FAILED SUMMIT
Background:
The G-7 (Group of Seven) comprises the world’s most advanced economies. It was formed in 1975 and includes the U.S., Canada, UK, France, Germany, Italy, and Japan. India has been regularly invited to Outreach sessions but is not a member.
Summit Context (Kananaskis, Canada, 2025):
The summit was marked by disunity and lack of coordination. Canada, the host, had an unstable government following a sudden election. PM Modi received a last-minute invitation, showing weak planning.
Key Failures:
- G-7 could not issue a joint statement on global crises like Russia-Ukraine, Israel-Gaza, and Iran tensions.
- U.S. President Donald Trump disrupted proceedings by:
- Suggesting inclusion of Russia and China (making it G-9).
- Opposing criticism of Israel’s actions in Gaza.
- Leaving the summit early.
- India’s key concern—terrorism—was not addressed in the final statements.
- The Transnational Repression (TNR) statement indirectly referred to Canada’s allegations against India (Nijjar case).
India’s Limited Gains:
- PM Modi’s meeting with Canadian PM Mark Carney helped resume diplomatic ties (restoration of High Commissioners).
- No shift in Canada’s stand on Khalistani extremism.
Concerns for India:
- High-level participation yielded low returns.
- Summit reflected declining effectiveness and internal conflict within G-7.
Way Forward:
- Reassess the strategic value of attending G-7 summits.
- Prioritize platforms like G-20, BRICS, SCO, and Global South initiatives where India has more voice.
- Push for global governance reforms and more equitable multilateralism.
A FAIR SHARE
Context:
The 16th Finance Commission (SFC), headed by Arvind Panagariya, will decide the next financial devolution formula for States starting April 1, 2026. Currently, the States receive 41% of the divisible pool. A majority of States are demanding an increase to 50%, citing revenue constraints and increasing reliance on central transfers.
Key Issues:
Shrinking Divisible Pool:
- The effective share of States in the Centre’s gross tax revenue has declined:
- 2015–2020: ~35%
- 2020–2024: ~31%
- Cause: Rise in non-divisible revenues like cesses and surcharges, which increased from 12.8% to 18.5% of total tax revenue.
Post-GST Constraints:
- States have lost many independent taxation powers.
- Dependence on Centre has increased, though GST collections are rising.
Horizontal Devolution Discontent:
- Formula biases: Heavy weight to population and income distance.
- Southern States feel penalized for good performance (lower population growth, higher revenue, better governance).
Federalism & Political Dynamics
- 22 out of 28 States (including BJP-ruled ones) have demanded a greater share.
- The Centre cites rising expenditure (defence, infrastructure) as a reason to avoid increasing the share.
- Maintaining status quo (41%) is seen as anti-federal and a missed opportunity to strengthen cooperative federalism.
Way Forward
- Vertical Devolution Reform:
- Modest increase to 43–45% as a compromise.
- Shows respect for fiscal federalism and rising State responsibilities.
- Cess and Surcharge Regulation:
- Recommend a cap on cesses/surcharges.
- Include excess collections in the divisible pool.
- Horizontal Devolution Adjustment:
- Reform formula to reward performance while addressing genuine needs.
- Factors to consider: Population control, area, fiscal efforts, governance quality.
About Finance Commission
- The Finance Commission in India is a quasi-judicial body constituted by the President of India under the provisions of the Constitution of India.
- It is not a permanent body and the President of India constitutes the Finance Commission every fifth year or at such earlier times as he/she considers necessary.
- Article 280 and Article 281 of the Constitution of India deal with the provisions related to the Finance Commission of India (FCI).
- Composition:
- The Finance Commission consists of a Chairman and four other members to be appointed by the President.
- The Chairman and other members of the Commission hold office for such period as specified by the President in his/her order.
- The Chairman and other members of the Commission are eligible for reappointment.
Qualification of Members of FC
- The Constitution authorizes the Parliament to determine the qualifications of members of the Commission.
