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

The ironies of Small States

Familiar questions of the political terrain—

  • Political instability (once inelegantly called ‘horse-trading’)
  • Containment of capacity of the anti-defection law
  • The regrettable tendency of parties controlling the Central government to inexorably expand their writ
  • The readiness of State leaders to violate their own obligations as representatives of the political public, and vitiate democracy

Formation of States—Deepening of Democracy

  • Smaller political units facilitate contact between the government and the governed
  • Enables local populations to imprint their opinions and interests onto the consciousness of their representatives

Demands for statehood followed struggles against injustice—

State leaders have shown great willingness to play into the hands of the Central government, with representatives forgetting the history of their own societies

  • Case of Chhattisgarh Mukti Morcha (CMM), Shankar Guha Niyogi— (from the late 1970s till 1991)
  • He was assassinated by the men of the liquor lobby— one of the most transformative social movements in the country.
  • Focussed not only on the struggle for wages, but also on alternative development strategies that inspired radical political consciousness among the Dalits and the Adivasis- giving ‘us’ an enormously creative interpretation of citizenship

 

  • When Chhattisgarh was carved out of Madhya Pradesh—
    • Presently, according to the 2011 India Human Development Report, the incidence of poverty among Scheduled Caste (SC) and Scheduled Tribe (ST) households in Chhattisgarh is much higher than in other social groups in the State and the country.
    • Chhattisgarh ranks low on Human Development Index rankings, with more malnourished women, underweight children, and illiterate people than the national average
    • People in the densely populated forests and hills of Dantewada and Bastar-where a majority of the STs live are the most illiterate
    • Ironically, Chhattisgarh is a mineral-rich and power-surplus State
  • Jharkhand with vast natural resources—
    • Accounted for 70 per cent of the Gross State Domestic Product of Bihar before 2000 (but presently remains one of the most economically backward States of the country)
    • The SC and ST population constitutes around 12 per cent and over 26 per cent of the State’s population.
    • Poverty figures in these two communities are much higher than corresponding figures at the all-India level.
    • A higher percentage of children of the communities suffer from malnutrition and illiteracy.
    • Demand for Statehood:
      • Emerged from a 200-year-old struggle against exploitation
      • 1970s- the Jharkhand Mukti Morcha led by prominent communists and tribal leaders focussed on the direct delivery of justice to exploited tribal communities in the mineral-rich areas, in agrarian districts, and in plantations— launched a concerted effort against displacement
      • The demand for statehood was part of the demand of control over resources by tribal communities
  • State of Uttarakhand—
  • It is inhabited by hill people (majority- upper castes)
  • 1970s- Local communities mobilised against transfer of forest resources to commercial companies.
  • The Chipko movement in the Kumaon and the Garhwal regions became famous for novel modes of protest and awareness of environmental harm (protested against appropriation of resources and actions that impinged upon their bare survival)
  • The demand for statehood on the ground of special needs was articulated by leaders in national parties, and gained momentum in the late 1990s.

 

Deepening of Democracy or Political Vacuum?

  • A new exploitative elite—  With the formation of three small States the two paths — the fight against injustice and the drive to hoard power in the name of identity — have diverged replacing claims of representative democracy by aspirations to political power and distasteful compromises made in pursuit of profit.
  • The political vacuum created by systemic injustice in both States have stepped the Maoists, with their ideology of a new world geared towards the interests of the poor and the oppressed.

Compromise— The chasm between the needs of the people who struggle for survival, action and inaction by representatives, and lack of remedial justice has compromised representative democracy enormously

Connecting the Dots:

  • In the light of the divergence between justice and power-hoarding, discuss the relationship shared between federalism, States, representative democracy and justice?
  • Many State Governments further bifurcate geographical administrative areas like Districts and Talukas for better governance. In light of the above, can it also be justified that more number of smaller States would bring in effective governance at State level? Discuss. (UPSC 2013 GS Mains)
Editorials, GS-3, Indian Economy, Uncategorized

Sensitise States, don’t intimidate them

Article Link

The finance ministry is preparing a model Centre-State Investment Agreement (CSIA), for effective implementation of the Bilateral Investment Treaty it is set to sign with other countries. The draft will shortly be presented to the Cabinet for approval.

