Environment

Biomes and Its types

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Biome

The terrestrial part of the biosphere is divisible into enormous regions called biomes, which are characterized, by climate, vegetation, animal life and general soil type.

No two biomes are alike.

The most important climatic factors are temperature and precipitation.

  1. Tundra- Northern most region  adjoining the ice bound  poles. Devoid of trees except stunted shrubs in the southern part of tundra biome, ground flora includes lichen, mosses and sedges.

The typical animals are reindeer, arctic fox polar bear, snowy owl, lemming, arctic hare,  ptarmigan. Reptiles and amphibians are almost absent

 

  1. Taiga- Northern Europe, Asia and North America. Moderate temperature than tundra. Also known as boreal forest.

The dominating vegetation is coniferous evergreen mostly spruce, with some pine and firs. The fauna consists of small seed eating birds, hawks, fur bearing carnivores, little mink, elks, puma, Siberian tiger, wolverine, wolves etc.

 

  1. Temperate Deciduous Forest- Extends over Central and Southern Europe, Eastern North America, Western China, Japan, New Zealand etc.

Moderate average temperature and abundant  rainfall. These are generally the  most  productive agricultural areas of the earth The flora includes trees like beech, oak, maple and cherry. Most animals are the familiar vertebrates and invertebrates.

  1. Tropical rain forest- Tropical areas  in  the equatorial regions, which is  a bound  with  life.  Temperature and rainfall high.

Tropical rainforest covers about 7% of the earth’s surface & 40% of the world’s plant and animal species.

Multiple storey of broad-leafed evergreen tree species are in abundance.

Most animals and epiphytic plants(An epiphyte is a plant that grows harmlessly upon another plant)  are concentrated in the canopy or tree top zones

  1. Savannah- Tropical region: Savannah is most extensive in Africa

Grasses with scattered trees and fire resisting thorny shrubs.

The fauna include a great diversity of grazers and browsers such as antelopes, buffaloes, zebras, elephants and rhinoceros;  the carnivores include lion, cheetah, hyena; and mongoose, and many rodents

 

  1. Grassland- North America, Ukraine, etc . Dominated by grasses. Temperate conditions with rather low rainfall. Grasses dominate the vegetation. The fauna include large herbivores like bison, antelope, cattle, rodents, prairie dog, wolves, and a rich and diverse array of ground nesting bird

 

  1. Desert- Continental interiors with very low and sporadic rainfall with low humidity. The days are very hot but nights are cold. The flora is drought resistance vegetation such as cactus, euphorbias, sagebrush. Fauna : Reptiles, Mammals and birds.

Coastal Regulation Zone

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 Act of 1991

  • To regulate development activity on India’s coastline
  • The approach adopted by the first notification was to define the ‘High Tide Line’ and ‘Coastal Regulation Zone’ and thereafter specify the activities permitted and restricted in the vicinity of the CRZ
  • This regulated zone was further divided into four categories (CRZ 1-4) as per permitted land use
  • There have been about 25 amendments in this notification between 1991 and 2009
  • Rules re-issued in 2011
    • The difference between 1991 and 2011 rule is that the ‘no development zone’ has been reduced from 200 m from the high-tide line (HTL) to 100 m only to meet the increased demands of housing of fishing and other traditional coastal communities.
    • CRZ has been expanded to include territorial waters as protected zone
    • The concept of ‘hazard line’ has been introduced
    • Concept of classification of CRZ into four zones has been continued
  • CRZ I- ecologically sensitive areas such as mangroves, coral reefs, salt marshes, turtle nesting ground and the inter-tidal zone.
  • CRZ II- areas close to the shoreline, and which have been developed.
  • CRZ III- Coastal areas that are not substantially built up, including rural coastal areas.
  • CRZ IV- water area from LTL to the limit of territorial waters of India
    • A new category called areas requiring special consideration has been created which includes
      • CRZ areas of Greater Mumbai, Kerala and Goa
      • Critically vulnerable coastal areas such as Sunderbans
    • The list of exceptions to the rule prohibiting setting up of new industries and expansion of existing industries has been expanded

 

INDIAN FOREST TYPES

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Forest types in India are classified by Champion and Seth into sixteen types.

 

Tropical Wet evergreen forests

are found along the Western Ghats, the Nicobar and Andaman Islands and all  along the north-eastern region.

It is characterized by tall, straight evergreen trees.

The trees in this forest form a tier pattern:

Beautiful fern of various colours and different varieties of orchids grow on the trunks of the trees.

Among the following States, which one has the most suitable climatic conditions for the cultivation of a large variety of orchids with minimum cost of production, and can develop

Tropical Semi-evergreen forests

found in the Western Ghats, Andaman and Nicobar Islands, and the Eastern

Himalayas.

Such forests have a mixture of the wet evergreen trees and the moist

deciduous trees. The forest is dense

Tropical Moist deciduous forests

found throughout India except in the western and the north -western regions.

The trees are tall, have broad trunks, branching trunks and roots to hold them firmly to the ground.

These forests are dominated by sal and teak, along with mango, bamboo, and rosewood.

Littoral and swamp

found along the Andaman and Nicobar Islands and the delta area of the Ganga and the Brahmaputra.

They have roots that consist of soft tissue so that the plant can breathe in the water.

Tropical Dry deciduous forest

The northern part of the country except in the North-East. It is also found in Madhya Pradesh, Gujarat, Andhra Pradesh, Karnataka, and Tamil Nadu. The canopy, of the trees does not normally exceed 25 metres.

The common trees are the sal, a variety of acacia, and bamboo.