- Accordingly, the Parliament has enacted the Finance Commission Act, of 1951 which specifies the qualifications of the members of the Finance Commission as follows:
- The Chairman should be a person having experience in Public Affairs.
- The four other members should be selected from amongst the following:
- a judge of the High Court or one qualified to be appointed as one.
- a person who has specialized knowledge of finance and accounts of the government.
- a person who has wide experience in financial matters and administration.
- a person who has special knowledge of Economics.
Functions of Finance Commission:
The Finance Commission of India is required to make recommendations to the President of India on the following matters:
- The distribution of the net proceeds of taxes to be shared between the Centre and the States, and the allocation between the States of the respective shares of such proceeds.
- The principles that should govern the grants-in-aid to the States by the Centre, i.e., out of the Consolidated Fund of India.
- The measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and the Municipalities in the State on the basis of the recommendations made by the State Finance Commission.
Any other matter referred to it by the President in the interests of sound finance
PRELIMS PRACTICE QUESTION
Consider the following: (2023)
- 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?
(a) Only two
(b) Only three
(c) Only four
(d) All five
Answer: b
Explanation:
The Fifteenth Finance Commission used the following criteria for horizontal tax devolution among states:
- Population (2011) – 15%
- Area – 15%
- Income Distance – 45%
- Demographic Performance – 12.5%
- Forest and Ecology – 10%
- Tax and Fiscal Effort – 2.5
Chandigarh tops school education index, Meghalaya comes last: report
Context:
The Union Ministry of Education released the PGI 2.0 report for 2023–24, assessing States and UTs on various school education indicators. Chandigarh topped the index, while Meghalaya ranked lowest.
What is PGI 2.0?
- Revised framework of the original PGI introduced by Ministry of Education.
- Evaluates States/UTs based on 1,000-point system.
- Covers 6 broad domains:
- Learning Outcomes & Quality
- Access
- Infrastructure & Facilities
- Equity
- Governance Processes
- Teacher Education & Training
Grading Categories in PGI 2.0
|
Grade |
Score Range |
Description |
|
Prachesta-1 |
701–760 |
Highest achieved by Chandigarh (Score: 719) |
|
Prachesta-3 |
581–640 |
10 States/UTs including Kerala, Delhi, Gujarat, Odisha |
|
Akanshi-1 |
521–580 |
14 States/UTs including TN, UP, WB, Karnataka |
|
Akanshi-2 |
461–520 |
States needing major improvement: Bihar, Telangana, Assam |
|
Akanshi-3 |
401–460 |
Lowest category – Meghalaya (Score: 417) |
Key Highlights
- No State scored in the top range (761–1000) → Reflects significant scope for improvement nationwide.
- 24 States/UTs improved scores from previous year.
- 12 States/UTs saw a decline in performance.
- Chandigarh is the only region in Prachesta-1, showing best performance.
State-Specific Observations
- Chandigarh: Best overall performer.
- Meghalaya: Worst performer (417 score).
- Telangana & Bihar: Highest improvement in access.
- Delhi, Telangana, Jammu & Kashmir: Notable progress in infrastructure.
Calcutta HC asks Centre to resume implementation of MGNREGS in West Bengal
Context:
On June 19, 2024, the Calcutta High Court directed the Union Government to resume the implementation of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in West Bengal from August 1, 2024, after a suspension of over two years.
Background of the Issue
- MGNREGS guarantees 100 days of wage employment to rural households.
- Scheme suspended in West Bengal since March 2022 due to alleged irregularities in wage disbursements.
- Union Ministry of Rural Development invoked Clause 27 of MGNREGA to withhold funds.
- Suspension impacted over 2 crore rural workers, causing distress migration and unemployment.
|
Term |
Explanation |
|
MGNREGS |
Enacted under MGNREGA, 2005 – legal guarantee for rural employment. |
|
Clause 27 |
Empowers Centre to withhold funds temporarily for non-compliance or irregularities. |
|
Consolidated Fund of India |
Main fund of the Government of India, where public money is held. |
MGNREGS – Mahatma Gandhi National Rural Employment Guarantee Scheme
Background
- Launched in 2006 under the Mahatma Gandhi National Rural Employment Guarantee Act, 2005.