What are BITs?

BITs protect investments made by an investor of one country into another by regulating the host nation’s treatment of the investment. BIT replaces the Bilateral Investment Promotion and Protection Agreements (BIPPA) that India had signed with 83 countries since 1994.

Background:

In his budget speech, Union Finance Minister Arun Jaitley had proposed the CSIA, to be signed between the central and state governments. This will ensure fulfilment of the obligations of state governments under BITs. States which opt to sign these will be seen as more attractive destinations by foreign investors.

Main features of CSIA:

Some of the features include an enterprise-based definition of investment, non-discriminatory treatment, protection against expropriation, an Investor State Dispute Settlement (ISDS) provision requiring investors to exhaust local remedies before commencing international arbitration, and limiting the power of tribunals to awarding of monetary compensation.

The Centre will also not make it mandatory for states to sign these agreements but if any don’t, counter-parties (other nations) will be informed.

Issues associated with CSIA:

  1. Obligations under international law.

According to some experts the Centre-State Investment Agreement (CSIA) does not make any sense from the perspective of international law. It is because whether a central government enters into any such agreement with states or not, the actions of state governments will continue to bind the Indian state. Irrespective of a foreign company running into trouble with any state, the liability will be on the Centre.

Also, the Centre’s proposal to warn their counter parties about non-compliant States before they make their investment in the State does not carry much legal significance.

  1. Cooperative federalism.

There are also practical considerations in this proposal. India is a quasi-federal structure with a multiparty system. The Centre and State governments are often politically non-aligned. In this context, a proposal by the Centre to enter into investment agreements with States as an optional arrangement may further sour fragile Centre-State relations for two reasons. First, the State governments will not like the shifting of the blame for violation of a BIT from New Delhi to State capitals. Second, the State governments will also not like the Centre informing India’s BIT partner country that a particular State government has not signed the agreement and thus, by implication, is not a safe destination for foreign investment.

Conclusion:

One of the objectives of the proposal could be to sensitise State governments about India’s BIT obligations given the fact that many regulations of State governments directly impact foreign investors. However, this objective would be better served by institutionalising the involvement of State governments in the process of treaty-making. A forum such as the NITI Aayog, which has all the Chief Ministers as members of the governing council, could be used to create a Centre-State consultative process on treaty-making. Also, this sensitisation should not be restricted to BITs but also extend to other international agreements like the World Trade Organisation treaty, numerous Free Trade Agreements, and Double Taxation Avoidance Agreements. Cooperative federalism requires that Centre and States work together, which in turn would ensure better implementation of international treaties.

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

Uttarakhand: The way forward

The Union government suffered a major setback with Uttarakhand High Court quashing President’s rule in the hill state and directing ousted CM Harish Rawat to prove his majority on April 29th. The HC had also upheld the disqualification of 9 rebel MLAs observing that they have to pay the price for constitutional sin of defection. But, in the latest development the SC has set aside High Court’s order and re-imposed President’s rule in the state.

Background:

The High Court’s judgement is based on previous Supreme Court judgements. The Supreme Court has clarified in several judgments that Central rule was no substitute to testing a democratically elected government’s strength on the floor of the assembly.

