What’s in today’s article?

• Why in News?
• Legislations Governing Campaign Finance in India
• Election expenditure limit in India
• Associated challenges
• Way forward

Why in News?

The estimated total expenditure for the upcoming U.S. presidential and Congressional elections in November 2024 is approximately $16 billion (around ₹1,36,000 crores).

In contrast, the total expenditure by various political parties for the recent general election to the Lok Sabha in India was about ₹1,00,000 crores, according to the Centre for Media Studies (CMS). This raises various debates surrounding campaign finance (election expenditure) in India.

Legislations Governing Campaign Finance in India

• Background
  • The issue of election funding was not specifically addressed during the Constituent Assembly debates (1946-1950).
  • The first significant laws governing election funding were the Representation of People Act, 1950, and Representation of People Act, 1951.
• Representation of People Act, 1951
  • It does not impose limits on expenditure for political party leaders in disseminating messages.
  • Candidates must maintain accounts of their election expenditures, but political parties are not required to maintain such accounts for promoting official programs.
  • However, parties must disclose contributions over ₹20,000 to income tax authorities and cannot accept donations from government companies or foreign sources.
• Election and Other Related Laws (Amendment) Act, 2003
  • The 2003 Amendment introduced Section 29C, requiring political party treasurers to prepare annual financial reports detailing donations over ₹20,000.
  • These reports must be submitted to the Election Commission before submitting audited accounts to the Income Tax authorities.
  • Non-compliance leads to disqualification from tax relief under the Income Tax Act.
• Companies Act, 1956
  • Under Section 293-A of the Companies Act, 1956, corporate contributions to political parties are limited to five percent of the company's average net profits over the last three years.
• Foreign Contribution (Regulation) Act, 1976
  • FCRA prohibits political organizations from receiving foreign contributions.
• Income Tax Act, 1961
  • Under the Income Tax Act, 1961, contributions to political parties are deductible from income tax calculations.
  • Section 13A mandates that political parties submit annual audited accounts to the Income Tax authorities by a specified date.

Election expenditure limit in India

• Existing limit
  • The election expenditure limit for candidates is ₹95 lakh per Lok Sabha constituency in larger States and ₹75 lakh in smaller States.
  • With respect to Legislative Assemblies, they are ₹40 lakh and ₹28 lakh for larger and smaller States respectively.
  • These limits are set, from time to time, by the Election Commission (EC). There are no limits on the expenditure of political parties during elections.
• Purpose and Reality of Expenditure Limits
  • While limits aim to minimize the influence of wealth in elections and ensure a level playing field, the effectiveness is questionable.
  • The Representation of the People Act mandates candidates keep accurate spending records within these limits and submit affidavits post-election.
  • However, analysis from the Association for Democratic Reforms (ADR) shows most candidates report spending far below the limits, raising doubts about transparency.

Associated challenge

• Political Party Spending — The "Elephant in the Room"
  • Currently, no cap exists on political parties’ expenditures during elections, which can indirectly favor wealthy candidates.
  • Experts argue that real reform requires transparency in party finances and internal democratization to achieve genuine equality for all candidates.
• Possible gap between actual and reported costs
  • The official expenditures declared by the BJP and Congress for the 2019 election were ₹1,264 crores and ₹820 crores, respectively. However, according to a report by the CMS, ₹50,000 crore was spent by various parties during the 2019 election.
  • The report suggests that 35% of this money was spent on campaigns and publicity, while 25% was illegally distributed among voters.
• Unholy nexus between the elected representatives and donors 
  • Elections across the world democracies have become very expensive.
  • Such increased expenditure that is met primarily through large donations creates an unholy nexus between the elected representatives and donors who seek favours. 
• Creates an entry barrier into electoral politics
  • Expensive elections act as an entry barrier into electoral politics for many well-meaning citizens.

