Current Affairs for 11 March 2026

India’s Big Step Amid Middle East War and Energy Crisis: Essential Commodities Act, 1955

• Growing geopolitical tensions in West Asia, particularly the escalating confrontation between the United States, Israel, and Iran, have increased uncertainty in global energy markets.
• Concerns about potential disruptions in major oil supply routes especially the Persian Gulf and the Strait of Hormuz have raised fears of an energy crisis in several countries.
• Although the supply of petroleum products and natural gas in India remains stable for now, the Government of India has taken precautionary steps by invoking provisions of the Essential Commodities Act, 1955.
• The government has instructed oil refineries to increase the production of Liquefied Petroleum Gas (LPG) and ensure adequate supply for domestic consumers.
• This move is considered a strategic step under India’s energy security policy, aimed at maintaining stable supply and controlling prices of critical energy resources during a potential global crisis.

What is the Essential Commodities Act, 1955 ?

• The Essential Commodities Act (ECA), 1955 is an important economic regulatory law passed by the Indian Parliament.
• Its primary objective is to ensure the availability of essential commodities at fair prices and to prevent hoarding, black marketing, and artificial scarcity in the market.
• Under this Act, the government has the authority to regulate the production, supply, storage, distribution, and pricing of important commodities such as food items, petroleum products, fertilizers, medicines, and other essential goods.
• For decades, this law has been a key policy tool used by the government to maintain food security, control inflation, and stabilize markets during crises.

Key Provisions of the Act

1. Declaration of Essential Commodities

Under the Act, certain goods are declared as “essential commodities.” Examples include:

• Food grains and edible oils
• Pulses
• Petroleum and petroleum products
• Fertilizers
• Medicines
• Seeds and yarn
• Raw jute
• Onions and other critical items

The central government can modify this list depending on economic or emergency situations.

2. Government Powers under Section 3

Section 3 grants extensive regulatory powers to the central government. It allows the government to:

• Control production of essential commodities
• Regulate supply and distribution
• Impose stock limits
• Control prices
• Prevent hoarding and black marketing

The aim is to ensure that essential commodities remain available to consumers at fair and reasonable prices.

3. Price Control and Market Stability

• If prices of any essential commodity rise sharply and create economic pressure on the public, the government can fix a Maximum Retail Price (MRP) or intervene in the market.
• Historically, these provisions have been used to stabilize prices of food grains, sugar, edible oils, and petroleum products.

4. Stock Limits

• In situations of shortage, the government can set stock limits for traders, wholesalers, and retailers.
• If stock beyond the permitted limit is found, authorities can release it into the market, reducing artificial scarcity and stabilizing prices.

5. Delegation of Powers to States (Section 5)

• Under Section 5, the central government can delegate its powers to state governments or authorized officials.
• This allows local administrations to conduct inspections, raids, and market monitoring more efficiently.

6. Penalties for Violations

If any person or trader violates orders issued under the Act, strict penalties may apply, including:

• Imprisonment ranging from 3 months to 7 years
• Monetary fines
• Confiscation of illegally hoarded commodities

The 2020 Amendment

• In 2020, the Parliament passed the Essential Commodities (Amendment) Act, 2020.
• The objective was to encourage private investment in agriculture and strengthen supply chains.

Under this amendment:

• Items such as cereals, pulses, potatoes, onions, and edible oils were removed from routine regulation.
• The government can regulate them only in extraordinary situations, such as:
  • War
  • Famine
  • Natural disasters
  • Extreme price rise

Stock limits can be imposed only when prices increase abnormally:

• 100% rise in horticultural products
• 50% rise in non-perishable food items.

Use of the Act in the Current Energy Crisis

Due to instability in global energy markets caused by conflicts in West Asia, the Government of India has taken several steps under this Act:

1. Increasing LPG Production

• Oil refineries have been directed to maximize LPG production to ensure uninterrupted supply of cooking gas for households.

2. Priority for Domestic Consumers

• Availability of LPG, PNG, and CNG is being prioritized for households and the fertilizer sector.

3. Restrictions on Petrochemical Use

• Refineries have been instructed not to divert propane and butane for petrochemical production and instead use them for LPG manufacturing.

4. Alternative Oil Supply

• To maintain energy supply stability, the United States has reportedly allowed India temporary flexibility to purchase crude oil from Russia for 30 days.

