1. Home
  2. |  
  3. Civil Services|  

Economic Survey 2016-17 for IAS Prelims: Towards Competitive Sub-Federalism Part 2

Mar 3, 2017 16:08 IST

    Economic Survey on Competitive Sub-Federalism Part 2

    By all accounts, urbanisation will define the trajectory of Indian development. The exodus of rural Indians into the cities over the coming decades will pose tremendous challenges for government, particularly the municipalities who will be primarily responsible for providing the services that the new migrants and established residents will need.

    Economic Survey 2016-17 for IAS Prelims: Towards Competitive Sub-Federalism Part 1

    Cities are complex, organic, humming entities that tend to defy the attempts of planners and architects to impose order. Empowering cities will be critical but the political economy challenges from state governments are considerable. It may well be that a few successful models will provide the impetus for wider change. Cities, like states, must compete with each other to unleash dynamism. To competitive federalism India must add competitive sub-federalism.

    ECONOMIC SURVEY 2016-17 IMPORTANT QUESTIONS

    Here, we provide exclusive questions on Competitive Sub-Federalism from the Economic Survey 2017 which can prove to be extremely helpful in IAS Prelims 2017 preparation.

    1. According to the economic survey 2017, there are glaring inter-state disparities in terms of devolution of functional and financial powers to the ULBs. Consider the following statements in this regard:

    1) All states have allowed the municipalities to levy property taxes.
    2) ULB per capita expenditure as compared to state per capita expenditure is generally high.
    3) Municipal own income comes from taxes; user fees; and domestic borrowing.

    Which of the above statements is correct?

    a. 1 and 2
    b. Only 3
    c. Only 2
    d. 1, 2 and 3

    Answer: b

    Explanation:

    The 74th Constitutional Amendment Act of 1992 provides for the ULBs as the third tier of government and ‛recommends’ that state governments assign them a set of 18 functions under the Twelfth Schedule. Twenty-five years on, there are glaring inter-state disparities in terms of devolution of functional and financial powers to the ULBs. Some states have not even allowed the municipalities to levy property taxes.

    There is much greater variation across states than across cities in expenditure per capita. What is most striking is the low level of ULB per capita expenditure as compared to state per capita expenditure, with a few exceptions such as Mumbai, Kanpur, and Kolkata. Either state is not devolving adequate financial resources to ULBs or ULBs are not raising these resources on their own.

    Moreover, even when powers have been devolved, exercising them has proved difficult. Municipal own income comes from taxes; user fees; and domestic borrowing.

    Union Budget 2017 Questions for IAS Exam

    2. While property tax is the most important constituent of own revenues but it is a non-buoyant source of revenue. consider the following statements why it is an unexplored source:

    1) Vey high rates of Property
    2) Low collection efficiency
    3) Lack of indexation of property values

    Which of the above statements is correct?

    a. 1 and 2
    b. 2 and 3
    c. Only 2
    d. 1, 2 and 3

    Answer: b

    Explanation:

    Even when powers have been devolved, exercising them has proved difficult for the ULBs. Municipal own income comes from taxes; user fees; and domestic borrowing. While property tax is the most important constituent of own revenues, there are problems of low coverage, low rates, low collection efficiency, and lack of indexation of property values, making it a non-buoyant source of revenue.

    The study on municipal finances conducted by the FFC indicated that per capita revenue from property taxes was $ 1677 at most, with a low of just $ 42. ULBs by and large have not been able to levy adequate user charges to cover even the operation and maintenance costs.

    Two Analytical Narratives on States’ Development III

    3. The primary responsibility for the development of urban areas lies with the state governments and the urban local bodies (ULBs) which face major and inextricably linked problems. Consider the following problem faced by ULBs:

    1) ULBs face a governance challenge.
    2) ULBs are mostly infrastructure deficit.
    3) ULBs receive timely and adequate finances.

    Which of the above statements is correct?

    a. 1 and 2
    b. Only 3
    c. Only 2
    d. 1, 2 and 3

    Answer: a

    Explanation:

    The primary responsibility for the development of urban areas lies with the state governments and the municipal corporations, municipalities and nagar panchayats, commonly known as urban local bodies (ULBs). These levels of government face major and inextricably linked problems: poor governance capacities, large infrastructure deficits and inadequate finances.

