Daily News Simplified - DNS

01 10 19
Notes
SL. THE HINDU
TOPICS
NO. PAGE NO.
1 States’ gross fiscal deficit stayed within 3%: RBI 15

2 Creating jobs for young India 11

3 Housing crisis, untouched 11

4 Kerala tops education ranking 01

5 A test for judicial review in India 10

Dated: 01.Oct.2019 DNS Notes

Title 1. States’ gross fiscal deficit stayed within 3%: RBI - (The Hindu, Page 09)
Syllabus Prelims: Indian Economy
Theme Status of States‘ Finances
Highlights Context:
The Reserve Bank of India (RBI) has recently released the report titled ―State Finances: A Study of
Budgets of 2019-20‖. It is an annual publication that provides information, analysis and an
assessment of the finances of state governments.

Highlights of the report are:

1. The States‘ gross fiscal deficit (GFD) has remained within the Fiscal Responsibility and
Budget Management Act (FRBM) threshold of 3 per cent of gross domestic product (GDP)
during 2017-18 and 2018-19. The consolidated state GFD was 2.9% of the GDP in 2018-19
and 2.4% of the GDP in 2017-18. The combined GFD is projected to be 2.6% of the GDP in
2019-20.

2. However, the decrease in the fiscal deficit is mainly on account of cut down in the capital
expenditure by the states. This raises concern because the states account for almost two-thirds
of the total capital expenditure in India. Hence, decline in the expenditure on the creation of
capital assets by the states does not bode well for the Indian Economy.
Since the Economy is facing the slowdown, there is a need for stepping up government
expenditure on the creation of capital assets which can in turn spur private sector investment
as well as higher demand in the Indian Economy.

3. There has been increase in the overall revenue expenditure by the states mainly on account of
interest payments as well as payment of salaries and pensions of the Government officials.

3. The Outstanding debt of states have risen over the last five years to 25 per cent of GDP,
posing medium term challenges to its sustainability. The NK Singh panel on fiscal
responsibility had suggested the overall public debt-to-GDP ratio of 60% by 2022-23 — 40%
for the Centre and 20% for the states.

4. The States must focus on revenue generation so as to reduce their debt liability and enhance
the capital expenditure. It has to raise the raise user charges on the various services they
provide and also focus on the technological measures to improve the tax collection efficiency.

Way Forward
It is important for states to pursue their capital expenditure plans as budgeted in 2019-20, considering
that states account for two thirds of general government capital expenditure with implications for
overall economic activity and welfare.
Personal Notes

P
Dated: 01.Oct.2019 DNS Notes

Title 2. Creating jobs for young India (The Hindu, Page 11)
Syllabus Mains: GS Paper III: Indian Economy
Theme Unemployment Problem in India
Highlights Context:
According to the Periodic Labour Force Survey (PLFS) Report, the unemployment in India has
increased to 45-year high of 6.1%. The Increase in the unemployment in the recent times has contributed
to the decline in the consumption expenditure leading to economic slowdown.
The problem of unemployment has actually got accentuated after 2012. In this regard, let us understand
as to what factors could have possibly contributed to the increase in the unemployment in India,
particularly after 2012.

Current Labour Market Scenario in India

Based upon the official employment surveys and Census data, there were around 471 million persons
who were employed and around 30 million people who were unemployed.
The unemployment in India has actually increased between 2012-2018. Further, the unemployment
problem is particularly concentrated among the people in the age group 15-29 who account for almost 21
million among the 30 million unemployed.

Reasons for higher unemployment among the age-group 15-29 years

Increase in the number of Job Seekers: There has been drastic increase in the potential workers for the
non-agricultural sectors. The potential non-agricultural workforce in India grew at the rate of 14 million
a year between 2005 and 2012, which rose further to 17 million a year between 2012 and 2018. This is
on account of the following reasons:
Increase in the working-age population in India due to demographic dividend.
Higher enrolment of the young population in the higher education leading to increase in job aspirations.
Decline in the agricultural workforce from 260 million (2005) to 197 million (2018) mainly due to
decline in agricultural incomes (Push factor) and rural-urban migration for better employment
opportunities (Pull factor).
Decrease in the employment creation: Between the years 2005-2012, construction sector emerged as
the major driver of employment creation and it was able to absorb a large number of people who had
exited from Agriculture. However, post 2012, the construction sector started facing slowdown. This was
accompanied by the decline in the agricultural incomes as well.
Further, the employment creation in other critical sectors such as manufacturing, services etc too
remained inadequate to cater to the increase in the number of job seekers between 2012-2018.
Hence, the higher employment in India could be attributed to the deepening of the mismatch between
potential supply of and demand for labour after 2012.