Way forward

• Advocacy for State Funding of Elections
  • The Indrajit Gupta Committee (1998) and the Law Commission report (1999) have proposed state funding of elections,
  • They suggested that the government should partially cover the election expenses of candidates nominated by recognized political parties.
  • However, doubts remain regarding the feasibility and implementation of this measure in the current context.
• Simultaneous Elections as a Solution
  • Simultaneous elections are often viewed as a potential solution to the rising costs of elections.
  • While this approach may help reduce campaign and publicity expenditures, it faces challenges related to federalism and the need for constitutional amendments.
  • Moreover, without effective measures to curb illegal cash distribution to voters, simultaneous elections alone may not significantly impact overall election expenditures.
• Proposed Electoral Reforms
  • The Election Commission's 2016 report on proposed electoral reforms outlines practical steps to create a more equitable environment concerning election expenditures:
• Regulating Financial Assistance: Amend the law to ensure that any financial assistance provided by political parties to their candidates falls within the candidates' prescribed expenditure limits.
• Ceiling on Party Expenditures: Establish a ceiling on the total expenditures of political parties, set at no more than the expenditure limit for individual candidates multiplied by the number of candidates from that party contesting the election.
• Expediting Legal Processes: Appoint additional judges in High Courts to facilitate the speedy disposal of election-related cases, serving as a deterrent against violations of expenditure norms.
• Need for Bipartisan Support
  • These reforms require bipartisan political support and prompt implementation to be effective in addressing the challenges associated with election financing in India.

Q.1. What is the current expenditure limit for candidates in Indian elections?

The election expenditure limit for candidates is ₹95 lakh per Lok Sabha constituency in larger states and ₹75 lakh in smaller states. For Legislative Assemblies, the limits are ₹40 lakh and ₹28 lakh, respectively, but political parties have no expenditure caps.

Q.2. What reforms are proposed to address election expenditure challenges?

Proposed reforms include regulating financial assistance from political parties to candidates, establishing expenditure ceilings for political parties, and appointing additional judges for quicker resolution of election-related cases. Bipartisan support is crucial for the effective implementation of these reforms. 

News: The burgeoning expenditure of elections | Explained | Down to Earth | ORF

What’s in today’s article?

• Why in News?
• Census in India
• Census and delimitation
• Demand for Caste Data in Upcoming Census

Why in News?

The Centre is reportedly preparing to conduct the Census, which was delayed in 2021 due to Covid-19. Although official confirmation is pending, the Census is expected to begin next year.

This exercise is crucial as it ties into two major issues: delimitation of Parliamentary constituencies, stalled for five decades, and the implementation of women’s reservation in Parliament.

India's Census, which has followed a decadal schedule since 1881, missed its 2021 mark for the first time. While the pandemic was largely over by 2022, allowing a Census in 2023 or 2024, the government appears to have postponed it to align with planned constituency reorganisation.

Census in India

• About
  • Population Census provides basic statistics on state of human resources, demography, culture and economic structure at local, regional and national level.
  • Beginning in the year 1872, when the first census was conducted non-synchronously, the census enumeration exercise in India is carried out in every 10 years.
• The first synchronous census was taken under British rule in 1881, by W.C. Plowden, Census Commissioner of India.
  • The responsibility of conducting the decadal census rests with the Office of the Registrar General and Census Commissioner of India, Ministry of Home Affairs.
• Legal/Constitutional basis of Census
  • Population census is listed in Union List (entry 69) of Seventh Schedule in Indian Constitution.
  • Census is conducted under the provisions of the Census Act, 1948.
• Process of census enumeration
  • The Census Operations in India have been carried out in two phases:
• Houselisting and Housing Census and
• Population Enumeration.
  • The Population Enumeration follows the Housing Census within a gap of six to eight months.
• Population enumeration happens in February, with figures representing the population as of midnight on March 1 of the Census year.
  • In Population Enumeration phase each person is enumerated and her/his individual particulars like Age, Marital status, Religion, mother tongue etc.

