Daily Current Affairs 28.06.2022 (‘Centre may raise small savings rates’, States, freebies and the costs of fiscal profligacy, Complicated, volatile, the descriptors of Israel’s politics, From higher to hire education, Modi’s two summits: UAE trumps G7, When defection is a mere detour for an MLA)

Daily Current Affairs 28.06.2022 (‘Centre may raise small savings rates’, States, freebies and the costs of fiscal profligacy, Complicated, volatile, the descriptors of Israel’s politics, From higher to hire education, Modi’s two summits: UAE trumps G7, When defection is a mere detour for an MLA)


1. ‘Centre may raise small savings rates’

Economists cite rising G-Sec yields — to which such rates are linked — as reason for optimism

Households could get some relief this week as economists expect the Centre to raise the interest rates paid on small savings schemes for the July to September 2022 quarter, with the yields on 10-year government securities hitting a four-year high of 7.6% earlier this month.

The rates of interest on instruments like the Public Provident Fund and the National Savings Certificate, currently at 7.1% and 6.8%, respectively, have not been changed for eight quarters since a reduction was effected in the first quarter of FY21. Retail inflation too had hovered above 7% in April and May, squeezing household budgets. Raising rates on small savings could also help the government reduce its reliance on market borrowings this year.

‘Deposit rates rising’

“There are chances of small savings rate being increased in upcoming review for July-September, in line with the higher policy repo rate,” CARE Ratings chief economist Rajani Sinha told The Hindu, noting that banks had also started revising deposit rates upwards. The government will announce the rates for the next quarter on June 30. “While the Reserve Bank of India (RBI) has hiked the policy interest rate by 90 basis points (bps) in the last two meetings, we expect further increase of at least 100 bps increase in FY23. This implies that yields on government securities (G-Secs) will continue to increase in the next few months,” Ms. Sinha said. One basis point is equal to 0.01%.

Aditi Nayar, chief economist, ICRA, said she too expected interest rates on small savings instruments to be raised, given the sharp rise in the G-Sec yields of various maturities, to which such rates are linked.

“In view of the increase in the G-Sec yields in recent months, the excess of the announced interest rates on SSIs over the respective formula-based rates moderated to 9-118 bps for Q1: 2022-23 from 42-168 bps in Q4 2021-22,” the RBI had noted in April. The average G-Sec yield, based on which the quarterly rate on the 15-year PPF is pegged, was 6.76% between December 2021 and February 2022, resulting in a formula-based rate of 7.01% for the April to June quarter.

The 7.10% for the quarter was thus nine bps higher than the formula then.

“The average month-end G-Sec yields for one-year, two-year and five-year bonds have increased substantially to 5.26%, 5.65% and 6.79%, respectively, between March and May 2022, from 3.88%, 4.72% and 6%, respectively, in the previous three months,” Ms. Nayar pointed out. On June 24, yields on 10-year G-Secs stood at 7.44%.

2. Editorial-1: States, freebies and the costs of fiscal profligacy

The need for instituting more effective checks that can make wayward States fall in line is compelling

During the planning last year and the campaign ahead of the Punjab Assembly election, the Aam Aadmi Party (AAP) promised a sum of ₹1,000 per month to every woman in the State. To drive home the generosity of the promise, the AAP leader and Delhi Chief Minister, Arvind Kejriwal, emphasised that under AAP’s ‘Mission Punjab’ for the Punjab polls 2022, if there were three adult women in a household (daughter-in-law, daughter, mother-in-law), each of them would get ₹1,000. When questioned how Punjab, already reeling under heavy debt, could afford this, Mr. Kejriwal said something to the effect that if there is good political management, money would not be a problem.

Growing freebie culture

Electoral promises of this kind raise several questions. Is borrowing and spending on freebies sustainable? Is this the best possible use of public money? What is their opportunity cost — what is it that the public are collectively giving up so that the government can fund these payments? Should not there be some checks on how much can be spent on them?

