Content

1. Restoring fiscal space for the States
2. Russia backs AMCA, offers to make Su-57 jets in India
3. Google’s new AI finds promising approach for cancer treatment
4. Sustainable fuel use could quadruple by 2035: IEA
5. 20 years of RTI Act: The slow unravelling of India’s transparency law

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Restoring fiscal space for the States

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 Why is it in the News?

• The GST compensation cess has been merged with the regular GST, ending the compensation mechanism for States.
• This move is expected to pass on over₹2 lakh crore in tax benefits to consumers and potentially boost local demand.
• Certain States fear revenue losses and erosion of fiscal autonomy, arguing that no proper estimation of losses has been made.
• The decision reignites discussions on Centre-State fiscal relations, cooperative federalism, and the sharing of tax powers.

Relevance

• GS-3: Indian Economy – Taxation, Centre-State relations, Fiscal Federalism, Public Finance, Revenue Sharing.

GST and Fiscal Policy

GST Introduction:

• Launched in July 2017 through the 101st Constitutional Amendment.
  • Replaced multiple indirect taxes with a common destination-based tax, shared between Centre and States.
  • Initial GST compensation mechanism ensured States were not worse off due to revenue loss.

Centre-State Fiscal Relations:

• Articles 246–293 govern taxation powers and transfers.
  • Finance Commission (Article 280) recommends devolution of funds to States.
  • Central transfers still account for 44% of States’ revenue receipts, with Bihar at 72% dependence, Haryana at 20%.
  • Dependence on Central transfers affects liquidity, fiscal autonomy, and political leverage.

Revenue Sharing History:

• Pre-GST (2012-17): Centre collected 67%, States 33%. Post-GST (2018-23): ratio remained similar.
  • Devolution share recommended by Finance Commissions increased from 29.5% (11th FC) → 42% (14th FC), but actual devolution fell short due to cesses and surcharges, which remain non-shareable.

Overview

Impact of GST Compensation Cess Merger

• Consumers may benefit from lower prices, boosting demand.
• States risk revenue loss: compensation previously guaranteed annual shortfalls.
• Cess and surcharge previously gave the Centre additional leverage, now merged, reducing that buffer.

Erosion of Fiscal Autonomy

• GST centralises tax power in the GST Council, dominated by the Centre.
• States’ ability to independently raise revenue is limited.
• Progressive States (e.g., Tamil Nadu, Maharashtra) contribute more to taxes but cannot fully retain the benefits.

Structural Issues in State Finances

• Expenditure responsibilities are higher at State level: health, education, agriculture, local governance.
• Central transfers and grants (CSS, CFS, Finance Commission) supplement but are performance-based or conditional.
• Heavy dependence on the Centre creates fiscal vulnerability and political friction, especially in opposition-ruled States.

Proposed Solutions for Greater Fiscal Autonomy

• Sharing personal income tax base with States on a 50:50 basis, similar to GST.
• Allowing States to top up income tax rates without altering the current levy system.
• Such reforms would:
  • Reduce dependency on Centre.
  • Improve liquidity and planning.
  • Reward progressive States contributing higher revenue.

Comparative Perspective

• Example of Canada: Federal govt collects 46%, sub-national governments 54%; federal spends 40%, provinces spend 60%.
• Suggests a model where States have more autonomy in raising resources and spending, improving accountability and service delivery.

Takeaway

• GST restructuring is a double-edged sword: consumer benefit vs. potential revenue loss for States.
• Centralised tax authority ensures uniformity but reduces State fiscal autonomy.
• A dynamic approach to tax sharing and grants is critical to maintain cooperative federalism.
• Fiscal reform may require structural redesign of transfers, tax bases, and conditionalities to empower States.

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Russia backs AMCA, offers to make Su-57 jets in India

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Why is it in the News?