Census and delimitation

• Delimitation and Its Suspension
  • Delimitation, mandated by the Constitution, adjusts the number of Parliamentary and Assembly constituencies based on population, ensuring equal representation.
  • It ensures a fair division of geographical areas so that all political parties or candidates contesting elections have a level playing field in terms of a number of voters.
• Article 82 and Article 170 of the Constitution empowers the Parliament to readjust the allocation of seats in the Lok Sabha and the Legislative Assemblies of States respectively, after every census.
  • However, this process has been suspended since 1976 due to political disagreements.
• Following a 2001 Census, the 2002 delimitation exercise only redrew constituency boundaries without changing their number.
• Southern states oppose delimitation, fearing that changes would reduce their representation despite their success in population control.
  • As of the 84th Constitutional Amendment (2001), delimitation is postponed until at least 2026, thus making 2031 the earliest opportunity for it if based on the Census.
• Immediate delimitation might not be possible
  • The 84th Constitutional Amendment restricts delimitation based on Census data from the first Census "taken after the year 2026."
  • Thus, even if the Census begins in 2025 and completes in 2026, immediate delimitation might not be possible unless the amendment is revised.
  • An amendment to the existing provision may be required if delimitation is to proceed in time for the 2029 Lok Sabha elections.
• Challenges of Political Consensus and Southern States’ Concerns
  • The suspension of delimitation since 1976 stems from political disagreements, especially with Southern states.
  • These states argue that accounting for current population figures would unfairly reduce their Parliamentary representation, penalizing them for successful population control.
  • Their support for delimitation may hinge on receiving compensations or other reassurances.
  • Additionally, the 128th Constitutional Amendment, passed to reserve 33% of seats in Parliament and State Assemblies for women, requires a delimitation exercise before implementation, further tying delimitation to upcoming political reforms.
• Role of the 16th Finance Commission
  • The 16th Finance Commission, due to submit its report next year, will address the distribution of financial resources between the Centre and states, which could impact state-level negotiations regarding delimitation.

Demand for Caste Data in Upcoming Census

• The demand
  • There is a growing expectation that the next Census may include caste data, addressing demands from some political parties for a caste census.
  • Caste census means inclusion of caste-wise tabulation of India's population in the Census exercise.
• Background
  • Caste was enumerated in British India Censuses (1881-1931).
  • Post-Independence, the 1951 Census excluded caste enumeration except for SCs and STs, who continue to be counted.
• Caste data were collected for the 2011 census but the data was never made public.
  • In 1961, the GOI recommended states conduct their own surveys for state-specific OBC lists, as there were no central reservations for OBCs at that time.
  • Though Census is a Union subject, the Collection of Statistics Act, 2008 allows States and local bodies to gather necessary data, as seen in Karnataka (2015) and Bihar (2023).

Q.1. Why was the Census originally delayed until 2025?

The Census was delayed from 2021 due to the Covid-19 pandemic. The government has now decided to begin the Census in 2025 to align it with planned constituency reorganization..

Q.2. What is the significance of including caste data in the Census?

Including caste data in the Census would address long-standing demands from various political parties for a caste census, helping to inform policy decisions and reservations for socially disadvantaged groups.

News: The next Census | Census India | Indian Express | India Today

What’s in today’s article?

• Why in the News?
• About Fertilizers
• Macro & Micro Elements in Fertilizers
• Current Fertilizer Import Scenario
• Production and Consumption Trends
• Impact of the Ukraine and Gaza Conflicts
• Financial Burden of Fertilizer Subsidies
• Strategic Initiatives for Self-Reliance
• Policy Recommendations and Future Outlook

Why in the News?

• India is currently grappling with significant challenges in meeting its fertilizer demands due to dependency on imports, especially amidst the ongoing Ukraine and Gaza crises, which could further impact fertilizer availability and prices.

About Fertilizers

• A fertilizer is a chemical product either mined or manufactured material containing one or more essential plant nutrients that are immediately or potentially available in sufficiently good amounts.
• Fertilizers have played an essential role in agricultural production, providing vital nutrients for crops, increasing demands over the years.
• As an agrarian country, India is home to numerous small and marginal farmers and is often plagued by low productivity and low quality.
• Crops are mainly rain-fed and cultivated on a single piece of land over time, decreasing soil fertility in many regions.
• Thereby, increasing quantities of nitrogen fertilizers have been used in the country.

