Answers: Mains Marathon – UPSC Mains Current Affairs Questions – November 29

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Q.1) A Parliamentary Budget Office helps MPs provide effective oversight over the functioning of parliament. How does Indian Parliament act as a Budget governing body? Explain Parliamentary Budget Office (PBO) and its role. Also, discuss the challenges ahead. (GS-2)

Introduction

• A Parliamentary Budget Office (PBO) is an independent and impartial body linked directly to Parliament that provides technical and objective analysis of Budgets and public finance to the House and its committees.

Indian Parliament as a Budget-approving body

• The Indian Parliament is a Budget-approving body contributing to budgetary matters in the following notable ways: presentation of the Budget;scrutiny of the demands for grants of various ministries;debate;consideration and approval of the Budget.
• To carry out these functions effectively, Parliament requires institutional, analytical and technical competence.
• Parliament as a Budget-approving body, makes it compulsory for its members to be well-informed for a legitimate approving process.
• Establishing a PBO within Parliament is undoubtedly necessary as an instrument for addressing bias towards spending and deficits and, more significantly, for enhancing fiscal discipline and promoting accountability.
• It can also generate quality public debate on Budget policy and public finance, enabling parliamentarians to engage meaningfully in the Budget process.

Role of BPO

• Independent and objective economic forecasts;
• Baseline estimate survey;
• Analyzing the executive’s Budget proposal;
• and providing medium- to long-term analysis. Costing is standard practice for many PBOs.
• A PBO can present either its own independent economic forecast or it can validate the government’s, providing an objective analysis on the official forecast.
• A PBO can perform other tasks depending on its mandate, resources and requirements of parliamentarians or committees.
• These may include general economic analysis, tax analysis, long-term analysis, options for spending cuts, outlining a budgetary framework that reflects priorities of the nation, bespoke policy briefs.

Key Challenges

• Any country that establishes a PBO faces challenges that are threefold—guaranteeing independence and viability of the office in the long-run; ability to carry out truly independent analysis; and demonstrating impact.
• Countries have adopted different models to suit their specific needs.
• India will need to ensure the independence and non-partisanship of such a body for it to have credibility with legislators.
• This may best be done if it is established as a statutory body reporting directly to Parliament. A clear set of deliverables may be desirable.

Q.2) The Supreme Court directed that vehicles without valid pollution under control (PUC) certificates would not be eligible for the annual insurance. In light of the statement, discuss the rules related to PUC certificates. Also discuss the need and the legal aspect of acquiring it. (GS-3)

Introduction

• The Supreme Court passed the order to issue PUC certificates on a petition for stringent steps to curb air pollution
• The court also asked the Centre to consider creating a national database of vehicles to monitor as to whether they are compliant to emission norms.

Pollution under Control (PUC) certificate:

• PUC is a certification mark that is provided to vehicles that undergo the PUC Test successfully.
• The certification indicates that the vehicle’s emissions are in alignment with standard pollution norms and are not harmful to the environment.
• All vehicles on Indian roads are mandated to carry a valid PUC certification.
• PUC (Pollution under Control) is a Certification Mark issued to certify that motor vehicles in India meet emission and pollution control norms.
• A vehicle, not carrying a valid PUC Certificate is liable to be prosecuted under Section 190(2) of the Motor Vehicles Act. A penalty of Rs.1000/- for first offence and Rs.2000/- for every subsequent offence of violation has been provided.
• After the expiry of period of one year from the date of first registration, every motor vehicle is required to carry a valid PUC Certificate.
• A valid driving license, valid insurance cover and a PUC Certificate are the mandatory documents that every vehicle owner must possess while driving a motor vehicle in India.
• The process for the PUC certification has been specified as per the Central Motor Vehicles Rule.

Need for PUC certificate:

• The PUC system is critical to keep emissions of on-road vehicles under check. Overall improvement in compliance will lead to lesser emissions on road,”
• The vehicular pollutants have damaging effects on both human health and ecology.
• These pollutants are believed to directly affect the respiratory and cardiovascular systems. In particular, high levels of Sulphurdioxide and Suspended Particulate Matter are associated with increased mortality, morbidity and impaired pulmonary function.
• Vehicular exhaust is one of the important sources of air pollution and there is an urgent need to check the extent of vehicular pollution in India.

Legal Aspect:

• An insurance coverage is mandated by the Motor Vehicles Act, 1988, for all cars plying on Indian roads.
• As per the Central Motor Vehicles Rule, 1989, it is mandatory to get a PUC Certification for your vehicle.

Q.3) Recently, the Ministry of Housing flagged off a new index-The National Housing Bank(NHB) Residex, designed to track housing price trends in 50 cities across India. What is NHB Residex and also discuss the reasons behind the rise in housing prices. (GS-3)

Introduction:

• NHB Residex that captures movements in the prices of residential real estate prices revealed that prices during January-March, 2017 have increased over that of October-December, 2016, in about half of the cities covered under the survey while the other half have either registered a decline or remained the same.

What is NHB Residex?

• Residex is a housing price index updated quarterly by National Housing Bank (NHB).
• NHB, the apex level housing finance institution fully owned by Reserve Bank of India (RBI).
• It regulates activities of housing finance companies (HFCs) in India.
• RESIDEX, the country’s first official housing price index (HPI) was launched in 2007 covering 26 cities and was published till March, 2015 on a quarterly basis. The revamped RESIDEX has been expanded to 50 cities spread over 18 States and UTs. These include 38 smart cities, of which 18 are state capitals.
• Base year for the new RESIDEX has been moved from 2007 to 2012-13 to capture the changing structure of the economy besides capturing the latest information to accurately reflect the current economic situation, as per the internationally accepted practices.
• NHB RESIDEX helps buyers and sellers to check and compare prices before entering a transaction
• It helps lenders in credit evaluation. It provides promoters with a standardized tool to assess the housing demand.
• Government agencies can monitor trends in macro and micro markets and predict future behavior of the housing.
• The National Housing Bank collected data on land prices which showed that a correction in land prices is taking place which again reflects the declining trend in transactions of unaccounted money.

Reasons behind rise in housing prices:

• The year 2016-17 saw a perfect storm of events came together to dampen demand housing in India.
• Demonetisation and the resulting purge of the cash component in real estate transactions.
• Budget delivered a rude shock by capping the tax break from ‘loss of house property’ at Rs 2 lakh a year, for second and subsequent homes. This effectively put paid to the ‘investment’ buying of homes, a key source of housing demand in Tier 1 cities.
• Cloudy job prospects, stingy increments and layoffs for the IT sector dampened purchases by this crucial segment too.
• The enactment of RERA (Real Estate Regulation Act) on May 1, which forces developers to segregate buyer advances and deploy it only in specific projects, was expected to result in a working capital crunch for developers.
• The industry was in go-slow mode in the run up to this event.
• Consulting firm Knight Frank India noted in a recent review that, the sales of residential homes in the top eight cities fell by a precipitous 48% in the second half of 2016, compared with the previous year.
• In January-June 2017, they climbed from that abyss, but home sales in these cities were still 11% below 2016 levels.