Towards Fiscal Empowerment of Municipal Bodies

 Source: TH 

Why in News?  

Urban India contributes nearly two-thirds of India’s GDP, yet its municipalities control less than 1% of national tax revenue. This stark fiscal imbalance has reignited debate over flawed fiscal architecture of Indian urban governance and the need for empowering cities through structural reforms. 

 What are the Structural Issues that Undermine the Fiscal Effectiveness of Municipal Bodies? 

• Over-reliance on Grants and Schemes: Urban finance now depends heavily on State and Central government grants, many of which are tied or discretionary. 
  • Intergovernmental transfers and grants often bypass municipal accounts or are delayed, disrupting planning and execution of projects. 
• GST Impact: The introduction of Goods and Services Tax (2017) has undermined municipal fiscal autonomy by subsuming key local taxes such as octroi, entry tax, and local surcharges, leading to nearly 19% revenue loss. 
• Unequal Contract: While cities are tasked with critical services-solid waste management, climate resilience, urban housing, they lack the financial tools to deliver. This has led to what experts term an "inversion of democracy”. 
  • Weak fiscal capacity limits municipalities’ ability to invest in infrastructure or meet sustainability goals. 
• Creditworthiness Issues: Credit rating mechanisms focus narrowly on "own revenue" performance (e.g., property tax), ignoring the regularity of state/central transfers. 
• Political Hesitation: Local representatives are reluctant to impose new taxes for fear of losing voter support. 
• Weak Institutional Capacity: Lack of trained staff, poor data systems, and fragmented governance hinder fiscal reforms. 

Urban Local Bodies (ULBs)  

• The 74^th Constitutional Amendment Act, 1992, was enacted to strengthen democratic governance in urban areas. 
• It introduced Part IXA (Articles 243P–243ZG) in the Constitution, providing a constitutional status to ULBs. 
• The Act created three types of urban bodies – Nagar Panchayats, Municipal Councils, and municipal Corporations. 
• The 12^th Schedule lists key municipal functions such as urban planning, water supply, sanitation, and waste management. 
• It mandated regular elections every five years, reservation for weaker sections, and a State Election Commission to oversee polls. 

Sources of Funds for Municipalities 

• Own Revenue Sources: Property tax, user charges, advertisement tax, trade licenses, parking fees, and development charges. 
• Transfers from Higher Governments: State Finance Commission and Central Finance Commission grants, revenue-sharing arrangements, and special-purpose transfers under schemes like AMRUT and Smart Cities Mission. 
• Borrowings and Bonds: Municipal bonds allow cities to raise funds from investors for long-term projects. Cities like Ahmedabad, Pune, Surat, Hyderabad, and Lucknow have used this route. 
• Public-Private Partnerships (PPP): Monetising underutilised assets or developing infrastructure through private participation. 

Why is the Need to Reform Urban Local Bodies’(ULBs) Fiscal Architecture? 

• First Layer of Democracy: Urban Local Bodies (ULBs) are the closest level of government to citizens, ensuring participatory democracy and effective delivery of essential urban services. 
• Mismatch Between Functions and Funds: The devolution of responsibilities under the 74th Constitutional Amendment has not been matched with adequate fiscal powers, creating a gap between duties and available resources. 
• Rising Population and Urbanisation: Rapid urban growth and migration have increased pressure on ULBs to provide infrastructure, housing, and public services, demanding stronger fiscal capacity. 
• Limited Access to Innovative Financing: Municipalities often lack frameworks for leveraging alternative financing tools like municipal bonds, PPP models, and land-based instruments to fund large-scale projects. 

What Steps Have Been Taken to Strengthen Urban Fiscal Governance in India? 

• AMRUT 2.0 Incentives: Under AMRUT 2.0, incentives have been continued for issuance of Municipal Bonds to ULBs.  
• SASCI Scheme: Incentives are also given to States for property tax reforms under Scheme for Special Assistance to States for Capital Investment(SASCI) 2023-24 - Part-IV (Financing reforms in ULBs to make them credit worthy for Municipal Bonds and for issue of Municipal Bonds) under which an amount of ₹3,298.23 crore has been released to the States by Department of Expenditure. 
• Finance Commission (FC) Recommendations: 12th Finance Commission– Use of GIS and digital mapping to improve property tax administration. 
  • 14th Finance Commission, empower municipalities to levy vacant land tax. 
• Smart Cities Mission and Swachh Bharat Mission: Encourage revenue generation through user charges and service improvements. 
• Digital Reforms: Promotion of online tax payment systems, e-filing, and transparent accounting practices for efficient collection and reduced leakages. 

