1.Fresh stirrings on federalism as a new politics

There are factors, which if harnessed well, that can create a political moment for a principled politics of federalism

Between vaccine wars, heated debates over the Goods and Services Tax (GST), personnel battles like the fracas over West Bengal’s Chief Secretary, and the pushback against controversial regulations in Lakshadweep, is India ready for a new federal bargain?

Emboldened by victories in the recent State Assembly elections, the idea of a third ‘federal’ front is once again gaining political cache as was evident in the Sharad Pawar organised Opposition meet. The Dravida Munnetra Kazhagam, since taking office, has begun to craft an ideological narrative on State rights, by re-introducing the term Union into the public discourse and pushing back against increased fiscal centralisation. Is this renewed emphasis on federalism, a genuine opportunity for forging a new politics?

Federalism in India has always had political relevance, but except for the States Reorganisation Act, federalism has rarely been an axis of political mobilisation. This was true even in the days of coalition politics when State politics mattered to national electoral outcomes. Fiscal and administrative centralisation persisted despite nearly two decades of coalition governments. Ironically, rather than deepen federalism, the contingencies of electoral politics have created significant impediments to creating a political consensus for genuine federalism. When confronted with entrenched centralisation of the present regime, the challenge is, ironically, even greater.

Nationalism on strong wicket

First, the rhetoric of nationalism has greater political purchase. Ideologically, the Bharatiya Janata Party (BJP) has had relatively little patience with federalism as a device to accommodate India’s multiple linguistic, religious, and ethnic identities. Post-2014, the BJP has couched its discomfiture with federalism in the grammar of development and nationalism, which has mass electoral appeal. To accelerate progress, India must become ‘one nation, one market’, ‘one nation, one ration card’, ‘one nation, one grid’. In this framing, federalism as a principle necessary for negotiating diverse political contexts and identity claims risks being equated with regionalism and a narrow parochialism that is anti-development and anti-national.

Thus, a politics for deepening federalism will need to overcome a nationalist rhetoric that pits federalism against nationalism and development. This is a hard ask, especially because most regional parties have failed to uphold principles of decentralisation in their own backyard.

Second, and relatedly, despite a rhetorical commitment to federalism, the politics of federalism has remained contingent rather than principled. As Pratap Bhanu Mehta has pointed out over the decades, federal principles have been bent in all kinds of ways to co-produce a political culture of flexible federalism — “federalism for me, but not for thee”.

Federalism in this rendition is reduced to a game of political upmanship and remains restricted to a partisan tussle rather than a regions’ genuine demand for accommodation. Especially, when claimants of greater federalism often maintain silence on unilateral decisions that affect other States.

Take for instance, the downgrading of a full-fledged State in Jammu and Kashmir into a Union Territory in 2019, or more recently, the notification of the NCT of Delhi (Amendment) Act, 2021. This blatant undermining of State’s rights hardly witnessed protest by parties that were not directly affected by these. Upholding federalism requires political maturity and a commitment to the federal principle. This is lacking in our politics.

Divide among States

Third, the increased economic and governance divergence between States. Economic growth trajectories since liberalisation have been characterised by growing spatial divergence. Across all key indicators, southern (and western) States have outperformed much of northern and eastern India resulting in a greater divergence rather than expected convergence with growth. This has created a context where collective action amongst States becomes difficult as poorer regions of India contribute far less to the economy but require greater fiscal resources to overcome their economic fragilities. Glimpses of these emerging tensions were visible in the debates around the 15th Finance Commission (FC) when the Government of India mandated the commission to use the 2011 Census rather than the established practice of using the 1971 Census to determine revenue share across States.

This, Southern states feared, risked penalising States that had successfully controlled population growth by reducing their share in the overall resource pool. The 15th Finance Commission, through its recommendations, deftly avoided a political crisis but the growing divergence between richer and poorer States, remains an important source of tension in inter-State relations that can become a real impediment to collective action amongst States. With the impending delimitation exercise due in 2026, these tensions will only increase.

These challenges notwithstanding, the BJP’s impatience with federalism affords an opportunity for regional parties to craft a new federal bargain. At one level, the BJP’s homogenising ideological project risks creating new forms of cultural alienation and associated regional tensions as occurred during the Citizenship (Amendment) Act protests in Assam. There is a very real possibility of the emergence of new forms of regional sub-nationalism, glimpses of which were visible during the recent Assembly elections particularly in West Bengal.

Fiscal management

Moreover, the realities of India’s macro-fiscal position risk increasing the fragility of State finances. Weak fiscal management has brought the Union government on the brink of what economist Rathin Roy has called a silent fiscal crisis. The Union’s response has been to squeeze revenue from States by increasing cesses. Its insistence on giving GST compensation to States as loans (after long delays) and increasing State shares in central schemes. The pandemic-induced economic crisis has only exaggerated this.