Tropical Thorn forests

This type is found in areas with black soil: North, West, Central, and South India. The trees do not grow beyond 10 metres. Spurge, caper, and cactus are typical of this region.

Tropical Dry evergreen forest

Dry evergreens are found along Tamil Nadu Andhra Pradesh and Karnataka coast. It is mainly hard-leaved evergreen trees with fragrant flowers, along with a few  deciduous trees.

Sub-tropical Broad-leaved forests

Broad-leaved forests are found in the Eastern Himalayas and the Western Ghats, along the Silent Valley.

There is a marked difference in the form of vegetation in the two areas.

In the Silent Valley, the  poonspar, cinnamon, rhododendron, and fragrant grass are predominant.

In the Eastern Himalayas, the flora has been badly affected by the shifting cultivation and forest fires.

There are oak, alder, chestnut, birch, and cherry trees. There are a large variety of orchids, bamboo and creepers.

Sub-tropical Pine forests

found in Shivalik Hills, Western and Central Himalayas, Khasi, Naga, and Manipur Hills.

The trees predominantly found in these areas are the chir, oak, rhododendion, and   pine as well as sal, amla, and laburnum are found in the lower regions.

 

Sub-tropical Dry evergreen forests

hot and dry season and a cold winter. It generally has evergreen trees with shining

leaves that have a varnished look.

found in the Shivalik Hills and foothills of the Himalayas up to a height of 1000 metres.

Montane Wet temperate forests

In the North, found in the region to the east of Nepal into Arunachal Pradesh, receiving a minimum rainfall of 2000 mm. In the North, there are three layers of    forests: the higher layer has mainly coniferous, the middle layer has deciduous trees such as the oak and the lowest layer is covered by rhododendron and champa.

In the South, it is found in parts of the Niligiri Hills, the higher reaches of Kerala.

The forests in  the northern region are denser than in the South. Rhododendrons and a

variety of ground flora can be found here.

Himalayan Moist temperate Forest

This type spreads from the Western Himalayas to the Eastern Himalayas. The trees

found in the western section are broad-leaved oak, brown oak, walnut,

rhododendron,

Eastern Himalayas, the rainfall is much heavier and therefore the vegetation is also more lush and dense. There are a large variety of broad-leaved trees, ferri, and  bamboo.

Himalayan Dry temperate Forest

This type is found in Lahul, Kinnaur, Sikkim, and other parts of the Himalayas.

There are predominantly coniferous trees, along with broad-leaved trees such as the oak, maple, and ash. At higher elevation, fir, juniper, deodar, and chilgoza are found.

 

Sub alpine forest

Sub alpine forests extend from Kashmir to Arunachal Pradesh between 2900 to 3500 metres.

In the Western Himalayas, the vegetation consists mainly of juniper, hododendron, willow, and black currant.

In the eastern parts, red fir, black juniper, birch, and larch are the common trees.

Due to heavy rainfall and high humidity the timberline in this part is higher than that in the West.

Rhododendron of many species covers the hills in these parts.

Moist Alpine scrub

Moist alpines are found all along the Himalayas and on the higher hills near the Myanmar border. It has a low scrub, dense evergreen forest, consisting mainly of rhododendron and birch. Mosses and ferns cover the ground in patches. This region receives heavy snowfall.

Dry alpine scrub

Dry alpines are found from about 3000 metres to about 4900 metres. Dwarf plants predominate, mainly the black juniper, the drooping juniper, honeysuckle, and willow.

Climate Change

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  • It is the long term change in the statistical distribution of weather patterns over periods of time
  • Though it has been happening naturally for millions of years, in recent years it has accelerated due to anthropogenic causes and has been causing global warming.
  • UNFCCC defines climate change as – “a change of climate which is attributed directly or indirectly to human activity that alters the composition of the global atmosphere and which is in addition to natural climate variability observed over comparable time periods”

MANGROVES

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Mangroves are the characteristic littoral plant formation of tropical and subtropical sheltered coastlines.

are trees and bushes growing below the high water level of spring tides which exhibits remarkable capacity for salt water tolerance.

basically evergreen land plants growing on sheltered shores, typically on tidal flats, deltas, estuaries, bays, creeks and the barrier islands. require high solar radiation and have the ability to absorb fresh water from saline/ brackish water. produces pneumatophores (blind roots) to overcome respiration problem in the anaerobic soil conditions

  • Leaves are thick and contain salt secreting glands.
  • exhibit viviparity mode of reproduction. i.e. SeedS germinate in the tree itself (before falling to the ground). This is an adaptative medianiSintoovercome the problem of germination in Saline water.
  • crystals of salt on the back of the leaves; others block absorption of salt at their roots

The mangroves of Sundarbans are the largest single block of tidal holophytic mangroves of the world. famous for the Royal Bengal Tiger and crocodiles.

The mangroves of Bhitarkanika (Orissa), which is the second largest in the Indian sub continent, harbour high concentration of typical mangrove species and high genetic diversity have (additional) special roots such as prop roots, pneumatophores  which help to impede water flow and thereby enhance the deposition of sediment in areas (where it is already occurring), stabilize the coastal shores, provide breeding ground for fishes. protects coastal lands from tsunami, hurricanes:and floods release oxygen back to the atmosphere, along with a little methane gas

Climate Change Mitigation

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  • Alternative Energy sources
    • Renewable energy
    • Nuclear Power
    • Reduce the carbon intensity of fossil fuels
  • Energy efficiency and conservation
    • Transport and urban planning
    • Building design
    • Reforestation and avoid deforestation
    • Eliminating waste methane
  • Geoengineering
    • Greenhouse gas remediation
      • Biomass
      • Carbon air capture
      • Carbon capture and storage
    • Societal control
      • Population
      • Sustainable life-style

ENVIRONMENT POLLUTION 2

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E — WASTE

E-waste is not hazardous if it is stocked in safe storage or recycled by scientific methods or transported from one place to the other in parts or in totality in the formal sector. The e-waste can be considered hazardous if recycled by primitive methods

Survey was carried out by the Central Pollution Control Board (CPCB) during 2005

In India, among top ten cities; Mumbai ranks first in generating e-waste followed by Delhi, Bangalore, Chennai, Kolkata, Ahmadabad, Hyderabad, Pune, Surat and Nagpur.

