{"id":90655,"date":"2026-03-02T10:44:28","date_gmt":"2026-03-02T05:14:28","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=90655"},"modified":"2026-03-02T10:44:28","modified_gmt":"2026-03-02T05:14:28","slug":"daily-editorial-analysis-2-march-2026","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/daily-editorial-analysis-2-march-2026\/","title":{"rendered":"Daily Editorial Analysis 2 March 2026"},"content":{"rendered":"<h2><strong>Sixteenth Finance Commission \u2014 Misses and Concerns<\/strong><\/h2>\n<h3><strong>Context<\/strong><\/h3>\n<ul>\n<li>The Sixteenth Finance Commission (SFC) operated with considerable autonomy, drawing its mandate directly from constitutional provisions.<\/li>\n<li>It examined the two core pillars of India\u2019s fiscal federalism: <strong>vertical devolution<\/strong> (distribution between Centre and States) and <strong>horizontal devolution<\/strong> (distribution among States).<\/li>\n<li>While it preserved certain structural features of earlier commissions, it introduced important shifts affecting <strong>fiscal balance<\/strong>, <strong>constitutional responsibility<\/strong>, and the principle of <strong>equalisation<\/strong>.<\/li>\n<\/ul>\n<h3><strong>Vertical Devolution: Fiscal Space and Constitutional Mandate<\/strong><\/h3>\n<ul>\n<li><strong>Background: The 42% Shift and Its Aftermath<\/strong>\n<ul>\n<li>A major restructuring occurred under the Fourteenth Finance Commission, which raised the States\u2019 share in the divisible pool from 32% to 42%, citing the discontinuation of plan grants.<\/li>\n<li>This was later revised to 41% after the reorganisation of Jammu and Kashmir and retained by the Fifteenth Finance Commission.<\/li>\n<li>The Sixteenth Commission maintained the 41% benchmark, granting it <strong>semi-permanence<\/strong>.<\/li>\n<li>However, the Centre expressed concerns about shrinking <strong>fiscal space<\/strong>, prompting adjustments outside the divisible pool framework.<\/li>\n<\/ul>\n<\/li>\n<li><strong>The Issue of Cesses and Surcharges<\/strong>\n<ul>\n<li>The Centre increasingly relied on <strong>non-shareable cesses and surcharges<\/strong>, reduced funding for centrally sponsored schemes, and declined certain grants recommended earlier.<\/li>\n<li>Since cesses and surcharges are excluded from the divisible pool, their expansion effectively narrows the States\u2019 share of total central revenue.<\/li>\n<li>Instead of firmly addressing this under its <strong>constitutional mandate<\/strong>, the Commission proposed a <strong>grand bargain<\/strong>: States would accept a smaller share of a larger pool if cesses were merged into regular taxes.<\/li>\n<li>Although pragmatic, this approach did not fully reinforce the spirit of Articles 270 and 280.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Trends in Effective Transfers<\/strong>\n<ul>\n<li>Effective transfers (tax devolution plus grants) averaged about 27\u201328% of the Centre\u2019s pre-transfer gross revenue during the Eleventh to Thirteenth Commissions.<\/li>\n<li>This rose sharply to 35.6% under the Fourteenth Commission and moderated to 34.4% under the Fifteenth.<\/li>\n<li>For 2026\u201327, the first year of the Sixteenth Commission\u2019s award, the ratio stands at 32.7%.<\/li>\n<li>The projections assume 11% nominal GDP growth, higher than budget estimates, and do not fully account for revenue-reducing GST reforms of September 2025.<\/li>\n<li>These assumptions may affect the credibility of long-term fiscal projections and signal a relative contraction in States\u2019 fiscal capacity.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Discontinuation of Revenue Deficit and Sector-Specific Grants<\/strong>\n<ul>\n<li>The discontinuation of <strong>revenue deficit grants<\/strong> and the absence of <strong>sector-specific grants<\/strong> mark a major departure.<\/li>\n<li>Such grants traditionally addressed <strong>revenue gaps<\/strong> and structural cost disabilities.<\/li>\n<li>Their removal limits scope for calibrated adjustments and weakens redistributive flexibility within the system.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><strong>Horizontal Devolution: Efficiency Versus Equalisation<\/strong><\/h3>\n<ul>\n<li><strong>Introduction of the Contribution Criterion<\/strong>\n<ul>\n<li>A new <strong>contribution criterion<\/strong> was introduced, measured through a <strong>state\u2019s share in aggregate GSDP. <\/strong><\/li>\n<li>While intended to reward efficiency, GSDP reflects market-driven concentration of capital and migration patterns rather than fiscal prudence.<\/li>\n<li>High-income States benefit from structural advantages, not necessarily superior fiscal management.