GS Analyst: Daily Current Affairs

The Supreme Court said establishment of Gram Nyayalayas across the country would help improve access to justice.

What are Gram Nyayalayas?

• The Central Government has enacted the Gram Nyayalayas Act, 2008 to provide access to justice to the citizen at their door steps.
• It provides for establishment of Gram Nyayalayas at intermediate Panchayat level.  However, the Act does not make setting up of Gram Nyayalayas mandatory.
• The State Governments are responsible for establishing Gram Nyayalayas in consultation with the respective High Courts.
  • Section 3 mandates state governments, in consultation with the respective high courts, to establish gram nyayalayas at the panchayat level, functioning as mobile courts capable of conducting proceedings at any suitable location within their jurisdiction.
• Gram Nyayalayas are deemed to be a Court of Judicial Magistrate of First Class with both civil and criminal jurisdiction to settle petty disputes at the village level.
• The concept of Gram Nyayalayas was proposed by the Law Commission of India in its 114^th

Challenges Facing Gram Nyayalayas (Village Courts):

• Inadequate Infrastructure and Resources: Many gram nyayalayas lack basic facilities required for conducting trials and hearings.  As per a report, 16,000 gram nyayalayas were required, but only a little over 450 were set up with about 300 actually functional.
• Financial Constraints: Insufficient financial assistance impacts the ability to cover recurring costs, including salaries for judges and staff.
• Lack of Awareness: Rural populations often lack awareness about gram nyayalayas and their functions, coupled with low legal literacy, limiting their use for dispute resolution.
• Low Case Disposal Rates: Due to limited resources and irregular functioning, gram nyayalayas have not effectively handled cases, with only 161 cases disposed of out of 42,184 pending.
• Lack of Integration with Mainstream Judiciary: There is a need for better coordination and oversight with higher courts, as the current system lacks a clear appeals process.
• Limited Access to Justice: When gram nyayalayas are non-functional, rural residents have to travel long distances to reach higher courts, leading to high costs and delays.
• Judicial Backlogs: Inefficiencies in gram nyayalayas contribute to a backlog of cases in higher courts.

Benefits of Gram Nyayalayas:

• Decentralised Justice Delivery: Bringing courts closer to rural citizens reduces physical and financial barriers. Mobile court sessions (Section 17) are particularly helpful in remote areas.
• Community-Centric Justice: Emphasizes conciliation and settlement, aligning with traditional dispute resolution methods that prioritize community cohesion.
• Increased Inclusivity: The informal setting and simplified procedures enable self-representation, reducing the need for costly legal representation, which benefits rural communities.

All central government employees retiring before April 1, 2025, can choose Unified Pension Scheme (UPS). Employees under National Pension Scheme (NPS) (post-April 1, 2004) have the option to switch to UPS. Once a decision is made to switch to UPS, it cannot be reversed.

What is National Pension Scheme?

• The traditional pension system in India was the Old Pension Scheme (OPS). Started in 1924 by the British government, it was relaunched by the Indian government post independence. The central government in 2004 introduced the National Pension System (NPS).
• The NPS, established in 2004 and expanded in 2009, was introduced as an alternative to the Old Pension Scheme. It is a contributory pension scheme designed to help individuals build a retirement fund through regular contributions.
• Eligibility: Open to all individuals aged 18 to 70 years.
• Objective: To help investors accumulate a retirement corpus through consistent contributions.
• Accounts:
  • Tier I Account: Has a lock-in period of 15 years. Offers additional tax benefits of up to Rs 50,000 per year, beyond the Section 80C limit of Rs 1.5 lakh.
  • Tier II Account: Functions like a savings account with no lock-in period.
• New Option: Starting April 1, 2025, central government employees will have the option to switch from the National Pension System (NPS) to the Unified Pension System (UPS) or continue with NPS.

Considerations for Employees

• For Younger Employees: NPS might be more advantageous due to its flexibility and mobility.
• For Tenured Employees: UPS offers more stability and guaranteed benefits, making it preferable for those closer to retirement.

Sustainability of Pension Schemes

• OPS was financially challenging for the government due to the lack of employee contributions.
• NPS puts the sustainability risk on the individual due to market-linked returns.
• UPS balances between defined benefit and contribution aspects. While it offers a guaranteed pension and inflation protection, it requires significant contributions from both employees and the government.

India’s Union Budget 2024-25 introduced significant changes in capital gains taxation. These changes aim to standardize tax rules for different types of assets and holding periods, impacting investors across various asset classes.