 

SOLID WASTE

the discarded (abandoned or considered waste-like) materials

does not include solid or dissolved materials in domestic sewage, or

solid or dissolved materials in irrigation return flows or industrial discharges0

Conventional plastics have been associated with reproductive problems in both humans and wildlife.

Dioxin (highly carcinogenic and toxic) by-product of the manufacturing process is one of the chemicals believed to be passed on through breast milk to the nursing infant.

Burning of plastics, especially PVC releases this dioxin and also furan into the  atmosphere.

Pyrolysis-It is a process of combustion in absence of oxygen or the material burnt under controlled atmosphere of oxygen. It is an alternative to incineration. The gas and liquid thus obtained can be used as fuels.

 

Waste Minimization Circles (WMC)

helps Small and Medium Industrial Clusters in waste minimization in their industrial plants.  assisted by the World Bank with the Ministry of Environment and Forests acting   as the nodal ministry.  being implemented with the assistance of National   Productivity Council (NPC), New Delhi.

aims to realise the objectives of the Policy Statement for Abatement of Pollution (1992), which states that the government should educate citizens about environmental risks, the economic and health dangers of resource degradation and the real economic cost of natural resources.

BIOREMEDIATION

the use of microorganisms (bacteria and fungi) to degrade the environmental contaminants into less toxic forms.

Phytoremediation

is use of plants to remove contaminants from Soil and water .

Rhizofiltration

  • a water remediation technique that involves the uptake of contaminants by plant roots.
  • used to reduce contamination in natural wetlands and estuary areas.

 

ENVIRONMENTAL IMPACT ASSESSMENT

Notification on Environmental Impact Assessment (EIA) of developmental

projects 1994 under the provisions of Environment (Protection) Act, 1986 making EIA  mandatory for 29 categories of developmental projects. One more item was added to the list in January, 2000. environmental impact assessment statutory for 30 activities

Environment Impact Assessment Notification of 2006 has categorized the developmental projects  in two categories, i.e., Category A and Category B

Ministry of Environment & Forests

‘Category A’ projects are appraised at national level by expert appraisal committee

India has constituted the State Level Environment Impact Assessment Authority (SEIAA) and State Level Expert Appraisal Committee (SEAC)  to decentralize the environmental clearance process

The objective of EIA is to foresee and address potential environmental problems/  concerns at an early stage of project planning and design.

 

 

The EIA notification establishes four stages for obtaining Environmental Clearance.

  1. Screening
  2. Scoping and consideration of alternatives Baseline data collection
  3. Impact prediction
  4. Assessment of alternatives, delineation of mitigation measures and environmental impact statement
  5. Public hearing
  6. Environment Management Plan Decision making
  7. Monitoring the clearance conditions

Screening- It is only for Categories B

Screening Criteria are based upon:

  • Scales of investment; •       Type of development; and, •      Location of development

B1 Categories project require Environmental Impact Assessment while B2 category projects are exempted from EIA.

State Level Expert Appraisal Committee determine about project categories

Climate Change

 

  • It is the long term change in the statistical distribution of weather patterns over periods of time
  • Though it has been happening naturally for millions of years, in recent years it has accelerated due to anthropogenic causes and has been causing global warming.
  • UNFCCC defines climate change as – “a change of climate which is attributed directly or indirectly to human activitythat alters the composition of the global atmosphere and which is in addition to natural climate variability observed over comparable time periods”

 

Climate Change Mitigation

  • Alternative Energy sources
    • Renewable energy
    • Nuclear Power
    • Reduce the carbon intensity of fossil fuels
  • Energy efficiency and conservation
    • Transport and urban planning
    • Building design
    • Reforestation and avoid deforestation
    • Eliminating waste methane
  • Geoengineering
    • Greenhouse gas remediation
      • Biomass
      • Carbon air capture
      • Carbon capture and storage
    • Societal control
      • Population
      • Sustainable life-style

 

Hot DESERT ECOSYSTEM  

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Deserts are formed in regions with less than 25 cm of annual rainfall, .or sometimes in hot regions where there is more rainfall, but unevenly distributed in the annual cycle.

Lack’ of rain in the mid latitude is often due to stable high pressure zones; deserts in temperate regions often lie in “rain shadows”, that is where high mountains block off moisture from the seas.

The climate:of these biomes is modified by altitUde and latitude. At greater distance from the equator the deSerts are cold and hot near equator and tropics.

As the large volume of water passes through the irrigation system, salts may be left behind that will gradually accumulate over the years until they become limiting, unless means of avoiding this difficulty are devised

Adaptations

(i)  These plants conserve water by following methods:

They are mostly shrubs. Leaves are absent or reduced in size.

Leaves and stem are succulent and water storing.

In some plants even the stem contains chlorophyll for photosynthesis.

Root system is well developed and spread over large area.

The annuals wherever present germinate, bloom and reproduce only during the short rainy season, and not in summer and winter.

