Finance Commissions (FCs)    
Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA)    
Financial Action Task Force (FATF)    
Law on Minimum Support Price (MSP): Farmers Back on Road    
Amul: A Pillar of India's Dairy Sector    
Indian Diamond Industry    
Appointment of Judges in the Supreme Court    

1.    Finance Commissions (FCs)
Overview
•    Constitutional Role: Established under Article 280 of the Constitution, Finance Commissions are constituted every five years to recommend the distribution of financial resources between the Union and states.
•    Mandate: They ensure fiscal federalism by recommending the devolution of taxes, distribution of grants, and fiscal consolidation measures for both the Union and states.
Key Functions
1.    Vertical Devolution: Recommends the share of states in the divisible pool of central taxes.
2.    Horizontal Distribution: Determines how the financial resources are distributed among states, based on their fiscal capacities, needs, and performance.
3.    Grants-in-Aid: Allocates specific grants to states or sectors requiring additional assistance, such as local bodies, disaster management, and sectoral development (e.g., health and education).

Notable Recommendations of Past FCs
•    Increased State Share: Over time, the state share in central taxes has increased from 10% to 42%.
•    Performance-Based Incentives: Incentivized states to adopt reforms in areas like fiscal discipline, forest conservation, and population control.
•    Disaster Relief Funds: Established mechanisms for providing funds to states for disaster preparedness and response.
•    Grants for Local Bodies: Strengthened local governance by recommending grants to improve fiscal autonomy and accountability of local bodies.
Challenges Faced by Finance Commissions
1.    Data Gaps: Reliable data on key indicators such as inter-state trade flows and public service costs are often missing, impacting decision-making.
2.    Implementation Issues: The recommendations are advisory in nature, and their implementation depends on the Union government's discretion.
3.    Balancing Interests: FCs must navigate the interests of various stakeholders, including the Union, states, and local bodies, amidst evolving political and economic conditions.

Prelims Question Example
Question: With reference to the Finance Commission, consider the following statements:
1.    The Finance Commission is a statutory body constituted every five years.
2.    Its recommendations on the division of taxes between the Union and states are binding on the government.
3.    The Finance Commission can recommend performance-based grants to states.

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Which of the statements given above is/are correct?
A)    1 only
B)    2 and 3 only
C)    3 only
D)    1, 2, and 3
Answer: C) 3 only

Mains Question Example
Question: Discuss the role of Finance Commissions in promoting fiscal federalism in India. How have their recommendations shaped the financial autonomy of states and addressed issues of equity in resource distribution?

2.    Pilot of Private Procurement & Stockist Scheme (PPPS):
o    PPPS will be implemented in certain pilot districts in place of PSS (Price Support Scheme) and PDPS.
o    Private agencies will be involved in procuring oilseeds in coordination with the government.
o    Private agencies will procure commodities at MSP when prices fall below the notified MSP, in collaboration with state/UT governments.

2. Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM- AASHA)
Objective:
To provide Minimum Support Price (MSP) assurance to farmers and ensure remunerative prices for their produce. This scheme was announced in the Union Budget of 2018.

Components of PM-AASHA:
1.    Price Deficiency Payment Scheme (PDPS):
o    Under this scheme, the state compensates farmers for the difference between the mandi prices and the MSP.
o    All oilseeds are covered under PDPS.
o    It is modeled after schemes like Bhawantar Bhugtan Yojana (Madhya Pradesh) and Bhavantar Bharpai Yojana (Haryana).
o    No physical procurement of crops; only payment of the price difference.

Key Institutions Involved:
1.    Food Corporation of India (FCI):
o    Set up under the Food Corporation’s Act 1964.
o    Main objectives:
    Ensure effective price support operations to safeguard farmers’ interests.
    Maintain operational and buffer stocks for National Food Security.
    Distribute food grains through the Public Distribution System (PDS).
2.    National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED):
o    Established in 1958 under the Multi-State Co-operative Societies Act.
o    Promotes cooperative marketing of agricultural produce to benefit farmers.
 

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o    Farmer members hold decision- making authority as part of the General Body of NAFED.

Prelims Question Example:
Question: Which of the following components are part of the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA)?
1.    Price Deficiency Payment Scheme (PDPS)

•    Headquarters: Located at the Organisation for Economic Cooperation and Development (OECD) headquarters in Paris.
Member Countries:
•    The FATF has 39 members, including India, and two regional organizations: the European Commission and the Gulf Cooperation Council (GCC).