Key Changes in Capital Gains Taxation:

• Uniform Holding Periods: According to the Union Budget 2024-25, there will now be only two holding periods—12 months and 24 months—to determine whether capital gains are classified as long-term or short-term.
  • This means that all listed assets must be held for at least 12 months for the gains to be considered long-term capital gains.
• This change will apply to: Listed stocks, Listed bonds, Equity exchange-traded funds (ETFs), Gold ETFs, Bond ETFs, Real estate investment trusts (REITs) and Infrastructure investment trusts (InvITs)
  • For Listed Assets: Short-term capital gains (STCG) and long-term capital gains (LTCG) are now based on a holding period of 12 months.
  • For Unlisted and Physical Assets: The holding period to qualify as LTCG is set at 24 months.
• Revised Tax Rates:
  • STCG on Certain Financial Assets: Taxed at 20% (previously lower for some assets).
  • LTCG on Listed Assets: Taxed at 12.5% (up from 10%).
  • LTCG on Other Assets: Taxed at 12.5% without indexation (previously 20% with indexation).
• The new changes in capital gains tax include:
  • The long-term capital gains exemption on financial assets has been raised from INR 100,000 (US$1194.3) to INR 125,000 (US$1492.9) per year.
  • Listed financial assets held for more than a year are now considered long-term.
  • Unlisted financial assets and all non-financial assets must be held for at least two years to be considered long-term.
  • Unlisted bonds, debentures, debt mutual funds, and market-linked debentures will be taxed on capital gains at the applicable rates, regardless of the holding period.
• Removal of Indexation Benefit:
  • Indexation adjusts the purchase price of an asset for inflation. From July 23, 2024, indexation will no longer apply to calculate capital gains, except for properties sold before this date, where taxpayers can choose between paying 20% with indexation or 12.5% without it.
• Exemption Limits and Options:
  • Section 54: Exemption on LTCG from selling residential property if reinvested in another residential property within specified timeframes.
  • Section 54EC: Exemption on LTCG from selling land/buildings if invested in specified bonds within six months.
  • Section 54F: Exemption on LTCG from selling all assets (excluding residential property) if proceeds are reinvested in a residential property.
• Impact on Non-Resident Indians (NRIs): NRIs are affected by the new rules based on their residential status. They will face changes in capital gains tax rates from July 23, 2024.

Global Comparison:

• Singapore, Mauritius, Oman: No capital gains tax.
• US: Capital gains taxed at 0%, 15%, or 20%, depending on income.
• China: 20% tax on capital gains from non-share assets; shares are exempt.
• Brazil: Progressive tax rates from 15% to 22.5% based on the amount of gain.
• Japan: Total capital gains tax rate of 20.315% (15.315% national and 5% local).

Delhi chief minister Arvind Kejriwal resigned from the post in two days — five months before his tenure is set to end.

About Chief Minister

• State Executive consists of Governor and Council of Ministers with Chief Minister as its head. 
• Chief Minister is the elected head of the state government.
• Appointment (Article 164): The Chief Minister is appointed by the Governor and the other Ministers are appointed by the Governor on the advice of the Chief Minister.
• Duty (Article 147): It shall be the duty of the Chief Minister of each State-
  • To communicate to the Governor of the State all decisions of the Council of ministers relating to the administration of the affairs of the State and proposals for legislation;
  • To furnish such information relating to the administration of the affairs of the State and proposals for legislation as the Governor may call for; and
  • If the Governor so requires, to submit for the consideration of the Council of ministers any matter on which a decision has been taken by a minister but which has not been considered by the Council.
• Qualification: To be eligible for this role, a person must:
  • Be a citizen of India.
  • Be at least 25 years old.
  • Be a member of the state legislature.
• Tenure: The Chief Minister’s term is not fixed and depends on the Governor’s discretion. The Governor cannot remove the Chief Minister unless:
  • The Chief Minister loses the confidence of the majority in the State Legislative Assembly.
  • The State Legislative Assembly passes a motion of no confidence against the Chief Minister.
• Removal:  As per the law, a Chief Minister can only be disqualified or removed from office when he is convicted in any case.
• No protection from arrest: President of India and Governors of states and Union Territories are the only constitutional post holders who are immune from civil and criminal proceedings until his/her term ends, as per the law.
• But the immunity doesn't cover the Prime Ministers or Chief Ministers who are treated as equals in front of the Constitution that advocates the Right to Equality before the law. Yet, they are not disqualified just by an arrest. 

Prime Minister Narendra Modi virtually inaugurated six new Vande Bharat Express trains, marking another milestone in India’s expanding rail network. The six new routes inaugurated include services between Tatanagar-Patna, Brahmapur-Tatanagar, Rourkela-Howrah, Deoghar-Varanasi, Bhagalpur-Howrah, and Gaya-Howrah.