Macro & Micro Elements in Fertilizers

• Macro Nutrients: Nitrogen (N), Phosphorus (P), Potash (K), Calcium, Sulfur (S), and Magnesium are known as macro-nutrients (required in comparatively larger amounts).
• Micro Nutrients: Iron (Fe), Zinc (Zn), Copper, Boron, Manganese Molybdenum, Chloride, and others are the micro-nutrients (required in a smaller quantity) for the growth and development of crop plants.
• Among the various types, NPK (nitrogen, phosphorus, and potassium) fertilizers are the most common ones, and Urea stands as the most highly consumed fertilizer in India.
• India is the second-largest consumer of fertilizers globally, with an annual consumption of more than 55.0 million metric ton.

Current Fertilizer Import Scenario

• India’s domestic fertilizer production does not meet its full demand, creating a dependency on imports. As per the 2023 Standing Committee of Parliament report:
  • Urea: 20% of the domestic requirement is imported.
  • Diammonium Phosphate (DAP): 50-60% of the demand is met through imports.
  • Muriate of Potash (MOP): 100% dependency on imports.
• The report stresses a need for self-reliance in fertilizer production to stabilize supplies.

Production and Consumption Trends

• India’s annual fertilizer consumption in 2021-22 was 579.67 lakh metric tonnes (LMT), with:
  • Urea: 341.73 LMT
  • DAP: 92.64 LMT
  • MOP: 23.93 LMT
  • NPK (Nitrogen, Phosphorus, and Potassium): 121.37 LMT
• Domestic production for the year totalled 435.95 LMT, leaving a shortfall of 143.72 LMT. Notably, MOP is entirely imported due to the lack of local production.

Impact of the Ukraine and Gaza Conflicts

• Nicholas Sitko, Senior Economist at the Food and Agriculture Organization (FAO), highlighted potential volatility in fertilizer prices due to the Ukraine and Gaza conflicts. This unrest could:
  • Affect oil prices, impacting petroleum-based fertilizer production.
  • Disrupt imports from Russia and West Asia, two significant suppliers for India’s fertilizer imports.

Financial Burden of Fertilizer Subsidies

• The Indian government has allocated substantial funds to support fertilizer affordability. In the 2023-24 Budget:
  • Total subsidy: ₹1.79 lakh crore.
  • Indigenous Urea subsidy: ₹1.04 lakh crore.
  • Imported Urea subsidy: ₹31,000 crore.
  • Indigenous P&K Fertilizer subsidy: ₹25,500 crore.
  • Imported P&K Fertilizer subsidy: ₹18,500 crore.
• These subsidies, while necessary for farmers, impose a heavy financial burden on the government.

Strategic Initiatives for Self-Reliance

• Experts recommend increasing India’s production capacity and reducing reliance on imports:
  • New Urea Plants: Since the 2012 investment policy, six new urea plants have been established, adding 76.2 LMT to India’s production capacity. Currently, 36 urea plants operate, with recent additions like Ramgundam, Gorakhpur, Sindri, and Barauni facilities.
  • Shift to Sustainable Fertilizers: Emphasis on nano urea and natural farming could reduce chemical fertilizer usage and dependency.
  • Investment in Domestic Production: The Standing Committee suggests fostering a favorable environment for investments from public, cooperative, and private sectors in fertilizer manufacturing.

Policy Recommendations and Future Outlook

• The Standing Committee recommends:
  • Increasing incentives for fertilizer manufacturing within India.
  • Encouraging use of nano urea and shifting focus to organic and sustainable farming practices.
  • Investing in infrastructure to better utilize existing fertilizers efficiently.
• By expanding production capacities and promoting sustainable agricultural practices, India could gradually reduce its dependency on imported fertilizers, stabilizing the domestic market and insulating it from global disruptions.

Q1. How does nitrogen fixation occur in plants?

Nitrogen is fixed, or combined, in nature as nitric oxide by lightning and ultraviolet rays, but more significant amounts of nitrogen are fixed as ammonia, nitrites, and nitrates by soil microorganisms. More than 90 percent of all nitrogen fixation is affected by them.

Q2. Which is the powerhouse of plants?

Chloroplasts are the powerhouses of plants. They are the site of photosynthesis, the process that uses sunlight and carbon dioxide to produce the energy that powers life on Earth. The protein PRXQ seems to bridge two systems that keep chloroplasts, and by extension, plants, healthy.