What Reforms can Strengthen the Fiscal Architecture of Urban Local Bodies (ULBs)? 

• Recognising Grants and Shared Taxes: Grants and shared taxes should be treated as legitimate and stable sources of municipal income to ensure reliable funding for urban services. 
• Revising Credit Rating Norms: Credit rating frameworks should include governance quality and fiscal management as key indicators to reflect municipal financial health accurately. 
• Using GST Compensation as Collateral: GST compensation or State revenue shares can be allowed to serve as collateral for municipal borrowing, improving access to finance. 
• Strengthening Property Tax Reforms: Property tax efficiency should be enhanced through GIS mapping, regular revaluation, and improved collection mechanisms to boost municipal revenues. 
• Promoting Cooperative Federalism: Cities should receive predictable, united, and formula-based transfers to encourage fiscal autonomy and accountable urban governance. 
• Exploring Innovative Financing Tools: Urban infrastructure funding can leverage Social Stock Exchanges and Value Capture Financing to mobilise additional resources sustainably. 

Conclusion 

A robust and equitable municipal finance framework is essential to realise Sustainable Development Goal 11 (Sustainable Cities and Communities) and ensure that India’s cities become financially self-reliant, accountable, and resilient. 

Drishti Mains Question  Q. What are the key reasons for India’s urban fiscal crisis, and what steps has the government taken to address it?

Australia’s Northern Rainforests Become Carbon Source

Source: DTE

Why in News?

A study published in Nature has found that the tropical forests in northeastern Australia are the first globally to shift from being a carbon sink to a net carbon source.

• This reversal is driven mainly by increased tree mortality due to climate stressors, including cyclones, which can reduce carbon storage for up to 6 years. 
• Key climate extremes causing this include rising temperatures, atmospheric dryness, and drought conditions. This highlights how climate change can threaten global carbon budgets.

What are the Consequences of Forests Turning into a Carbon Source and Measures Needed for its Mitigation?

Consequences	Measures Needed
Vicious Feedback Loop: Climate change damages forests, causing tree death and carbon release, which further intensifies climate change via more fires and droughts.	Aggressive Global Emission Cuts: Prioritize deep, rapid, and sustained reductions in fossil fuel emissions and strictly implement enhanced carbon budgets under the Paris Agreement.
Social and Cultural Impacts: Degradation threatens the livelihoods, food, medicine, and culture of Indigenous communities, risking displacement and conflict.	Proactive Forest Management: Implement large-scale strategies like assisted species migration, controlled burns for fuel reduction, and integrated pest management to break the cycle of dieback.
Ecosystem Collapse: Biodiversity loss and extinction risk as forest degradation and a changing climate make areas unsuitable for native species.	Climate-Adaptive Policies: Invest in water-efficient irrigation, promote drought-resistant crops, diversify rural economies, and strengthen public health systems.
Impacts on Human Systems: Endangers water security, agriculture, and food production; causes economic losses and increases public health risks.	Empowerment of Local Communities: Integrate Indigenous knowledge into forest governance, secure land tenure rights, and ensure their active participation in sustainable management.

Conclusion

The shift of forests from carbon sinks to sources signals a critical climate tipping point, creating a vicious feedback loop that accelerates global warming, demanding urgent emission cuts, forest management, and community action.\

Drishti Mains Question:  Q. What are carbon sinks and carbon sources? Examine the consequences of the transformation of forest ecosystems from sinks to sources and suggest a framework for its mitigation.

United Nations Day 2025

Source: TH

Why in News? 

The world marks United Nations (UN) Day on 24th October 2025, celebrating 80 years since the UN was established in 1945. The day commemorates the entry into force of the UN Charter, officially bringing the United Nations into being.

What are the Key Facts About the United Nations?

• About: The UN is an intergovernmental organization established after World War II, succeeding the League of Nations to promote global peace, security, and cooperation through its various specialized agencies.
  • The UN Charter was signed 26 June 1945, in San Francisco, at the conclusion of the United Nations Conference on International Organization, and came into force on 24 October 1945, a date now celebrated annually as United Nations Day.
  • The UN Charter was ratified by 51 nations, including the five permanent Security Council members (US, UK, USSR/Russia, China, France).
• Evolution: Membership has grown from 51 countries(1945) to 193 countries (2025). India is a founding member of the United Nations. Its headquarters is located in New York City, US
  • Expanded focus to include health, environment, gender equality, human rights, and sustainable development.
  • Responded to global crises like pandemics, refugee movements, and climate change.
• Core Goals: Maintain international peace and security.
  • Develop friendly relations among nations.
  • Achieve international cooperation in solving global problems.
  • Act as a center for harmonizing actions of nations to reach common objectives.

