Editorials, GS-2, Indian Polity, Uncategorized

Towards restorative criminal justice

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Criminal Law of India is a replica of colonial times. It is hostile to the poor and the weaker sections of society. The law still serves and protects the needs of the haves and ignores the have-nots. Such biasness has resulted in rich people escaping law and the jail is more often full of the unprivileged class of society.

  • The way criminal justice is designed and administered today hardly serves any of the purposes for which it is set up: towards securing life and property.

The Criminal Justice System in India has many loop holes:

  • It does not deter criminals because of the delay and uncertainties involved in its processes and ridiculously ineffective punishments it imposes on those few who get convicted.
  • It provides wide discretion to the police and the prosecution, rendering the system vulnerable to corruption and manipulation and endangering basic rights of innocent citizens.
  • It ignores the real victim, often compelling him/her to find extralegal methods of getting justice.
  • It also puts heavy economic costs on the state for its maintenance without commensurate benefits in return.
  • Also, more than 30 million criminal cases are still pending in the system (the annual capacity of which is only half that number), and another 10 million or more cases are being added every year.

Hence, to arrest the drift and to prevent total disaster, the committee on criminal justice reforms recommended the following reforms:

  1. Have a fresh comprehensive relook at the law, substantive and procedural, based on changes in society and economy as well as priorities in governance. The guiding principle in the reform process should be decriminalisation wherever possible and diversion, reserving the criminal justice system mainly to deal with real hard crimes.

For this, the Penal Code can be divided into four different codes —

  • A “Social Offences Code” consisting of matters which are essentially of a civil nature and can be settled or compounded through administrative processes without police intervention and prison terms.
  • A “Correctional Offences Code” containing offences punishable up to three years’ imprisonment where parole, probation and conditional sentences can be imposed in lieu of prison terms and can be handled under summary/summons procedure where plea bargaining can be liberally invoked without the stigma of conviction.
  • An “Economic Offences Code” where property offences which affect the financial stability of the country are dealt with by a combination of criminal and administrative strategies including plea bargaining (both on charge as well as on punishment) with a view to making crimes economically non-viable.
  • An “Indian Penal Code” which will have only major crimes which warrant 10 years’ imprisonment or more or death and deserve a full-fledged warrant trial with all safeguards of a criminal trial.
  1. Reorganize the police and prosecution systems making them more specialised, efficient and accountable. For this, institutional reform of police processes, including investigation of crimes, professionalisation and rationalisation of court systems with induction of technology are required.
  2. Bring in a bigger and responsible role to victims of crime in the whole proceedings by changing the system to a victim-centric one. Toward this end, the system must confer certain rights on victims to enable them to participate in the proceedings, including the right to be impleaded and to engage an advocate in serious offences, the right to track the progress of the proceedings, the right to be heard on critical issues and to assist the court in the pursuit of truth.
  3. Victims should also have the right to seek and receive compensation for injuries suffered including appropriate interim relief irrespective of the fate of the proceedings. Victims may also submit a victim impact statement to the courts setting out the effect of the crime on their lives.
  4. Government can also make use of restorative justice system. Restorative justice is more akin to indigenous systems of quick, simple systems of resolution of wrongs which enjoy community support, victim satisfaction and offender acknowledgement of obligations. Restorative justice takes on board all three parties — the offender, the victim and the community — in a harmonious resolution of the injury, maximising the sense of justice and restoring peace and harmony in the community. It is not a substitute to the formal criminal justice system, but a good backup to reduce its workload and to increase the sense of justice in the system as a whole.
  5. The number of Forensic Science Institutions with modern technologies such as DNA fingerprinting technology should be enhanced. The system of plea-bargaining (as recommended by the Law Commission of India in its Report) should be introduced as part of the process of decriminalization.

Conclusion:

Crime and violence constitute a major impediment for development and social integration for a plural society like India. The adversarial model of criminal justice, with punishing the offender as its only aim, has proved costly and counterproductive. While keeping the adversarial system for certain serious and complex offences, India needs to experiment with more democratic models aimed at reconciliation and restoration of relationships. Also needed is a change of mindset, willingness to bring victims to the centre stage of criminal proceedings and to acknowledge that restoring relationships and correcting the harm are important elements of the criminal justice system.