- First implemented in 200 districts, now covers all rural districts in India.
- Based on Article 41 (Right to work) of the Indian Constitution and aims to promote livelihood security.
Key Features
|
Feature |
Details |
|
Legal Guarantee |
100 days of wage employment to every rural household whose adult members volunteer for unskilled manual work. |
|
Demand-Driven |
Work must be provided within 15 days of demand, else unemployment allowance is paid. |
|
Wage Payment |
Paid as per notified state-specific wage rates, revised annually. |
|
Transparency Measures |
Social audits, electronic fund management system (e-FMS), Geo-tagging of assets. |
|
Women Participation |
At least one-third of beneficiaries must be women (actual participation often >50%). |
|
Local Empowerment |
Gram Panchayats plan and implement 50% of the works. |
PRELIMS PRACTICE QUESTION
Among the following who are eligible to benefit from the “Mahatma Gandhi National Rural Employment Guarantee Act”?
(a) Adult members of only the scheduled caste and scheduled tribe households
(b) Adult members of below poverty line (BPL) households
(c) Adult members of households of all backward communities
(d) Adult members of any household
Answer: (d)
Explanation:
The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005 guarantees 100 days of wage employment in a financial year to any adult member of a rural household who is willing to do unskilled manual work.
- No restriction based on caste, income, or community.
- The only requirement is that the person must:
- Be an adult (18+ years).
- Belong to a rural household.
- Be willing to engage in unskilled manual labour.
The real challenge for foreign campuses
Context:
Following the UGC (Foreign Higher Educational Institutions in India) Regulations, 2023, foreign universities have begun establishing campuses in India. Recent developments include the entry of universities from Australia, the U.K., and proposals from the U.S. and Italy.
Major Challenges
- Rushed Implementation
- Admissions began before full disclosure of academic and faculty details.
- Perception of poor planning could harm trust and brand reputation.
- Global Context
- Foreign universities face budget cuts and political hostility (e.g., U.S. under Trump), deterring outward expansion.
- India’s Competitive Academic Landscape
- Presence of IITs, IIMs, and reputed private universities with international collaborations.
- Branch campuses may lack academic identity and resemble “diploma mills.”
- Narrow Curriculum Focus
- Emphasis on market-driven fields (e.g., business, IT, analytics), ignoring holistic or research-led education.
- Over-reliance on Marketing
- Heavy branding with little academic substance.
- Students demand faculty profiles, curriculum design, and support systems.
- Poor Campus Experience
- Operating from rented vertical buildings; lack of student life and campus culture.
Steps to be taken:
India must:
-
- Evaluate proposals based on local relevance, long-term viability, and institutional quality.
- Avoid partnerships where profit is the primary motive.
- Push for academic excellence, infrastructure, and community engagement.
Why are oil prices rising amid Iran-Israel war?
context:
- Rising tensions between Iran and Israel in June 2024 led to Brent crude prices rising by 9%, hitting nearly $78.50/barrel (a 5-month high).
- Triggered fears of disruption in global oil supply, especially through the Strait of Hormuz.
Background: Iran-Israel Conflict
|
Aspect |
Detail |
|
Root Cause |
Long-standing geopolitical rivalry; Iran supports anti-Israel groups (Hezbollah, Hamas); Israel targets Iranian proxies and nuclear facilities. |
|
Recent Escalation |
Iran threatened to block the Strait of Hormuz amid rising military tensions; sought Arab mediation to urge the U.S. to press Israel for ceasefire. |
|
Geopolitical Importance |
Both nations are regional powerhouses; conflict destabilizes the West Asian oil corridor. |
Reasons for the Rise in Oil Prices
- Threat to the Strait of Hormuz:
- A key oil chokepoint connecting the Persian Gulf to the Arabian Sea.
- Handles ~20 million barrels/day, i.e., ~25% of global oil supply (EIA & IEA).