• Russia has expressed readiness to support India’s Advanced Medium Combat Aircraft (AMCA) programme by offering local production of Su-57 fifth-generation fighter jets.
• The announcement highlights India-Russia defence cooperation amid geopolitical shifts in global energy and defence trade.
• Both countries are exploring next-generation technologies: anti-drone systems, advanced radars, and precision strike capabilities.

Relevance

• GS-3: Defence and Security – Defence production, Aerospace technology, Strategic partnerships.
• GS-2: International Relations – India-Russia strategic partnership, Geopolitics, Indo-Pacific security dynamics.

India-Russia Defence Ties

Historical context

• India has relied on Russia for over six decades for defence equipment.
  • Nearly 70% of India’s military hardware is of Russian origin.
  • Past collaborations include BrahMos supersonic cruise missile, now being upgraded to a hypersonic version.

Strategic significance

• Russia has been a trusted defence partner, supporting India’s military modernization.
  • Defence cooperation extends beyond purchases to joint development, co-production, and technology sharing.

Overview

AMCA and Su-57 Collaboration

• AMCA: India’s indigenous fifth-generation fighter programme, aimed at next-gen combat capabilities.
• Su-57 :
  • What it is: Russia’s fifth-generation stealth multirole fighter aircraft, designed for air superiority, ground attack, and precision strike missions; comparable to the US F-22 and F-35.
  • Capabilities: Stealth features, supercruise (sustained supersonic speed without afterburners), advanced avionics, AESA radar, integrated electronic warfare systems, and high maneuverability for air-to-air and air-to-ground combat.
  • Weapons & Operational Edge: Equipped with long-range air-to-air missiles, precision-guided munitions, and capable of networked warfare; can operate in contested airspaces with enhanced survivability and situational awareness
• Russia’s offer of local Su-57 production:
  • Reinforces joint development and technology transfer.
  • May accelerate AMCA programme and reduce import dependence.
  • Strengthens India’s aerospace industrial base.

 

Geopolitical Implications

• Amid U.S. sanctions and trade pressures, Russia emphasizes alternative logistics and payment mechanisms, ensuring continuity in defence ties.
• India-Russia partnership remains a counterbalance in Indo-Pacific geopolitics and global arms supply networks.
• Russia’s energy cooperation remains cost-effective despite U.S. pressure, showing strategic interdependence beyond defence.

Technological and Industrial Impact

• Joint production of Su-57 and AMCA can:
  • Boost R&D and skill development in Indian defence industry.
  • Facilitate indigenous design, assembly, and maintenance capabilities.
  • Expand collaboration in precision strike, radar, and anti-drone technologies, critical for modern warfare.

Operational Lessons and Validation

• Russia highlights effectiveness of its equipment in Operation Sindoor, underlining reliability in real-world operational scenarios.
• Joint platforms like BrahMos demonstrate success of India-Russia co-production and tech sharing model.

Takeaway

• India-Russia defence ties are moving from buyer-seller to co-development model.
• Local production of Su-57 aligns with India’s Make in India and defence self-reliance objectives.
• Strategic, technological, and industrial dimensions of cooperation enhance India’s military modernisation while reducing vulnerability to external pressures.
• This collaboration may redefine India’s aerospace and fighter jet capabilities, giving it a qualitative edge in air warfare.

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Google’s new AI finds promising approach for cancer treatment

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 Why is it in the News?

• Google unveiled AI tools (C2S-Scale 27B) that discovered a novel drug combination for detecting tumors, which was previously unknown to human experts.
• The AI-predicted drug candidate, silmitasertib, showed effectiveness in laboratory validation, marking a milestone in AI-assisted scientific discovery.
• The research opens a new approach to cancer detection and therapy development, emphasizing AI’s role in translating biological data into actionable hypotheses.

Relevance

• GS-3: Science & Technology – AI in healthcare, biotechnology, drug discovery, foundation models.

AI in Drug Discovery

C2S-Scale 27B

• A 27-billion-parameter foundation model trained to understand the language of individual cells.
  • Designed to simulate tumor-immune interactions and predict drug effects under specific cellular conditions.