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Dual Use of GSDP and Conceptual Tensions<\/strong>\n<ul>\n<li>GSDP was used in opposite ways: the <strong>income distance<\/strong> criterion favours lower per capita GSDP States, whereas the contribution criterion rewards higher GSDP States.<\/li>\n<li>To moderate extremes, the square root of GSDP was applied.<\/li>\n<li>Even so, the same indicator simultaneously advances equity and performance, creating conceptual inconsistency between efficiency and equity objectives.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Dropping the Fiscal Discipline Criterion<\/strong>\n<ul>\n<li>The removal of the <strong>fiscal discipline<\/strong> or tax effort criterion contradicts the emphasis on performance.<\/li>\n<li>This criterion directly measured fiscal responsibility and revenue mobilization.<\/li>\n<li>Its exclusion reduces incentives for prudent financial management and shifts emphasis toward output-based indicators rather than governance quality.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><strong>Distributional Impact: Gains and Losses<\/strong><\/h3>\n<ul>\n<li><strong>States Experiencing Losses<\/strong>\n<ul>\n<li>Compared to the Fifteenth Commission, significant States such as Madhya Pradesh, Uttar Pradesh, West Bengal, Bihar, Odisha, Chhattisgarh, and Rajasthan faced reductions.<\/li>\n<li>Several smaller and north-eastern States, including Arunachal Pradesh, Meghalaya, Manipur, Nagaland, Tripura, Sikkim, and Goa also experienced losses. Gains among richer States were uneven.<\/li>\n<\/ul>\n<\/li>\n<li><strong>The Case for Equalisation Grants<\/strong>\n<ul>\n<li>Article 275 provides for grants-in-aid addressing State-specific needs, particularly in health and education.<\/li>\n<li>Well-designed <strong>equalisation grants<\/strong> can offset disparities arising from formula changes.<\/li>\n<li>The complete withdrawal of such mechanisms limits corrective capacity and risks widening inter-State disparities.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><strong>Conclusion<\/strong><\/h3>\n<ul>\n<li>The Sixteenth Finance Commission preserved the 41% devolution benchmark but avoided assertive intervention on expanding cesses and surcharges.<\/li>\n<li>The reduction in effective transfers, optimistic growth assumptions, and discontinuation of revenue gap grants signal a cautious recalibration of fiscal federalism.<\/li>\n<li>In horizontal distribution, the adoption of a GSDP-based contribution measure introduces tension between <strong>performance incentives<\/strong> and the constitutional goal of balanced development.<\/li>\n<li>The long-term impact on <strong>cooperative federalism<\/strong>, regional equity, and sustainable public finance will unfold over time.<\/li>\n<\/ul>\n<h3><strong>Sixteenth Finance Commission \u2014 Misses and Concerns FAQs<\/strong><\/h3>\n<p><strong>Q1. <\/strong>What was the key decision of the Sixteenth Finance Commission regarding vertical devolution?<br \/>\n<strong>Ans. <\/strong>The Sixteenth Finance Commission retained the States\u2019 share in the divisible pool of central taxes at 41%, continuing the benchmark set by earlier commissions.<\/p>\n<p><strong>Q2.<\/strong> Why are cesses and surcharges controversial in fiscal federalism?<br \/>\n<strong>Ans. <\/strong>Cesses and surcharges are controversial because they are non-shareable taxes that reduce the effective share of revenue transferred to the States.<\/p>\n<p><strong>Q3. <\/strong>What new criterion was introduced in horizontal devolution?<br \/>\n<strong>Ans. <\/strong>The Commission introduced a contribution criterion based on a State\u2019s share in aggregate Gross State Domestic Product (GSDP).<\/p>\n<p><strong>Q4. <\/strong>Which major States experienced losses under the new devolution formula?<br \/>\n<strong>Ans. <\/strong>States such as Bihar, Uttar Pradesh, and West Bengal experienced reductions in their shares compared to the previous award.<\/p>\n<p><strong>Q5. <\/strong>Why are equalisation grants considered important?<br \/>\n<strong>Ans. <\/strong>Equalisation grants are important because they help address inter-State disparities and ensure balanced development by supporting States with greater fiscal needs.<\/p>\n<p><strong>Source: <a href=\"https:\/\/www.thehindu.com\/opinion\/lead\/sixteenth-finance-commission-misses-and-concerns\/article70692152.ece#:~:text=The%20Sixteenth%20Finance%20Commission%20makes,with%20the%20Centre&#039;s%20general%20funds.\" target=\"_blank\" rel=\"nofollow noopener\">The Hindu<\/a><\/strong><\/p>\n<hr \/>\n<h2><strong>Skill India as Herculean Challenges, Galgotian Blunders<\/strong><\/h2>\n<h3><strong>Context<\/strong><\/h3>\n<ul>\n<li>India stands at a decisive moment in its development journey. Its <strong>demographic dividend<\/strong>, lasting until 2040, offers a rare opportunity to transform a youthful population into productive human capital.<\/li>\n<li>However, this opportunity demands systemic reform in vocational education and <strong>skill development<\/strong>.