I am using Punjab to illustrate a point and by no means to suggest that it is unique. In fact, many States are pursuing the freebie culture, some even more aggressively than Punjab.

Ideally, governments should use borrowed money to invest in physical and social infrastructure that will generate higher growth, and thereby higher revenues in the future so that the debt pays for itself. On the other hand, if governments spend the loan money on populist giveaways that generate no additional revenue, the growing debt burden will eventually implode and end in tears.

Concerned by an increasing number of States that are embarking on this financially ruinous path, senior bureaucrats reportedly flagged the issue at a meeting with the Prime Minister, telling him that ‘some States might go down the Sri Lankan way’.

There is an argument that this concern is being exaggerated. After all, if you look at any analysis of State Budgets by the Reserve Bank of India or any think tank, the inference you will draw is that State finances are in good, if indeed robust, health, and that all of them are scrupulously conforming to the Fiscal Responsibility and Budget Management (FRBM) targets.

This is a misleading picture. Much of the borrowing that funds these freebies happens off budget, beyond the pale of FRBM tracking. The typical modus operandi for States has been to borrow on the books of their public enterprises, in some cases by pledging future revenues of the State as guarantee. Effectively, the burden of debt is on the State exchequer, albeit well concealed. The Comptroller and Auditor General of India (CAG) had in fact pointed out that in respect of some States ‘if extra-budgetary borrowings are taken into account, the liabilities of the government are way above what is acknowledged in the official books’.

How big is the problem? There is no comprehensive information in the public domain to assess the size of this off-budget debt, but anecdotal evidence suggests that it is comparable in size to the debt admitted in the Budget books.

The obvious motivation for States in expanding freebies is to use the exchequer to build vote banks. A certain amount of spending on transfer payments to provide safety nets to the most vulnerable segments of the population is not only desirable but even necessary. The problem arises when such transfer payments become the main plank of discretionary expenditure, the spending is financed by debt, and the debt is concealed to circumvent the FRBM targets.

The more States spend on transfer payments, the less they have for spending on physical infrastructure such as, for example, power and roads, and on social infrastructure such as education and health, which can potentially improve growth and generate jobs. The truth of the Chinese saying, ‘give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime’ is self-evident to everyone, including politicians. But electoral calculations tempt them to place short-term gains ahead of long-term sustainability.

Institutional checks, balances

What about the institutional checks and balances that should prevent this downward spiral? Unfortunately, all of them have become ineffective. In theory, the first line of defence has to be the legislature, in particular the Opposition, whose responsibility it is to keep the Government in line. But given the perils of our vigorous democracy, the Opposition does not dare speak up for fear of forfeiting vote banks that are at the end of these freebies.

Another constitutional check is the CAG audit which should enforce transparency and accountability. In practice, it has lost its teeth since audit reports necessarily come with a lag, by when political interest has typically shifted to other hot button issues. Besides, our bureaucracy has mastered the fine art of turning audit paras into ‘files’ which run their course and die a quiet death.

The market is another potential check. It can signal the health or otherwise of State finances by pricing the loans floated by different State governments differently, reflecting their debt sustainability. But in practice this too fails since the market perceives all State borrowing as implicitly guaranteed by the Centre, never mind that there is no such guarantee in reality.

The costs can be huge

The costs of fiscal profligacy at the State level can be huge. The amount States borrow collectively every year is comparable in size to the Centre’s borrowing which implies that their fiscal stance has as much impact on our macroeconomic stability as does that of the Centre. The need, therefore, for instituting more effective checks that can make wayward States fall in line is compelling.

Here are two suggestions towards that end.

First, the FRBM Acts of the Centre as well as States need to be amended to enforce a more complete disclosure of the liabilities on their exchequers. Even under the current FRBM provisions, governments are mandated to disclose their contingent liabilities, but that disclosure is restricted to liabilities for which they have extended an explicit guarantee. The provision should be expanded to cover all liabilities whose servicing obligation falls on the Budget, or could potentially fall on the Budget, regardless of any guarantee.