Key Achievements of UN

• Peacekeeping and Conflict Resolution: UN deployed over 70 peacekeeping missions since 1948 in conflict zones like Congo, Lebanon, and South Sudan.
  • The Nobel Peace Prize 1988 was awarded to United Nations Peacekeeping Forces for preventing armed clashes and creating conditions for negotiations.
• Decolonization and Nation-Building: Supported the independence of more than 80 countries, mainly in Asia and Africa, fostering self-determination and sovereignty.
• Human Rights Protection: UN adopted the Universal Declaration of Human Rights (1948) and established bodies like the Human Rights Council (2006) and International Criminal Court (ICC) to uphold justice and accountability.
• Global Health and Humanitarian Aid: Through World Health Organization (WHO), UN led eradication of smallpox and coordinated global Covid-19 response under COVAX.
  • UN agencies like World Food Programme (WFP) and United Nations High Commissioner for Refugees(UNHCR) provide food, shelter, and protection to millions affected by war and disasters.
• Sustainable Development and Poverty Reduction: UN introduced Millennium Development Goals (MDGs) (2000–2015) and Sustainable Development Goals (SDGs) (2015–2030) to reduce poverty, promote equality, and ensure global progress.
• Climate and Environmental Action: UN facilitated key global accords such as the Paris Agreement (2015) and established the Intergovernmental Panel on Climate Change (IPCC) in 1988.
• International Law and Justice: UN strengthened rule of law through the International Court of Justice (ICJ) and conventions like United Nations Convention on the Law of the Sea (UNCLOS) and Geneva Conventions..
• Education and Social Welfare: United Nations Educational, Scientific and Cultural Organization (UNESCO) promotes global education and cultural preservation, while United Nations International Children's Emergency Fund (UNICEF) safeguards children’s rights and welfare.

 

Click here to Read : India Calls for UN Reforms at 80th UNGA Session

EPF New Withdrawal Rules 2025

Source: TH

Why in News? 

The Central Board of Trustees (CBT) of the Employees Provident Fund Organisation (EPFO) approved new guidelines for partial and premature withdrawal of Provident Fund (PF) funds, aiming to enhance the “ease of living” for subscribers. 

What are the EPF New Withdrawal Provisions 2025?

• Simplified Rules: 13 complex withdrawal provisions merged into three categories – essential needs (illness, education, marriage), housing, and special circumstances.
• Employer Contribution: Members can now withdraw from both employee and employer contributions.
• Minimum Balance Rule: Members must maintain at least 25% of their contribution balance at all times, ensuring a financial cushion and long-term security.
• Premature Withdrawal During Unemployment: 75% of PF can be withdrawn immediately after leaving a job. 
  • Full 100% withdrawal allowed if unemployed for 12 months (previously 2 months).
  • The final pension amount can be withdrawn only after 36 months, instead of 2 months earlier.  
    • The change aims to help members accumulate a sufficient pension corpus by discouraging early full withdrawals, as about 50% of members had less than Rs 20,000 at final settlement.
• Flexibility: Withdrawals for marriage, house purchase, education, illness, or emergencies can now be made earlier and more frequently.

What is an Employees Provident Fund (EPF)?

• About: EPF is a social security and retirement savings scheme for salaried employees in India. It is administered by the Employees’ Provident Fund Organisation (EPFO) under the Ministry of Labour and Employment and is governed by the Employees’ Provident Funds &
  • The PF account benefits are extended to all the establishments which employ 20 or more persons.Miscellaneous Provisions Act, 1952.
• Membership: All employees of eligible establishments can become members from the date of joining.
  • Membership provides access to Provident Fund (PF) savings, Pension benefits, and Insurance benefits. 
  • Members must submit a nomination at the time of joining.
• Contribution Structure: Employers and employees both contribute around 12% of wages in contribution accounts.
  •  Further, the employers also contribute towards administration of the benefits under the EPF & MP Act.
  • Funds earn interest declared annually by the Government of India.
• Benefits: EPF provides long-term savings for retirement while allowing partial withdrawals for housing, education, marriage, illness, and special circumstances. 
  • It ensures financial security for employees and their families in case of resignation, retirement, or death. 
  • Members can also access online services such as e-passbook, PF account transfer, and claims.