(ii) The animals are physiologically and behaviorally adapted to desert conditions.

They are fast runners.

They are nocturnal in habit to avoid the sun’s heat during day time.

They conserve water by excreting concentrated urine.

Animals and birds usually have long legs to keep the body away from the hot ground.

Lizards are mostly insectivorous and can live without drinking water for several days.

Herbivorous animals get sufficient water from the seeds which they eat.

Mammals as a group are poorly adapted to  deserts

Indian Desert — Thar desert (hot)

The climate of this region is characterised by excessive drought, the rainfall being scanty and , irregular.

The winter rains of northern India rarely penetrate into the region.

The proper desert plants may be divided into two main groups.

  1. i) depending directly upon on rain and
  2. ii) those depending on the presence of subterranean water.

The first group consists of two types:

the ‘ephemera’s’ and the rain perennials’.

The ephemera’s are delicate annuals, apparently free from any xerophilous adaptations, having slender stems and root-systems and often large Flowers.

They appear almost immediately after rain, develop flowers and fruits in an incredibly short   time, and die as soon as the surface layer of the soil dries up.

The rain perennials are visible above the ground only during the rainy season, but have a perennial underground stem.

The second group – depending on the presence of subterranean water

By far the largest number of indigenous plants are capable of absorbing water from deep below the surface of the ground by means of a well-developed root system, the main part of which generally consists of a slender, woody tap root of extraordinary length.

Generally, various other xerophilous adaptations are resorted to such as reduced leaves, thick hairy growth, succulence, coatings of wax, thick cuticle, protected stomata, etc., all having for  their object of reduction of transpiration.

 

Fauna

It is home to some of India’s most magnificent grasslands and sanctuary for a charismatic bird, the Great Indian Bustard. Among the mammal fauna, the blackbuck, wild ass, chinkara, caracal, Sandgrouse and desert fox inhabit the open plains, grasslands, and saline depressions.

The nesting ground of Flamingoes and the only known population of Asiatic wild Ass lies in the remote part of Great Rarm, Gujarat.

It is the migration flyway used by cranes and flamingos.

Some endemic flora species of Thar Desert includes Calligonum Polygonoides, Prosopis cineraria, Tecomella undulate, Cenchrus biflorus and Sueda fruticosa , etc

Sikkim Public Finance and fiscal Policy

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Sikkim Public Finance and fiscal Policy

Basic Understanding of Public Finance of Sikkim

Public finance as a concept may be understood on two levels –

  1. as a practical activity of all components of public administration and
  2. As a theoretical area.
  • The term “public finance“ may be defined as the identification of specific financial relationships and functions running between public administration bodies and institutions (i.e. public sector entities – the state) as one party and in mutual interaction with other entities of the economic system as the other party (i.e. private entities – households and companies).Sikkim Public Finance and fiscal Policy
  • These relationships and functions may be considered special as they include:
  1. Procuring public goods (production and provision);
  2. arranging and funding various transfers (particularly in the social area);
  3. Directing entities existing in the economy towards socially desirable behaviours; for instance through taxes, penalties, subsidies and other stimuli and charges.
  • In order to arrange the funding of the above-mentioned areas, there is a fiscal system (public budgeting system) whose aim is to collect the required amount of public revenue. Public revenue serves, at various levels of public budgets (governmental, regional and local), to fund public expenditures.
  • Public expenditures, public revenue and particularly taxes may be considered to be the fundamental elements of public finance. Important terms derived from these three elements include deficit, public debt, budgetary policy and fiscal policy.
  • The development of public finance is connected with economic mechanisms that should ideally lead to the effective and fair allocation of limited resources.

Public Finance – Causes of Development Aspects of Sikkim

  • The reason for developing public funding is the state intention to soften the drawbacks resulting from economic decisions made by individual entities (households and companies). It uses fiscal tools (public revenue and expenditure) to accomplish this.
  • Certain behaviour is classified as the “quasi-fiscal funding principle”, where publiclaw goods are funded from off-budgetary resources (e.g. the public-law television in the Czech Republic is funded from television licence fees).
  • Another important term that relates to public finance, and that is also a strong argument for its development, is market failure.
  • The market system follows supply and demand through the price mechanism. It is a system that has developed itself, and that has strong ties with the interactions between people and companies.
  • All these entities strive to maximize their benefit (welfare). The greatest benefit is strongly interconnected with reaching the economic optimum condition.
  • A system that reaches the optimum is considered, in the neoclassical economics concept, to be efficient, fair and stable.
  • The ideal condition is called the Pareto optimum. This exists in an economy when none of the involved entities can improve its position without worsening another entity’s position. If any of the entities intends to improve its position, it is possible for it to do so only to the detriment of another entity. The existence of perfect competition is a necessary requirement for reaching the optimum.
  • The three above-mentioned elements (efficiency, stability and fairness) are connected with microeconomics from the viewpoint of efficiency, connected with macroeconomics from the viewpoint of stability, and connected with sciences outside economics from the viewpoint of fairness. The perception of fairness is investigated by other social sciences, and is closely linked to ethics, etc.
  • If no conditions exist for reaching a market-efficient solution, or the conditions are simply violated for any reason, market failure will ensue.
  • It consists of the following:
  1. The allocation of resources is not efficient,
  2. The economy in the area of macroeconomics indicators oscillates around the desired values and
  3. The distribution of wealth and income may diverge from the consensus on fairness.
  • It is then up to the state to perform its fiscal function (the public finance function) in those three areas in order to preferably eliminate or at least reduce market failure. Specifically, those are microeconomic failures from the allocation function perspective, macroeconomic failures from the stabilization function perspective, and the redistribution function then falls into the area of market failure caused by outside economies.
  • If the conditions for perfect competition are not met, a malfunction in the price mechanism will arise, which disturbs the allocation mechanism. Some failures can be eliminated without public finance intervention through auto-regulation (the internalization of externalities). However, others are part of the government’s allocation function and its fiscal tools (taxes and governmental purchases or transfers).
  • Macroeconomic failure is indicated by instability in the economic system that usually suffers from cyclical inflation, a high rate of unemployment, low or even negative growth of production or problems in the foreign trade balance, etc.
  • The above-mentioned macroeconomic cases of instability are why governments perform the state stabilization functions (stabilization fiscal functions).
  • The state uses several tools to perform the stabilization function. The basic classification is a division into monetary and fiscal tools. The monetary tools include open market operations, the setting of basic interest rates, determining the level of mandatory minimum reserves, etc. Fiscal tools may include public expenditure, public revenue and ways of funding deficits.
  • The causes of market failure outside the economy relate to reaching fairness in society through the distribution of wealth and income. With the distribution of wealth, the market does not practically perceive fairness. In this case, the state performs a redistributive role with 5h3 principles of solidarity, social conscience, charity, etc. based on the social consensus.
  • The state performs the redistribution function through two basic categories of tools. The first includes revenue (tax) and the other expenditures (transfers, grants and subsidies).
  1. First, a tax transfer mechanism may be implemented through a combination of progressive taxation of high incomes and transfers (subsidies) in favour of low income households.
  2. Secondly, this can occur through the taxation of luxury goods combined with subsidies on goods for the low-income population.