Second, under the Constitution, States are required to take the Centre’s permission when they borrow. The Centre should not hesitate to impose conditionalities on wayward States when it accords such a permission. States slapped with conditionalities will of course baulk and allege political motives. The challenge for the Centre will be to act transparently and in accordance with well-defined, objective and contestable criteria.

Finally, there is the draconian provision in the Constitution of India which allows the President to declare financial emergency in any State if s/he is satisfied that financial stability is threatened. This Brahmastra has never been invoked so far for fear that this will turn into a political weapon of mass destruction. But the provision is there in the Constitution for a reason. After all, the root cause of fiscal irresponsibility is the lure of electoral nirvana. It will stop only if the political leadership fears punishment. It is therefore important to ensure that the prospect of a financial emergency in case of gross and continuing fiscal irresponsibility is not just an abstract threat but a realistic one.

Disappointingly, the Centre itself has not been a beacon of virtue when it comes to fiscal responsibility and transparency. To its credit, it has embarked on course correction over the last few years. It should complete that task in order to command the moral authority to enforce good fiscal behaviour on the part of States.

3. Editorial-2: Complicated, volatile, the descriptors of Israel’s politics

It remains to be seen whether the country’s fifth national election, later this year, will result in a stable government

Israel is to call for yet another national election, its fifth since 2019, as Naftali Bennett’s coalition government has ended abruptly. Israel’s Foreign Minister, Yair Lapid, has succeeded him as the caretaker Prime Minister and Israel is to go to the polls in either October or November 2022. In April, Mr. Bennett had planned to travel to India to celebrate 30 years of diplomatic relations between the two countries. His visit was cancelled at the last minute due to the rise in terror attacks in Israel and the crisis of a failing coalition.

Domestic polarisation

In the scene of a rapidly changing domestic politics, Naftali Bennett and his right-wing members were constantly targeted by Opposition leaders such as Benjamin Netanyahu for having an alliance with an Arab party and giving work permits to the Palestinians from Gaza. The coalition whip, Idit Silam, left the government in April and said this government has not been Jewish enough or loyal to the right-wing constituencies. Accommodation of ideological differences was rejected; ideological compromise was seen as weakening the state of Israel. Mr Bennett could not create unity in diversity and offered to step down.

Mr. Bennett gave his ‘exit statement’ to The New York Times columnist, Bret Stephens (“Naftali Bennett’s Exit Interview”) who reported their telephone conversation; the first thing Mr Bennett said in the interview was: “In a world where domestic polarization is becoming almost the single biggest challenge, the experiment succeeded (the fact that his government was in power for one year and showed that there is an alternative to hardline leaders such as Netanyahu)”. His experiment was putting together a diverse coalition of eight odd parties together with his friend and partner, Yair Lapid. They were called ‘agents of change’.

This coalition spelt exceptional change in domestic Israeli politics as it had Ministers and the parliamentary unity of the right, centre, left. For the first time, there was an Arab party as well. A year ago, while making his first speech in Parliament, Mr. Bennett said, “I am proud of the ability to sit together with people with very different views than mine.” He invited all his ideological opponents to join the government with the realisation that Israeli society and politics have become too divided, toxic, and violently radical. He worried for national unity and knew Israel is threatened from within — divisions across the right and the left, religious and secular and Mirahim (oriental Jews) and Ashkanazim (European Jews) have caused political instability for too long. The forecast for the next national election is also worrisome as no political party, including Mr. Netanyahu’s Likud, is likely to get a majority of its own according to the pollsters.

Spoiler leader

Mr. Netanyahu was one of the factors behind the formation of the coalition; he has also helped in its failure. Otherwise, ideologically divided parties were compelled to come together by the logic of ‘anyone but Netanyahu’ and give Mr. Bennett a historic opportunity. Mr. Netanyahu, as the Opposition leader, ensured this would not last for long. Despite him being indicted for corruption charges and a trial he did not leave any stone unturned in Parliament to oppose the government. It was nothing less than an audacious decision on his part to oppose the bill extending Israeli laws in the West Bank last week that brought down the Bennett government. Mr. Netanyahu said to Ms. Silam who defected, “Idit, you’re proof that what guides you is the concern for the Jewish identity of Israel, the concern for the land of Israel, and I welcome you back home to the national camp. I call on all those elected by the national camp to join Idit and come home. You will be welcomed with complete respect and with open arms.”