2.    Private Procurement & Stockist Scheme        

(PPPS)
3.    Bhavantar Bhugtan Yojana
Select the correct option:
A)    1 and 2 only
B)    1 and 3 only
C)    2 and 3 only
D)    1, 2, and 3
Answer: A) 1 and 2 only

Mains Question Example:
Question: Analyze how the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) ensures remunerative prices for farmers. Discuss the impact of its Price Deficiency Payment Scheme and the role of private procurement in addressing market volatility.

3.    Financial Action Task Force (FATF)
About:
•    The FATF is an inter-governmental body established in 1989 during the G7 Summit in Paris.
•    It aims to set standards and promote the effective implementation of legal, regulatory, and operational measures for combating money laundering, terrorist financing, and other related threats to the international financial system.

Objectives:
•    Assess the strength of a country’s frameworks to combat money laundering and terrorist financing.
•    It does not focus on individual cases but rather evaluates overall country performance.

Lists under FATF:
1.    Grey List:
o    Countries identified as safe havens for terror financing and money laundering.
o    Being on this list serves as a warning to the country that it may be moved to the blacklist if actions are not taken to address deficiencies.
2.    Black List:
o    Countries classified as Non- Cooperative Countries or Territories (NCCTs).
o    These countries are known to support terror funding and money laundering activities.
o    The FATF regularly revises the blacklist by adding or removing countries.
o    Current Blacklist Countries: Iran and the Democratic People's Republic of Korea (DPRK).

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Prelims Question Example:
Question: Which of the following statements is correct regarding the FATF?
1.    FATF was established in 1989 during the G7 Summit.
2.    India is not a member of FATF.
3.    FATF focuses on individual cases of money

•    22 Mandated Crops:
o    Kharif: Paddy, Maize, Soybean, Groundnut, etc.
o    Rabi: Wheat, Barley, Gram, Mustard, etc.
o    Others: Cotton, Jute.
•    Fair and Remunerative Prices (FRP): For
sugarcane.

laundering and terror financing.        

Select the correct option:
A)    1 only
B)    1 and 2 only
C)    2 and 3 only
D)    1, 2, and 3
Answer: A) 1 only

Mains Question Example:
Question: Discuss the role of the Financial Action Task Force (FATF) in combating money laundering

MSP Calculation:
•    Commission for Agricultural Costs & Prices (CACP) recommends MSP.
•    Formulas:
o    A2: Costs incurred in seeds, labor, fertilizers, etc.
o    A2+FL: A2 + Value of family labor.
o    C2: Comprehensive costs, including A2+FL and rental value of owned land.

and terrorist financing. How do the FATF grey list        

and black list impact countries’ financial systems?

4.    Law on Minimum Support Price (MSP): Farmers Back on Road
Context:
•    Farmers, primarily from Punjab, Haryana, and Uttar Pradesh, resumed their protests, demanding a legal guarantee of MSP.

About Minimum Support Price (MSP):
•    MSP is a price floor set by the Government to protect farmers from sharp price drops.
•    It ensures that farmers receive a minimum price for their produce, encouraging agricultural production.

Crops Covered under MSP:

Demand for Legal MSP:
1.    Financial Viability:
o    Ensures that farmers are not pushed into debt due to low market prices.
o    Helps reduce rising farm debt.
2.    Reducing Farmer Debt:
o    Rising debt due to inadequate MSP and market instability.
3.    Livelihood Support:
o    Around 50% of India’s population depends on agriculture for their livelihood.
4.    Risk Mitigation:
o    MSP provides a safety net against unpredictable factors like natural disasters.
5.    Market Imperfections:
o    Reduces dependence on
middlemen who inflate consumer

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prices while giving lower rates to farmers.

Challenges in Legalizing MSP:
1.    Financial Burden:
o    Substantial financial resources are required to sustain procurement.
2.    Disincentive for Investment:
o    Legal MSP could discourage private investment in agriculture.
3.    Exacerbating Water Scarcity:
o    MSP crops like paddy and sugarcane are water-intensive, leading to overexploitation.
4.    Neglect of Non-MSP Crops:
o    Legalizing MSP may lead to neglect of crops like pulses and oilseeds, affecting food security.
5.    Reduced Export Competitiveness:
o    Higher MSPs could make Indian crops less competitive in global markets.

Way Forward:
1.    Price Deficiency Payments (PDP):
o    Government pays the difference between market price and MSP without physical procurement.
2.    Balanced Agricultural Pricing:
o    Transition to a balanced pricing policy with MSP and direct income support schemes.
3.    Sustainable Farming Practices:
o    Encouraging crop diversification
and climate-resilient crops.
4.    Investment in Agricultural Infrastructure:
o Strengthening market linkages, storage, and irrigation facilities.
5.    Land and Water Management:

o    Promoting drip irrigation, rainwater harvesting, and efficient water use technologies.