<\/li>\n<li>Despite ambitious initiatives such as the 2020 <strong>National Education Policy<\/strong>, structural weaknesses in financing, governance, and industry participation continue to limit outcomes.<\/li>\n<li>Without a shift toward a <strong>demand-driven<\/strong>, accountable, and employer-owned model, the demographic advantage risks turning into a demographic burden.<\/li>\n<\/ul>\n<h3><strong>Historical Neglect of Vocational Education<\/strong><\/h3>\n<ul>\n<li><strong>International Comparisons<\/strong>\n<ul>\n<li>Several European Union countries and China have institutionalised strong vocational systems, enrolling nearly 50% of secondary students in vocational streams.<\/li>\n<li>In many advanced economies, vocational education receives around 2% of the education budget; in China and Germany, it reaches 11%.<\/li>\n<li>India, by contrast, enrols only 1.3% of its secondary students in vocational education.<\/li>\n<li>This reflects decades of <strong>policy neglect<\/strong>, delayed focus on school education, and insufficient prioritisation of skill pathways.<\/li>\n<li>Limited public data and <strong>fragmented schemes<\/strong> across ministries further weaken transparency and coordination.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Fragmented Financing and Policy Instability<\/strong>\n<ul>\n<li>Skill initiatives frequently rely on annual Budget announcements, leading to <strong>policy instability<\/strong> and short-lived programmes.<\/li>\n<li>Schemes are often celebrated one year and forgotten the next. Underutilisation of allocated funds and weak implementation reveal structural inefficiencies.<\/li>\n<li>Such inconsistency undermines long-term planning and prevents the development of a stable <strong>skills ecosystem<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><strong>Policy Ambition versus Ground Reality<\/strong><\/h3>\n<ul>\n<li><strong>The National Education Policy (2020)<\/strong>\n<ul>\n<li>The 2020 National Education Policy aims for 50% of learners to be exposed to vocational education by 2025.<\/li>\n<li>However, exposure does not guarantee integration, certification, or employability.<\/li>\n<li>A meaningful transformation requires mainstreaming vocational education within the formal system and elevating its social and economic status.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Accountability Concerns and CAG Findings<\/strong>\n<ul>\n<li>Audits by the Comptroller and Auditor General of India of the Pradhan Mantri Kaushal Vikas Yojana reveal persistent governance failures.<\/li>\n<li>Financial reporting delays, invalid bank accounts, and limited placement outcomes expose deep <strong>financial impropriety<\/strong> and weak accountability.<\/li>\n<li>Only about 41% of short-term trainees secured placements, highlighting the limitations of a quantity-driven approach focused on enrolment numbers rather than sustainable employment.<\/li>\n<li>The continued emphasis on short-term training without quality assurance, monitoring, and labour market alignment has yielded modest returns.\n<ul>\n<li>Institutional learning and reform have lagged behind policy ambition.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><strong>Reimagining Skill Financing: Three Reform Proposals<\/strong><\/h3>\n<ul>\n<li><strong>Skill Loans: Shifting Power to Students<\/strong>\n<ul>\n<li>A significant portion of public expenditure on skills could be redirected toward <strong>skill loans<\/strong> for students rather than operational funding for institutions.<\/li>\n<li>This approach would:\n<ul>\n<li>Empower students with informed choice<\/li>\n<li>Encourage <strong>competition<\/strong> among training providers<\/li>\n<li>Improve <strong>quality assurance<\/strong> through market discipline<\/li>\n<li>Promote <strong>demand-driven development<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li><strong>Skill Vouchers: Promoting Lifelong Learning<\/strong>\n<ul>\n<li>Skill vouchers place purchasing power directly in the hands of learners.<\/li>\n<li>Since funding follows the trainee rather than the institution, providers are incentivised to deliver measurable outcomes.<\/li>\n<li>Vouchers support <strong>lifelong learning<\/strong>, targeted upskilling in <strong>Artificial Intelligence<\/strong>, digital and green sectors, and greater inclusion of women in the workforce.<\/li>\n<li>They also encourage school leavers to consider vocational pathways instead of defaulting to degree inflation.<\/li>\n<li>International experience demonstrates that voucher systems create competitive and responsive markets aligned with evolving labour demands.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Skill Levies: Ensuring Employer Ownership<\/strong>\n<ul>\n<li>A <strong>Reimbursable Industry Contribution (RIC)<\/strong> model links employer contributions to payroll and reimburses firms when training is conducted.