Mr. Netanyahu, the orator of rhetoric in Israeli politics, has been sharp in his attacks on this government for having an Arab party (labelled as the ‘terror supporters’) and left parties (labelled as anti-national because of their support for the peace process and two-state solution with the Palestinians). In short, Mr. Bennett lost the battle of narratives even when he meant sincere tikkun (the Hebrew word for repair) of Israel’s internal divisions with moderation and compromises.

It is the right-wing politicians, of Mr. Bennett’s own party, who felt they have been making too many compromises and now need to revive their radical positions to uphold macho-nationalist, ultra-religious constituencies where a compromise of core principles is not rewarded. Whether this is true or merely an assumption will be known after the fresh elections. For now, Israeli domestic politics is becoming too polarised. Mr. Bennett still thinks that the new government that will come will have to build consensus and agree to compromise because no one is going to get a majority (61 out of 120 seats) in Parliament.

The road ahead

Henry Kissinger once said that Israel does not have a foreign policy but domestic politics. Israel is a house that is constantly in chaos; domestic issues overpower leaders so much that Israel fails to have long-drawn pro-active foreign policy. As a small state, Israel is inward-looking and parochial.

The Times of Israel has reported that “Bennett said he should have focused more on managing his own party and domestic politics while he was prime minister, and less on making progress with international leaders including Ukraine’s Volodymyr Zelensky and the United Arab Emirates’ Mohamed bin Zayed”.

Mr. Bennett has attempted to mediate between Russia and Ukraine when the conflict between them started. Israel has also signed a Free Trade Agreement with the United Arab Emirates (UAE) which is a historical development considering the amount of regional isolation Israel has had to endure. There is a new chapter opening in Israel-Turkey relations. There is a buzz with Saudi Arabia and Pakistan as well. Next month, the United States President, Joe Biden, is making his first trip to Israel and there is a scheduled joint summit level meeting of the Middle East Quad (now called I2U2, or India, Israel, the U.S. and the UAE). So, not only is a celebration of 30 years of India-Israel relations awaiting a stable Israeli government but there are also other very significant geo-political changes.

4. Editorial-3: From higher to hire education

Higher education is increasingly getting delivered by for-profit entities

Higher education policy planners and regulators are busy giving shape to the digital university, which was announced in the 2022-23 Union Budget. Though still on the drawing board, the digital university is expected to offer any number, kind, and type of course without limits on intake, in a hybrid or ‘physical plus digital’ mode. It proclaims to provide equitable access to quality higher education and employability-enhancing skill development programmes to all.

Recent developments

In the interim, the University Grants Commission has relaxed the norms and standards for setting up open universities. In particular, land requirement has been reduced from 40 acres to just five acres. This is likely to open the floodgates for private open universities. Simultaneously, more universities are being enabled to offer courses in the distance, open and online mode, mostly in collaboration with EdTech startups and unicorns. Some have already outsourced the delivery of their courses to such agencies. Students are also made to complete a certain portion of their course requirements through Massive Open Online Courses. Additionally, they can accumulate credits at will and deposit them in their Academic Bank of Credit to be exchanged for a degree at a later stage. Higher education in India is getting metamorphosed into ‘hire education’. In the process, higher education is now getting delivered by for-profit entities, in contravention of the long-held belief that education at all levels must be provided on a not-for-profit basis.

The idea of providing higher educational opportunities in a non-formal mode is not new. Most mainstream universities in India have been allowing students, particularly women and working people, to learn on their own and take university exams as private candidates. Many have performed quite well.