The Problem

• Detect emerging tumors before the immune system recognizes them.
  • Tumors often evade immune detection, requiring strategies to trigger antigen presentation and immune response.

Traditional Methods vs AI

• Large Language Models or small AI tools could not capture complex tumor-immune signaling.
  • AI simulated 4000+ drugs in virtual environments mimicking low interferon signaling, a key immune evasion scenario.

Overview

Novel Approach

• AI predicted drug candidates that boost immune signals selectively when interferon levels are low.
• Out of all AI hits:
  • 10–30% matched known literature.
  • Remaining were “surprising hits” with no prior known link to tumor detection, demonstrating AI’s ability to generate novel hypotheses.

Scientific Validation

• AI predictions were experimentally validated in living cells, confirming:
  • Silmitasertib activates immune response only under tumor-like conditions.
  • This suggests a new pathway for early tumor detection and immunotherapy.

Technological Significance

• Shows AI as a collaborator in scientific discovery, not just a data tool.
• Highlights the value of foundation models trained on cell-level biological language.
• Bridges computational predictions and experimental biology, accelerating drug development timelines.

Medical and Societal Implications

• Potential to detect tumors earlier, improving cancer prognosis.
• Reduces reliance on trial-and-error drug testing.
• Can transform personalized medicine, by tailoring therapies based on cellular immune responses.

Challenges & Next Steps

• Pre-clinical and clinical trials are necessary to confirm efficacy and safety in humans.
• AI models must be continuously validated and refined with experimental data.
• Ethical and regulatory frameworks must govern AI-guided drug discovery.

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Sustainable fuel use could quadruple by 2035: IEA

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Why is it in the News?

• The International Energy Agency (IEA) released the report Delivering Sustainable Fuels: Pathways to 2035, projecting that global sustainable fuel use could quadruple by 2035.
• The report was released ahead of COP30 under Brazil’s UNFCCC presidency, highlighting sustainable fuels’ role in climate mitigation, energy security, and economic development.
• Focus is on biofuels, biogases, and low-emissions hydrogen as complements to electrification in transport, industry, and power generation.

Relevance

• GS-3: Energy & Environment
  • Renewable energy transition, biofuels, hydrogen economy, energy security.
  • Industrial and transport sector decarbonisation, sustainable development.
• GS-2: International Relations
  • Multilateral cooperation (IEA, ICAO, IMO) for global climate action.

Sustainable Fuels and Global Energy Transition

Definition and Types

• Sustainable fuels: Liquid or gaseous fuels with lower carbon intensity than fossil fuels.
  • Key categories:
    • Biofuels: Ethanol, biodiesel from crops or waste.
    • Biogases: Methane produced from organic matter.
    • Low-emissions hydrogen: Hydrogen produced with minimal greenhouse gas emissions.

Current Global Impact

• Already reduce global oil demand by ~2.5 million barrels per day (2024).
  • Reduce transport fuel import dependence by 5–15 percentage points in importing countries.
  • Liquid biofuels dominate (~4% of global transport energy).

Drivers of Sustainable Fuel Adoption

• Energy security: Reduced dependence on fossil fuel imports.
  • Economic benefits: Rural employment, new income streams, industrial growth.
  • Environmental sustainability: Lower carbon emissions, compliance with GHG performance standards (~80% of biofuel use).

Overview

Projected Growth to 2035

• Fourfold increase in sustainable fuel use if current policies are implemented.
• Sectoral projections:
  • Road transport: 10% of demand.
  • Aviation: 15% of fuel demand.
  • Shipping: 35% of fuel demand.
• Industry and power generation uptake expected post-2030, especially low-emissions hydrogen in chemical, steel, and refining sectors.

Economic and Investment Implications

• USD 1.5 trillion cumulative investments by 2035.
• Creation of ~2 million direct jobs globally.
• Sustainable fuels can be competitive in some markets (ethanol in Brazil, US) and may slightly increase consumer costs (e.g., 15% aviation fuel blend → 5–7% ticket rise).

