousands of years. There are always safety concerns with regard to storage and reprocessing in case of any mishappening, following the Chernobyl accident in 1986. There is need to increase international co-operation and accelerate moves to harmonise global nuclear safety standards to ensure that all countries had confidence in the safety of their neighbours’ nuclear installations.