The mode and medium of remote learning have, however, been changing to keep pace with technological advancement. Broadcasts and telecasts were once regarded as game changers to impart education remotely. They were espoused to be the cheapest way of enhancing access to quality education. The realities belied these expectations.

Information Communication and Entertainment technologies, augmented and virtual realities, artificial intelligence and machine learning are being touted as technologies with immense possibilities for transforming the delivery of education. The higher education horizon appears densely dotted with EdTech startups and tech companies as higher education aggregators.

Technology-enabled and mediated digital learning is projected as the future of higher education. Such learning is supposed to end face-to-face formal education — so much so that some have already started writing the obituary of the brick-and-mortar universities. Two years of COVID-19-compelled online education seems to have convinced them that in future, education, particularly higher education, will transform into a virtual space.

Evidence of massive learning losses due to the digital divide, but primarily due to the inherent limitations of technology, are being regarded as mere teething troubles. Sold to the idea, policy planners and regulators are aggressively pushing the distance, open, virtual, and online modes of education.

The EdTechs and technology companies are euphoric about these developments. The media is already abuzz with EdTechs raising resources and enhancing capacities to capitalise on the opportunities that these market-friendly reforms throw up. How successful and effective would such programmes be? No one knows. Going by the evidence, employers across the world are generally negatively disposed towards this. Most recruiters prefer to hire those who have graduated in face-to-face mode.

No wonder even the strongest proponents of online and virtual education feel that such programmes be subjected to stricter oversight, tighter regulations, and rigorous processes to ensure high standards and robust quality control. Given the fact that the quality of higher education is inversely proportional to the intensity of regulation, designing and developing an efficient and effective regulatory mechanism often proves more challenging than imagined.

The open and distance mode of learning, including the latest model based on digital and virtual delivery, often finds favour with the government due to cost considerations. It is, however, wrong to assume that these are economical and cost-effective. To be effective, they not only require massive capital investment in infrastructure, but also demand a significantly higher recurring expenses on content development and their continuous updating and upgradation.

No substitute for teachers

Digital delivery and technology integration in education may undoubtedly serve a useful purpose. Higher education must indeed embrace and keep pace with the advancements in technology. Technology can be effectively leveraged as a quality-enhancement tool. It would, however, be a blunder to regard technology-mediated teaching-learning as an alternative to face-to-face education. Technology can supplement and not substitute teachers.

No world-class universities, including those with a high degree of technology integration in their teaching and learning processes, are planning to cut down their faculty cost or their number any time soon. On the contrary, they envision hiring more of them to attain greater excellence. India cannot be an exception to this. Higher education is a lot more than borrowing content and delivering them online or outsourcing content. This would render India a consumer of knowledge. We must, instead, be focussed on exploiting our full potential to emerge as a producer of knowledge and providers of the global workforce.

5. Editorial-4: Modi’s two summits: UAE trumps G7

The UAE was a bigger investor in India in 2021 than Germany and France combined

Prime Minister Narendra Modi is attending two summits this week – he is a ‘special invitee’ at the 48th G7 Summit at Schloss Elmou in Germany. After that, he has a bilateral summit in Abu Dhabi with the UAE President Sheikh Mohammed bin Zayed Al-Nahyan on June 28. Though the pundits may consider the second event as a sideshow, some statistics are enough to prove them wrong.

If the U.S. is exempted, no G7 country comes close to the UAE as India’s trading partner, exports market, Indian diaspora base and their inward remittances. According to our official Foreign Direct Investment data, the UAE invested more in India in 2021 than Germany and France combined. Unlike the UAE, none of the G7 countries has yet signed a bilateral Comprehensive Economic Partnership Agreement (CEPA) with India.

Both summits are important to India, but unlike the interlocutors in the Bavarian Alps, our Prime Minister is unlikely to be hectored in Abu Dhabi about where not to buy oil from or how much Indian wheat and sugar must be sold. The agenda is likely to be more constructive and benign.