  • In 1977, then Janata Party government asked CMs of nine Congressruled states to resign or face dismissal through Article 356. This was challenged in the SC, which took a lenient view of the political manoeuvring. It said judicial review of presidential proclamation was on a limited ground and couldn’t touch political aspects.
  • But the judiciary started taking a stern view of Article 356’s misuse after overturning the Centre dismissed SR Bommai in Karnataka and the Meghalaya government in 1989 and 1991. Bommai case ruling of 1994 became the guiding light for constitutional courts.
  • Here, the court said floor test was the best method to judge an elected government’s majority. It said, “The SC or HC can strike down the proclamation if it is found mala fide or based on irrelevant or extraneous grounds. When called upon, the Union of India has to produce the material on the basis of which action was taken. It cannot refuse to do so, if it seeks to defend the action.”
  • In the Ranmeshwar Prasad Vs Union of India case (2005), the supreme Court reiterated this position: “The President’s satisfaction has to be based on objective material. The objective material must vindicate that the government of the state cannot be carried on in accordance with the provision of the Constitution. That is a condition precedent before the issue of the proclamation.”

Was it necessary to impose President’s rule in Uttarakhand?

No, say few experts. It is because none of reports, submitted by the governor to the centre, spoke about the breakdown of constitutional machinery in the state. Instead, President’s rule was imposed in the state by the President based on Centre’s advice. The centre’s argument is based on the way the appropriation bill was passed in the state.

What the law says?

The President can exercise powers under Article 356 ‘either on the report of the Governor or otherwise’. Here, the word ‘otherwise’ means the President may act even without the governor’s report. Article 356 says that if any piece of advice is given by the Centre and a state government does not comply with it, it shall be deemed that ‘there is breakdown of the constitutional machinery of the state’. It does not mean corruption or misuse of powers by the Speaker.

Way ahead:

Now, the Supreme Court of India; the final arbiter of the constitutional maters will decide the case. While doing so, it will definitely look back to the point when a judgement by their predecessors changed the course of federal politics in the country. While pronouncing its judgement in S R Bommai case, the constitutional bench of the highest court made the arbitrary use of Article 356 of the Constitution very difficult. Now more than two decades after the Bommai case, apex court will once again deliberate upon the use and abuse of the Article 356.

If Supreme Court overturns the high court order, it would raise serious questions about the ability of judges of lower courts in handling matters of constitutional crisis. The Supreme Court also needs to take a serious look at the current lacunae in the system like the Parliament approval within two months when a government is in minority in the Upper House.

Editorials, GS-3, Indian Economy, Uncategorized

A Ringside View of the Proposed GST

Article Link

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.

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

Issues related to Police

Following are the issues which need to be discussed in the conference (DGP Conference in Kutch):

  1. Collection and analysis of preventive intelligence:

The most important and challenging task faced by the law enforcement authorities and intelligence agencies today is the collection and analysis of preventive intelligence and follow-up action, especially pertaining to terrorists and insurgents who pose a constant challenge to internal security.

  • While there’s a dire need to improve the capability of the intelligence-collection machinery and upgrade its resources, the intelligence-sharing mechanism leaves a lot to be desired. Our intelligence, collected by state and Central agencies, still sits in silos.
  • Apart from the fact that it’s often not analysed properly, the mania for getting credit drives the organisation having the intel to follow it up even if it doesn’t have the wherewithal.
  • Our efforts in setting up the Natgrid, to build a secure sharing platform, have remained tied in knots despite huge investments.

The DG/IG conference needs to discuss and find a way out of the current situation and lay down a roadmap for establishing a robust intel collection and sharing mechanism.

What needs to be done?

  • The Central intelligence agencies have to strengthen their capabilities and also help states upgrade their machineries for collecting both human and technical intelligence.
  • States also need to pick up on generalised inputs flowing to them and work on specific information, rather than ignoring it all as vague and non-actionable.
  1. Criminal Investigation:

The other important, but badly neglected, aspect of policing is criminal investigation. Standards have declined sharply in the last few years. Unfortunately, the so-called premier investigation agencies like state CIDs and the CBI are no exception.