Against this backdrop, if harnessed well, both sub-nationalist sentiments and the need to reclaim fiscal federalism create a political moment for a principled politics of federalism. However, there are risks along the way. As Suhas Palshikar has argued, the politics of regional identity is isolationist by its very nature. An effort at collective political action for federalism based on identity concerns will have to overcome this risk. On the fiscal side, richer States must find a way of sharing the burden with the poorer States. States will have to show political maturity to make necessary compromises if they are to negotiate existing tensions and win the collective battle with the Union. An inter-State platform that brings States together in a routine dialogue on matters of fiscal federalism could be the starting point for building trust and a common agenda. The seeds of this were planted in the debates over the 15th Finance Commission and the GST.

Finally, beyond principles, a renewed politics of federalism is also an electoral necessity. No coalition has succeeded, in the long term, without a glue that binds it. Forging a political consensus on federalism can be that glue. But this would require immense patience and maturity from regional parties. Are they up to the task?

15^th Finance Commission

• The Finance Commission (FC) is a constitutional body, that determines the method and formula for distributing the tax proceeds between the Centre and states, and among the states as per the constitutional arrangement and present requirements.
• Under Article 280 of the Constitution, the President of India is required to constitute a Finance Commission at an interval of five years or earlier.
• The 15^th Finance Commission was constituted by the President of India in November 2017, under the chairmanship of NK Singh. Its recommendations will cover a period of five years from the year 2021-22 to 2025-26.

Key Points

• Vertical Devolution (Devolution of Taxes of the Union to States):
  • It has recommended maintaining the vertical devolution at 41% – the same as in its interim report for 2020-21.
• It is at the same level of 42% of the divisible pool as recommended by the 14th Finance Commission.
• It has made the required adjustment of about 1% due to the changed status of the erstwhile State of Jammu and Kashmir into the new Union Territories of Ladakh and Jammu and Kashmir.

• Horizontal Devolution (Allocation Between the States):
  • For horizontal devolution, it has suggested 12.5% weightage to demographic performance, 45% to income, 15% each to population and area, 10% to forest and ecology and 2.5% to tax and fiscal efforts.
• Revenue Deficit Grants to States:
  • Revenue deficit grants emanate from the requirement to meet the fiscal needs of the States on their revenue accounts that remain to be met, even after considering their own tax and non-tax resources and tax devolution to them.
  • Revenue Deficit is defined as the difference between revenue or current expenditure and revenue receipts, that includes tax and non-tax.
  • It has recommended post-devolution revenue deficit grants amounting to about Rs. 3 trillion over the five-year period ending FY26.
    • The number of states qualifying for the revenue deficit grants decreases from 17 in FY22, the first year of the award period to 6 in FY26, the last year.
• Performance Based Incentives and Grants to States:
  • These grants revolve around four main themes.
  • The first is the social sector, where it has focused on health and education.
  • Second is the rural economy, where it has focused on agriculture and the maintenance of rural roads.
    • The rural economy plays a significant role in the country as it encompasses two-thirds of the country’s population, 70% of the total workforce and 46% of national income.
  • Third, governance and administrative reforms under which it has recommended grants for judiciary, statistics and aspirational districts and blocks.
  • Fourth, it has developed a performance-based incentive system for the power sector, which is not linked to grants but provides an important, additional borrowing window for States.
• Fiscal Space for Centre:
  • Total 15^th Finance Commission transfers (devolution + grants) constitutes about 34% of estimated Gross Revenue Receipts to the Union, leaving adequate fiscal space to meet its resource requirements and spending obligations on national development priorities.
• Grants to Local Governments:
  • Along with grants for municipal services and local government bodies, it includes performance-based grants for incubation of new cities and health grants to local governments.
  • In grants for Urban local bodies, basic grants are proposed only for cities/towns having a population of less than a million. For Million-Plus cities, 100% of the grants are performance-linked through the Million-Plus Cities Challenge Fund (MCF).
    • MCF amount is linked to the performance of these cities in improving their air quality and meeting the service level benchmarks for urban drinking water supply, sanitation and solid waste management.

Criticism

• Performance based incentives disincentivizes independent decision-making. Any conditions on the state’s ability to borrow will have an adverse effect on the spending by the state, particularly on development thus, undermines cooperative fiscal federalism.
• It does not hold the Union government accountable for its own fiscal prudence and dilutes the joint responsibility that the Union and States have.