India-UAE synergy

The current India-UAE synergy and amity are largely due to Prime Minister Modi’s tending. This would be his fourth visit to Abu Dhabi and sixth summit with Sheikh Mohammed over the past seven years. These have re-energised this historic, but long-dormant, relationship. The visits have plenty to show — from Emirati investments in Jammu and Kashmir to a CEPA. After a COVID-19-induced three-year hiatus, a Modi-Sheikh Mohammed summit was desirable to infuse a fresh momentum.

In protocol terms, Mr. Modi would commiserate the passing away of UAE President Sheikh Khalifa bin Zayed on May 13 and the appointment of Sheikh Mohammed, 61, as his successor. As Sheikh Mohammed has been the de facto President since Sheikh Khalifa suffered a stroke in 2014, the change at the helms means little in the practical term. However, this being the only second transition at the top since the formation of the UAE in 1971, it is significant. It symbolises political stability and continuity in a turbulence-prone region. Mr. Modi would probably be the first non-Arab leader to be received in Abu Dhabi after the 40-day State mourning ended on June 22. Thus, the Abu Dhabi summit would be a useful opportunity to recalibrate the bilateral ties and open new vistas following the operationalisation of the bilateral CEPA from May 1.

Changes since the pandemic

Significant changes in the bilateral, regional and global context have taken place since the two leaders last met in August 2019. Both countries have successfully contained the COVID-19 pandemic and can pool their experiences. Their bilateral trade grew by 68% in 2021-22 to $72.9 billion, a new record. While both exports and imports grew, the trade deficit reached $16.8 billion, also a new record. Thanks to the CEPA, the robust economic revival, higher oil prices and larger Indian imports, trade is likely to grow even higher in 2022-23. The corrective mechanism built into CEPA would, hopefully, prevent the deficit from going out of hand. As the UAE collects petrodollars, India, the world’s fastest-growing major economy, could be a lucrative market for investments in areas such as petrochemicals, pharmaceuticals, renewables, infrastructure, manufacturing, logistics, start-ups, etc. A lot has already been done to streamline the manpower sector, including skilling the young Indian labour force to suit the Emirati requirements, but more can be done. The two sides can collaborate for the eventual reconstruction of the war-ravaged regional countries such as Yemen, Syria, Somalia, Iraq, Libya and Afghanistan. In the bilateral political domain, the two sides have cooperated efficiently on security and anti-terrorism, but they need to do more to fight money laundering and the flow of illicit narcotics.

A complex area

The South West Asian region is a complex and evolving area. The UAE has disrupted the longstanding Arab Israeli stalemate by normalising relations with Israel in 2020. The two sides have recently signed a bilateral CEPA. After pursuing a muscular regional foreign policy against political Islam and in regional hotspots such as Syria, Yemen, Libya, Sudan, and Somalia, Abu Dhabi seems to have decided to stage a phased withdrawal and improve ties with Syria, Qatar and Turkey. The ties with Saudi Arabia remain somewhat edgy, due to policy divergences and economic competition. Similarly, Abu Dhabi has developed some ruction with the Biden presidency in the U.S. and is diversifying its strategic options with Russia and China. It has conspicuously ignored the plea by the U.S. and other Western countries to raise its oil production. India, the UAE’s second-largest trading partner, and largest source of tourists and manpower, can be a useful ally. Against this ongoing regional and global flux, the India-UAE summit is both topical and opportune and can have an impact beyond the bilateral context.

6. When defection is a mere detour for an MLA

It is possible to avoid Karnataka-like incidents if MLAs jumping ship are disqualified for six years

The most prominent case of political defection was that of Haryana’s Gaya Lal, originally an independent MLA who, in 1967, juggled between the Congress and Janata Party for two weeks. The recurrence of this phenomenon led to the 1985 Anti-Defection Law.

The Anti-Defection Law provided a safeguard for defections made on genuine ideological differences. It accepted “split” within a party if at least one-third of the members of the legislative party defect, and allowed the formation of a new party or “merger” with other political party if not less than two-thirds of the party’s members commit to it.

Defections like these can only be stopped by extending the disqualification period from re-contesting to at least six years.