Prelims Question Example:
Question: With reference to the Minimum Support Price (MSP) in India, consider the following statements:
1.    MSP is announced for 22 mandated crops.
2.    Sugarcane is covered under the Fair and Remunerative Price (FRP) system.
3.    MSP is calculated based on the C2 cost formula, which includes family labor and imputed rental value of land.
Which of the above statements is/are correct?
A)    1 and 2 only
B)    2 and 3 only
C)    1 and 3 only
D)    1, 2, and 3
Answer: D) 1, 2, and 3

Mains Question Example:
Question: Discuss the implications of providing a legal guarantee for the Minimum Support Price (MSP) for farmers in India. What are the potential benefits and challenges associated with such a policy?

5.    Amul: A Pillar of India's Dairy Sector
Context:
•    The Prime Minister participated in the Golden Jubilee celebration of the Gujarat Cooperative Milk Marketing Federation (GCMMF) and highlighted Amul's success.

About Amul:
•    Founded in 1946 as the Kaira District Cooperative Milk Producers Union.
 

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•    Managed by GCMMF, jointly owned by
3.6 million milk producers in Gujarat.
•    Pioneered the Anand Pattern, empowering small producers through collective action.
•    Integral to India's White Revolution, transforming the country into the world's largest milk producer.
•    Exporting to over 50 countries, Amul processes over 3.5 crore litres of milk daily.

Operation Flood (India’s White Revolution):
1.    Phase I (1970-1980):
o    Launched by NDDB under Verghese Kurien.
o    Linked 18 milksheds with major cities.
o    Funded by the sale of gifted milk powder and butter oil.
2.    Phase II (1981-1985):
o    Expanded to 136 milksheds and 290 urban markets.
o    Strengthened dairy cooperatives.
3.    Phase III (1985-1996):

1.    Low Milk Yield:
o    Milk yield per animal is below global averages due to poor feed, traditional breeds, and lack of veterinary care.
2.    Issues in Milk Collection and Processing:
o    Challenges in safe handling, pasteurization, and transportation of milk.
3.    Adulteration Concerns:
o    Quality control issues leading to adulteration of milk.
4.    Profit Disparities:
o    Discrepancies between prices received by producers and market prices.
5.    Cattle Health Challenges:
o    Outbreaks of diseases like Foot and Mouth Disease and Black Quarter impact livestock productivity.
6.    Limited Crossbreeding Success:
o    Crossbreeding efforts to improve genetic potential have seen limited success.

o    Expanded infrastructure for milk        

procurement and marketing.
o    Focused on veterinary healthcare, artificial insemination, and adding 30,000 new cooperatives.

Current Status of Indian Dairy:
•    India ranks first in global milk production, contributing 24% of the world's total.
•    Top milk-producing states: Rajasthan, Uttar Pradesh, Madhya Pradesh, Gujarat, and Andhra Pradesh.
•    Milk production has increased by 60% over the last 10 years.

Challenges in the Dairy Sector:

Government Initiatives for the Dairy Sector:
1.    Animal Husbandry Infrastructure Development Fund (AHIDF)
2.    National Programme for Dairy Development
3.    Pradhan Mantri Kisan Sampada Yojana
4.    Kisan Credit Cards (KCC) for Livestock Farmers
5.    Rashtriya Gokul Mission
6.    National Livestock Mission

Prelims Question:
Question: Which of the following initiatives is primarily focused on enhancing milk production and improving dairy infrastructure in India?

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1.    Rashtriya Gokul Mission
2.    Pradhan Mantri Kisan Sampada Yojana
3.    National Programme for Dairy Development
4.    Operation Green
Select the correct option: A) 1, 2, and 3
B)    1 and 3 only
C)    2 and 4 only
D)    1, 3, and 4
Answer: B) 1 and 3 only

Mains Question:
Question: Analyze the impact of Operation Flood on India’s dairy sector. What challenges does the Indian dairy industry face today, and how can they be addressed to sustain long-term growth?

6.    Indian Diamond Industry
Diamond Deposits in India:
•    Diamonds occur in two types of deposits:
o    Igneous Rocks: Found in basic or ultrabasic compositions.

o    India handles over 90% of global polished diamond manufacturing.
o    More than 75% of the world’s polished diamonds are exported from India.
•    Dependency on Imports:
o    India relies on imports of rough diamonds for its cutting and polishing industry, with only one notable producer in Madhya Pradesh.