Horizontal Devolution Criteria

• Population:
  • The population of a State represents the needs of the State to undertake expenditure for providing services to its residents.
  • It is also a simple and transparent indicator that has a significant equalising impact.
• Area:
  • The larger the area, greater is the expenditure requirement for providing comparable services.
• Forest and Ecology:
  • By taking into account the share of dense forest of each state in the aggregate dense forest of all the states, the share on this criteria is determined.
• Income Distance:
  • Income distance is the distance of the Gross State Domestic Product (GSDP) of a particular state from the state with the highest GSDP.
  • To maintain inter state equity, the states with lower per capita income would be given a higher share.
• Demographic Performance:
  • It rewards efforts made by states in controlling their population.
  • This criterion has been computed by using the reciprocal of the total fertility ratio of each state, scaled by 1971 population data.
    • This has been done to assuage the fears of southern States about losing some share in tax transfers due to the reliance on the 2011 Census data instead of the 1971 census, which could penalise States that did better on managing demographics.
  • States with a lower fertility ratio will be scored higher on this criterion.
• The Total Fertility Ratio in a specific year is defined as the total number of children that would be born to each woman if she/they were to pass through the childbearing years bearing children according to a current schedule of age-specific fertility rates.

• Tax Effort:
  • This criterion has been used to reward states with higher tax collection efficiency.
  • It has been computed as the ratio of the average per capita own tax revenue and the average per capita state GDP during the three-year period between 2016-17 and 2018-19.

2.Vacancies send a wrong signal

Leaving top posts in the government unoccupied affects governance and is demoralising for officers

The vacancies in the Central government and the States in recent years have had a deleterious effect on governance. For months on end, top slots in important government agencies remain vacant. Delays in promotions and appointments not only affect the organisations but also tend to demoralise the officials who await promotions after vacancies arise.

Posts waiting to be filled

The post of the Chairman of the National Human Rights Commission was kept vacant until June this year even though the previous Chairman, H. L. Dattu, retired in December 2020. The post of the Director of the Central Bureau of Investigation (CBI) too was kept vacant until the recent appointment of Subodh Kumar Jaiswal. The post had been vacant since February after Rishi Kumar Shukla retired.

The Chief Election Commissioner (CEC), Sunil Arora, retired on April 12 amidst an aggressive election campaign and polling in West Bengal and four other States this year leaving just two members in the Commission. One of them became CEC by virtue of his seniority in the Election Commission. In case of a disagreement on any issue between the two of them, a solution would have become difficult. The Centre appointed Anup Chandra Pandey as the new Election Commissioner in June. Meanwhile, the Association for Democratic Reforms (ADR) has filed a public interest litigation in the Supreme Court demanding the appointment of Election Commissioners by a committee, as is done in the case of appointment of the Director of the CBI, and not by the Centre as is the case now. ADR has referred to the 255th Report of Law Commission that had recommended that Election Commissioners be appointed by a high-powered committee. Though the high-powered committee headed by the Prime Minister has two members – the Chief Justice of India and the Leader of the Opposition in the Lok Sabha – the Opposition leader has little say in the selection process. If the Prime Minister decides on a candidate and the CJI consents, the Opposition leader’s dissenting note carries no weight. There is a need, therefore, to expand the high-powered committee to include at least two more members of eminence with proven integrity for the selection process – preferably a retired police officer and a Chief Minister of a State governed by a party other than that of the party of the Prime Minister.

After Hrushikesh Senapaty’s retirement in November last, the National Council of Educational Research and Training, which is largely responsible for chalking out the education policy of the country, is headless. Of the 40 Central universities across the country, nearly half are without regular Vice-Chancellors.

Rakesh Asthana assumed additional charge of the Narcotics Control Bureau (NCB) from December 2019. After his appointment as Director-General (DG) of the Border Security Force in August last, he continues to hold charge of the NCB as DG. Kuldiep Singh, DG of the Central Reserve Police Force, now also heads the National Investigation Agency after the previous incumbent, Y.C. Modi, retired on May 31 last.

Impact of vacancies

Similar vacancies or examples of officers holding additional charge exist in other ministries, commissions and departments, but the government appears to turn a blind eye to the malefic effect it has on governance. Vacancies for such long periods tend to paralyse the backbone of these organisations. Appointments to higher echelons can be announced well in time. Delays in important appointments send a wrong signal to the nation. If the government can announce its chiefs and vice chiefs months in advance, there is no reason why this cannot be done in all other ministries and departments. A time frame needs to be worked out to announce top appointments at least a month in advance. Political considerations need to be pushed to the back seat for a clean and honest administration.

