TGPSC Daily Current Affairs - 5th February 2026
Relevance:
GS Paper III – Indian Economy, MSMEs, Manufacturing, Employment
Important Keywords
For Prelims:
PM MITRA Parks | MSMEs | Textile Clusters | GST Rationalisation | Make in India
For Mains:
Textile-Led Employment Generation | MSME Growth | Cluster-Based Industrialisation | Ease of Doing Business | Export Competitiveness
Why in News?
The Telangana State Federation of Textile Associations has welcomed the Union Budget 2026–27 for its measures aimed at strengthening MSMEs, particularly in the textile and garment sector. The Federation, led by its President Prakash Ammanabolu, highlighted that Budget provisions related to credit access, infrastructure development, and manufacturing support align with the sector’s long-standing demands. However, it also sought targeted fiscal and policy support, including GST rationalisation and subsidies, to address persistent structural challenges.
Significance of the Textile Sector in India’s MSME Economy
The textile and garment sector is one of India’s largest employment-generating industries, second only to agriculture. It plays a critical role in:
- Absorbing low- and semi-skilled labour, especially women
- Supporting millions of MSMEs across spinning, weaving, processing, and trading
- Promoting exports and regional development through clusters and handloom hubs
In states like Telangana, textiles serve as a backbone for rural livelihoods and traditional crafts, making policy support crucial for inclusive growth.
Positive Budget Measures Highlighted by the Textile Federation
The Federation welcomed several Budget announcements that directly benefit the textile ecosystem:
- MSME Credit Support:
Emphasis on easier access to institutional credit and improved ease of doing business is expected to help small textile traders and manufacturers overcome liquidity constraints. - Infrastructure and Cluster Development:
Initiatives such as PM MITRA Parks, textile clusters, and integrated infrastructure aim to create end-to-end textile ecosystems, enhancing productivity and export competitiveness.
- Alignment with National Vision:
The Budget reinforces flagship initiatives like Make in India and Vocal for Local, positioning India as a potential global textile hub.
Key Demands and Sector-Specific Concerns
Despite welcoming the Budget, the Federation flagged several unresolved issues:
GST Rationalisation:
High and uneven GST rates on textiles and garments increase costs for traders and consumers, affecting demand and competitiveness.
Targeted Subsidies:
- Interest subsidy on collateral-based loans
- Subsidised electricity tariffs for textile markets and processing units
- Insurance premium support to protect small traders from unforeseen risks
These measures are seen as essential for MSME resilience in a volatile market environment.
Telangana-Specific Requirements
Highlighting regional priorities, the Federation urged the Centre to:
- Provide financial assistance for Kakatiya Mega Textile Park, Warangal
- Strengthen handloom and textile clusters in Sircilla, Gadwal, Pochampally, and Narayanpet
- Establish common processing centres, dyeing units, and testing laboratories to reduce costs and improve quality
- Support the development of Hyderabad as a textile trading and distribution hub
- Enhance export facilitation, branding, warehousing, and logistics for Telangana’s handloom products
Conclusion
The Union Budget 2026–27 marks a positive step towards strengthening the textile sector through MSME-centric reforms, infrastructure creation, and manufacturing support. However, realising the sector’s full potential requires complementary measures such as GST rationalisation, targeted subsidies, and region-specific interventions. Addressing these gaps can not only revitalise traditional textile clusters but also reinforce textiles as a pillar of employment, exports, and inclusive industrial growth in India
CARE MCQ
Q. With reference to the PM Mega Integrated Textile Region and Apparel (PM MITRA) Scheme, consider the following pairs:
| Pair | Location | State |
| 1 | Virudhunagar | Tamil Nadu |
| 2 | Warangal | Telangana |
| 3 | Navasari | Gujarat |
| 4 | Kalaburagi | Andhra Pradesh |
Which of the pairs given above are correctly matched?
- 1, 2 and 3 only
- 1 and 4 only
- 2 and 3 only
- 1, 2, 3 and 4
Answer: A
Explanation:
- Pair 1 – Correct: Virudhnagar is located in Tamil Nadu.
- Pair 2 – Correct: Warangal is located in Telangana.
- Pair 3 – Correct: Navasari is located in Gujarat.