<\/li>\n<li>This mechanism ensures <strong>industry ownership<\/strong>, stable funding insulated from political cycles, and stronger alignment with real workforce needs.<\/li>\n<li>Transitioning from an employer-engaged to an <strong>employer-owned system<\/strong> would deepen private sector responsibility and reduce excessive dependence on government funding.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><strong>The Way Forward: The Need for Real-Time Labour Market Intelligence<\/strong><\/h3>\n<ul>\n<li>Effective skills planning requires accurate and continuous labour market data. Periodic <strong>skill gap studies<\/strong> are insufficient in a rapidly evolving economy.<\/li>\n<li>A modern labour market information system should integrate anonymised data from online job platforms, use <strong>data analytics<\/strong> and AI modelling, and make aggregated insights available through the National Career Service portal.<\/li>\n<li>Real-time intelligence would align training supply with actual demand, enhance transparency, and support evidence-based policymaking.<\/li>\n<\/ul>\n<h3><strong>Conclusion<\/strong><\/h3>\n<ul>\n<li>India\u2019s demographic window is narrowing. Harnessing the <strong>demographic dividend <\/strong>requires bold structural reform in vocational education and skill development.<\/li>\n<li>Sustainable financing, institutional accountability, employer ownership, and real-time <strong>labour market intelligence<\/strong> are central to transformation.<\/li>\n<li>With decisive action, India can convert its demographic advantage into <strong>long-term economic strength<\/strong> and global competitiveness. Without reform, the opportunity may pass unfulfilled.<\/li>\n<\/ul>\n<h3><strong>Skill India as Herculean Challenges, Galgotian Blunders FAQs<\/strong><\/h3>\n<p><strong>Q1. <\/strong>What makes India\u2019s demographic dividend a critical opportunity?<br \/>\n<strong>Ans. <\/strong>India\u2019s demographic dividend, lasting until 2040, provides a limited window to transform its young population into productive human capital that can drive economic growth.<\/p>\n<p><strong>Q2.<\/strong> Why is vocational education weak in India compared to other countries?<br \/>\n<strong>Ans. <\/strong>Vocational education in India remains weak due to historical policy neglect, low enrolment rates, fragmented financing, and limited budgetary prioritisation.<\/p>\n<p><strong>Q3.<\/strong> What major issues were identified in the audit of PMKVY?<br \/>\n<strong>Ans. <\/strong>The audit of the Pradhan Mantri Kaushal Vikas Yojana by the Comptroller and Auditor General of India revealed financial irregularities, invalid bank accounts, and low trainee placement rates.<\/p>\n<p><strong>Q4.<\/strong> How can skill vouchers improve the skill development system?<br \/>\n<strong>Ans. <\/strong>Skill vouchers can improve the system by placing purchasing power in the hands of learners and encouraging competition and accountability among training providers.<\/p>\n<p><strong>Q5.<\/strong> Why are skill levies considered a sustainable financing solution?<br \/>\n<strong>Ans. <\/strong>Skill levies are considered sustainable because they ensure stable funding, promote employer ownership, and align skill development with industry needs.<\/p>\n<p><strong>\u00a0<\/strong><strong>Source: <\/strong><a href=\"https:\/\/www.thehindu.com\/opinion\/op-ed\/skill-india-as-herculean-challenges-galgotian-blunders\/article70692190.ece\" target=\"_blank\" rel=\"nofollow noopener\"><strong>The Hindu<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Daily Editorial Analysis 2 March 2026 by Vajiram &#038; Ravi covers key editorials from The Hindu &#038; Indian Express with UPSC-focused insights and relevance.<\/p>\n","protected":false},"author":20,"featured_media":86373,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[138],"tags":[141,882,909],"class_list":{"0":"post-90655","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-daily-editorial-analysis","8":"tag-daily-editorial-analysis","9":"tag-the-hindu-editorial-analysis","10":"tag-the-indian-express-analysis","11":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/90655","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=90655"}],"version-history":[{"count":3,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/90655\/revisions"}],"predecessor-version":[{"id":90674,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/90655\/revisions\/90674"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/86373"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=90655"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=90655"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=90655"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}