Way forward
India is presently facing demographic dividend wherein the share of the working-age population is
around 53%. The demographic dividend would start reducing after 2 decades and hence India needs to
make optimum use of this opportunity by creating a large number of formal sector, well-paying jobs.
The Government must make adequate investment in human capital formation such as promotion of skills
among the youth. It should also focus on the revival of the MSMEs which are considered to be major
drivers of employment creation.
Personal
Notes
Dated: 01.Oct.2019 DNS Notes

Title 3. Housing crisis, untouched – (The Hindu, Page 11)

Syllabus Mains: GS Paper-II in Polity & Governance
Theme Model tenancy act 2019 - Analysis
Highlights Mains objective - The Act aims to promote rental housing and ‗balance the interests‘ of landowners
and tenants. It covers residential and non-residential properties, but it is apparent from the framing that
it is largely aimed at the urban residential sector.

Limitations
Informal tenancies: Majority of tenancies in India are informal in nature. Either a majority of the
rental agreements will continue to be unregistered thus nullifying the legislative intent of the Act, Or
the Act might formalize existing arrangements and due to this rents can increase.

Rent Courts: The act provides for the constitution of Rent Courts and Tribunals. The Act provides for
a time-bound process with dedicated courts for tenants and landlords. The problem is that the
jurisdiction or power of these courts to hear cases is limited to the tenancy agreement submitted to the
Rent Authority.
On the one hand, this implies that all future tenancies that have been submitted to the Rent Authority
shall be eligible to approach these courts. On the other hand, older tenancies and informal tenancies will
still not fall under its jurisdiction.

Thus, the twin problems of resolving older disputes and informal arrangements will continue.

Steps required to improve the act

Addressing vacancy - The act needs to focus on higher end of the rental market. An effective
implementation of the Act in the upper segments of the housing market will allow some of these vacant
houses to enter the rental market and serve to relieve the massive amount of pressure and demand on
the lower segments.
Differentiating commercial tenancy with residential ones- Act needs to differentiate between
commercial tenancies that attract a lot more institutional investment and residential tenancies that are
largely held between individuals and households.
Increasing the supply of formal affordable rental housing: This requires investment on the part of
the Central and State governments. Additionally, prior experience has shown that publicly provided
rental housing will need structured efforts in management, planning and design in order to achieve its
inclusive agenda.
Housing built to rent for migrants, low-wage informal and formal workers, and students; rent-to-own
housing for unsteady low-wage households; and even rental housing allowances/vouchers for the most
marginalised in the housing market.
Personal Notes
Dated: 01.Oct.2019 DNS Notes

Title 4. Kerala tops education ranking – (The Hindu, Page 01)

Syllabus Prelims: Social Issues
Theme School Education Quality Index
Highlights About School Education Quality Index:
 SEQI is an output-based education index compiled by Niti Aayog.
 It measures performance of the states in quality of school education based on 30 indicators
between 2015-16 and 2016-17.
 The SEQI, 2019 is compiled on the basis of data from National Achievement Survey, 2017-18,
Shagun MIS portal of MHRD and self-reported data from the states.
 The 30 indicators are clubbed under the following parameters
1. Learning outcomes
2. Access
3. Infrastructure & facilities
4. Equity
Key Results
Trend
 18 of 20 large states, 5 out of 8 small states and all 7 UTs have reported an improvement from
base year to reference year.
Rankings
Large states
 Kerala, Rajasthan and Karnataka are the top performers.
 UP, J&K, Punjab and Bihar are the worst performers.
Smaller states and UTs
 While Manipur is the best performer, Arunachal Pradesh is the worst performer in the
category.
 Chandigarh is the best-performing UT.

Impact of SEQI
 Outcome-based
 While current measures of school education like Performance Graded Index
(compiled by MHRD) emphasises more on input and infrastructure, SEQI emphasis
more on outcomes with nearly 50% of the weightage on learning outcomes.
 This will encourage states to adopt outcome-based, result-oriented policies.
 Spirit of competitive federalism
 Since school education is subject in the concurrent list, ranking fosters the principle
of competitive federalism.
 Benchmark for incentives
 The index can act as a benchmark for disbursing performance-linked grants to states.
 Best-practices
 Knowledge-sharing of best-practices of high-ranking states.

Some Concerns
 Large gap between states in terms of learning outcomes, access, infrastructure.
 While the variation in equity parameter is low, it is consistently low at 60% in most states
highlighting the gap across caste lines, class, region, gender etc.
Dated: 01.Oct.2019 DNS Notes