- Pair 4 – Incorrect: Kalaburagi is in Karnataka, not Andhra Pradesh.
Relevance:
GS Paper: II – Centre–State Relations, Constitutional Bodies, Cooperative Federalism
Important Keywords
For Prelims:
- 16th Finance Commission, Tax Devolution, Cess, Surcharge, Total Fertility Rate, Fiscal deficit.
For Mains:
- Recommendations of the 16th Finance Commission, Tax Devolution its significance and its Constitutional Mandates, Evolution and role of Finance Commissions in Indian federalism.
Why in News?
- The 16th Finance Commission, chaired by Arvind Panagariya, has submitted its recommendations for the award period 2026–2031.
- The report was presented in Parliament along with the Union Budget 2026–27.
- It signals a structural shift from entitlement-based transfers toward a performance and compliance-driven fiscal federal framework.
Overview of the Report
- States’ share in central taxes remains 41%, continuing the arrangement of the 15th Finance Commission.
- Fiscal transfers are increasingly tied to performance indicators and compliance norms.
- A new parameter — contribution to GDP — has been introduced.
- Strong emphasis has been placed on:
- Fiscal prudence
- Transparency
- Reduction of off-budget liabilities
- Rationalisation of subsidies
However, concerns have emerged regarding:
- Reduced untied funds
- Equity in inter-state distribution
- Fiscal autonomy of states, particularly southern and economically weaker regions.
Key Recommendations of the 16th Finance Commission
1. Tax Devolution
Vertical Devolution
- Refers to the proportion of the Union’s divisible tax pool allocated to states.
- Retained at 41%, unchanged from the previous commission.
- The divisible pool excludes:
- Cesses
- Surcharges
- Collection charges
This retention has sparked debate because states had demanded an increase to 50% citing expanding responsibilities.
Horizontal Devolution
Determines how the 41% share is distributed among states.
Revised Criteria and Weightage
| Criterion | Weight |
| Income Distance | 42.5% |
| Population (2011 Census) | 17.5% |
| Demographic Performance | 10% |
| Area | 10% |
| Forest & Ecology | 10% |
| Contribution to GDP | 10% |
Major Change:
- The earlier tax and fiscal effort parameter has been removed.
- Economic output is now directly rewarded.
Understanding the Devolution Criteria
Income Distance
- Measures the gap between a state’s per capita GSDP and that of the top three high-income states.
- Lower-income states receive greater allocations, promoting inter-state equity.
Population (2011 Census)
- Reflects expenditure needs arising from population size.
Demographic Performance
- Based on population growth between 1971–2011 rather than Total Fertility Rate.
- Rewards states that successfully controlled population growth.
Forest & Ecology
- Allocation considers:
- Share in national forest area
- Increase in forest cover (2015–2023)
- Unlike earlier commissions, open forests are included.
Contribution to GDP
- Newly introduced indicator.
- Recognises states that significantly support national economic output.
Grants-in-Aid
Total recommended grants: ₹9.47 lakh crore
Local Body Grants – ₹8 lakh crore
- Rural local bodies: ₹4.4 lakh crore
- Urban local bodies: ₹3.6 lakh crore
Entry Conditions
States must ensure:
- Constitutionally compliant local bodies
- Public disclosure of audited accounts
- Timely formation of State Finance Commissions
Structure
- 80% Basic Grants
- 50% untied
- 50% tied to sanitation, waste, and water management
- 20% Performance Grants
- Linked to local outcomes and state-level reforms
Additional Urban Measures
- Urbanisation Premium: ₹10,000 crore (one-time)
- Supports integration of peri-urban villages.
- Special Infrastructure Grants: ₹56,100 crore
- For wastewater systems in cities with populations between 10–40 lakh.
Disaster Management Grants
- Total allocation: ₹2,04,401 crore
- Cost sharing:
- 90:10 → North-Eastern & Himalayan states
- 75:25 → Other states
- Centre’s contribution: ₹1,55,916 crore
Discontinued Grants
The Commission has removed:
- Revenue deficit grants
- Sector-specific grants
- State-specific grants
(This marks a departure from earlier redistributive support mechanisms.)