Technological Innovation

• Emerging fuel pathways:
  • Alcohol-to-jet fuels
  • Hydrogen-based synthetic fuels
• Innovation and scale-up expected to reduce costs, making them more competitive with fossil fuels.

Policy and Regulatory Actions

• IEA identifies six priority actions:
  • Region-specific roadmaps aligned with broader energy goals.
  • Predictable demand to attract private investment.
  • Transparent carbon accounting and performance-based incentives.
  • Innovation support to lower costs.
  • Integrated supply chains and infrastructure development.
  • Expanded access to finance, especially in emerging economies.

Global Cooperation

• International collaboration crucial for matching regional strengths with global demand.
• ICAO and IMO working to promote aviation and maritime sustainable fuel uptake.
• Aligns with global decarbonisation goals and supports COP30 discussions on climate action.

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20 years of RTI Act: The slow unravelling of India’s transparency law

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Why is it in the News?

• 20th anniversary: The Right to Information (RTI) Act was enacted on 12 October 2005.
• Erosion of effectiveness: Activists and Information Commissioners warn that the law has lost its impact due to neglect, bureaucratic apathy, and institutional delays.
• Rising filings, rising rejections: Record RTI filings (1.75 million in 2023-24) contrast with the highest-ever rejection rates (67,615 applications).
• Concerns about citizen access: The law, once a symbol of empowerment and accountability, now faces fear and obstacles in implementation.

Relevance

• GS-2: Governance
  • Transparency, accountability, e-governance, citizen empowerment.
  • Institutional challenges in administrative law implementation.
• GS-3: Social Issues / Public Policy
  • Role of civil society in governance reform.
  • Implementation of rights-based legislation and citizen oversight mechanisms.

RTI Act and Its Origins

Grassroots beginnings

• MKSS (Mazdoor Kisan Shakti Sangathan) founded in 1990 by Aruna Roy and colleagues in Rajasthan.
  • Early public hearings (1994–95) exposed corruption in schemes like Jawahar Rozgar Yojana, Apna Gaon Apna Kaam, Indira Awas Yojana.
  • These hearings led to state-level RTI laws in Tamil Nadu (1997), Goa, Rajasthan, Karnataka, Maharashtra, Delhi by 2001.

National legislation

• National Campaign for People’s Right to Information (NCPRI) drafted the national law.
  • Passed by Parliament: 12 May 2005, Presidential assent: 15 June 2005, enforced from 12 October 2005.

Constitutional backing

• Recognised as part of Article 19(1)(a) – freedom of speech and expression.
  • Landmark cases:
    • State of Uttar Pradesh vs Raj Narain – first recognition of citizens’ right to information.
    • SP Gupta vs Union of India – affirmed RTI as integral to free speech.
    • Shri Kulwal vs Jaipur Municipal Corporation – explicitly included under Article 19.

Overview

Implementation gaps

• Increasing vacancies in Information Commissions, leading to millions of pending cases.
• RTI applications often tossed between departments under Section 6(3) without response.
• Citizens fear police visits or intimidation when filing requests.

Erosion of accountability

• Officials face no consequences for ignoring RTI requests.
• Public perception: RTI effectiveness has regressed, unlike its early promise of transparency.
• 3T formula (Timely, Transparent, Trouble-Free) promoted by PM Modi has not materialized in practice.

Historical significance vs current reality

• RTI began as a citizen empowerment tool, exposing scams and corruption effectively until 2014.
• Activist movements (MKSS, NCPRI) drove major policy and governance reforms, including MGNREGA.
• Currently, official hostility, procedural hurdles, and lack of political will have hollowed out its power.

Impact on civil society

• Reduced participation by NGOs and social activists in using RTI.
• Disillusionment among journalists and citizen activists, with many abandoning RTI as a tool.
• RTI, once a vehicle for accountability, now increasingly symbolizes bureaucratic inertia and citizen frustration.