Importance for India’s Energy Security

1. Protecting Domestic Energy Supply

India is the third-largest oil importer in the world, making it highly vulnerable to global supply disruptions.

2. Stabilizing Prices

The use of the Essential Commodities Act helps the government control price volatility and reduce inflationary pressure.

3. Preventing Hoarding and Black Marketing

During crises, traders may hoard goods to raise prices. The Act enables authorities to prevent such practices.

4. Ensuring Social and Economic Stability

Stable supply of cooking gas, petroleum products, and fertilizers supports both households and the agricultural sector, maintaining economic balance.

What is the DART Mission?Humanity’s First Planetary Defense Technology That Changed the Path of an Asteroid

A recent scientific study has revealed that NASA’s DART Mission (Double Asteroid Redirection Test) not only changed the motion of a small asteroid within its system but also slightly altered the orbit of the entire asteroid pair around the Sun. This achievement is considered a major milestone in the field of planetary defense and humanity’s ability to protect Earth from potential asteroid threats.

What is the DART Mission ?

• DART (Double Asteroid Redirection Test) was a space mission developed by NASA to test whether the trajectory of a potentially hazardous asteroid could be changed through a kinetic impact.
• In simple terms, a spacecraft was intentionally crashed into an asteroid to observe whether the collision could alter its speed or orbital path.
• The mission was historic because it was the world’s first planetary defense technology demonstration.
• Its main goal was to test a technique that could one day protect Earth by redirecting dangerous asteroids away from our planet.

Launch and Mission Design

• The DART mission was launched on 24 November 2021 from Vandenberg Space Force Base in California, USA.
• The spacecraft was designed as an autonomous system, capable of navigating and guiding itself to the target without real-time human control.
• It was equipped with advanced cameras and navigation systems that allowed it to identify and lock onto its target asteroid during the final stage of the mission.

Target: A Binary Asteroid System

The mission targeted a binary asteroid system, which consists of two celestial bodies:

• Didymos – the larger asteroid, about 780 meters wide.
• Dimorphos – the smaller moonlet, about 160 meters wide, orbiting Didymos.

Scientists selected this system because any change in the orbit of the smaller asteroid could be easily measured from Earth.

The idea was that since the two bodies are gravitationally bound, disturbing the orbit of Dimorphos would affect the entire system.

The Historic Impact (2022)

On 26 September 2022, the DART spacecraft successfully collided with Dimorphos at a speed of approximately 22,500 km/h.

After the impact, scientists observed that:

• The orbital period of Dimorphos around Didymos shortened by about 32 minutes.
• A measurable change occurred in the asteroid’s orbit.
• The collision produced a large plume of debris that spread into space.

This marked the first time in history that humans successfully altered the motion of a celestial object in space.

What Does the New Study Reveal ?

• Recent research indicates that the impact did not only affect the smaller asteroid.
• The energy and debris from the collision also caused a slight change in the entire Didymos–Dimorphos system’s orbit around the Sun.
• These findings help scientists understand the broader effects of asteroid deflection techniques.

Importance for Planetary Defense

• The DART mission represents a significant step toward protecting Earth from potential asteroid impacts.
• If a dangerous asteroid is detected in the future, kinetic impactor technology could be used to alter its trajectory and prevent a collision with Earth.
• To further analyze the results of the DART impact, the European Space Agency is planning the Hera Mission, expected to study the asteroid system around 2026.

What is Sheshnaag-150 ?

Why in the News ?

India is developing Sheshnaag-150 swarm drone, a long-range swarm attack drone capable of flying over 1,000 km, carrying heavy payloads, and conducting coordinated strikes using artificial intelligence-driven swarm technology.

The drone is being developed by NewSpace Research and Technologies, a Bengaluru-based aerospace startup specialising in AI-enabled unmanned systems and swarm robotics.

The system is expected to significantly enhance India’s long-range precision strike and autonomous warfare capabilities.

Background: Rise of Drone and Swarm Warfare

Unmanned Aerial Vehicles (UAVs) have rapidly transformed modern warfare by enabling precision strikes, intelligence gathering, and reduced risk to human soldiers.

