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GS Paper 2:
Topic: Statutory,Regulatory & Quasi Judicial Bodies
- Do you think that the ‘Insolvency and Bankruptcy Code’ is a radically different approach from the existing framework for dispute resolution? – (150 words.)
Insolvency related dispute resolution is one of the main aspect which the business community look forward for establishing an enterprise in a country.
The Insolvency and Bankruptcy Code do put forth an alternative framework for dispute resolution.
1. Before this law, the insolvency related proceedings were governmed by the Sick Industial Companies Act, 1987.
2. The purpose of above mentioned act is not dispute resolution but to revive the financially stressed industries, so investors were left with a less and inconsistent law to deal insolvency.
3. IBC aims to strike a balance between creditors and debtors interests and strives to maintain the company a functional one.
4. Time bound resolution is core of the code – 180 days.
5. De criminalise the petty and un intentional deeds of wrong by business entities.
6. Establishes a dedicated Insolvency and Bankruptcy Board to regulate the insolvency professionals, agencies and information utilities.
7. All above mentioned measures are aimed at enhancing the investor confidence, encourage entrepreneurship and improving ease of doing business.
Insolvency and Bankruptcy Code definitely attempts to establish a more reliable and efficient framework for the resolution of disputes. Some results are already visible in the form of improvement in FDIs and Ease of doing business rankings.
GS Paper 2:
Topic: Federalism and Challenges
- “COVID-19 has exposed the challenges to Fiscal Federalism in India” – Explain. (150 Words.)
The Constitution of India has bestowed the States with the large responsibility of undertaking various subjects related to the social and economic development. On the other hand, the federal framework of the country has assigned excessive revenue mobilization power to the Union Government. It is paradoxical that fiscal power lies with Centre and responsibilities of work like health, sanitation, testing, quarantine, relief work and migrant labourers are in List II (State List) as per the Constitution of India i.e these functions are to be performed by the states.
Most of the states including major opposition led states like Maharashtra, Punjab, Rajasthan, Kerala, Andhra Pradesh Delhi, and West Bengal, are finding it difficult to fund basic relief measures in this crisis and have requested the Centre to release the money urgently. Many states are now facing financial crunch because they are not able to get their due share from GST revenue collected by Centre.
To deal with COVID crisis, 19 States have had to borrow an aggregate sum of Rs 37,500 crore through sale of bonds. However, they could only mobilise Rs. 32,560 crore. Due to Fiscal Responsibility and Budget Management Act 2003, States cannot to exceed their fiscal deficit by more than three percent of their GSDP. In this situation, states would not be able to borrow for meeting their expenditure needs without permission of the Union government.
Many States are facing delay in release of funds in Centrally Sponsored Schemes, Central Sector Schemes and less quantum of transfer from Centre to Sates as per the recommendation of 14th FC. They have also been requesting Centre for the advance payment under MGNREGA which could mitigate the unemployment, food shortage and hunger crises in the rural areas.
In these dire circumstances, there is a need to develop a more nuanced and evolved Centre-State relationship where states should be given more fiscal autonomy for setting their own development priorities. In addition, the NITI Aayog should work more closely with constitutional bodies like the 15th Finance Commission (15th FC) and Inter State Council for resource allocation and dispute resolution respectively related to Centre–State and between states.