Personal Notes
Dated: 01.Oct.2019 DNS Notes

Title 5. A test for judicial review in India (The Hindu, Page 10)
Syllabus Mains: GS Paper 2 under Polity & Governance
Theme Judicial Review
Highlights Context: Supreme Court of United Kingdom in a major judgment has held that the actions taken by
Prime Minister Boris Johnson to prorogue Parliament were unlawful on the grounds of parliamentary
sovereignty and democratic accountability. The judgment focussed on constitutionality of the Prime
Minister‘s action of prorogation of Parliament in mid-session.
Supreme Court of UK has asserted its judicial might to assert the constitutional legitimacy within a
timeframe. This judgment becomes equally important for the countries following Westminster Model
including India to uphold principles of their constitutional process and rule of law especially for the
executive branch of government. The verdict was delivered unanimously by panel of 11 Justices.
Constitution in UK
 Unlike India, United Kingdom does not have a single document named as ‗The Constitution‘.
It nevertheless possesses a Constitution, established over the course of our history by common
law, statutes, conventions and practice‖.
 Though not codified, ―it has developed pragmatically, and remains sufficiently flexible to be
capable of further development‖ and it ―includes numerous principles of law, which are
enforceable by the courts in the same way as other legal principles‖.
How did the matter reach the Supreme Court in UK?
 Boris Johnson led government was always in favour of exiting the European Union even
without a deal. The suspicion around his action increased when the PM advised the Queen to
prorogue Parliament for it to reconvene on October 14, 2019.
 The process was widely perceived to be a sharp and calculated move by the government to
conclude the Brexit process with minimal parliamentary scrutiny.
 This triggered a legal challenge whereby the Scottish Court of Session found that the Prime
Minister had misled the Queen on the issue of prorogation of Parliament. The matter was
simultaneously heard by the High Court of England and Wales, which ruled that the
prerogative powers of the government were non-justiciable. These conflicting judgments
became clear by 11th September, 2019.
 Because of the conflicting opinion, an appeal was heard by the Supreme Court between
September 17 and 19 and the judgment was delivered on September 24, 2019.
Timely Judicial Review by Supreme Court of UK
 The entire judicial approach, in dealing with a matter concerning the ―fundamentals of
democracy‖, underlines the effectiveness of the judicial review process when conducted in a
timely manner.
 Supreme Court confirmed that the prorogation was ―unlawful because it had the effect of
frustrating or preventing the ability of Parliament to carry out its constitutional functions
without reasonable justification.‖
 So for countries following Westminster system of government, this judgment will naturally
lead to increased introspection of executive actions and provide a boost to due parliamentary
processes.
How is Executive in India violating Parliamentary Process
Dated: 01.Oct.2019 DNS Notes

 The article highlights that two key executive actions of the government this year were passed
in a hurry without proper legislative scrutiny -
1. The Constitutional 103rd Amendment Act 2019 providing reservation for EWS.
2. Abrogating Article 370 of the Indian Constitution and introducing Jammu and
Kashmir State Reorganisation Bill, 2019.
 The conventional practice is that legislative documents are provided at least a few days before
they are tabled in Parliament. This is done for the MPs to understand the contents of the
legislations, seek views and formulate their positions in the final law.
 Rule 69 in Rajya Sabha mentions about ‗Motions after Introduction of Bills‘ and ‗Scope of
Debate‘. As per the rule, discretion has been given to the Chairman in exceptional situations.
But, every discretionary power does require that the Chairman must exercise it judiciously and
with proper application of mind.
 So, such action of the executive flouting parliamentary process can be subject to judicial
review including the action of Chairman to allow for discretion with respect to introduction of
Bills without prior information and debate in the Parliament.
Conclusion – Continuous disregard of parliamentary rules and practices weakens democratic
institutions. However, such disregard of Parliamentary process in India will depend on the direction
taken by Indian Judiciary in valuing parliamentary process thereby upholding constitutional values.
Neither the Monarch, nor the Prime Minister, may insulate themselves from parliamentary sovereignty
and democratic accountability. It is the Court‘s responsibility to determine whether the Prime Minister
or his council has remained within the legal limits of the power as prescribed under the law. The Court
will intervene if the consequences of executive actions are sufficiently serious and violates basic
principles of constitutional good governance. So, in asking Parliament to finally decide the terms and
conditions of Brexit, the British court has valuably upheld the principles of democratic accountability of
a sovereign parliament.
Westminster system of government
The Westminster system is a democratic parliamentary system of government modeled after that of
the United Kingdom system.
It is founded on the British Palace of Westminster model of responsible government which comprises:
 A head of state who is the nominal or theoretical source of executive power, holds
numerous reserve powers, but in practice is a ceremonial figurehead. Such examples include
the British Sovereign or the President of India.
 An elected Parliament, with one or two Houses.
 A Government formed by the political party, or coalition, with majority support in the Lower
House
 A Prime Minister or Premier, who heads the Government.
 A Ministry, drawn from members of Parliament – usually Government members – exercising
executive authority and accountable to the Parliament
 A de facto executive branch usually made up of members of the legislature with the senior
members of the executive in a Cabinet; such members execute executive authority on behalf of
the nominal or theoretical executive authority.
Dated: 01.Oct.2019 DNS Notes

 The presence of opposition parties

 Dissolution of Parliament and regular conduct of elections
 An Independent Judiciary.
At the heart of the system is the concept of the separation of powers between the three branches
of government:
 The Legislature: the Parliament, which makes the law
 The Executive: the Governor, Prime Minister/Premier, Ministers, departments and agencies,
which implement the law.
 The Judiciary: the courts, which interpret and apply the law.
Public Service - Another key feature of the Westminster System is an apolitical, professional public
service providing impartial advice to the Government of the day and implementing the Government‘s
policies and programs. Another core requirement of the Westminster System is that the recruitment and
promotion of employees in the public service is on the basis of merit.
Personal Notes