Recent conflicts across the world have demonstrated the increasing importance of drone swarms, where multiple autonomous drones coordinate their actions to overwhelm enemy air-defence systems.

Countries such as the United States, China, and Israel are heavily investing in AI-enabled autonomous drone technologies.

India has also accelerated indigenous drone development under initiatives such as Make in India and Aatmanirbhar Bharat to strengthen domestic defence manufacturing.

What is Sheshnaag-150 ?

Sheshnaag-150 swarm drone is a long-range collaborative swarm attack drone designed for deep strike missions and coordinated aerial assaults.

The system uses autonomous artificial intelligence algorithms that allow multiple drones to operate together as a coordinated swarm capable of executing saturation attacks against enemy targets.

Such technology enables drones to identify targets, coordinate flight paths, evade defences, and strike simultaneously.

Developer of the Drone

The drone is being developed by NewSpace Research and Technologies, an Indian aerospace startup based in Bengaluru.

The company focuses on:

• AI-based autonomous defence systems
• Swarm robotics
• Unmanned aerial combat technologies

Its work aligns with India’s broader push to develop indigenous defence technology ecosystems.

Key Features of Sheshnaag-150

1. Long Operational Range

The drone has an operational range of over 1,000 km, enabling deep-strike capabilities against distant targets.

Such long-range capability allows the drone to operate far beyond frontlines.

2. Heavy Payload Capacity

The drone can carry a payload of 25–40 kg, which is sufficient to damage:

• Military vehicles
• Infrastructure
• Strategic installations
• Personnel targets

This allows the drone to perform precision strike missions.

3. AI-Powered Swarm Technology

One of the most distinctive features of the system is its AI-driven swarm capability.

Multiple drones can operate together autonomously to:

• Coordinate flight paths
• Evade air defence systems
• Strike targets simultaneously

This saturation attack capability can overwhelm conventional air defence systems.

4. Long Endurance

The drone can remain airborne for over five hours, allowing it to loiter over target areas before carrying out a strike.

This improves flexibility during military operations.

5. Real-Time Surveillance and Targeting

The system is equipped with advanced capabilities such as:

• Real-time surveillance
• Autonomous target identification
• Precision strike capabilities

These features allow the drone to function as both reconnaissance and attack platform.

6. Operation in GPS-Denied Environments

The drone can operate even in GPS-jammed environments, which are common in modern electronic warfare.

It uses visual navigation systems and onboard sensors to navigate and reach targets even if satellite navigation signals are disrupted.

Significance for India’s Defence Capabilities

1. Strengthening Indigenous Defence Technology

The development of Sheshnaag-150 supports India’s efforts to reduce dependence on imported defence systems.

2. Enhancing Long-Range Strike Capability

With a range exceeding 1,000 km, the drone can conduct deep strikes against strategic targets.

3. Advancing AI-Enabled Warfare

The use of autonomous swarm intelligence represents a significant technological leap in modern warfare.

4. Improving Battlefield Surveillance

Integrated surveillance capabilities allow the drone to collect intelligence while preparing for attacks.

5. Countering Advanced Air Defence Systems

Swarm technology enables multiple drones to attack simultaneously, potentially overwhelming advanced defence systems.

Challenges and Concerns

Despite its advantages, swarm drone technology raises several challenges.

Ethical and Legal Issues

Autonomous weapons systems raise concerns regarding accountability and compliance with international humanitarian law.

Counter-Drone Technologies

Adversaries may develop advanced anti-drone systems, including electronic warfare and directed-energy weapons.

Cybersecurity Risks

AI-driven systems could be vulnerable to cyberattacks or electronic interference.

Way Forward

To maximise the benefits of swarm drone technology, India should:

• Continue investing in AI-driven defence technologies
• Develop counter-drone defence systems
• Strengthen cybersecurity measures for autonomous systems
• Expand collaboration between startups, defence agencies, and research institutions

These steps can help India build a robust and technologically advanced defence ecosystem.

NH Green Cover Index

Why in the News ?

The National Highways Authority of India has released the first National Highways Green Cover Index (NH-GCI), a technology-driven tool designed to assess the extent of vegetation and green cover along India’s national highways network.

The index has been developed in collaboration with the National Remote Sensing Centre under the Indian Space Research Organisation, using satellite-based remote sensing technologies to provide a scientific measurement of green cover along highway corridors.