Editorials, GS-3, Indian Economy, Uncategorized

A Ringside View of the Proposed GST

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If implemented, GST will be the single most important tax reform in the country since independence. However, it has been in the offing for a decade now and continues to figure as a top priority on the economic agenda of the government.

What’s the issue now?

Although the model GST has been the subject of wide scrutiny and debate, most of the discussions have been centred on its road to passage or on its larger form and structure. Many issues of significance, which will be crucial to the making of a robust and successful GST, have largely been underplayed.

Issues associated with the GST:

  1. Dilution of uniform GST rate:

A lot has been discussed on the benefits of uniformity that the GST would usher in. It was expected that the GST would obviate potential rate wars between the states by putting in place a uniform tax rate by combining Central GST (CGST) and State GST (SGST).

  • However, a Report of the Rajya Sabha Select Committee has indicated that a uniform GST rate would be diluted by giving States the freedom to impose the SGST within a band of rates in order to meet revenue expediencies or as a policy tool. Experts argue that this move undermine the true spirit of the GST Bill.
  1. GST Dispute Settlement Authority:

The failure to incorporate a GST Disputes Settlement Authority, as was provided for in the 2011 Bill, is a serious lacuna that must also be filled. The Authority would have reined in any deviations affecting the harmonised structure of the GST.

  • Now, instead, all issues concerning rates, exemptions, and so on are to be decided by the GST Council (of which the Centre and States are members) by consensus, which may prove elusive given the political, social and revenue dynamics at play.
  • Hence, the GST Council must be supplemented and reinforced with a GST Disputes Settlement Authority in toto as provided for in the 2011 Bill.
  1. Voting pattern within the GST Council:

It is also argued that the new GST Bill is unduly weighted in favour of the Centre. According to the new pattern, within the GST Council, the centre will get one-third share in voting rights. On the other hand, states’ collective share will be limited to two-third. In effect, each State, irrespective of size, representation and GDP contribution, will command an equal vote, a structure which militates against the basic spirit of representative democracy enshrined in the Constitution.

  • This provision also opens up the Council to greater manoeuvring by the Centre on issues that it seeks to pass or veto.
  • Hence, in the interests of true “cooperative federalism”, the share of the States in voting in the GST Council must be enhanced to 75% and the share of the Centre brought down to 25%.
  1. Rewarding destination states:

The existing tax system has typically followed a model of rewarding States where production activity is based (origin States), as opposed to States where consumption is high (destination States). Accordingly, most States have incentivised the setting up of local industries in order to drive growth and augment tax collections.

  • But, GST is trying to disturb this delicate balance. GST, by nature, is a destination-based consumption tax. While origin States may chalk out measures to redress the imbalance, consumption and production patterns will not alter overnight, and industrialised States could be left in the lurch, at least in the immediate aftermath of the GST.
  • In such a scenario, it will be difficult to predict the reaction of industrialised States. There is also the troubling prospect that such an aggrieved State may seek to substantially deviate from the uniform model.
  • Hence, before proceeding further, it is the responsibility of the centre to make some alternative arrangements for these origin states.
  1. Disparity in IT connectivity:

Unlike the existing system, which has greater scope for manual intervention, the GST aims to achieve a tectonic shift to a singular digitised compliance set-up. While this would be a great leap forward if implemented well, what has perhaps been underestimated is the huge geographical disparity across the length and breadth of India in terms of IT connectivity and functionality.

  • With Digital India campaign the government has planned to address this issue. But, it has a long way to go to achieve reasonable Internet penetration. As a result, in some sections of the country today, manual tax compliance remains the only option.
  1. Dependence of GST on IT:

The proposed GST is also highly dependent on IT. For instance, the Integrated Goods and Services Tax (IGST) mechanism, which enables the crucial fungibility of taxes across States, will be unworkable outside an automated set-up, especially given the sheer volume of transactions that the GST will subsume. The proposed IT infrastructure will have to be suitably equipped, as any snags would effectively render the levy dysfunctional.