    ULBs face a governance challenge. Cities do not have a single city government or a local self-government, leading to functional overlap. There is a significant fragmentation of responsibilities and service delivery across a gamut of institutions: the municipality, state departments and parastatal agencies or civic agencies reporting directly to the state government.

    There are also transparency/ accountability issues, as even the most basic information on ULBs finances and quality of basic services are lacking in many cities, in part because the implementation of the e- Governance initiative has also not been uniform.

    The second challenge is the infrastructure deficit. Productive and healthy urbanisation requires efficient public services delivery. But every Indian city faces serious challenges related to water and power supply, waste management, public transport, education, healthcare, safety, and pollution.

    Economic Survey 2016-17 for IAS Prelims: Income, Health, and Fertility

    4. The Government has launched several new initiatives to rejuvenate urban areas. Consider the following statements regarding Swachh Bharat Mission (SBM):

    1) All 4041 statutory towns as per census 2011 are covered under SBM.
    2) The programme includes the elimination of open defecation, conversion of unsanitary toilets to pour flush toilets, eradication of manual scavenging, municipal solid waste management etc.

    Which of the above statements is correct?

    a. Only 1
    b. Only 2
    c. Both 1 and 2
    d. Neither 1 nor 2

    Answer: c

    Explanation:

    The Swachh Bharat Mission (SBM) was launched on 2nd October 2014, with a target to make the country clean by 2nd October 2019. All 4041 statutory towns as per census 2011 are covered under SBM. The programme includes the elimination of open defecation, conversion of unsanitary toilets to pour flush toilets, eradication of manual scavenging, municipal solid waste management and bringing about a behavioural change in people regarding healthy sanitation practices.

    Under the solid waste management state/cities are being encouraged to come out with innovative solutions and MoUD supports them technically and financially. Some of the initiatives being taken are the waste to energy, composting plants, capping of the dumpsites. All the initiatives are being supported by capacity building efforts to empower the Municipal Authorities to carry out their functions properly.

    5. Consider the following statements regarding the High Powered Expert Committee (HPEC) appointed by the Ministry of Urban Development (MoUD) on urban infrastructure. Which of the below statements is the recommendation made by this committee?

    a. About $ 39 lakh crore (at 2009-10 prices) was required for creation the of urban infrastructure over the next 20 years.
    b. The requirement for operation and maintenance (O&M) was separately estimated to be $ 20 lakh crore.
    c. Both (a) and (b)
    d. None of the above

    Answer: c

    Explanation:

    According to the High Powered Expert Committee (HPEC) appointed by the Ministry of Urban Development (MoUD), about $ 39 lakh crore (at 2009-10 prices) was required for the creation of urban infrastructure over the next 20 years.

    Out of this total, about $ 17 lakh crore (44 per cent) was needed for roads and $ 8 lakh crore (20 per cent) for services such as water supply, sewerage, solid waste management and storm water drains. In addition to these investments, the requirement for operation and maintenance (O&M) was separately estimated to be $ 20 lakh crore.

    Addressing this infrastructure deficit will require resources, some of which could come from the Centre and the states. The Fourteenth Finance Commission (FFC) has recommended a grant of around $ 87,000 crore to the municipalities for the period 2015-20, constituting assistance of around $ 500 per capita per annum on average.

    Current Issues and Events

    DISCLAIMER: JPL and its affiliates shall have no liability for any views, thoughts and comments expressed on this article.

    Latest Videos

    Register to get FREE updates

      All Fields Mandatory
    • (Ex:9123456789)
    • Please Select Your Interest
    • Please specify

    • ajax-loader
    • A verifcation code has been sent to
      your mobile number

      Please enter the verification code below

    This website uses cookie or similar technologies, to enhance your browsing experience and provide personalised recommendations. By continuing to use our website, you agree to our Privacy Policy and Cookie Policy. OK
    X

    Register to view Complete PDF