  • Apart from investigations and conclusions of trials taking an abnormally long time, these tend to fall flat in court, often attracting the judiciary’s wrath. On the other hand, investigation is no longer a coveted job in the states.
  • The fate of cases involving terrorism is no better. Several cases investigated by special units/ agencies have not only ended in acquittals but also resulted in courts posing serious questions as to the veracity of the evidence presented and the procedures adopted.

The directors general and inspectors general of police attending the conference need to discuss and debate this situation to find urgent remedies. They also need to examine existing laws and procedures and suggest modifications and measures for improvement.

  1. Vacancies:

Central investigation agencies like the CBI, the National Investigation Agency (NIA) and the Enforcement Directorate continue to have huge vacancies, as officers from states are not willing to join and sister agencies are staffed with officers from the Central armed police forces.

  • Even the apex court’s direction to fill these posts and experiments like additional remuneration have not yielded the desired results. This is unfortunate, and it can’t be allowed to persist.
  • The conference may discuss whether a system whereby certain posts in the investigative wings of states are financed by the Centre and states are obligated to depute a fixed number of officers to Central agencies could be the way out.
  • These officers may revert to the states after five or six years, taking with them valuable investigative experience.
  • A system of fast-track promotions — based on merit determined by a limited competitive exam — for officers recruited at the sub-inspector level, who have put in a certain minimum amount of service, may be another solution.

Even, most states have a huge number of unfilled vacancies. They tend to fill these on the eve of elections and train personnel in facilities arranged in an ad-hoc manner.

  1. Outdated arms and equipments:

Most state police forces continue to use obsolete equipment and arms, and lack the latest technology that would help in investigation and intelligence-gathering.

  • State governments haven’t considered it their responsibility to apportion a part of their budgets to upgrade police capabilities, even though law and order is their domain.
  • They need to realise that investing in better law enforcement will yield dividends in the form of more economic investment and development.
  1. Lack of Organisation:

There are no organisations to provide the police forces with tested and dependable specifications on equipment and technology. They are generally dependent on vendors, who often sell outdated or not-so-suitable technology.

  • Though the Bureau of Police Research and Development (BPR&D) has been tasked with this responsibility, it hasn’t been able to fulfil this need.
  • The conference needs to discuss a mechanism, under the BPR&D and with the involvement of organisations like the DRDO, the IITs, IISc, etc, to help decide on specifications for equipment as well as identify and develop the latest technology to be inducted at regular intervals.
  • IIT Bombay’s effort to set up the National Centre of Excellence in Technology for Internal Security, with assistance from the department of information technology is a right step.
  1. Lack of proper training:

Well-trained and motivated human resources are key to any police force’s success. But, most training academies are poorly staffed and often don’t have the necessary facilities. Institutions need to be upgraded in terms of facilities, equipment and technology.

  • There’s a need for advanced personnel planning and commensurate training facilities.
  • The best officers must be encouraged to join as trainers. It must be mandatory for personnel, including officers, to undergo in-service training before promotion.
  1. Involvement of state administrators:

While the DG/IG conference is attended by the Union home minister and senior ministry officials, it doesn’t involve chief secretaries and senior officers of the state home departments.

  • This is peculiar since law and order and investigation are state subjects. Any recommendations or decisions arrived at cannot be implemented without the express support of state administrations.

Conclusion:

The state police forces and the Central armed police forces have been facing several problems and confronting new challenges. To tackle these, a dynamic national strategy and farsighted policies are required that go beyond state boundaries. The DG/IG conference should, therefore, serve as a platform for serious thinking on issues confronting the police. It is necessary to provide impetus to senior officers to make an objective assessment of where they stand today and what they are required to do in the next five years to meet the complex challenges of policing and internal security.

Indian Polity, Public Admin 2, Social Issue, Uncategorized

Discouraging the proliferation of CSS

Over the years, proliferation of the centrally sponsored schemes (CSS) has greatly curbed the autonomy of the state governments. The greater the devolution through these one-size-fits-all CSS, the lesser is the untied fund available to the state governments.