The initiative marks an important step toward sustainable infrastructure development and environmental monitoring in India.

Background: Need for Green Infrastructure in Highway Development

India has rapidly expanded its road infrastructure in recent years to support economic growth, connectivity, and logistics efficiency.

The National Highways Authority of India manages a vast network of highways that form the backbone of the country’s transportation system.

However, large-scale highway construction can lead to:

• Loss of vegetation and biodiversity
• Increased carbon emissions
• Heat island effects
• Environmental degradation

To address these concerns, the government has emphasised green highways and large-scale roadside plantation programmes.

Monitoring the effectiveness of such plantation initiatives requires scientific and objective tools, which led to the development of the NH Green Cover Index.

What is the National Highways Green Cover Index (NH-GCI) ?

The National Highways Green Cover Index is a satellite-based index that quantitatively measures vegetation cover along national highway corridors.

It provides a scientific assessment of green cover within the Right of Way (RoW) of highways.

The index measures the percentage of land covered with vegetation along highways, including plantations along the left and right sides of roads and the central median wherever feasible.

By providing measurable data, the index allows policymakers to monitor environmental sustainability in highway development.

Role of Remote Sensing and Space Technology

The index has been developed with technical support from the National Remote Sensing Centre, a key research centre under the Indian Space Research Organisation.

Using high-resolution satellite sensors, scientists are able to detect vegetation through chlorophyll content present in plant leaves.

Satellite data allows authorities to monitor green cover across vast highway networks efficiently and accurately without extensive field surveys.

Methodology Used in the Index

The NH Green Cover Index uses advanced geospatial technologies to assess vegetation levels.

1. Satellite-Based Vegetation Detection

Vegetation is identified using chlorophyll signals captured by high-resolution satellite imagery.

These signals help determine whether land areas contain vegetation or barren surfaces.

2. Use of NDVI

The analysis relies on the Normalized Difference Vegetation Index (NDVI).

NDVI is a widely used remote sensing indicator that measures vegetation health by analysing how plants reflect light in different wavelengths.

Higher NDVI values generally indicate dense and healthy vegetation, while lower values indicate sparse or absent vegetation.

3. Segment-Wise Analysis

The assessment is conducted for every one-kilometre segment of the national highways network.

This granular analysis enables authorities to identify:

• Areas with strong green cover
• Areas with insufficient plantation
• Sections requiring intervention

4. Right of Way Assessment

The index measures vegetation within the Right of Way (RoW) of highways.

The Right of Way refers to the designated land corridor allocated for road infrastructure, including the carriageway, shoulders, medians, and roadside areas.

Significance of the NH Green Cover Index

1. Scientific Monitoring of Green Highways

The index provides a quantitative and objective method to measure green cover, replacing subjective field assessments.

2. Promoting Sustainable Infrastructure

It integrates environmental sustainability with infrastructure development, ensuring that highway expansion is balanced with ecological protection.

3. Improved Plantation Management

Authorities can identify areas with low vegetation cover and implement targeted plantation drives.

This will improve the effectiveness of green corridor initiatives.

4. Comparative Assessment and Ranking

The index enables comparison and ranking of highway stretches based on vegetation levels, encouraging better environmental performance.

5. Cost-Effective and Efficient Monitoring

Satellite-based monitoring provides a time-efficient and cost-effective method for assessing vegetation across thousands of kilometres of highways.

Broader Environmental Benefits

Enhancing green cover along highways offers several ecological benefits:

• Reduction in air pollution and dust
• Improved carbon sequestration
• Lower surface temperatures along road corridors
• Protection against soil erosion
• Creation of habitats for small wildlife species

These benefits contribute to climate resilience and environmental sustainability.

Challenges and Way Forward

1. Maintenance of Plantation

Plantation efforts often suffer from poor maintenance and survival rates.

Regular monitoring and irrigation systems must be ensured.

2. Integration with Climate Goals

The index should be integrated with India’s climate mitigation and afforestation targets.

3. Expanding Green Infrastructure

Future highway projects should include mandatory green planning, biodiversity corridors, and eco-sensitive designs.

4. Use of Advanced Geospatial Technologies

Continuous use of remote sensing, GIS mapping, and satellite monitoring will improve environmental governance in infrastructure development.