Fiscal Policy Meaning

  • Arthur Smithies defines fiscal policy as “a policy under which the government uses its expenditure and revenue programmes to produce desirable effects and avoid undesirable effects on the national income, production and employment.”
  • Though the ultimate aim of fiscal policy in the long-run stabilisation of the economy, yet it can be achieved by moderating short-run economic fluctuations.
  • In this context, Otto Eckstein defines fiscal policy as “changes in taxes and expenditures which aim at short-run goals of full employment and price-level stability.

Objective of Fiscal Policy

  1. To maintain and achieve full employment.
  2. To stabilise the price level.
  3. To stabilise the growth rate of the economy
  4. To maintain equilibrium in the balance of payments.
  5. To promote the economic development of underdeveloped countries

Revenue Receipt Aspects of Sikkim

  • Tax Revenue Comprises taxes collected and retained by the State and State’s share of union taxes under Article 280(3) of the Constitution.
  • Non-Tax Revenue Includes interest receipts, dividends, profits etc. Grants in Aid and Contributions
  • Grants-in-aid represent central assistance to the State Government from the Union Government. Includes ‘External Grant Assistance’ and ‘Aid, Material & Equipment’ received from Foreign Governments and channelised through the Union Government. In turn, the State Government also gives Grants-in-aid to Panchayati Raj Institutions, Autonomous Bodies etc.

 

Expenditure Aspects of Sikkim

  • Expenditure is classified as Revenue Expenditure (which is used to meet the day-to-day running of the Government), and Capital Expenditure (which is used to create permanent assets, or to enhance the utility of such assets or to reduce permanent liabilities). Expenditure is further classified under Plan and Non-plan across different services viz., General services, Social services and Economic Services.
  1. General Services Includes Justice, Police, Jail, PWD, Pension etc.
  2. Social Services Includes Education, Health & Family Welfare, Water Supply , Welfare of SC-ST etc.
  3. Economic Services Includes Agriculture, Rural Development, Irrigation, Cooperation, Energy, Industries, Transport etc.

Medium Term Fiscal Plan for Sikkim: 2016-17

Introduction – Fiscal Policy Overview

  • The fiscal year 2016-17 is the second year of the award period of the 14th Finance Commission (FFC). The fiscal stress faced by the State in the year 2015-16 persisted in 2016-17 as well.
  • The fiscal challenges faced by the State necessitated modifications in the financing pattern based on the changes in resource transfers by the Central Government.
  • The share of Sikkim in the divisible pool of Central taxes has been raised to 0.367 per cent as compared to the share of 0.239 recommended by the 13th FC.
  • The increase in State’s and rise in the divisible pool of Central taxes from 32 to 42 percent due to the recommendations of the FFC has resulted in higher tax devolution to the State. However, rise in tax devolution subsumed many grants to the State and overall Central transfer was declined last year.
  • However, the State Government is committed to improve the provision of the public services and protect the spending on priority sectors while being prudent in fiscal management.
  • The Sikkim Fiscal Responsibility and Budget Management Act of 2010 (FRBM Act) provides the benchmark for fiscal management in the State.
  • The FRBM Act was enacted in the State with the objective of providing fiscal stability and conducting the fiscal policy in a sustainable manner to reduce the deficit and stabilize the debt burden.
  • It is expected that a rule based fiscal policy will establish long run fiscal sustainability improving the credibility of the Government policy and focus on spending to build social and physical infrastructure.
  • Given that the State has a limited base to generate resources internally and the provision of public services in a difficult hilly terrain is costly, the Government needs to calibrate it fiscal policy and spending pattern with a restraint provided through the fiscal rules.
  • The State Government, over the years, managed to adhere to the fiscal targets, while adopting a development oriented fiscal policy. The overall fiscal management in terms of budget decisions and implementation has remained within the boundary set in the fiscal rules.
  • The fiscal adjustment path for Sikkim recommended by the Thirteenth Finance Commission (TFC) with targeted fiscal deficit to ensure sustainable level of debt ended at 2014-15.
  • The FRBM Act of the State took into account the recommendations made by the 14th Finance Commission starting from the fiscal year 2015-16.The FFC recommended certain changes in the fiscal consolidation process to provide flexibility in the fiscal management of the State.
  • The State Government has brought amendments this fiscal to the State FRBM Act reflecting these recommendations.
  • The development oriented fiscal management over the years helped the State Government achieving socio-economic development and an inclusive growth process. Creating an enabling environment for different sections of the society, different tribal groups, women, and young people to participate in economic activities and contribute to the development of the State has remained as major objectives of the Government