  1. Conflict between the Centre and the States:

Under the GST, States will have the constitutional power to tax on a par with the Centre, bringing a host of service sectors within their scope for the first time.

  • However, past precedent has shown that such dual taxing power has resulted in complete chaos at the cost of assesses.
  1. Issues of place of supply:

With GST in place, it is expected that issues of place of supply will also arise, with the Centre and States each asserting that the respective supply has occurred within their jurisdiction, so as to be able to garner the tax revenue. Poorly drafted rules will only aid and abet the confusion.

  1. Approach of revenue authorities:

With the implementation of the GST in India, many taxpayers will, for the first time, be exposed to the State authorities. It is possible that these tax payers may be abused by the state authorities. Hence, clear and objective guidelines should be put in place to whittle down the potential for any abuse of discretion.

Conclusion:

Along the road to GST, it is also critical that these issues are subjected to the same level of governmental and public scrutiny so that the implementation of GST is a success in letter as well as in spirit.

Editorials, Pub admin 1, Uncategorized

Public and Private sector

The debate about reforms pivoted on one central axis. What should be the role of the public and private sectors in development? This debate is not as simple as ideological purists think. And the mere rolling back of the licence-permit raj in areas of industrial production was only a small part of this debate. Admittedly, much of the energy of the debate has shifted from a concern about the role of the public and private to a concern about proper regulation of the private. This is all for the good. But you get the sense that thinking about the role of the public and private has become extremely ad hoc.

Just take one example, in the apparent ideological moorings of this government. It should be obvious to most that this government, contrary to the myth supporters had created, does not believe in disinvestment of state-owned companies. It has no intent of meeting even the disinvestment targets it had set itself for fiscal reasons. Quite the contrary, it seems to believe that with the right bureaucratic intervention, public-sector companies can be turned around. Certainly, some companies can. But it would take a peculiar obtuseness to argue that in some areas, disinvestment cannot be a good thing. The opportunity cost in terms of finances and human capital of the state running things that are unnecessary for it to run are still huge. Yet there remains an immense 1970s-style commitment to the public sector in areas of production.

On the other hand, the two areas where you would expect the public to take a lead role, health and education, are on a galloping privatisation trajectory. Much of this is due to state failure. But a lot of the failure was almost deliberately induced to create opportunities for politically connected education entrepreneurs. Just the list of politicians who run educational institutions will point to this fact. But whatever the political-economy story, we still have a curiously schizophrenic view of the private sector’s role in this area. On the one hand, we want it to bear the load of state failure: It should perform the public sector’s role.

On the other, the private sector should bear costs and be burdened by excessive regulation. The ostensible rationale for this is the following: Normatively speaking, education is a right that should not be dependent on the ability to pay. This aspiration is correct. But how do you square that with the idea of private education, where ability to pay will determine what you can access to some degree? Our answer: We will impose more regulation, more price controls (as the All-India Council for Technical Education is now proposing), more control over selection mechanisms. So what we want is a private economy with extensive price controls? Price controls can work in some areas but as a generalised principle, a price-controlled private sector is a bit of an oxymoron — with probably moronic outcomes.

But what the state cannot get itself to honestly answer is why so many students are at the mercy of the private sector. The state is willing to put all its energies into running loss-making airlines, reviving defunct fertiliser plants. But it cannot commit itself to infusing new energy in public education, at all levels. If you destroy public university after public university, the private sector will laugh all the way to the bank. And then, in response to an outcry, we will pretend that regulation of the private sector can produce social justice. In retrospect, it is truly extraordinary how much energy, focus and moral piety has been expended on “regulating” private education in India.

Yet proportionately, so little political effort has been expended to improve public education. It is a pipe dream to think that we can build a good, equitable education system without a major revival of public universities and government schools. And a strong public system will automatically “regulate” the private system by reducing demand. But it is a sign of how warped our thinking on the public and private has become that we are happy to hollow out the public where we should not, and regulate the private in ways that are counterproductive.