- 83% of crude oil & LNG exports through the Strait go to Asia, including India.
- Risk Premium on Oil:
- Fears of supply delay, increased shipping costs, higher insurance.
- Even without actual disruption, perceived risk triggers price spikes.
- Potential Disruption to Red Sea & Suez Canal Access:
- Impacts Indian exports and maritime trade routes.
- Market Sentiment:
- High volatility due to geopolitical uncertainties, despite stable global inventory levels.
Impact on India
|
Area |
Observation |
|
Crude Oil Imports |
India imports >80% of its oil; even indirect disruption raises import costs. |
|
Tehran Imports |
Minimal due to U.S. sanctions, but global price hikes impact India. |
|
Diversification |
India has diversified oil sources; Union Minister affirms stable supply. |
|
Economic Impact |
ICRA notes current prices may not alter GDP forecast (6.2%), but sustained price rise could: |
- Affect India Inc’s profitability,
- Delay private capital expenditure,
- Trigger downward GDP revision in H2 FY2024–25.
|
Term |
Explanation |
|
Strait of Hormuz |
Connects Persian Gulf to Arabian Sea; vital oil route. |
|
Brent Crude |
International benchmark for oil prices. |
|
IEA & EIA |
International Energy Agency & U.S. Energy Information Administration – key oil market analysts. |
Way Forward
- India: Continue to diversify oil imports, build strategic reserves, promote renewable energy.
- Global: Diplomatic efforts to de-escalate Iran-Israel tensions, ensure maritime security in Hormuz & Suez corridors.
- Policy Watch: Monitor OPEC+ responses, sanctions dynamics, and global fuel price movements.
What was decided at the UN Oceans Conference?
Context:
- The United Nations Oceans Conference (UNOC) 2024 was held in France.
- 56 of the required 60 ratifications for the BBNJ Treaty were achieved, marking major progress toward protecting marine biodiversity in international waters.
What is UNOC?
|
Aspect |
Details |
|
Full Name |
United Nations Oceans Conference |
|
Edition |
3rd (2024, France) |
|
Goal |
Accelerate action to protect oceans; support SDG 14 (Life Below Water) |
|
Focus Areas |
Marine Protected Areas (MPAs), overfishing prevention, deep-sea mining regulation, ocean governance |
What is the BBNJ Treaty (High Seas Treaty)?
|
Aspect |
Details |
|
Full Name |
Agreement on Biodiversity Beyond National Jurisdiction |
|
Scope |
Governs the high seas – ocean areas beyond national jurisdiction (~two-thirds of ocean) |
|
Objective |
Conservation and sustainable use of marine biological diversity in high seas |
|
Status (as of June 2024) |
160 countries signed; 56 ratified (needs 60 to enter into force) |
|
Legal Activation |
Becomes binding 120 days after 60 ratifications |
|
India’s Position |
Has signed but yet to ratify |
|
U.S. Position |
Has not ratified |
Key Features of BBNJ Treaty
- Creation of Marine Protected Areas (MPAs) beyond EEZs.
- Mandatory Environmental Impact Assessments (EIAs) for activities in international waters.
- Rules for use of marine genetic resources (MGRs) and benefit-sharing.
- Support for capacity building in developing countries.
- Future mechanism: BBNJ Conference of Parties (COP), similar to UNFCCC COPs (first expected in 2026).
Challenges in Implementation
|
Challenge |
Details |
|
Benefit Sharing |
Disagreements over how profits from marine genetic resources should be shared. |
|
Extraction vs. Conservation |
Environmental groups demand ban on extraction to prevent ocean degradation. |
|
Lack of Enforcement Mechanisms |
Voluntary nature of many commitments; requires robust legal and institutional backing. |
Way Forward
- India should ratify the BBNJ to demonstrate global environmental leadership.
- Strengthen domestic marine laws and expand Blue Economy initiatives aligned with international commitments.
- Enhance research and capacity-building for monitoring and conserving international waters.
The post Daily Current Affairs 19-June-2025 first appeared on Ekam IAS Academy.