Significance

The NH Green Cover Index represents a major step toward data-driven environmental governance in infrastructure development.

By combining space technology with environmental monitoring, India is moving toward sustainable highway expansion that balances economic growth with ecological protection.

This initiative also highlights the growing role of satellite technology in environmental planning and policy implementation.

Partial Relaxation of Press Note 3

Why in the News ?

The Union Cabinet of India has approved a partial relaxation of Foreign Direct Investment (FDI) restrictions imposed under Press Note 3 (2020) for countries sharing land borders with India.

The move allows limited investments in select manufacturing sectors, including:

• Capital goods
• Electronic capital goods
• Electronic components
• Solar manufacturing inputs such as polysilicon and ingot-wafer

However, restrictions remain in strategic sectors such as semiconductors, reflecting a cautious approach balancing economic growth and national security concerns.

What is Press Note 3 (PN3) ?

Press Note 3 (2020) amended India’s FDI policy framework to regulate investments from countries sharing land borders with India.

Under this policy:

• Any investment from neighbouring countries must receive prior government approval.
• Investments where the beneficial owner is from such countries also require approval.

The rule applies to investors from:

• China
• Pakistan
• Bangladesh
• Nepal
• Myanmar
• Bhutan
• Afghanistan

The objective was to prevent opportunistic takeovers of Indian companies and protect national economic security.

Background: Why Press Note 3 Was Introduced

The Government of India introduced Press Note 3 in April 2020 during the economic disruptions caused by the COVID-19 pandemic.

Key reasons behind the policy

1. Preventing opportunistic acquisitions

During the pandemic-induced economic slowdown, there were concerns that foreign investors could acquire distressed Indian firms at undervalued prices.

2. National security considerations

Tensions escalated after the Galwan Valley clash between Indian and Chinese troops in 2020, heightening scrutiny of foreign investments.

3. Rising Chinese investments

Chinese companies had become significant investors in Indian startups and technology firms, prompting regulatory oversight.

Although the policy applied to all neighbouring countries, it was primarily aimed at Chinese investments.

Why the Government Has Eased the Restrictions

The decision to partially relax PN3 is driven by several economic and strategic considerations.

1. Need for Investment and Technology

India requires capital inflows, advanced technologies, and integration into global supply chains, particularly in manufacturing sectors such as electronics and renewable energy.

2. Recommendations from Policy Bodies

A high-level committee chaired by Rajiv Gauba, associated with the NITI Aayog, recommended easing the restrictions to boost investments.

3. Economic Survey Recommendations

The Economic Survey 2023-24 suggested that Chinese investments could enhance India’s export competitiveness, particularly in manufacturing sectors.

4. Impact on Global Investors

Press Note 3 also affected global private equity and venture capital funds with minor Chinese ownership stakes, creating investment bottlenecks.

5. Global Supply Chain Pressures

Geopolitical tensions and disruptions in global trade routes—including risks around the Strait of Hormuz—have increased the need to strengthen domestic manufacturing capabilities.

Key Details of the New Relaxation

1. Limited Sectoral Opening

FDI from neighbouring countries will now be allowed in selected manufacturing sectors, including:

• Capital goods
• Electronic capital goods
• Electronic components
• Solar manufacturing inputs such as polysilicon and ingot-wafer

However, strategic sectors like semiconductors remain restricted.

2. Investment Threshold

Investments with up to 10% beneficial ownership from land-border countries will be allowed through the automatic route.

3. Indian Ownership Requirement

To maintain domestic control:

Majority ownership must remain with Indian residents or Indian entities.

4. Faster Approval Process

The government has introduced a 60-day deadline for processing investment proposals, improving regulatory efficiency.

5. Oversight Mechanism

A Committee of Secretaries (CoS) headed by the Cabinet Secretary will review and update the list of sectors eligible for relaxation.

6. Beneficial Ownership Rules

Investment proposals will be assessed based on beneficial ownership criteria aligned with anti-money laundering regulations.

Potential Impact of the Policy Change

1. Boost to Manufacturing

The relaxation could attract investments in electronics and renewable energy manufacturing, strengthening domestic production.

2. Technology Transfer

Foreign investors may bring advanced manufacturing technologies, enhancing India’s industrial competitiveness.