Other Major Recommendations
Fiscal Roadmap
- Centre to reduce fiscal deficit to 3.5% of GDP by 2030–31.
- States’ fiscal deficit capped at 3% of GSDP.
- Off-budget borrowings must be discontinued and incorporated into official debt.
Combined debt is projected to decline from 77.3% (2026–27) to 73.1% (2030–31).
Power Sector Reforms
- States encouraged to privatise DISCOMs.
- Legacy debts to be transferred to a Special Purpose Vehicle.
- Repayment allowed via the Special Assistance Scheme for Capital Investment after privatisation.
Subsidy Rationalisation
- States urged to:
- Introduce exclusion criteria
- Stop off-budget financing
- Ensure uniform disclosure
Trends:
- Cash transfer schemes form 20.2% of subsidy spending (2025–26), up from 3% (2018–19).
- Large-group transfers alone constitute 47.4%.
The expansion is attributed to the success of the JAM Trinity, which made direct transfers administratively easier.
Public Sector Enterprise Reform
- Closure recommended for 308 inactive SPSEs.
- Loss-making enterprises (3 of 4 years) must be reviewed for:
- Closure
- Privatisation
- Strategic retention
Transparency in Tax Data
- Union government should publish CAG-certified net tax proceeds annually under Article 279.
- This improves clarity regarding the divisible pool.
Major Concerns
1. Stagnant Vertical Devolution
- States sought 50%, but allocation remains at 41%.
- Growing use of cesses and surcharges reduces untied fiscal space.
Leads to vertical fiscal imbalance.
2. Changes in Horizontal Formula
- Reduced weight for income distance weakens redistribution.
- Population and GDP criteria favour industrialised states.
Example:
- Tamil Nadu’s share:
- 15th FC → 4.079%
- 16th FC → 4.097%
- Increase → Only 0.44%
Southern states argue this penalises their success in population control.
3. Declining Incentives for Demographic Performance
- Commission warns of “aging before becoming rich.”
- Gradual reduction in rewards raises concerns about fairness.
4. Removal of Revenue Deficit Grants
- Hill and special-category states argue deficits are structurally unavoidable.
5. Fiscal Constraints
- Strict deficit limits may compress infrastructure and welfare spending.
6. Over-Centralisation
- Expansion of tied grants reduces states’ policy flexibility.
- Risks converting states into implementing arms of the Union.
Measures to Strengthen Fiscal Federalism
Elasticity-Linked Transfers
- Link part of devolution to revenue buoyancy.
Floor Guarantee
- Ensure no state’s nominal share falls below previous levels.
Empowering State Finance Commissions
- Provide matching grants for states implementing SFC recommendations.
Cap on Cesses and Surcharges
- Consider limiting them to ~10% of Gross Tax Revenue.
Revitalise the Inter-State Council
- Use Article 263 for real-time fiscal dialogue.
Conclusion
The 16th Finance Commission represents a transition toward a compliance-oriented fiscal regime, rewarding economic productivity and ecological stewardship while enforcing fiscal discipline. Its long-term success hinges on balancing efficiency with equity and ensuring that vulnerable states are not left behind in India’s evolving federal structure.
UPSC PYQ
Q. Consider the following:
- Demographic performance
- Forest and ecology
- Governance reforms
- Stable government
- Tax and fiscal efforts
For the horizontal tax devolution, the Fifteenth Finance Commission used how many of the above as criteria other than population area and income distance (2023)
A. Only two
B. Only three
C. Only four
D. All five
Ans: B
Q. With reference to the Fourteenth Finance Commission, which of the following statements is/ are correct? (2015)
- It has increased the share of States in the central divisible pool from 32 percent to 42 percent.
- 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
Ans: (a)
CARE MCQ
Q. Consider the following statements regarding the India–US Trade Deal 2026:
- States’ share in the divisible pool has been increased to 50%.
- Contribution to GDP has been introduced as a criterion for horizontal devolution.
- Revenue deficit grants have been continued.
How many of the above statements are correct?
(a) Only one
(b) Only two
(c) All three
(d) None
Answer: (a)
Explanation:
- Statement 1 – Incorrect (remains 41%). States’ share in the divisible pool has been decreased to 41%.