S.Y. Quraishi

The Supreme Court, after hearing rebel MLA faction leader Eknath Shinde’s petition challenging the disqualification notices issued to him and 15 other rebel MLAs, extended the deadline given to the concerned MLAs to file their responses to the disqualification notices. In this article dated January 3, 2020, S.Y. Quraishi explains how defecting MLAs need to be barred for at least six years before they can contest elections again.

They defected, re-contested, and became members again, all in six months. Some are even likely to become Ministers soon.

The Karnataka byelection results have widely put to display the ineffectiveness of the Anti-Defection Law. Of the 17 defecting Congress-Janata Dal (Secular) MLAs, 11 were re-elected on a Bharatiya Janata Party (BJP) ticket. Not only did this set of events lay down a well-structured framework to sidestep the law, it even set a dangerous precedent for neutralising the consequences of the law altogether.

The phenomenon of defections is not new to Indian politics. It has been plaguing the political landscape for over five decades. The most prominent case was that of Haryana’s Gaya Lal, originally an independent MLA who, in 1967, juggled between the Congress and Janata Party for two weeks, during which he switched his loyalty thrice. The recurrence of this evil phenomenon led to the 1985 Anti-Defection Law, which defined three grounds of disqualification of MLAs — giving up party membership; going against party whip; and abstaining from voting.

Resignation not a condition

Resignation as MLA was not one of the conditions. Exploiting this loophole, the 17 rebel MLAs in Karnataka resigned, their act aimed at ending the majority of the ruling coalition and, at the same time, avoiding disqualification. However, the Speaker refused to accept the resignations and declared them disqualified. This was possible as the legislation empowers the presiding officer of the House (i.e. the Speaker) to decide on complaints of defection under no time constraint.

The law originally protected the Speaker’s decision from judicial review. However, this safeguard was struck down in Kihoto Hollohan v. Zachillhu and Others (1992). While the SC upheld the Speaker’s discretionary power, it underscored that the Speaker functioned as a tribunal under the anti-defection law, thereby making her/his decisions subject to judicial review. This judgment enabled judiciary to become the watchdog of the anti-defection law, instead of the Speaker, who increasingly had become a political character contrary to the expected neutral constitutional role. The same could be witnessed in Shrimanth Balasaheb Patel & Ors vs Speaker Karnataka Legislative Assembly & Ors (2019), where the three-judge SC bench upheld the then Karnataka Speaker’s decision of disqualification of the 17 rebel MLAs. However, it struck down his ban on the MLAs from contesting elections till 2023, negating the only possible permanent solution to the problem. The Supreme Court played the role of a neutral umpire in this political slugfest. But, the spectacle of MLAs hoarded in a bus, and being sent to a resort, openly exposed not just the absence of ideological ties between a leader and his party, but also her/his weak moral character. It was also upsetting to see public acceptance of such malpractices as part of politics, with some even calling it Chanakya niti!

Exit, and swift return

The Anti-Defection Law provided a safeguard for defections made on genuine ideological differences. It accepted “split” within a party if at least one-third of the members of the legislative party defect, and allowed the formation of a new party or “merger” with other political party if not less than two-thirds of the party’s members commit to it. The 91st Constitutional Amendment introduced in 2003 deleted the provision allowing split.

The 91st Amendment also barred the appointment of defectors as Ministers until their disqualification period is over or they are re-elected, whichever is earlier. But, obviously, such laws have not put to rest the trend of defections.

The main issue, as witnessed in Karnataka, is that the defectors treat disqualification as a mere detour, before they return to the House or government by re-contesting. This can only be stopped by extending the disqualification period from re-contesting and appointment to Chairmanships/Ministries to at least six years. The minimum period limit of six years is needed to ensure that the defectors are not allowed to enter the election fray for least one election cycle, which is five years.

Of course, MLAs can still be bought from the ruling dispensation to bring it to a minority by being paid hefty sums, simply to stay at home for six years. Almost every political outfit has been party to such devious games, with hardly any political will to find a solution.

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