Daily News Digest 5 Feb 2024

Table of content

• Revenues of the Panchayats Raj Institutions
• Hundi
• Gatka
• Ergosphere
• The Economics of the Food System Transformation report
• Unified Payments Interface (UPI) launched at the iconic Eiffel Tower in France

Revenues of the Panchayats Raj Institutions

Why in news?

More about the news 

• According to a study of Finances of Panchayat Raj Institutions conducted by the Reserve Bank of India (RBI), 80% of the revenue of panchayats was from Central government grants; only 15% was from State government grants.
• The revenue raised by panchayats formed a tiny share of the States’ own revenue.

Major reasons behind poor finances

• Poor Revenue Generation: Taxes earned by the panchayats in India are grossly inadequate to meet their expenditure needs.
• Discrepancies in Revenue Generation: Some state governments have not devolved enough taxation powers to the Panchayats. For example: Panchayats in states like Kerala, Andhra Pradesh and Karnataka do collect some direct taxes.
• GST Implications on Panchayats: it has affected the tax base of local governments including Panchayats, it has subsumed some taxes that formed base of own source revenue for Panchayats. For example, Octroi Tax on advertisement
• Dependency on grants: Gram panchayats are fiscally dependent on grants (both discretionary and non-discretionary grants) from the State and the Centre for everyday activities.
• Inordinate delays: Some state governments delay releasing funds to panchayats. An inordinate delay in transferring approved funds to panchayat accounts stalls local development.
• Lack of autonomy: The powers of local elected officials remain curtailed by State governments through the local bureaucracy; it continues to exercise considerable discretionary authority and influence over panchayats.

• Access to grants: In some states, access to discretionary grants for panchayats remains contingent on political and bureaucratic connections.

Measure to augment panchayats resources 

• Fiscal Decentralisation: Fiscal decentralisation to rural local governments in India is meaningful when the panchayats have adequate powers to impose taxes.
• Devolution of powers: State governments should make adequate efforts to devolve funds, functions, and functionaries to panchayats for them to effectively plan economic development and social justice schemes.
• Capacity building: there is a need to strengthen panchayats through capacity building and training. It would enable them to prepare better Gram Panchayat Development Plans and become more responsive towards citizens’ needs.
• Transparency and Accountability: The Union Ministry of Panchayati Raj should monitor the release and expenditure of Finance Commission grants to ensure that there is no delay in their release. 
• Regular Audit:  State governments should make adequate provisions for regular audit of the panchayat finances to determine how the funds were actually used and to identify factors that contribute to suboptimal use.

Way Forward

• Overall, given the pivotal role of PRIs in local governance and rural development in India, it is imperative to empower local leaders and officials by providing them with ample and diverse funding sources, promoting greater decentralisation, implementing capacity-building programs, and upgrading infrastructure.
• There is a need to raise citizens' awareness about the functions and significance of PRIs by encouraging their increased participation in local governance processes and by enhancing people-centric administration and communication.
• For sustainable growth, panchayats need to intensify their efforts to augment their own tax and non-tax revenue resources and improve their governance.

Hundi

Why in news? 

The BJP alleges that money donated to the Tirumala hundi is being used for purposes other than those intended by devotees.

About Hundi

• Hundi can be defined as a financial instrument or a negotiable bill of exchange, which was used for carrying out trade and credit transactions during the Medieval period in India. 
• A Hundi is primarily an unconditional contract or order which warrantees a monetary payment which can be transferred by valid negotiation.
• It was commonly used in India during the post-Harsha period.
• According to RBI, "a Hundi is an unconditional order in writing made by a person directing another to pay a certain sum of money to a person named in the order.”

Gatka

Why in news? 

In Amritsar, during a religious procession celebrating the birth anniversary of the Sikh warrior Shaheed Baba Deep Singh, a young Sikh performed Gatka, an ancient form of Sikh martial arts.

About Gatka

• Traditional martial art form, that is historically associated with the Sikh gurus.
• Stick fighting between two or more practitioners, with wooden sticks (called Soti) intended to simulate swords.
• Gatka (martial arts in Punjab) is performed by Nihangs.

Ergosphere

Why in news? 

Unlocking the secrets of the ergosphere: Could black holes become the ultimate power source for the future?

About ergosphere

• Rotating black holes (a.k.a. Kerr black holes) have a unique feature: a region outside their outer event horizon called the ergosphere. 
• A black hole is formed when a really massive star runs out of fuel to fuse, blows up, leaving its core to implode under its weight to form a black hole.
• The centre of a black hole is a gravitational singularity, a point where the general theory of relativity breaks down, i.e. where its predictions don’t apply. 
• A black hole’s great gravitational pull emerges as if from the singularity.
• The event horizon describes a sphere around the singularity: when anything enters this sphere, it can’t escape unless it travels faster than light (which is impossible). 
• Just beyond this sphere, a rotating black hole will also have an ergosphere – a bigger sphere that an object can enter and then leave if it’s moving fast enough, but still less than the speed of light.
• The label ‘ergosphere’ comes from ‘ergon’, the Greek word for ‘work’. 
• It is so named because it is possible to extract matter and energy from the ergosphere, but not from beyond the event horizon.

The Economics of the Food System Transformation report

Why in news?

A new global policy report by the Food System Economics Commission (FSEC) underscores the transformative potential of food systems to deliver widespread socio-economic benefits.

A key highlight of the report

• Globally, current food systems cost significantly more than they contribute to development. A sustainable transformation of existing food systems is urgently required at an estimated total cost of $500 billion per year. 
• This cost is equivalent to only 0.2–0.4 per cent of global GDP and is small relative to the multi-trillion dollar benefits it could bring.
• The commission contrasted two science-based, quantitative pathways up to 2050: Current trends (CT) and the food system transformation (FST).
• The CT pathway showed that by 2050, food insecurity will still leave 640 million people (including 121 million children) underweight in some parts of the world, while obesity will increase by 70 per cent globally.
• Under the existing scenario, food systems will continue to drive a third of global greenhouse gas emissions, which will contribute to 2.7 degrees Celsius of warming by the end of the century compared to pre-industrial periods. 
• Food production will become increasingly vulnerable to climate change, with the likelihood of extreme events dramatically increasing.

Unified Payments Interface (UPI) launched at the iconic Eiffel Tower in France

Why in news?

On February 2, 2024, India formally launched its Unified Payments Interface (UPI) at the iconic Eiffel Tower during the Republic Day Reception in Paris.

About UPI 

• Unified Payments Interface is an Indian instant payment system developed by the National Payments Corporation of India (NPCI) in 2016.
• According to NPCI, UPI is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing and merchant payments into one hood.

India-France

• The collaboration between National Payments Corporation of India’s arm International Payments Limited (NIPL) and France’s Lyra Collect resulted in an agreement to implement UPI in France and Europe. 
  • This initiative is expected to facilitate seamless financial transactions for Indian tourists in France.
• At present, Indian tourists rank as the second largest group of international visitors to the Eiffel Tower, as per NIPL.