- Statement 2 – Correct. Contribution to GDP has been introduced as a criterion for horizontal devolution.
- Statement 3 – Incorrect (discontinued). Revenue deficit grants have been discontinued.
Relevance:
GS Paper II (Governance): GS Paper III (Environment)
Important Keywords
For Prelims:
- Solid Waste Management Rules, 2026
- Four-Stream Waste Segregation
- Bulk Waste Generators (BWGs)
- Polluter Pays Principle
- Refuse-Derived Fuel (RDF)
For Mains:
- Circular Economy–Based Waste Governance
- Extended Bulk Waste Generator Responsibility (EBWGR)
- Decentralised Urban Environmental Governance
- Digital Monitoring & Regulatory Accountability
- Landfill Minimisation & Legacy Waste Remediation
Why in News?
The Union Ministry of Environment, Forest and Climate Change has notified the Solid Waste Management (SWM) Rules, 2026, which will come into force from 1 April 2026, replacing the SWM Rules, 2016. The new framework introduces four-stream waste segregation, extended responsibility for bulk waste generators, deterrence-based enforcement, digital monitoring, restrictions on landfilling, and mandatory energy recovery from high-calorific waste, signalling a decisive policy shift towards a circular economy–based waste governance model.
Rationale Behind the New Rules: India’s Waste Crisis
India faces a severe solid waste management challenge:
- Annual waste generation: over 620 lakh tonnes
- Daily generation: ~1.85 lakh tonnes
- Daily processing: only 1.14 lakh tonnes
- Daily landfilling: nearly 40,000 tonnes
Despite the SWM Rules, 2016, poor segregation, weak accountability of bulk generators, and landfill dependence have resulted in garbage mountains, methane emissions, groundwater contamination, and public health risks. The 2026 Rules aim to correct these structural deficiencies by reducing landfill dependence, strengthening accountability, and treating waste as a resource.
Key Policy Shifts under SWM Rules, 2026
1. Waste Hierarchy and Four-Way Segregation
The 2026 Rules formally introduce a waste hierarchy prioritising:
Prevention → Reduction → Reuse → Recycling → Recovery → Disposal (last resort).
To operationalise this hierarchy, four-way segregation at source has been made mandatory:
- Wet waste: biodegradable household waste
- Dry waste: recyclable materials (plastic, paper, metal, glass)
- Sanitary waste: sanitary napkins, tampons, condoms
- Special-care waste: medicines, paint cans, bulbs, tube lights
Urban local bodies must provide enabling infrastructure such as green, blue and red bins, especially in public spaces, addressing a major implementation gap of the 2016 Rules.
2. Enhanced Responsibility of Bulk Waste Generators
A central governance reform is the introduction of Extended Bulk Waste Generator Responsibility (EBWGR).
Bulk waste generators—defined as entities with:
- Built-up area ≥ 20,000 sq m, or
- Water consumption ≥ 40,000 litres/day, or
- Waste generation ≥ 100 kg/day
These include residential societies, gated communities, malls, hotels, institutions, government establishments, and large townships.
New obligations include:
- Mandatory four-way segregation
- On-site wet waste processing (preferred)
- Registration on a centralised portal
- Certification-based compliance replacing self-declaration
- Annual waste accounting and reporting
Given that bulk generators account for nearly 30% of total solid waste, this reform reduces pressure on ULBs and promotes decentralised waste management.
3. Polluter Pays Principle and Deterrence-Based Regulation
Unlike the advisory nature of earlier rules, the 2026 framework operationalises the Polluter Pays Principle through:
- Environmental compensation for non-registration, false reporting, forged documents
- Higher landfill fees for unsegregated waste
- Financial disincentives for landfill use
The CPCB will frame guidelines, while SPCBs and local bodies will enforce penalties—marking a shift from voluntary compliance to regulatory deterrence.
4. Digitalisation and Centralised Monitoring
A centralised online portal will track the entire waste lifecycle:
- Generation
- Collection
- Transportation
- Processing
- Disposal
- Biomining and bioremediation of legacy dumpsites
Mandatory registration applies to ULBs, bulk generators, waste processors, transporters, waste pickers, railways, airports and SEZs. Online reporting and mandatory audits address data opacity and weak oversight under the 2016 regime.