The increasing confusion over the role of the public and private has many sources. Some of it is ideological mystification: We thought reform meant rolling back the state, not building it in some areas. This has become a self-fulfilling prophecy to the point where we do not recognise the potential within the public system. Some of it had to do with political economy. The whole logic of public-private partnerships was driven not entirely by the idea of efficiency gains but the creation of new forms for rent-seeking. This form of entanglement of state and capital ended up corrupting both.

Crony capitalism backed by the state delegitimised capital as well. The dividing line between an anti-corruption movement and an anti-private-sector sentiment became very thin indeed. The confidence that the Indian private sector, particularly its big players, was ready to play by anything other than crony capitalist rules has diminished. In fact, it has so diminished that RBI Governor Raghuram Rajan has to rightly give them sermons on just how low the legitimacy of capital is in India. Part of the confusion also came from a certain kind of laziness. We just assumed that wherever the state fails, the market will automatically provide the answer. Less went into thinking about the conditions under which each works. The 2009 financial crisis rightly led people to rethink regulation. But it was also used as a convenient excuse to pretend that the role of the public and private had been settled.

But the net result is a deep consensus that there is little point in having a debate around the role of the public and private, based on first principles, our recent historical experience, and the appropriateness of particular institutional forms to producing particular kinds of goods. So all the things that a public system should ideally produce — law and order, basic social rights like health and education — are increasingly privatised but with ad hominem and corrupt regulation. It is a good thing that this government ideologically does not believe in defeatism about the state. But it has done little to restore clarity on the roles of the state and the market, the public and the private.

– See more at: http://indianexpress.com/article/opinion/columns/private-sectors-rbiraghuram-rajan/#sthash.DmslOAeF.dpuf

GS-2, Public Admin 2, Uncategorized

Misdiagnosis of the Rajya Sabha malfunction

Mohammad Tahir representing Bihar in the Constituent Assembly during the debate on the Constitution on July 28, 1947 said that

“the Upper House is a creation of imperialism” and argued that independent India did not need it.

To which Gopalaswami Ayyangar, replied that “the role of the Upper House is merely to delay legislation which might be the outcome of passions of the moment until the passions have subsided”. It was obvious even to our founding fathers that the “House of People” (Lok Sabha) can fall prey to passionate rhetoric and thus felt a need for a “House of Elders” (Rajya Sabha) to instil calm.

Next is this false narrative of indirectly elected members of the Rajya Sabha having veto powers over the members of the Lok Sabha who are direct representatives of the people.

In our first-past-the-post electoral system where a political party can form a government without the majority of citizens voting for it, legislation passed by the Lok Sabha may not necessarily represent the views of the majority. It then becomes even more pertinent and critical to have an active and vibrant Rajya Sabha.

That the Rajya Sabha would an indirectly elected body and would act as a balance to certain whimsical legislation of the people’s representatives in the Lok Sabha was a conscious design of our founding fathers. If anything, this need has only been exacerbated with creeping majoritarianism in the current Lok Sabha. The inability to build consensus by a ruling party cannot be disguised as opposition obstruction.

The need to build consensus in both Houses of Parliament to pass legislation should be the guiding principle of our parliamentary democracy.

Then, there is the argument that the Anti-Defection Act, which immediately disqualifies any member of Parliament who either changes political parties mid-way or disobeys the whip of her party, aggravates the chances of a dysfunctional Parliament.

The core principle behind the Anti-Defection Act is to prevent horse-trading on the floor of the House and penalise members who succumb to temptations from opposition parties. This principle still remains very relevant for a large, diverse polity such as ours, with a large number of regional parties.

The Lok Sabha recently held a discussion on a private member’s bill to de-criminalise certain Section 377 of the Indian Penal Code. There was no whip issued by the major parties and members voted according to their choices, many times contrary to their party colleagues.

The choice of when to issue a whip rests with the party. The Anti-Defection Act in itself cannot be made a villain for an internal matter of political parties over degrees of freedom to be given to their members for voting in Parliament.

Scope for reform

There is clearly a need for new rules to prevent productivity of the entire House being held hostage by a few members rushing to the Well. There has to be an outlet for opposition members to voice their protests without disrupting productivity. One suggestion is to have designated day(s) in a week on which the opposition can raise, discuss and debate issues rather than the government dictating the order of business every day of the session. There can be innovative ways to create a framework within which the right to protest is not taken away but is done constructively.