Economic Contributions:
•    Employment:
o    Diamond cutting and polishing is a labour-intensive sector employing over 5 million people.
•    GDP Contribution:
o    The industry contributes around
7% to India’s GDP.
•    Exports:
o    Accounts for 15% of India’s total merchandise exports.

o    Alluvial Deposits: Derived from        

primary sources.
Key Diamond Fields:
1.    South Indian Tract (Andhra Pradesh):
o    Parts of Anantapur, Kadapa, Guntur, Krishna, Mahabubnagar, and Kurnool districts.
2.    Central Indian Tract (Madhya Pradesh):
o    Panna belt, Behradin-Kodawali area in Raipur, and Tokapal, Dugapal in Bastar, Chhattisgarh.
3.    Eastern Indian Tract (Odisha):
o    Located between Mahanadi and

Prelims Question:
Question: Which of the following states is known for diamond fields in India?
1.    Andhra Pradesh
2.    Gujarat
3.    Madhya Pradesh
4.    Odisha
Select the correct option: A) 1 and 2 only
B)    1, 3, and 4 only
C)    2 and 4 only
D)    1, 2, 3, and 4
Answer: B) 1, 3, and 4 only

Godavari valleys.        
Mains Question:

India's Role in the Global Diamond Market:
•    World’s Largest Cutting & Polishing Centre:

Question: Discuss the significance of the diamond cutting and polishing industry in India’s economy. What are the challenges faced by this sector, and

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how can India maintain its leadership in the global diamond market?

7.    Appointment of Judges in the Supreme Court
Qualifications for Appointment (Article 124(3) of the Constitution):
•    Must be a citizen of India.
•    Must have served as a judge of a High Court for at least five years or have been an advocate of a High Court for ten years.

•    Retired judges are prohibited from practicing law in any court or before any government authority in India.

Removal of Judges:
•    Judges can only be removed by the President after an address from both Houses of Parliament, supported by a special majority (two-thirds of the members present and voting).
•    Grounds for removal: Proven misbehavior or incapacity.

•    Alternatively, must be a distinguished        

jurist in the opinion of the President.

Appointment Process:
•    Judges of the Supreme Court are appointed by the President under Article 124(2).
•    The President consults with judges of the

Collegium System:
•    The Collegium, consisting of the CJI and four senior-most judges, makes recommendations for appointments.
•    The government has a limited role, mainly conducting Intelligence Bureau (IB) inquiries if required.

Supreme Court and High Courts before        

making appointments.
•    The Chief Justice of India (CJI) and the four senior-most judges form the Collegium, which recommends appointments and transfers.

Oath of Office:
•    Judges take an oath to uphold the

Evolution of the Collegium System:
1.    First Judges Case (1981): Primacy of the CJI’s recommendation was emphasized.
2.    Second Judges Case (1993): Collegium system introduced; "consultation" was interpreted as "concurrence".
3.    Third Judges Case (1998): Collegium expanded to a five-member body.

Constitution and perform their duties        

impartially.

Tenure and Resignation:
•    Supreme Court judges serve until they reach 65 years of age.
•    Judges may resign by submitting a written resignation to the President.
Post-retirement Restrictions:

Procedure for Various Judicial Appointments:
•    For CJI: The outgoing CJI recommends the successor based on seniority.
•    For Other SC Judges: The CJI initiates recommendations, consulting the Collegium and the senior-most judge from the candidate’s High Court.
•    For High Court Judges: A Collegium recommends appointments, with inputs from the Chief Minister and Governor. 
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Criticism of the Collegium System:
•    Lack of transparency and accountability.
•    Potential for nepotism and opaque decision-making.

Related Constitutional Provisions:
•    Article 124(2): Provides for the appointment of Supreme Court judges.
•    Article 217: Governs the appointment of High Court judges in consultation with the CJI, Governor, and Chief Justice of the High Court.

Prelims Question:
Question: Which of the following statements about the Collegium system is correct?
1.    The Collegium includes the Chief Justice of India and the four senior-most judges of the Supreme Court.
2.    The Collegium system is explicitly mentioned in the Indian Constitution.
Select the correct option:
A)    1 only
B)    2 only
C)    Both 1 and 2
D)    Neither 1 nor 2
Answer: A) 1 only

Mains Question:
Question: Critically evaluate the role of the Collegium system in the appointment of judges in India. Discuss the challenges it faces and suggest reforms to enhance transparency and accountability.