Landfills: From Default Option to Last Resort
The 2026 Rules aim to end landfill dependency:
- Landfills restricted strictly to non-recyclable, non-energy-recoverable and inert waste
- Higher fees for unsegregated waste discourage dumping
Legacy Waste Remediation
- Mapping of all legacy dumpsites by 31 October 2026
- Time-bound biomining and bioremediation
- Quarterly progress reporting via the online portal
This directly targets India’s long-standing landfill mountains and land contamination issues.
Energy Recovery and Industrial Responsibility
Waste with calorific value ≥ 1,500 kcal/kg must be diverted for energy recovery through:
- Refuse-Derived Fuel (RDF)
- Co-processing in cement and thermal power plants
Industries are mandated to progressively replace fossil fuels with RDF:
- 6% initially
- 15% within six years
This links waste management with energy transition, climate mitigation, and circular economy goals.
Governance Significance and Federal Dimensions
The Rules redefine roles across governance levels:
- ULBs: frontline implementation and by-law framing
- SPCBs/CPCB: regulation, monitoring and enforcement
- District Collectors: landfill oversight
- Bulk generators: decentralised responsibility
Special provisions for hilly areas and islands, including tourist user fees and decentralised processing, reflect ecological sensitivity and environmental justice.
Implementation Challenges
- Capacity constraints of ULBs and SPCBs
- Behavioural resistance to segregation at source
- Financial stress in urban governance
- Integration of informal waste pickers into formal systems
Way Forward
- Strengthen ULB capacity and fiscal support
- Institutionalise Behaviour Change Communication (BCC)
- Formal inclusion of waste pickers
- Monetise waste through RDF markets and carbon credits
- Promote cooperative federalism in waste governance
Conclusion
The Solid Waste Management Rules, 2026 represent a paradigm shift from landfill-centric sanitation to accountability-driven environmental governance. By embedding circular economy principles, extended responsibility, digital oversight and economic deterrence, the rules aim to address India’s waste crisis at its roots. Their success, however, will ultimately depend on institutional capacity, citizen participation and effective inter-governmental coordination, making implementation—not intent—the true test of reform.
UPSC PYQ
Q. As per the Solid Waste Management Rules, 2016 in India, which one of the following statements is correct? IAS 2019
- Waste generator has to segregate waste into five categories.
- The Rules are applicable to notified urban local bodies, notified towns and all industrial townships only
- The Rules provide for exact and elaborate criteria for the identification of sites for landfills and waste processing facilities
- It is mandatory on the part of waste generator that the waste generated in one district cannot be moved to another district.
- Option (c) – Correct The Solid Waste Management Rules, 2016 lay down detailed and elaborate criteria for identification and notification of sites for solid waste processing, treatment and sanitary landfills. Authorities are required to ensure scientific site selection to minimise environmental and public health impacts.
- Option (a) – Incorrect The Rules mandate segregation of waste into three categories — wet, dry and domestic hazardous waste, not five categories.
- Option (b) – Incorrect
The Rules have wide applicability, covering:
- Municipal areas
- Census towns
- Notified industrial townships
- Areas under Railways, airports, ports, defence establishments
- SEZs, pilgrimage places, religious and historical sites Hence, they are not limited only to notified urban local bodies and industrial townships.
- Option (d) – Incorrect The Rules do not prohibit inter-district movement of waste. There is no mandatory restriction preventing waste generated in one district from being transported to another district for processing or disposal.
CARE MCQ
Q. With reference to the Solid Waste Management Rules, 2026, consider the following statements:
- The Rules mandate segregation of solid waste at source into wet, dry, sanitary and special care waste.
- Dry waste is required to be transported to Material Recovery Facilities (MRFs) for sorting and recycling.
Which of the statements given above is/are correct?
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Answer: C
Explanation
- Statement 1 – Correct
The Solid Waste Management Rules, 2026 make four-stream segregation at source mandatory—wet, dry, sanitary and special care waste. - Statement 2 – Correct
Dry waste such as plastic, paper, metal and glass is to be transported to Material Recovery Facilities (MRFs) for sorting and recycling.