3. Integration with Global Supply Chains

Greater investment may help Indian firms integrate into global value chains, particularly in electronics manufacturing.

4. Increased FDI Inflows

The policy change could boost Foreign Direct Investment inflows, supporting economic growth and industrial development.

5. Strategic Safeguards

By maintaining restrictions in sensitive sectors such as semiconductors, the government aims to balance economic openness with national security.

Gradual Normalisation of India–China Economic Engagement

The relaxation signals a calibrated approach toward economic engagement with China.

Recent developments indicating gradual normalisation include:

• Easing of business visa procedures for Chinese workers
• Allowing joint ventures in electronics manufacturing, such as partnerships involving Dixon Technologies and Longcheer
• Diplomatic efforts to stabilise relations, including the resumption of the Kailash Mansarovar Yatra and restoration of direct flights

These steps reflect a pragmatic approach to balancing economic cooperation with strategic caution.

Significance of the Policy Shift

1. Strengthening Domestic Manufacturing

The relaxation supports India’s efforts to build a stronger manufacturing base, particularly in electronics and renewable energy sectors.

2. Enhancing Export Competitiveness

Improved supply chain integration can help Indian industries expand exports and participate in global markets.

3. Attracting Global Capital

The move may encourage greater investment flows from international funds and multinational companies.

4. Strategic Economic Diplomacy

The policy reflects a balanced approach toward economic engagement with neighbouring countries, especially China.

5. Building Supply Chain Resilience

By promoting domestic manufacturing of critical components, India can reduce dependence on imports and strengthen economic resilience.

Fiscal Federalism in Focus: Debate Over Retaining 41% Tax Devolution to States

Why in the News ?

The Government of India has accepted the Sixteenth Finance Commission of India recommendation to retain 41% tax devolution to States from the divisible pool of central taxes.

While this decision maintains the existing share recommended by the Fifteenth Finance Commission of India, it has triggered debates over the evolving nature of fiscal federalism in India, particularly regarding:

• Shrinking divisible pool due to cesses and surcharges
• Changes in allocation criteria among States
• Rising fiscal stress in several State governments

Fiscal Federalism in India

Fiscal federalism refers to the distribution of financial powers, taxation authority, and expenditure responsibilities between different levels of government in a federal system.

In India, it governs how tax revenues are shared between the Union government and State governments to ensure balanced development and efficient governance.

Constitutional Framework

The Constitution provides a clear framework for fiscal relations through several provisions:

• Articles 268–281 of the Constitution of India: Define taxation powers and revenue-sharing mechanisms between the Union and States.
• Article 280 of the Constitution of India: Provides for the establishment of the Finance Commission to recommend tax devolution and grants.
• Seventh Schedule of the Constitution of India: Divides taxation powers among the Union List, State List, and Concurrent List.

Since the Union government collects a significant portion of taxes, a redistribution mechanism is required to ensure equitable allocation across States. This role is performed by the Finance Commission.

Evolution of Tax Devolution

Over time, the share of central taxes devolved to States has increased.

• The Fourteenth Finance Commission of India raised the States’ share to 42% of the divisible pool.
• After the reorganisation of Jammu and Kashmir, the Fifteenth Finance Commission of India slightly reduced the share to 41%.
• The Sixteenth Finance Commission of India has now recommended continuing the 41% share.

Although the percentage has remained stable, debates have emerged about whether the actual transfers to States have effectively declined.

Understanding the Divisible Pool

The divisible pool refers to the portion of central tax revenues shared between the Union government and the States.

However, not all tax revenues are included in this pool.

Excluded Components

Certain revenues such as cesses and surcharges are not shared with States and are retained entirely by the Centre.

These levies are often imposed for specific purposes, such as:

• Education
• Infrastructure development
• Health initiatives

Declining Share of Divisible Pool

According to Finance Commission data, the divisible pool’s share of gross tax revenues has gradually declined:

• 13th Finance Commission period: about 89.2%
• 14th Finance Commission period: about 82.1%
• 15th Finance Commission period: about 78.3%

This means that even though States receive 41% of the divisible pool, the base itself has become smaller, leading to concerns among States about declining fiscal transfers.

Recommendations of the Sixteenth Finance Commission

The Sixteenth Finance Commission of India evaluated the fiscal position of both the Union and the States and made several recommendations.