About

• Vande Bharat is India's first indigenously designed and manufactured semi-high-speed train.
• These semi-high-speed trains has transformed rail travel in India. Originally launched as Train 18 in 2019, these trains have become a game-changer for Indian Railways, connecting major cities in half the time. 
• According to the Indian Railways, these trains have already completed approximately 36,000 trips and carried over 3.17 crore passengers.
• The fleet travelled a distance equivalent to7 rounds of the Earthin the fiscal year 2023-24.
• The extensive network of these trains covers more than 280 districts across 24 states and Union Territories, highlighting their widespread reach and efficiency.
• The newest iteration, Vande Bharat 2.0, boasts several technological upgrades, including:
  • faster acceleration
  • indigenous 'Kavach' safety system
  • WiFi
  • anti-virus system
• These features make it a state-of-the-art option for travelers, ensuring both speed and safety.

In response to the operational challenges faced during the standoff with China in Eastern Ladakh and the lessons learned from the ongoing Russia-Ukraine conflict, India’s Defence Research and Development Organisation (DRDO) has developed its first 'mountain tank', named Zorawar. This tank aims to address the specific needs of high-altitude and rugged terrain deployment.

About

• The Zorawar tank has been developed by DRDO’s Combat Vehicles Research & Development Establishment (CVRDE) in collaboration with Larsen & Toubro (L&T).
• The project, named after the historic General Zorawar Singh Kahluria, took approximately three years to complete.
• Key Features of Zorawar
• Mobility and Deployment:
  • Weight: 25 tonnes, making it light enough for air transport by helicopter.
  • Speed: Capable of traveling at about 60 kilometers per hour on land.
  • Deployment: Designed for high-altitude areas and able to perform effectively in both mountainous and desert terrains.
• Armament:
  • Main Gun: Equipped with a Cockerill 3105 turret, featuring a 105-millimetre calibre gun.
  • Additional Armament: Can be fitted with machine guns and anti-tank guided missiles.
  • Fire Capability: Capable of firing at high angles, allowing it to perform limited artillery roles.
• Durability and Design:
  • Armor: Strong armor for its category, providing enhanced protection.
  • Water Mobility: Can wade through water, adding to its versatility.
  • Modularity: Built in a modular fashion to allow for future upgrades and modifications.

In 2014, scrutiny of coal block allocations and the Comptroller and Auditor General's 2012 report led to the government amending the Mines and Minerals (Development and Regulation) Act in 2015. This amendment introduced mandatory auctions and established District Mineral Foundations (DMFs) to channelize mining revenues for local development. The DMFs have been instrumental in local community development over the past decade, marking a significant transformation from past practices.

Establishment and Purpose:

• Creation of DMFs: The Mines and Minerals (Development and Regulation) Act was amended in 2015 to mandate auctions for mineral allocations and to create District Mineral Foundations (DMFs) as a new body for channelizing mining revenues.
• Objective of DMFs: DMFs were established to ensure that a portion of mining revenues is invested in community-centric development projects in mining-affected districts, thus aligning with the Prime Minister’s vision of integrating local communities into the resource-led development model.
• Impact on Local Communities: Over the past decade, DMFs have accumulated nearly Rs 1 lakh crore, funding three lakh projects across 645 districts, significantly contributing to the socio-economic development in mining regions.

Achievements and Innovations:

• Project Implementation: DMFs have spearheaded various projects such as skills development, infrastructure enhancement, and socio-economic upliftment. Notable examples include self-help groups in Odisha and drone technology training in Madhya Pradesh.
• Transparency and Efficiency: The ‘National DMF Portal’ has been introduced to digitize administration and oversight, ensuring greater transparency and efficient fund utilization.
• Local Innovations: Each DMF has adopted unique strategies, such as including elected representatives and establishing engineering departments, to address local needs and challenges effectively.

Future Directions and Integration:

• Standardization and Planning: Efforts are underway to standardize best practices across DMFs while maintaining local context. This includes creating three-year plans for targeted goal achievement.
• Convergence with Existing Schemes: DMFs are encouraged to align with central and state schemes to enhance their impact and support sustainable development goals.
• Expansion of Focus: Future initiatives include using DMFs to support forest dwellers, develop sports infrastructure, and integrate broader development goals with ongoing government schemes.

Practice Question:

Q: Evaluate the impact of the District Mineral Foundations (DMFs) established under the Mines and Minerals (Development and Regulation) Act amendment of 2015. Discuss the successes and challenges faced by DMFs in transforming mining-affected areas, and suggest measures to enhance their effectiveness in achieving sustainable development goals.

