Daily News Simplified - DNS

13 JULY 21
Notes
SL. THE HINDU
TOPICS
NO. PAGE NO.

1 Don’t permit Mekedatu project: all-party 08

meet
2 Inflation remains above 6% in June 01
Date: 13-July-21 DNS Notes - Revision

1. UPSC Current Affairs: Don’t permit Mekedatu project: all-party meet | Page – 08

UPSC Syllabus: GS Paper II: Federalism |

Sub Theme: Federalism |Sharing of water | Inter State RIVER SHARING | UPSC

ANALYSING INTER-STATE RIVER WATER DISPUTES ACT, 1956

Purpose of the Act

• The Act provides for the adjudication of disputes relating to waters of inter-State rivers and river
Valleys.
What does Water dispute include?
• Water dispute means any dispute or difference between two or more State Governments with respect
to:
• Use, distribution or control of the waters of, or in, any inter-State river or river valley
• The interpretation of the terms of any agreement relating to the use, distribution or control of such
waters or implementation of such agreement.
• Levy of any additional fee with respect to use of water by other State or their inhabitants.
Complaints by a State about water dispute
• If it appears to the government of any state that a water dispute with the Government of another
State has arisen or is likely to arise, then the State Government may request the Central Government
to refer the water dispute to a Tribunal for adjudication.
• When a request with respect to water dispute is made by any State government, then the Central
Government (if it is of the opinion that water dispute cannot be settled by negotiations) shall within
one year from the date of receipt of such request by notification in the Official Gazette, constitute a
Water Disputes Tribunal for the adjudication of the water dispute.
• So, centre under this Act has the discretion to constitute water tribunal and this at times is based on
political considerations of parties enjoying power at the centre and state. This also results in delay to
solve the dispute.
Composition of Water Disputes Tribunal
• The Water Disputes Tribunal shall consist of a Chairman and two other members nominated in this
behalf by the Chief Justice of India from among persons who at the time of such nomination are
Judges of the Supreme Court or of a High Court.
Bar of jurisdiction for Supreme Court
• Neither the Supreme Court nor any other Court shall have or exercise jurisdiction in respect of any
water dispute which may be referred to a Tribunal under The Inter-State River Water Disputes Act,
1956.
• It means that once a matter is referred to the Tribunal, no state can proceed to either the Supreme
Court or any other Court during the course of proceeding at the Tribunal.
A new Bill on Inter-State River water dispute
• With an aim to settle inter-state river disputes in a speedy manner, the government had earlier
introduced The Inter-State River Water Disputes (Amendment) Bill 2017.
• The Inter-State River Water Disputes (Amendment) Bill 2017 aims to replace the existing the Inter-
State River Water Disputes Act, 1956.
• The 2017 Bill has proposed to constitute Disputes Resolution Committee (DRC) and a permanent
tribunal having multiple benches for settlement of river water disputes among states.
Even the Second Administrative Reform Commission (2nd ARC) and Sarkaria Commission had suggested to
replace the Inter-State River Water Disputes Act, 1956 and River Boards Act, 1956 with a new law or amend
the existing law.
Date: 13-July-21 DNS Notes - Revision

How is the New Bill different from the Inter-State River Water Dispute
Act, 1956
• The Inter-State River Water Disputes (Amendment) Bill, 2017 seeks to streamline the adjudication of
inter-State river water disputes and make the present legal and institutional architecture robust.
• The Bill proposes to introduce a mechanism to resolve the water dispute amicably by negotiations
through a Disputes Resolution Committee, to be established by the Central Government consisting of
experts from relevant fields, before such dispute is referred to the Tribunal. This was not provided in
the previous Act.
• The proposed Bill further seeks to provide for a single standing tribunal which will be permanent in
nature (with multiple Benches) instead of multiple tribunals as per the Dispute Act of 1956.
• The proposed Bill also provides for experts known as Assessors as they will provide technical support
by furnishing relevant data and information which shall be helpful in the adjudication of water
disputes.
• The total time period for adjudication of a water dispute has been fixed at a maximum of four and half
years. This will help in coming to a solution in a strict and scheduled time frame.
Date: 13-July-21 DNS Notes - Revision
Date: 13-July-21 DNS Notes - Revision

