MAINS Current Affairs includes India retains states’ share in federal taxes at 41% & Safeguarding Women at Work

Polity & Governance

1. India retains states’ share in federal taxes at 41%

Context

The Union Finance Minister recently stated that 41% of the divisible tax pool has been devolved to States and that no State’s share has been reduced, amid ongoing debates on fiscal federalism.

Understanding Tax Devolution

Tax devolution refers to the allocation of tax revenues between the Union and State governments.

The Finance Commission of India determines:

• Vertical devolution: The proportion of the Centre’s net tax revenue allocated to all States collectively.
• Horizontal devolution: The distribution of this share among individual States.

The 15th Finance Commission recommended that 41% of the divisible pool be transferred to States.

Horizontal distribution is based on criteria such as population, income distance, demographic performance, area, and other indicators. Besides tax devolution, States also receive grants-in-aid and funding for Centrally Sponsored Schemes.

Constitutional Framework

• Articles 202–206: Govern state financial administration, including budgeting and expenditure.
• Articles 268–272: Provide for distribution of taxation powers and revenue sharing.
• Article 280: Mandates the establishment of a Finance Commission every five years.
• Article 282: Permits the Union to provide financial assistance to States for public purposes.

Importantly, recommendations of the Finance Commission are advisory and not legally binding on the Centre.

Areas of Friction

Disagreements have emerged over revenue sharing mechanisms.

• The Centre collects major taxes such as income tax, corporate tax, and GST.
• States rely heavily on revenue from items like liquor and petroleum products, which remain outside GST.

States argue that centralisation of taxation powers under GST has limited their fiscal autonomy while responsibilities for sectors like health, education, and policing remain largely with them.

Key Concerns Raised by States

1. Demand for Higher Share

• States contend that given their expanding expenditure obligations, a larger portion of central tax revenue should be devolved.

2. Shrinking Divisible Pool

• Cesses and surcharges, which are excluded from the divisible pool, now form a significant share (around 28%) of central tax collections, effectively reducing the amount available for sharing.

3. Questions on Finance Commission Autonomy

• Some critics argue that since the Centre appoints members of the Finance Commission, there may be concerns about perceived neutrality.

Way Forward

• The upcoming 16th Finance Commission should review the balance between shareable taxes and non-shareable cesses to correct structural imbalances.
• Greater transparency and rationalisation of cesses and surcharges could widen the effective divisible pool.
• Strengthening institutional platforms such as the Inter-State Council and the GST Council can promote cooperative fiscal federalism and coordinated fiscal management.

Conclusion

Centre–State fiscal relations remain central to India’s federal structure. Ensuring equitable resource distribution, maintaining transparency, and fostering dialogue will be essential to harmonise fiscal autonomy with national economic priorities in a changing fiscal environment.

Issues related to Women

2. Safeguarding Women at Work

Context

The Government reaffirmed its commitment to the effective enforcement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and to ensuring a safe and dignified working environment for women.

Sexual Harassment of Women at Workplace Act, 2013 (POSH Act)

Objective

To guarantee a secure and harassment-free workplace for women.

Scope and Definition

Sexual harassment includes:

• Unwelcome physical contact
• Requests for sexual favours
• Sexually coloured remarks
• Display of pornography
• Any unwelcome verbal, non-verbal, or physical conduct

The Act applies to all workplaces—government offices, private enterprises, NGOs, educational institutions, and the unorganised sector.

Who Can File a Complaint?

All women employees—regular, temporary, contractual, daily wage workers, interns, apprentices, or even those working without formal contracts—are covered.

Institutional Mechanisms

Internal Complaints Committee (ICC)

Mandatory for every workplace with 10 or more employees.

• Headed by a senior woman employee
• At least two women members
• One external member (NGO/activist with relevant experience)

Local Committee (LC)

Constituted at the district level to address complaints from establishments with fewer than 10 employees

Complaint Process

• Written complaint to be filed within 3–6 months of the incident.
• Resolution through:
  • Conciliation (without monetary settlement), or
  • Formal inquiry, followed by disciplinary action if required.

Inquiries must be completed within 90 days.

Employers must submit annual reports detailing complaints received and action taken.

Non-compliance may attract penalties up to ₹50,000 and possible cancellation of licences for repeat violations.

Government Measures

The Ministry of Women and Child Development (MoWCD) is the nodal authority for implementation.

• Issues advisories to Ministries, States, UTs and private organisations.
• Launched the SHe-Box Portal (2024) to create a centralised digital platform for complaint registration and monitoring.

Why Workplace Safety is Crucial

Constitutional Backing

• Articles 14, 15 and 21 guarantee equality, non-discrimination and dignity. The Supreme Court has held that weak enforcement amounts to constitutional violation.

Economic Imperative

• India’s goal of achieving a 70% female labour force participation rate (Viksit Bharat 2047) depends on workplace safety.

The “Harassment Tax”

• Recent studies show women are willing to sacrifice nearly 19% of wages for safer work conditions—indicating hidden economic costs.

Talent Retention

• Biased grievance systems contribute to high female attrition, particularly in professional sectors like technology.

Key Challenges

Unorganised Sector Coverage

• Nearly 90% of working women are in informal employment. Awareness about Local Committees remains extremely low.

Trust Deficit

• Many women hesitate to report incidents due to fear of bias or procedural delays.

Digital Divide

• Online portals like SHe-Box may not be accessible to rural or digitally marginalised women.

Procedural Misconduct

• Some ICCs allegedly pressure victims into informal settlements to protect institutional reputation.

Retaliation

• Victims may face professional or social backlash after filing complaints, which is difficult to document and address.

Way Forward

• Consider gradual expansion towards gender-neutral protection while maintaining focus on women’s vulnerability.
• Link compliance to funding incentives under schemes like Safe City projects.
• Update the Act to explicitly include digital and remote workspaces such as virtual platforms and messaging applications.
• Strengthen awareness campaigns, especially in the unorganised sector.

Conclusion

Ensuring workplace safety for women is both a constitutional obligation and an economic necessity. Effective enforcement, institutional accountability, awareness expansion, and adaptation to evolving work environments are essential to create inclusive and secure workplaces across India.

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