Achievement of social sector commitments

  • Achievement of social sector commitments constitutes an important element of resource allocation decisions in the context of rule based fiscal policy that restricts incurring deficit and borrowing to a sustainable level. The Gross State Domestic Product (GSDP) at constant prices recorded a healthy growth rate of 7.88 percent in 2013-14.
  • The per capita income of the state, which was Rs.30727 in 2004-05, has increased substantially to Rs.196144 in 2016-17 at current prices. The major socioeconomic indicators for the State show commendable improvement.
  • The poverty ratio has declined to 8.19 per cent as compared to all India average of 21.92 per cent in 2011-12. The literacy rate at 81.40 per cent in 2011-12 is significant achievement. The IMR has gone down to 24 per 1000 in 2011 as compared to the all India average of 44.

Macroeconomic Outlook of Sikkim

  • The CSO has not updated the GSDP data of Sikkim for the year 2014-15. For all projection purposes, the method suggested by the FFC has been adopted to update the GSDP. The State GSDP, during 2012-13 and 2013-14, grew consistently at a reasonable rate of 7.6 and 7.9 per cent respectively.
  • While the service sector dominated the State income during 2005-06 to 2008-09, the share of Industry sector started increasing since 2009-10 and in 2013-14 the service sector constituted about 60.6 per cent of the total GSDP.
  • The relative share of industry sector has increased mostly driven by manufacturing, construction and power sectors. The inter-sectoral composition of GSDP since 2004-05 shows that the service sector, which accounted for half of the State GSDP till 2008-09, has declined to about 30 per cent in 2013-14.
  • The relative share of agriculture sector, which comprises of agriculture, forestry and fishing, has been declining over the years. The share of agriculture sector has come down from about 14 per cent in 2008-09 to 9.5 per cent in 2013-14.
  • The manufacturing and construction sectors remained as major contributors to the growth of the State economy. The year 2009-10 marks a clear shift in the growth path of the GSDP as the growth rate in this year jumped to a high of 73.6 per cent (89.9 per cent in current prices).
  • The impressive growth of power sector was basically driven by generation of hydroelectricity in newly commissioned power projects.
  • The manufacturing sector showed very high growth due to higher production in pharmaceutical industries and strengthening of small-scale industries. The manufacturing sector constitutes about one third of the State GSDP in 2013-14.
  • The initial burst in the growth of power and manufacturing sectors has stabilized in recent years. However, this established a strong base for the GSDP in Sikkim.

 

Fiscal Profile of the State

The Changing Fiscal Architecture and Its Impact on Sikkim

  • The budget for the year 2016-17 was the second budget after the FFC gave its recommendations on devolution of resources to the States. Despite the rise in share of Sikkim in tax devolution, aggregate transfers to the State declined in 2015-16 relative to GSDP due to sharp decline in grants.
  • Based on the tax devolution share for Sikkim and grants recommended by the FFC, the State received less central transfers in 2015- 16 as compared to 2014-15. The loss of assured source of block grants has created fiscal stress for the State and it seems unlikely that the increased tax devolution would compensate for this.
  • The FFC increased tax devolution to the State from 32 per cent to 42 per cent to provide higher flexibility in the use of enhanced level of untied fund.
  • As the FFC relied on tax devolution to cover the assessed revenue expenditure needs of the States, it took a holistic view of the revenue expenditure needs of States without Plan and Non-Plan distinction.
  • The FFC departed from past practice by not awarding specificpurpose grants. These grants, according to the Commission, were small to make any impact and crate confusion where large Plan schemes already exist, and were left to the Centre and the states acting cooperatively for those needs. The only grants awarded by the Commission were disaster relief grants and grants for local bodies.
  • The Commission was required by their terms of reference to recommend grants for these two purposes. The commission steered clear of both the Plan/Non-Plan distinction and that between special-category and other states.
  • Consequent upon the enhancement of share of the states in the central divisible pool from the current 32 percent to 42 percent which is the biggest ever increase in vertical tax devolution, Central Assistance to State Plan has been restructured.
  • The Central Government has discontinued the normal central assistance (NCA), special plan assistance (SPA), special central assistance (SCA), and the additional central assistance (ACA).
  • The Central Government also delinked eight centrally sponsored schemes (CSS) from funding and brought about substantial changes in the funding pattern of some other schemes.
  • The higher growth rate assumed by the FFC resulted in higher assessed revenue of the State during the award period of the Commission.
  • The own tax revenue projected for 2015-16 by the Commission is Rs 876.00 crore (calculation is based on GSDP of Rs 20634 crore), which rises to Rs.3039 crores in the year 2019-20.
  • Higher tax projection by the Commission reduced the pre-devolution revenue deficit gap for the State during the award period. The FFC projected revenue receipts seems to be unachievable.
  • The FFC transfer to the State also depends on the resource mobilization by the Central Government. While the FFC recommended Rs.2129 crores as share in Central Taxes to Sikkim, the Union budget for 2015-16 provided Rs.1929 crores only.
  • The actual flow however, was much less at Rs.1870 crores. This implies a gap of Rs.259 crores, which is expected to grow in the future years unless the the Central taxes increases considerably.
  • Decline in Central Grants and the gap in actual flow of tax devolution to that of the budget projection makes it very difficult to provide funds to the infrastructure projects started earlier based on the fund flow mechanism existing under the then Planning Commission and the Finance Commission.