  • Hence, to examine the current centrally sponsored schemes (CSS) and recommend their suitable rationalization, a sub-group was constituted under the aegis of NITI Aayog.
  • The sub-group, composed of chief ministers, has offered the Union government an institutional framework to further consolidate the constructive trends in fiscal devolution under the new emblem of cooperative federalism.
  • Even, the Fourteenth Finance Commission (FFC) had brought in significant changes in state-centre finances by increasing the devolution to states from 32% to 42% of the net Union tax receipts.

Important recommendations made by the sub-group:

  • Reduce the number of centrally sponsored schemes (CSS) down to 30 from 50 in 2015-16.
  • Divide CSS into core schemes and optional schemes. The core schemes will require mandatory implementation by the states, and the centre will fund 100% share for the Union territories, 90% for the eight north-eastern (NE) and three Himalayan states, and 60% for the rest of the states. The corresponding figures for the optional schemes are 100%, 80% and 50%, respectively.
  • States should be given the flexibility to choose optional schemes they want to implement.
  • The fund meant for the scheme opted out by any state can be used in other schemes. The states should be made free to deselect some components of a scheme they are implementing.
  • Increase the flexi-funds—meant to provide greater flexibility to spend on diverse requirements under the overall objective of the scheme—from 10% to 25%.

Position on special category states:

The special category states were disproportionate beneficiaries of the block grants—including Normal Central Assistance, one-time Additional Central Assistance, Special Central Assistance and Special Plan Assistance—which have now been subsumed into the increased fourteenth finance commission devolutions.

  • It should be noted here that the sub-group, in its report, has no where used the phrase “special category states”. It has instead used the phrase “Eight North Eastern states and three Himalayan states”. This might have important implications, if this report is accepted. This may bring a much-needed end to the practice of states queuing up for special category status.

Why states are not happy with CSS?

The Union Budget allocates about 59% of the Central Plan funds as Central Plan Assistance (CPA) to the States and the balance 41% is allocated in the form of CSS. The straight-jacketed conditionalities of the CSS do not allow any flexibility to meet local needs which result in the States either conforming to a uniform eligibility and strategic posture, or losing out on resource allocation.

downloadHow can the financial position of states be improved?

  • Devolution of funds should be done leaving space for local initiatives.
  • The States should be given greater liberty in opting for strategies to achieve the national goals within the given time-frame.
  • The States must be allowed greater flexibility to raise funds from the market to finance their projects.

The states have an important role to play in terms of both economic growth as well as poverty reduction. It should also be recognized that the States are not homogenous and hence they should be allowed to collectively deliberate and do the groundwork for defining the national goals, the sectoral targets and the achievable indicators. The constitution of the sub-group was an excellent example of involving the states in the decision-making process. However, much more work still needs to be done in order to realize the true ideals of cooperative federalism.

The Centrally Sponsored Schemes do not fall within the subjects allocated to Union Government in List I of the Seventh Schedule of the Constitution. However, they are funded by the Union Government to achieve certain national objectives. The flow of funds from the Union Government to the ultimate implementing agencies for any scheme is through one of these two channels. i) Funds are transferred to the Consolidated Fund of the State Governments which spend the money through the implementing agencies. ii) The Union Government transfers funds directly to implementing agencies in the States through normal banking channels.

In India’s developmental plan exercise we have two types of schemes viz; central sector and centrally sponsored scheme. Under Central sector schemes, it is 100% funded by the Union government and implemented by the Central Government machinery.

Under Centrally Sponsored Scheme (CSS) a certain percentage of the funding is borne by the States in the ratio of 50:50, 70:30, 75:25 or 90:10 and the implementation is by the State Governments.

In the Union Budget 2015-16, there are 31 Schemes to be fully sponsored by the Union Government, 8 Schemes have been delinked from support of the Centre and 24 Schemes will now be run with the changed sharing pattern. The details of these Schemes may be seen here by clicking me.