Read Less check and more balance, another good article

Q.  “The Upper House is a creation of imperialism and independent India did not need it.” Critically comment.

Editorials, GS-3, Indian Economy, Public Admin 2, Uncategorized

Municipal Bonds

What is Municipal Bonds?

Municipal bonds (also known as munis) are debt vehicles issued by state and local governments to finance their operations and fund municipal projects. Debt instrument may be a perplexing term, but think of municipal bonds as loans from lenders to state and local governments. In the case of municipal bonds, many of the lenders are individuals and institutions.

The attractiveness of municipal bonds to individual investors is that the income paid by these bonds is typically federal income tax-free. If you live in the state in which the bond was issued, the income paid by those bonds may be state income tax-free. The same goes for if you live in a county or municipality in which the bond was issued. (USA)

With cumulative issuance of less than Rs 2,000 crore since the first issue in 1997, the municipal bonds market in India is virtually non-existent. A municipal bond is a bond issued by a local government, or their agencies.

  • They are very popular among investors in many developed nations, especially in the U.S., where these have attracted investments totalling over $500 billion and are among preferred avenues for household savings.
  • In India, the Bangalore Municipal Corporation was the first municipal corporation to issue a municipal bond of Rs.125 crore with a State guarantee in 1997. However, the access to capital market commenced in January 1998, when the Ahmedabad Municipal Corporation (AMC) issued the first municipal bonds in the country without State government guarantee for financing infrastructure projects in the city. AMC raised Rs.100 crore through its public issue.
  • Among others, Hyderabad, Nashik, Visakhapatnam, Chennai and Nagpur municipal authorities have issued such bonds, however, there is no provision as yet for listing and subsequent trading of muni bonds on stock exchanges in India.

However, making municipal bonds work in India is a dark-horse reform for Indian public policy.

Significance of Municipal bonds:

  • Cities in India were estimated to require over Rs 40 lakh crore during 2011-2031 for capital infrastructure, whereas the aggregate annual revenues of municipalities are likely to be less than Rs 1.2 lakh crore (of which Mumbai alone accounts for Rs 30,000 crore).
  • There is massive capital investment need in municipal infrastructure and funds from programmes such as Jawaharlal Nehru National Urban Renewal Mission (JNNURM) can only partly meet the requirement.
  • Therefore, to meet their financing needs, the municipalities have to seek recourse to other means including issuance of municipal bonds. Municipal bonds can quite obviously play a pivotal, singular role in funding this gap.
  • Countries like South Africa and Vietnam are leveraging municipal bonds to fund large urban infrastructure development, with Johannesburg alone having issued bonds of $400 million (40% higher than cumulative issuances in India).
  • Municipal bonds can also simultaneously deepen the long-term infrastructure financing market in India as well as redirect retail investments into liquid securities (by city residents) away from real estate and gold.
  • By creating opportunities for citizens (as retail investors) to invest in tangible public causes in their cities, these bonds can also build strong bonds of trust between municipalities and citizens; bonds of trust that can galvanise citizen participation in cities at historic scale and to mutual financial benefit.

What needs to be done to jumpstart the municipal bonds market in India?

  • A long-term roadmap to financial self-sufficiency of municipalities needs to be drawn up covering powers over revenues and borrowings, efficiency of revenue administration (both assessments and collections) and systematic measurement, reporting and review of revenue performance. Such a roadmap will require collaborative effort between the Centre and the states.
  • There is a crying need to professionalise financial management in municipalities. The scale of funding required for public expenditure in our cities cannot be met with the human resources (both in terms of numbers and skills and competencies) that they currently possess. The revenue and finance departments of municipalities need to be urgently professionalised and made market-oriented. The Institute of Chartered Accountants of India can play a significant role here.
  • There needs to be a deliberate creation and positioning of the municipal bond brand to make it popular among citizens, and a slew of enabling measures to make them attractive.
  • Enabling measures such as making all municipal bond issuances tax-free, making investments in muni bonds by banks part of their priority sector lending and actively encouraging pension funds and insurance companies to participate in municipal bond issuances need to be put into place by respective regulators. These are presently crucial missing links.
  • Municipalities need to produce audited balance sheets each financial year and get themselves credit-rated so that they are able to access the municipal bond market in a credible and sustained manner.