Expenditure Profile

  • The Government of Sikkim has successfully controlled the revenue expenditure as percentage to GSDP. This has helped the State to increase the revenue surplus and expand the capital expenditure.
  • The priority sectors in social and economic services were traditionally given emphasis in resource allocation. The State Government has initiated several schemes in education and health to improve overall social and human infrastructure in the State.
  • The revenue expenditure, which was at 29.8 per cent relative to GSDP in 2009-10, was compressed to 23.12 per cent in 2014-15 and was budgeted at 23 percent in 2016-17. While the level of expenditure on social and economic services was protected in 2015-16 as compared to the previous year, the level of spending relative to GSDP projected for the year 2016-17 was low.
  • The expenditure compression in 2016-17 was due to lower availability of resources.

Outstanding Debt and Government Guarantee

  • Maintaining the debt burden of the State at sustainable level remains one of the major objectives of the fiscal management of the State as reflected in the FRBM Act.
  • The TFC in their revised fiscal roadmap have worked out the yearly outstanding debt burden for all the states aligning with the fiscal path.
  • The debt-GSDP ratio in the State has been reduced considerably, which is projected to be 23 per cent in 201617 BE.
  • The decline in the average cost of debt of the state because of the debt restructuring formula of the Twelfth Finance Commission has helped to lowering the debt burden.
  • Decline in the average cost of debt will result in reduction in the volume of interest payments and availability of higher fiscal space for the state government.
  • The interest payment has declined from 2.5 per cent in 2009-10 relative to GSDP to 1.6 per cent in 2016-17 (BE).

Medium Term Fiscal Plan: 2016-17 to 2018-19

Fiscal Indicators

  • The fiscal outcomes in the form of indicators like fiscal deficit, revenue deficit, and outstanding liabilities for previous year, current year, ensuing budget year and two outward years are presented.
  • The fiscal outcomes of the year 2014-15, for which audited figures are available, show that the State Government has adhered to the fiscal targets under the Act. In the year 2015-16, the Government took the benefit of flexibility provided by the FFC to raise the fiscal deficit to 3.25 percent to GSDP.
  • However, due to slippage in revenue receipts, the fiscal deficit has increased to 3.31 percent. The budget projections of the year 2016-17, however, show that the fiscal deficit has been contained at 3 percent of the GSDP. The Government managed to generate revenue surplus all along.
  • The projections for the budget year, 2016-17, and for two outward years, which give a medium term perspective to the fiscal stance, is aligned with the FRBM Act. The MTFP from 2016-17 to 2018-19 conforms to the recommendations of the FFC to anchor the fiscal deficit to 3 per cent of GSDP.
  • The MTFP 2016-17 presents the outlook of the fiscal management of the State Government in the medium term. The detailed projection of fiscal variables show that the revenue account surplus has been maintained during the MTFP period and the fiscal deficit has been stabilized at 3 per cent relative to the GSDP.
  • Despite reducing the revenue expenditure from 23 percent relative to GSDP to about 22.3 percent, the revenue surplus could not be increased due to low growth of revenues relative to the GSDP.
  • While GSDP is assumed to grow at 17.69 percent, the total revenue receipt grow at about 16 percent. The loss of block grants has pulled down the aggregate revenue receipts.
  • In nominal terms the revenue surplus increases from Rs.260.51 croers in 2016-17 (BE) to Rs.359.81 crores in 2018-19. Despite rise in fiscal deficit in nominal terms, it remains at 3 percent of GSDP, the mandatory requirement under the FRBM Act. The outstanding liabilities declines from 23.18 percent in 2016-17 BE to 22.29 percent in 2018-19.
  • As indicated, due to higher growth of GSDP, the fiscal variable in the medium term show a lower value. However, there has been substantial growth in revenue receipts and allocations to various sectors in nominal terms. While revenue receipts increases from Rs.4885 crores to Rs.6580 crores in the medium term, the revenue expenditure rises from Rs.4625 crores to Rs.6221 crores. The growth of revenue expenditure remains below the growth revenues.
  • The provision for capital outlay has increased from Rs.847 crores to Rs.1178 croers during MTFP period. Relative to GSDP, the capital outlay has shown an increase in the medium term.
  • Despite pressure on revenue receipts and competing demands, the focus on investments in infrastructure will remain a key factor in fiscal policy of the Government.