As India transitions to an urban-centric era due to significant demographic shifts, challenges arise in addressing infrastructure needs and governance across urban and rural areas. The existing policy frameworks and flagship programmes like AMRUT and Swachh Bharat Mission often fail to integrate the urban-rural continuum, leading to inefficiencies and inadequate infrastructure development.

Financial Decentralization and Constraints:

• Centralization Issues: Recent years have seen over-centralization of finances, with local bodies facing severe financial constraints. The 13th Finance Commission highlighted the "asphyxiation" of local bodies due to tied grants linked to central schemes.
• Impact of Property Tax and GST: The rise in property tax should ideally align with the State Goods and Services Tax (SGST) to prevent loss of tied grants. The disconnect between these components risks diminishing financial resources for towns.
• Tied vs. Untied Grants: Financial devolution has increasingly favored tied grants over untied ones, limiting the flexibility of local bodies and impacting their ability to address local needs effectively.

Issues with Existing Urban-Rural Programmes:

• AMRUT and Urban-Rural Continuum: The Atal Mission for Rejuvenation and Urban Transformation (AMRUT) targets urban infrastructure but excludes contiguous areas like census towns and urban villages, which are significant in the waste flow cycle.
• Swachh Bharat Mission Limitations: The Swachh Bharat Mission addresses solid and liquid waste management separately for urban and rural areas. This division creates inefficiencies, as integrated waste management solutions are needed for peri-urban and urban areas.
• Missed Opportunities for Integration: Both AMRUT and Swachh Bharat Mission could benefit from collaborative planning at the district level to address infrastructure needs more holistically and reduce bureaucratic centralization.

Need for Governance Reforms:

• Revisiting Constitutional Amendments: The 73rd and 74th Constitutional Amendments aimed to address urban and rural challenges but now require strengthening to better reflect contemporary needs.
• District Planning Committees, which should ideally lead planning and resource allocation, have often become extensions of district bureaucracy rather than autonomous entities.
• Case Study of Kerala: In Kerala, integrated management of urban and rural issues, such as the withdrawal of a landfill site due to combined local governance, demonstrates the benefits of unified oversight.

Practice Question:

Q. Critically analyze the current challenges in India's urban and rural governance frameworks, particularly focusing on financial decentralization and infrastructure development. How can integrating urban-rural policies and strengthening local governance structures address these challenges effectively? Suggest measures for improved policy implementation and resource management.

India's shift to competitive bidding for electricity procurement over the past two decades has significantly advanced the renewable energy (RE) sector by fostering competition and driving down tariffs. However, recent developments involving composite bidding structures for coal and solar capacities threaten to undermine these gains. This new approach could potentially hinder competition, innovation, and price reductions in the RE sector.

Achievements of Competitive Bidding:

• Tariff Reductions: Competitive bidding for solar power has dramatically reduced tariffs from Rs 15/kWh in 2010 to Rs 2.80/kWh by 2018, and in wind energy from Rs 5.30/kWh to Rs 2.50/kWh in two years.
• Capacity Addition: Approximately 27 GW of solar capacity and substantial wind capacity have been added through competitive procurement, driven by private sector investment.
• Innovation and Storage: Recent innovations in storage-linked tenders have led to the addition of over 9 GW of RE and 15 GWh of storage, improving the reliability of renewable power despite its intermittent nature.

Issues with Composite Bidding Structures:

• Investment Requirements: Composite bids requiring both coal and solar capacities involve massive investments, potentially Rs 28,000 crore to Rs 52,000 crore, which may exclude smaller players from participating.
• Operational Timelines: Coal plants, which require six to seven years to become operational, contrast sharply with solar projects that take only 1.5 to 2 years. Composite tenders create mismatches in power delivery timelines.
• Market Concentration: By centralizing procurement in large tenders, states risk concentrating market power, which could stifle competition and innovation, and may result in higher overall costs and reduced tariff benefits.

Recommendations for Future Procurement:

• Diversified Procurement: To maintain the benefits of competitive bidding, states should avoid large composite tenders and instead spread procurement across multiple smaller tenders. This approach would foster greater competition and innovation.
• Annual Procurement Calendar: Distribution utilities should implement an annual procurement calendar to offer greater clarity and stability for investors, which can promote more efficient and competitive bidding processes.
• Encourage Participation: Measures should be taken to ensure that smaller developers can compete effectively, including reducing entry barriers and encouraging a wider range of players to participate in the renewable energy market.

Practice Question:

Q. Evaluate the impact of recent composite bidding structures for coal and solar power on the competitive dynamics and pricing in India’s renewable energy sector. Discuss the potential challenges posed by these structures and propose measures to enhance competition and innovation in power procurement.