1. UPSC Current Affairs: Inflation remains above 6% in June| Page – 01

UPSC Syllabus: GS Paper III: Economy |

Sub Theme: Inflation | Headline inflation | UPSC

Measurement of Inflation in India

Criteria WPI CPI

Level Measures Inflation at Wholesale level Measures Inflation at Retail Level

Who Calculates? Office of Economic Advisor, Ministry of National Statistical Office, Ministry of Statistics and
Commerce and Industry programme Implementation

Base year 2011-12 2012

Categories Primary Articles Food and beverages

Manufactured products Pan, Tobacco and Intoxicants
Fuel and Power Clothing and Footwear
Housing
Fuel and Light
Miscellaneous- Education, Healthcare,
Transportation etc.

Highest Manufactured products Food and Beverages

Weightage

Impact of increase Less impact on WPI as compared to CPI since Larger impact on CPI as compared to WPI since it
in Food items WPI provides higher weightage to gives more weightage to food products.
manufactured products and lower weightage
to Food items.

Services included No Yes

Indirect Taxes No Yes

Included?

Targeted by RBI? No Yes. The RBI is required to maintain CPI rate of

inflation of 4% with a deviation of 2%.

Headline and Core Inflation

The headline inflation simply refers to the inflation in the CPI (or WPI) covering all the categories of goods and services.
On the other hand, the core inflation excludes the volatile categories such as food and fuel in order to measure the increase
in the prices of goods and services. Hence, a drastic fall in the food and fuel prices can bring down the headline inflation by
a to a large extent. However, the core inflation may remain unaffected.
Note: Presently, the RBI is targeting the CPI headline rate of inflation (and not Core Inflation)

Base Effect: To calculate the rate of Inflation, the prices of Goods and services in the current month are compared with the
prices in the corresponding month of the previous year.
The rate of inflation in the current month is calculated as
(Prices of Goods in Current Month- Prices of Goods in Corresponding month of Previous year)/ Prices of Goods in
Corresponding month of Previous year * 100
As can be seen in the above formula, the denominator (base) is the prices of Goods in the corresponding month of previous
year.
Date: 13-July-21 DNS Notes - Revision

So, the if the denominator (base) value is lower, the rate of inflation in the current year would be higher. Similarly, if the
denominator (base) value is higher, the rate of inflation in the current year would be lower. This can be understood as seen
below:

Reasons for the rising Inflation in India

• Imported Inflation: Increase in global commodity prices such as Crude oil, Edible oil etc.
• Increase in certain food items such as Egg , Edible oils, Fruits, Pulses.
• Increase in services such as Health, Transport and Communication etc.
• Low Base effect as the prices of some of the Goods had declined last year due to the pandemic.

What to Target: Headline or Core Inflation?

Presently, the RBI targets CPI headline rate of inflation and not the Core Inflation. In this regard, the Economic Survey 2020-
21 has highlighted that sole focus on CPI headline rate of Inflation may not be appropriate on account of number of reasons.
Accordingly, it has recommended that a greater focus on core inflation is warranted.
Reasons:
Firstly, Headline inflation may take place due to volatility in prices of Crude oil and Food commodities, over which RBI has
no control. For example, failure of monsoons, lack of cold chain infrastructure, supply side bottlenecks etc. usually lead to
increase in Food prices.
Secondly, most of the time inflation in Food commodities is transitory and may not require any policy action by the RBI
Thirdly, if the RBI tries to control inflation due to volatility in prices of food commodities, it can prove to be counter
productive. For example, to control inflation, rate of interest would increase--> Decline in Investment and Consumption
Expenditure--> Economic Slowdown.
Fourthly, to measure inflation correctly, weightage must be assigned to different categories of commodities depending upon
their share in the household expenditure. Higher the share, higher should be weightage. The share of food commodities in
the household expenditure has declined since 2011-12, yet the CPI gives a weightage of almost 45% to the food commodities.