Daily Current Affairs September 7, 2024

1. DAILY CURRENT AFFAIRS 7 SEPTEMBER 2024 Mains Economy technological innovations in the last two decades across 36 countries. ILO Report on the Impact of Artificial Intelligence on Labour Income ●The report further states that while these innovations have led to a persistent jump in labour productivity Context and output, at the same time, it has reduced the Recently, a report published by the International labour income share. Labour Organization linked a dip in Labour income to ●Further, automation-based technological innovations Artificial Intelligence. have aggravated the situation. ●According to the report, the absence of a stronger About policy response across relevant domains can further ●According to the latest report of the International deepen the crisis in the labour market. (ILO) Labour Organization titled ‘World ●Reduction in Global Worker Income Share: The Employment and Social Outlook: September 2024 report has stated that global labour income share had Update’, inequality is rising globally and the share of fallen by 0.6 percentage points from 2019 to 2022 labour income has stagnated over time. and has since then remained flat. ●No Skilling, Upskilling and Reskilling: The report ●Impact of Post-COVID Effects: The stated decline has stated that a large share of youths have remained in the labour income was linked to the COVID-19 out of employment, education, or training. This has pandemic which had a contribution of 40% of the further led to unemployment in major economies of reduction in the labour income share during 2019- the world. 2022. But post-COVID-19 recovery has still not ●Role of Artificial Intelligence: The report has reinstated the pre-COVID-19 scenario. highlighted that a major reason for this fall in labour What Needs To Be Done To Fight The Crisis? income is artificial intelligence or AI. ●The International Labour Organization has come to ●Policy Formulation: There is a need to push for a this conclusion after it analyzed the impact of stronger policy across relevant domains such as:

2. 1)Restricting the useof ArtificialIntelligencein priority policy interventions to check the technology- aided unemployment. certain areas which have high engagements of Sources: The Hindu, ILO labour. 2)Limitations in the use of Robotics in countries Mains Environment/Economy/ Planning with high working-age populations. Question Mark on Capability of ANIIDCO to Implement Great Nicobar Project ●Equitable Sharing of Benefits: The report has suggested that the benefits of technological progress Context should be widely distributed to mitigate the potential Recently, the qualifications of the Andaman and adverse impacts of inequality. Nicobar Islands Integrated Development ●Fast Tracking Progress of Sustainable Corporation came into question after it got Development Goals: The report has further permission to do a ₹72,000 crore mega underlined the slow progress in achieving the infrastructure project. Sustainable Development Goals (SDGs). It further reiterates that there is a need to fast-track this About development. ● The Andaman and Nicobar Islands Integrated ●Equitable Distribution of Income Benefits: The Development Corporation (ANIIDCO) is the ILO has urged the member nations to counter the risk project proponent for ₹72,000 crore mega of declining labour income share. It further states the infrastructure project in Great Nicobar. need for such policies that promote an equitable ● This project has been promoted by the NITI distribution of economic benefits. Aayog. ●It also urges the promotion of democratic policies ● Great Nicobar is the southernmost island in the that can allow freedom of association, collective Andaman and Nicobar archipelago. bargaining and effective labour administration to Great Nicobar Project achieve inclusive growth. ● The project has been proposed for the Conclusion construction of a trans-shipment port, which is a greenfield airport, a tourism and township Rising inequalities across the globe, with poverty and unemployment, have led to a crisis in the labour market. The driving force behind the stated crisis is essentially the technological innovations, especially Artificial Intelligence, which has reduced the demand for labour in sectors such as Information Technology, Business Processing Outsourcing (BPO), and Knowledge Processing Outsourcing (KPO), etc. It has reduced the overall share of income of workers. India, having the largest demographic dividend in the world must take project and a solar and gas-based power plant in Great Nicobar. ● The Great Nicobar is a 910 sq km island that is not just a biodiversity hotspot but also home to Indigenous communities with special rights. ● It is also located in one of the most tectonically active zones.

3. that it started a process for recruiting people What is ANIIDCO? with relevant expertise, such as urban planners, ● ANIIDCO which has been granted permission for environmental planners, architects, the mega project. infrastructure specialists, and legal and financial ● It is a little-known quasi-government agency experts. based in Port Blair. ● ANIIDCO was incorporated on June 28, 1988, Suggestions of Expert Appraisal Committee (EAC) under the Companies Act. ● The Expert Appraisal Committee (EAC) under Objectives of the Agency the Union environment ministry had asked ANIIDCO to formulate a corporate environment ●All-round Development of the Island: It also policy. aims “to develop and commercially exploit natural ● It also asked the entity to ensure compliance with resources for the balanced and environment- environmental clearance conditions. friendly development of the territory.” ●Trading: It will also facilitate trading of petroleum Conflicts of Interest products, Indian-made foreign liquor and milk, ● In 2022, the Mumbai-based Conservation Action managing tourism resorts and infrastructure Trust filed a petition before the National Green development for tourism and fisheries. Tribunal. ●Annual Turnover of ANDICO:The company’s ● It challenged the Stage 1 forest clearance granted average annual turnover and profit over the last by the Union Environment Ministry. three financial years has been ₹370 crore and ₹35 ●Serving in Double Capacity: The petition pointed crore, respectively. out that at the time forest clearance was granted ● The corporation can handle a high-profile, high- to ANIIDCO, the corporation’s managing director investment and high-risk project like the one in was the same person who was also the Great Nicobar. Commissioner cum Secretary (Environment and Forests) of the island. Criticism of ANDICO ● The petition also pointed out that numerous ●No Environment Cell: ANIIDCO does not have persons employed at ANIIDCO in various an environment policy or an environment cell. capacities are currently civil servants with the ●Lack of Human Resources: The corporation Andaman and Nicobar administration in charge did not even have the human resources needed of environmental and tribal welfare issues. to oversee the project. ● Further, the project can't implement and monitor Conclusion the project for which it has been tasked to A strategically and economically important project like implement. the Great Nicobar Project with a Rs. 72,000 crore ● Hence, it was only in late 2022, more than two investment must be implemented by an agency which years after it was made the project proponent,