Conclusion:

The Rs 50,000-crore Smart Cities Mission envisages creation of special purpose vehicles in cities that would raise monies from the capital markets. Sebi issued guidelines earlier this year for issuance of municipal bonds. Both of these are steps in the right direction, but do not cover the required distance. The Union finance ministry alone is capable of making municipal bonds work, because this requires serious domain expertise and leverage with states and regulatory institutions. SEBI, the RBI, the CBDT and the ICAI are all institutions that have roles to play and all of them fall under the broad umbrella of the Union Finance Ministry. The urban development ministry can only play a supporting role by facilitating appropriate provisions in urban schemes and shepherding State municipal administration departments. Though local self-government is a state subject, the Centre has a crucial role to play in addressing the infrastructure deficit in our cities, for which municipal bonds will be highly significant.

GS-2, Indian Polity, Public Admin 2, Uncategorized

Court-monitored CBI probes: Is judiciary overstepping its brief?

Observation made by Parliamentary Committee —

  • Parliamentary committee has raised a question on increasing number of court-monitored CBI probes. It states apex courts have started performing the functions of the lowest rung of criminal justice system, taking over the role of a magistrate.
  • At present, many high-profile cases like 2G spectrum case, Vyapam Scam, Coal Block Allocation Scam, Virbhadra Singh corruption probe, Shardha Chit Fund Scam etc. are being monitored by SC and several other HC.
  • Committee also slammed establishment of special CBI courts in states saying it is leading to dual judicial system which is not contemplated under Constitution.

Watch Rajya Sabha TV Debate here

Why do we need monitoring of Judiciary?

  • Investigating agencies like CID, CBI and others are under constant pressure from political masters and this affects the investigation. If SC-led monitoring didn’t happened, cases like 2G, Coal Block Allocation Scam etc. would never have come to the surface. Credibility of investigation agencies is therefore always under doubt w/o monitoring of courts.
  • Moreover, when a leader of opposition comes under scan of investigation, his party demands for independent monitoring of investigation under apex courts.

Why there must be no monitoring by Judiciary?

  • Under Article 22 of Indian Constitution, right to free & impartial trial has been given to the accused and he is considered to be innocent until proved guilty, i.e., a presumption of innocence is given to him to constitutionally. For this judiciary must be totally neutral and must give fair chance to the accused to prove his innocence.
  • But if investigation of a case is started under apex courts, this infringes the right of accused as under same judiciary whole investigation has happened and same judiciary will try him in the end.
  • Parliamentary Committee observed if monitoring, ordering of investigation kept on happening under apex courts there is clear danger of inversion of pyramidical structure of governance provided under the constitution.
  • Therefore, monitoring under apex courts cannot be the institutional answer to independent monitoring of investigation.

 

Way forward —

  • Power given to courts for interfering, ordering and monitoring the investigation by CBI or other is institutional power and has been given by parliament. But daily-basis of monitoring must be checked as it not only infringes the right of accused but also over-burdens the judiciary. Judiciary can’t monitor every investigation.
  • Therefore, we need a constitutional answer and Lokpal can be the answer for monitoring the investigation, free from political intervention.
  • In US, a different kind of approach is being followed. After Watergate Scam, US broughtIndependent Counsel Act in which Federal Court establishes an Independent Counsel which will be responsible for investigation and prosecution. Funds for the independent Counsel are provided by Federal Court.
  • For independent and impartial investigation we need independence of police from political masters. Police Reforms has been ordered by SC in 2006 but unfortunately nothing has been brought yet. Therefore, we need to correct our executive machinery.

Question

‘Now-a-days judicial activism has become a common phenomenon. Increasing number of Court-monitored investigation has raised few questions’. Do you think judicial activism of this kind is acceptable? Suggest measures for free and fair investigation.