Key Recommendations Accepted

The Union government accepted several major proposals:

• Retaining 41% tax devolution to States
• Continuing the horizontal distribution formula among States
• Providing grants to local bodies
• Supporting the disaster management funding framework

Structural Reforms Deferred

However, some important structural reforms were deferred for future consideration, including:

• Reform of Fiscal Responsibility Legislation (FRL) frameworks
• Regulation of off-budget borrowings by States
• Reforms in power distribution companies (DISCOMs)
• Rationalisation of subsidies

The government indicated that these issues would be examined separately in the future.

Structural Issues in State Finances

The Finance Commission’s report highlights growing fiscal stress in several States.

Examples of State Debt Levels

• Punjab – Debt-to-GSDP ratio around 42.9% (2023–24)
• Rajasthan – Liabilities about 37.9% of GSDP
• West Bengal – Liabilities about 38.3% of GSDP
• Andhra Pradesh – Liabilities about 34.6% of GSDP

In many cases, borrowing is used to finance revenue expenditure such as salaries, subsidies, and interest payments rather than productive capital investments.

Concern Over Off-Budget Borrowing

Some States engage in off-budget borrowing, where government-controlled entities borrow funds and repayments are made using public resources.

This practice:

• Keeps liabilities outside official fiscal deficit figures
• Reduces fiscal transparency

The Finance Commission recommended tighter regulation of such borrowing practices.

Changes in the Horizontal Devolution Formula

The Finance Commission also revised the formula used to distribute funds among States.

Previous Criterion

Earlier, the formula included tax and fiscal effort, rewarding States that improved tax collection efficiency relative to their economic capacity.

New Criterion

The new formula introduces a “contribution to GDP” indicator, assigned 10% weight in the allocation formula.

Likely Impact

States with strong economic output such as:

• Maharashtra
• Gujarat
• Karnataka

may benefit from this criterion.

However, poorer States such as:

• Bihar
• Jharkhand
• Uttar Pradesh

may benefit less because they rely more heavily on central transfers.

Critics argue that this change could weaken the principle of fiscal equalisation, which aims to support less-developed States.

Local Body Grants

Finance Commission transfers also include grants to local governments.

The Sixteenth Finance Commission recommended ₹7,91,493 crore in grants for rural and urban local bodies.

Types of Grants

1. Basic Grants

These support essential functions of local governments such as sanitation, water supply, and administration.

2. Performance Grants

These are released only if certain conditions are met, including:

• Timely constitution of State Finance Commissions
• Maintenance of audited financial accounts
• Compliance with national data reporting systems

Implementation Challenges

During the previous Finance Commission period, only about 62.6% of recommended urban local body grants were actually released, highlighting administrative and compliance challenges.

Implications for India’s Fiscal Federalism

Recent developments reflect important trends shaping fiscal federal relations.

1. Growing Centre–State Asymmetry

Increasing reliance on cesses and surcharges allows the Union government to retain a larger share of revenues.

2. Shift in Allocation Principles

Greater weight given to GDP contribution may favour economically stronger States.

3. Delayed Structural Reforms

Key reforms related to fiscal discipline, subsidies, and power sector finances remain unresolved.

4. Fiscal Stress in States

Rising debt levels and off-budget borrowing indicate growing fiscal challenges for State governments.

5. Evolution of Cooperative Federalism

The debate over tax devolution reflects broader discussions about balancing fiscal autonomy with national economic coordination.

Significance

The debate surrounding the 41% tax devolution highlights the evolving dynamics of India’s federal system.

Ensuring a fair distribution of financial resources is essential for:

• Balanced regional development
• Fiscal stability of States
• Effective governance at local levels

The Finance Commission remains a crucial institution in maintaining cooperative fiscal federalism in India.

Removal of the Chief Election Commissioner: Constitutional and Legal Framework

Why in the News ?

The Opposition is preparing to move a motion seeking the removal of Gyanesh Kumar, the Chief Election Commissioner (CEC) of the Election Commission of India, alleging biased conduct.

Under the Constitution, the CEC can be removed only through a process similar to the removal of a judge of the Supreme Court of India, ensuring a high level of institutional independence.

The move has reignited discussions about the constitutional safeguards and legal procedures governing the removal of the Chief Election Commissioner.