Defence Procurement Manual (DPM) 2025

Source: PIB

Defence Minister Rajnath Singh released the Defence Procurement Manual (DPM) 2025, effective from 1st November 2025, to simplify procedures, ensure uniformity, and boost Armed Forces’ operational preparedness.

• Defence Procurement Manual: It is a guideline issued by India’s Ministry of Defence that lays out the procedures, rules, and policies for acquiring goods, services, and equipment for the Armed Forces. 
  • It ensures transparency, accountability, and efficiency in defence purchases while promoting indigenisation, ease of doing business, and operational readiness.
• Salient features of DPM 2025:
  • Effective & Scope: Will govern revenue procurement worth approximately Rs 1 lakh crore by the three Services and other establishments under the Ministry of Defence.
  • Relaxed Liquidated Damages (LD): LD levied on delayed delivery of stores and services, have been relaxed with a maximum of 10% for delays and 0.1% per week for indigenisation projects instead of 0.5% in other cases.
  • Assured Orders: Items developed under indigenisation can get orders up to 5 years or more.
  • No NOC Requirement: Procurement from sources other than Ordnance Factory Board no longer needs No Objection Certificate.

Read more: Reviewing Defence Procurement Procedure

‘Atomic Stencils’ Enable Precision Design of Nanoparticles

Source: TH

Researchers have developed an atomic stenciling technique to precisely apply polymer patches onto microscopic gold nanoparticles, allowing unprecedented control over their structure.

• Process: The process has two key steps:
  • Atomic Stenciling (The Masking): The researchers use iodide atoms as an "atomic stencil" or mask. These atoms are engineered to selectively bond and stick only to specific, flat crystal faces of the gold nanoparticle.
  • Polymer Painting (The Patching): A polymer solution is then introduced. The polymer material only bonds to the unmasked, exposed gold surfaces, forming a precise patch exactly where intended.
    • The patches so formed are so uniform that the nanoparticles could spontaneously self-assemble into highly ordered 3D crystals (superlattices), representing a major milestone in nanomaterials science that was previously largely theoretical. 
• Benefits: The method allows for atomic-level control over the patch's size, shape, and location, enabling the creation of over 20 distinct types of patterned nanoparticles (e.g., corner patches, face patches, web designs).
• Applications: This control is a crucial step toward creating metamaterials with properties not found in nature. 
  • Potential applications include targeted drug delivery, ultra-efficient catalysts, advanced electronics, and smart materials.

Read More: Nanotechnology

Global Forest Resources Assessment 2025

 Source:PIB

India has secured the 9th position globally in terms of total forest area, as per the latest Global Forest Resources Assessment (GFRA) 2025 released by the Food and Agriculture Organization (FAO).  India also retained its 3rd position worldwide in annual forest area gain.

• Top countries by forest area are Russia (832.6 million ha), Brazil (486 million ha) and Canada (368.8 million ha).
  • India’s forest area stands at 72.7 million hectares. 
• Global Forest Resources Assessment (GFRA): The GFRA, conducted every 5 years by the FAO, assesses global forest resources based on official national data. 
  • This data is vital for policymaking, international conventions (like those on climate change and biodiversity), and promoting sustainable forest management globally.
• India's Key Initiatives Related to Forest Conservation:
  • Key Forest Legislations in India:
    • Forest (Conservation) Act, 1980: It restricts the diversion of forest land for non-forest purposes and ensures central government approval for such use to prevent large-scale deforestation.
    • Wildlife (Protection) Act, 1972: It provides legal protection to wildlife species and their habitats and establishes National Parks, Wildlife Sanctuaries, and Conservation Reserves.
    • National Forest Policy, 1988: It sets the goal of bringing 33% of India’s total land area under forest and tree cover and promotes participatory forest management involving local communities.
    • Forest Rights Act, 2006: It recognizes the rights of traditional forest dwellers and tribal communities and empowers them to manage, conserve, and protect forest resources sustainably.
  • Other Key Initiatives: 
    • National Mission for a Green India (GIM): GIM is part of the National Action Plan on Climate Change (NAPCC) aiming to enhance ecosystem services and carbon sequestration.
    • Compensatory Afforestation Fund Management and Planning Authority (CAMPA): CAMPA utilizes funds from diverted forest land for compensatory plantation.
    • Ek Ped Maa Ke Naam Initiative: Ek Ped Maa Ke Naam Initiative is a national campaign encouraging citizens to plant a tree in honour of their mothers.

Read More: India State of the Forest Report 2023