Law Commission of India

Introduction

• Law Commission of India is neither a constitutional body nor a statutory body, it is an executive body established by an order of the Government of India. Its major function is to work for legal reforms.
• The Commission is established for a fixed tenure and works as an advisory body to the Ministry of Law and Justice.
• Its membership primarily comprises legal experts.

History of Law Commission in India

• Law Reform has been a continuing process particularly during the last 300 years or more in Indian history. In the ancient period, when religious and customary law occupied the field, the reform process had been ad hoc and not institutionalised through duly constituted law reform agencies.
• However, since the third decade of the nineteenth century, Law Commissions were constituted by the Government from time to time and were empowered to recommend legislative reforms to clarify, consolidate and codify particular branches of law where the Government felt the necessity for it.
  • The first such Commission was established in 1834 under the Charter Act of 1833 under the Chairmanship of Lord Macaulay which recommended codification of the Penal Code and the Criminal Procedure Code.
  • Thereafter, the second, third and fourth Law Commissions were constituted in 1853, 1861 and 1879 respectively which, during a span of fifty years contributed to enrich the Indian Statute Book with a large variety of legislations on the pattern of the then prevailing English Laws adapted to Indian conditions.
  • The Indian Code of Civil Procedure, the Indian Contract Act, the Indian Evidence Act, the Transfer of Property Act. etc. are products of the first four Law Commissions.

Post-Independence Developments

• After independence, the Constitution stipulated the continuation of pre-Constitution Laws under Article 372 until they are amended or repealed.
  • There had been demands in Parliament and outside for establishing a Central Law Commission to recommend revision and updation of the inherited laws to serve the changing needs of the country.
• The Government of India established the First Law Commission of Independent India in 1955 with the then Attorney-General of India, Mr M. C. Setalvad, as its Chairman. Since then twenty one more Law Commissions have been appointed, each with a three-year term.

The Functions of Law commission     

• The Law Commission, on a reference made to it by the Central Government or suo-motu, undertakes research in law and review of existing laws in India for making reforms therein and enacting new legislations.
  • It also undertakes studies and research for bringing reforms in the justice delivery systems for elimination of delay in procedures, speedy disposal of cases, reduction in the cost of litigation etc.
• The other functions of the Law Commission include:
  • Review/Repeal of obsolete laws: Identification of laws which are no longer relevant and recommending for the repeal of obsolete and unnecessary enactments.
  • Law and Poverty: Examines the Laws which affect the poor and carries out post-audit for socio-economic legislations.
  • Suggesting enactment of new legislation as may be necessary to implement the Directive Principles and to attain the objectives set out in the Preamble of the Constitution.
  • Judicial Administration: Considering and conveying to the Government its views on any subject relating to law and judicial administration that may be specifically referred to it by the Government through the Ministry of Law and Justice (Department of Legal Affairs).
  • Research: Considering the requests for providing research to any foreign countries as may be referred to it by the Government through the Ministry of Law & Justice (Department of Legal Affairs).
  • Examine the existing laws with a view of promoting gender equality and suggesting amendments thereto.
  • Examine the impact of globalization on food security, unemployment and recommend measures for the protection of the interests of the marginalized.
  • Preparing and submitting to the Central Government, from time to time, reports on all issues, matters, studies and research undertaken by it and recommending in such reports for effective measures to be taken by the Union or any State.
  • Performing such other functions as may be assigned to it by the Central Government from time to time.
• Before concretizing its recommendations, the Commission consults the nodal Ministry/Departments and such, other stakeholders as the Commission may deem necessary for the purpose.

Reports of Law Commission

• The law commission of India has submitted 277 reports so far on various issues, some of the recent reports are:
  • Report No. 277 – Wrongful Prosecution (Miscarriage of Justice): Legal Remedies
  • Report No. 276 – Legal Framework: Gambling and Sports Betting Including in Cricket in India
  • Report No. 275 – Legal Framework: BCCI vis-à-vis Right to Information Act, 2005
  • Report No. 274 – Review of the Contempt of Courts Act, 1971
  • Report No. 273 – Implementation of the United Nations Convention against Torture
  • Report No. 272 – Assessment of Statutory Frameworks of Tribunals in India
  • Report No. 271 – Human DNA Profiling
  • Report No.270 – Compulsory Registration of Marriages
• The recommendations of the commission are not binding on the government. They may be accepted or rejected. Action on the said recommendations depends on the ministries/departments, which are concerned with the subject matter of the recommendations.

In an era of globalisation and constantly evolving societies, Law Commission identifies the laws which are not in harmony with the existing climate, and laws which require change. It suggests suitable measures for quick redressal of citizens’ grievances, in the field of law and takes all necessary steps to make the poor benefit out of the legal process. Its presence has become even more relevant in recent times.