4. ●Hence, there is the problem of Vertical Fiscal Imbalance (VFI) in Indian fiscal federalism, where expenditure decentralization overwhelms the revenue-raising powers of the States. ●The Indian Constitution has divided the financial duties of the Union government and the States. ●On the revenue front, to maximize the efficiency of tax collection, the Personal Income Tax, the Corporation Tax and a part of indirect taxes are best collected by the Union government. ●But on the expenditure front, to maximize the efficiency of spending, publicly provided goods and services are best supplied by the tier of the government which is closest to its users. ●Hence, Vertical Financial Imbalance needs attention in India has already gained expertise in different domains such as economic and environmental viability. However, the state of the current implementation of the project raises a question Mark on policymakers and planners. The government must intervene effectively to handle the project sustainably. Source: The Hindu Prelims (Economy ) Vertical Fiscal Imbalance Context There is the problem of Vertical Fiscal Imbalance (VFI) in Indian fiscal federalism, where expenditure 15th Finance Commission on Imbalance decentralization overwhelms the revenue-raising powers of the States. ●The 15th Finance Commission had opined that India has had a larger and rising vertical About imbalance than most other federations. ●These imbalances were magnified by the ●A vertical fiscal imbalance occurs when revenues COVID-19 pandemic. do not match expenditures for different ●The pandemic created a gap between revenues government levels. ●Various policymakers have suggested that the and expenditure responsibilities at the sub- national level. upcoming 16th Finance Commission must look into the issue of Vertical Fiscal Imbalance The question in front of the 16th Finance (VFI). Commission Financial Relationship Between Union and States in ●The problem of VFI falls under the purview of India the Finance Commission. ●The commission deals with broadly two ●The financial relationship between the Union government and the States asymmetrical. ●According to the 15th Finance Commission, States in India incur 61% of the revenue expenditure but collect only 38% of the revenue receipts. in India is questions. These are: 1.Distribution of Taxes Between Union and States

5. ●The first question is how to distribute the taxes proceeds devolved to the States must rise to about 49% to eliminate VFI. collected by the Union government to the States ● An increase in devolution would place more as a whole. ●These transfers are made as a prescribed share of untied resources in the hands of the States the“Net Proceeds” (Gross Tax Revenue of the to spend locally. ●Optimum Utilisation of Borrowing Limits: Union less surcharges, cesses and costs of Most of the states have underutilized the collection). 2.Distribution of Taxes Between States borrowing limits specified in the fiscal ●The second question is how to distribute taxes responsibility legislation. Hence, there is a need for the optimum utilization of these across States. The matter of VFI arises as part of limits. the first question. ●Grants-in-Aid: The Finance Commissions also Conclusion recommend grants to States in need of assistance under Article 275 of the Constitution. Reduction in VFI would ensure that States’ ●But these are generally for short periods and expenditures better respond to jurisdictional needs specific purposes. and priorities and that the efficiency of expenditures is enhanced. Further, it would be a move towards a Transfers Outside the Purview of the Finance healthy system of cooperative fiscal federalism in Commission India. ●There are also transfers to the States that fall outside the ambit of the Finance Commission. ●Article 282: The Union government spends substantial amounts of revenue under Article 282 of the Constitution. ●The subjects on which these expenditures are done fall under the State and Concurrent lists through centrally sponsored schemes and central sector schemes. ●But such grants are tied transfers which require certain conditions to be fulfilled. ●Hence, the devolution of taxes from the net proceeds is the only transfer to the States that is untied or unconditional. Sources: The Hindu, Investopedia Mains Questions 1. What is ‘Vertical Fiscal Imbalance’? How can VFI be reduced in India? 2. Discuss about the ‘Great Nicobar Project’. What is the present crisis in implementing agency ANIIDCO? 3. ‘Artificial Intelligence has, on the one hand, increased efficiency in Industries but at the same time has caused loss of Jobs. Critically How can Vertical Financial Imbalance be narrowed? Anal ●Increasing the Devolution Limit: Economic Experts have suggested that the share of net