Summary Assessment

  • The State of Sikkim continues to face fiscal stress for the second year in a row after the fiscal architecture involving the fiscal federal arrangements have changed following the FFC recommendations.
  • As the Central transfers constitute a large portion of the State’s budget, the loss of some of assured source of revenue from plan grants has created difficulties in resource allocation in the State.
  • Although, the fiscal indicators show a declining trend due to high growth of GSDP, the nominal numbers show growth in revenues and resource allocation. The growth in resource allocation, particularly in the priority sectors in social and economic series and capital outlay has been restrained.
  • This has added increased responsibility on the State Government to generate higher revenue and continue with the traditional policy of emphasizing social and infrastructure sectors.
  • Despite the pressure on resources, the MTFP indicates a stable and growth oriented fiscal policy for Sikkim. The rise in production of electricity and growth of the manufacturing sector influenced the economic growth of the State in recent years.
  • The fiscal policy has to create an enabling environment for further growth and socioeconomic progress.
  • The resource allocation in the medium term focuses on enhancing the capital expenditure and social and economic sector spending. The economy needs better infrastructure and human development to make progress. The State Government has initiated several schemes in the social and economic sectors in recent years.
  • Despite the problem of cost disability, the State is committed to improving the service delivery spanning over the social and economic sector. The MTFP safeguards the fiscal consolidation process and provides adequate resources to existing schemes in priority areas.
  • The FFC recommended anchoring fiscal deficit to 3 per cent of the GSDP. The MTFP continues with the fiscal target set for fiscal deficit at 3 per cent. As debt stock in the State relative to the GSDP remains low, the debt-GSDP target remains stabilized. While projecting State taxes, the MTFP assumed higher buoyancy to augment resources, which will be achievable in the medium term.
  • The modernization of tax administration and efforts to improve the tax base is expected to improve the revenue receipts. It was observed that there has been some uncertainty in the flow of share in Central taxes. The tax devolution to the State varies depending upon the collection of Central taxes as the Finance Commission recommends a share in the divisible pool.
  • In the year 2015-16, against a budgeted amount of Rs.1924 crores, which was also less than what the FFC projected, the transfer to the State was only Rs.1870 crores. This level unpredictability affects State finances adversely.
  • The expenditure side restructuring in the MTFP was based on the realties regarding the resource availability and priorities expressed Government’s policies, and new schemes announced in the budget.
  • The MTFP protected the capital outlay relative to the GSDP and raised it marginally during the MTFP period. The rise in nominal terms is substantial. The rise in the capital expenditure will be instrumental in strengthening the infrastructure base in the State.
  • The State Government will be able to enhance the level of capital expenditure with the improvement in resource position.
  • What is important is to develop a policy to focus more on productive capital expenditure. The debt burden of the State remains below the limit suggested by the FFC to gain from the flexibility clause regarding the fiscal deficit.
  • The State Government has amended its FRBM Act in 2016-17 to avail the facility of increasing the borrowing limit and consequently the fiscal deficit by 0.25 present separately based on the FFC recommendations.
  • This will further help in maintaining the fiscal discipline and stability, adequate resource allocation to social and economic sector and strengthening infrastructure base.
The highlights of the Budget for the year 2017-18 with a summarized account of the receipts and disbursements incorporated in the budget.
 

A

  

RECEIPTS

  

AMOUNT (in crore)
 

1

  

Tax Revenue

  

669.51
2 Non Tax Revenue 426.46
 

3

  

State’s Share of Central Taxes

  

2477.78
4 Grant in Aid 1752.56
5 Gross Borrowings 881.60
6 Recoveries of Loans and Advances 0.80
7 Net Public Accounts 13.10
A Total Receipts 6221.81
B EXPENDITURE (net)
1 Revenue Expenditure 4613.47
2 Capital Expenditure 1608.35
 

B

  

Total Expenditure

  

6221.82

 

Soil Pollution

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Soil Pollution is the Contamination of the soil by human and natural activities which may cause harmful effects on living beings.
This may be due to the following factors.

(i) Industrial wastes: Industries are the major causes for soil pollution Textiles, steel, paper, Cement, oil, dyeing and other industries are responsible for soil pollution. Toxic organic compounds and phenol destroy the fertility of the soil.
(ii) Biological agents – Fungi, protozoa, bacteria are important Biological agents for soil pollution. The human and animal wastes, garbage, waste water generates heavy soil pollution.
(iii) Radio active pollutants: Atomic reactor, nuclear radio active devices releases radio active pollutants. These pollutants enter the land and accumulate there by causing soil pollution.
(iv) Pesticides: Pesticides pollute the soil. There are of two types (i) chlorinated hydrocarbon insecticide (2) Organic phosphorous pesticides. Common chlorinated hydrocarbon insecticides are DDT, BHC.

Organo phosphorous insecticides are synthetic chemicals like Malathion and parathion.

DDT reduces the activity of sex hormones of male and female. The land with fungicides insecticides causes diseases to human beings.

Fertilizers: These discharge N, Na, K, S, Nitrates etc., into the soil. The nitrate causes cancer.

Polymer, Plastics & other water: These materials appear as garbage. Solid wastes and their quantities increase day by day. They pollute the atmospheres, land and also water badly.

Agricultural practices: Modern agriculture practices pollute the soil to a large extent. Today huge quantities of fertilizers, pesticides, weedicides are added to increase the crop field. Apart from these farm wastes, manure debris, soil erosion containing inorganic chemicals are causing soil pollution.
Effect of soil pollution
1.Organic wastes enter the soil pores and decompose. Pathogenic bacteria spread infection.
2.Compounds containing As, Hg, Cr, Ni, Zn and Fe are toxic to life.
3.Fluorides affect plant development
4.Water logging and salinity increase the dissolved salt content in the soil. Some plants are very sensitive to soil PH and salinity.
Thus land becomes unfit for irrigation.
Control of soil pollution
1.Treat the sewage before land disposal
2.Rotate the crop pattern to allow the soil replenish the nutrients.
3.Preserve and protect top fertile soil, control soil erosion by tree plantation.
4.Fertilizers may be applied only after estimating the soil and crop measures.
5.Production of natural fertilizers Excessive use of chemical fertilizers and insecticides should be avoided. Bio pesticides should be used instead of toxic chemical pesticides.
6.Proper hygienic condition- People should be trained regarding the sanitary habits.
7.Recycling and reuse of waster – The wastes such as paper, plastic, metals, glasses should be recycled and used.