Background: Election Commission and Constitutional Status

The Election Commission of India is a constitutional body responsible for conducting free and fair elections to:

• Parliament
• State legislatures
• The offices of the President and Vice-President

It derives its authority from Article 324 of the Constitution of India, which vests the superintendence, direction and control of elections in the Commission.

The Commission typically consists of:

• One Chief Election Commissioner (CEC)
• Two Election Commissioners (ECs)

To ensure independence, the Constitution provides strong protections regarding tenure and removal of the CEC.

Opposition’s Allegations Against the Chief Election Commissioner

Opposition parties have initiated steps to move an impeachment motion against Gyanesh Kumar.

Key Allegations

• Alleged biased conduct in the functioning of the Election Commission.
• Accusations that the Commission disproportionately targeted West Bengal during the Special Intensive Revision of electoral rolls.
• Deployment of micro-observers in certain regions, which critics claim indicates partiality.

Opposition parties are currently gathering signatures from Members of Parliament to initiate the formal removal motion.

Constitutional Provision for Removal of the CEC

The removal of the Chief Election Commissioner is governed by Article 324(5) of the Constitution of India.

Key Provisions

• The CEC can be removed only in the same manner and on the same grounds as a judge of the Supreme Court.
• This provision ensures institutional independence of the Election Commission.
• Election Commissioners can be removed only on the recommendation of the Chief Election Commissioner.

This constitutional safeguard prevents arbitrary removal by the government.

Legal Framework Governing Removal

Parliament has enacted legislation to regulate the appointment and service conditions of Election Commissioners.

The relevant law is the Chief Election Commissioner and Other Election Commissioners (Appointment, Conditions of Service and Term of Office) Act, 2023.

Section 11 of the Act

Section 11 reiterates that:

• The CEC can only be removed through the same procedure applicable to the removal of a Supreme Court judge.
• The removal process is therefore subject to the constitutional framework governing judicial impeachment.

Grounds for Removal

The grounds for removal are identical to those applicable to judges under Article 124(4) of the Constitution of India.

A Chief Election Commissioner can be removed only on the grounds of:

1. Proved misbehaviour, or
2. Incapacity

These grounds must be established through a formal inquiry process before Parliament.

Parliamentary Procedure for Removal

The procedure for removal follows the mechanism laid down in the Judges (Inquiry) Act, 1968.

The process consists of multiple stages.

1. Initiation of the Removal Motion

A motion for removal must be supported by a minimum number of Members of Parliament.

• At least 100 members of the Lok Sabha, or
• At least 50 members of the Rajya Sabha

The motion is then submitted to the Speaker of the Lok Sabha or the Chairman of the Rajya Sabha.

2. Admission of the Motion

The presiding officer of the House has the authority to:

• Admit the motion, or
• Reject the motion

If admitted, the removal process formally begins.

3. Inquiry by an Investigation Committee

Once admitted, a three-member investigation committee is constituted to examine the charges.

The committee includes:

• One judge of the Supreme Court of India
• One Chief Justice of a High Court
• One distinguished jurist

The committee investigates the allegations and submits its findings to the presiding officer of the House.

4. Parliamentary Voting

If the committee finds the charges proved, the motion is taken up for voting in Parliament.

To pass, the motion must secure:

• A majority of the total membership of each House, and
• A two-thirds majority of members present and voting

Additionally, both Houses of Parliament must pass the motion in the same session.

5. Final Order by the President

After both Houses pass the motion, an address is sent to the President of India.

The President then issues an order removing the Chief Election Commissioner from office.

Significance of the Removal Safeguards

1. Ensuring Independence of the Election Commission

The stringent removal process protects the Election Commission from political interference, enabling it to function impartially.

2. Strengthening Democratic Institutions

By requiring a special majority in Parliament, the Constitution ensures that removal occurs only in exceptional cases.

3. Promoting Electoral Integrity

The security of tenure for the CEC enhances public confidence in the credibility of elections.

4. Checks and Balances

The procedure balances accountability and independence, allowing removal in cases of proven misconduct while preventing arbitrary dismissal.

5. Upholding Constitutional Governance

The removal framework reflects the broader principle of institutional autonomy for constitutional authorities in India’s democratic system.