News: What challenges does India face in fertilizer imports?

What’s in today’s article?

• Why in News?
• Performance of the Indian Economy
• Policy Responses and Future Outlook of the Indian Economy
• Conclusion

Why in News?

• The Finance Ministry’s latest monthly economic review points to evidence of a slowdown in urban demand as reflected in the performance of various indicators during the first half of FY25.

It summarises key factors contributing to the shifting economic landscape in India, highlighting challenges and potential growth avenues.

Performance of the Indian Economy:

• Overview:
  • India’s economic growth faces a slowdown in urban demand, with rural resilience offering partial balance.
  • While rural areas show increasing consumption, urban centres experience demand softness due to high food inflation, weakened credit growth, and increased household expenses.
• Urban demand challenges:
  • Softening demand in consumer goods:

• Major fast-moving consumer goods (FMCG) companies, such as Tata Consumer Products and Nestle India, signal a decline in urban demand due to high food inflation, especially in metropolitan regions.
• Auto companies also report demand slowdown, exacerbated by seasonal factors like monsoon rains and election-related spending restrictions.
• Decline in economic indicators:

• GDP: India's Q1 FY25 GDP growth moderated to 6.7%, with projections for further decline in Q2 due to weakened urban investment and consumption.
• Corporate profits: A review of listed companies' Q2 results shows slowing profit growth, largely due to rising input costs. Crisil noted this as the slowest growth in the last 16 quarters.
• Real wages and spending: Urban wages have also stagnated, with growth in salary outlays falling from 1.2% in Q1 to 0.8% in Q2 FY25, indicating reduced consumer spending capacity.
• Inflationary pressures:
  • Persistent food inflation has made the Reserve Bank of India (RBI) cautious about rate cuts.
  • RBI Governor emphasises a flexible approach to inflation management, avoiding premature easing of monetary policy.
• Rural demand resilience:
  • FMCG and auto sales:
    • Rural consumption shows positive momentum, reflected in FMCG volume sales growth and rising tractor and three-wheeler sales.
    • Nielsen IQ data shows rural FMCG sales rose by 5.2% in Q1 FY25, compared to 4% the previous year.
  • Agriculture and wage growth: Real wage growth for agricultural and non-agricultural rural workers supports rising consumption, bolstered by a favourable monsoon season.

Policy Responses and Future Outlook of the Indian Economy:

• Government and RBI initiatives:
  • Government expenditure:
    • Increased government spending post-election season could stabilise growth, with a strong capital expenditure plan expected from September to March.
    • Central government expenditure in the first five months of FY25 reached Rs 16.52 lakh crore, down 1.2% from the previous year, indicating room for expansion.
  • RBI’s monetary stance: The RBI remains flexible, cautiously monitoring inflation before adjusting rates. RBI continues to support growth by balancing inflation concerns with strategic policy measures.
• Festive demand and external stimuli:
  • Festive season: With upcoming festivals, consumer discounts and demand are anticipated to lift sales. This boost may partially offset the urban slowdown.
  • Global influences: Potential monetary easing by the US Federal Reserve may encourage capital inflows to India, supporting investment and growth in the coming quarters.

Conclusion:

• India’s economic outlook is mixed, with rural resilience and government spending likely to stabilise growth despite urban demand challenges.
• High inflation and global uncertainties remain key concerns, but fiscal policies and a strategic monetary stance from the RBI provide a foundation for sustainable recovery.
• The evolving economic environment will require continued data-driven adjustments to maintain growth momentum.

Q.1. Why are car sales declining in India?

Car sales in India are slowing due to high inflation and rising interest rates, which have increased costs for consumers. Seasonal factors like heavy monsoon rains and shifting preferences toward used cars and electric vehicles are also contributing to the decline.

Q.2. How are high inflation and global uncertainties affecting the Indian economy?

High inflation is straining household budgets and reducing consumer spending, which slows down domestic demand in key sectors. Global uncertainties are weakening export demand and deterring foreign investments, which further hampers economic growth and stability.

News: Finance Ministry flags softer urban demand, factory output | IE