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  • Citizen’s Charter: Importance, Objective, Features, Problems faced in implementation, Guidelines

    In any nation, there is a need of good governance for sustainable development, both economic and social.

    The three major aspects highlighted in good governance are transparency, accountability and responsiveness of the administration.

    What is Citizen’s Charter?

    Citizens’ Charters initiative is a response to the mission for solving the problems which a citizen meets, day in and day out, while dealing with the organisations providing public services.

    The charter is the declaration of commitment to superiority in service to customers of the department. The citizen charter declares the standards for various services offered. It includes expectations of the Organisation from the Citizens for fulfilling its commitment. Citizen charter is available on India post website.

    The concept of Citizens’ Charter protects the trust between the service provider and its users.

    Citizens’ Charter was first expressed and implemented in the United Kingdom by the Conservative Government of John Major in 1991 as a national programme with aim to constantly improve the quality of public services for the people of the country so that these services respond to the needs and wishes of the users.

    Importance of Citizen’s Charter in India

    1. To make administration accountable and citizen friendly.
    2. To ensure transparency.
    3. To take measures to improve customer service.
    4. To adopt a stakeholder approach.
    5. To save time of both Administration and the citizen.

    Objective of the Citizens’ Charter

    Fundamental objectives of Citizens’ Charter are as follows:

    Goal of Citizens’ Charter is to empower the citizen in relation to public service delivery.  

    Six principles of the Citizens’ Charter movement as originally framed were:

    1. Quality: Improving the quality of services
    2. Choice: Wherever possible
    3. Standards: Specify what to expect and how to act if standards are not met
    4. Value: For the taxpayers’ money
    5. Accountability: Individuals and Organisations
    6. Transparency: Rules/ Procedures/ Schemes/Grievances

    Later on, these were elaborated by the Labour Government as following nine principles of Service Delivery (1998):

    1. Set standards of service
    2. Be open and provide full information
    3. Consult and involve
    4. Encourage access and the promotion of choice
    5. Treat all fairly
    6. Put things right when they go wrong
    7. Use resources effectively
    8. Innovate and improve
    9. Work with other providers
    10. The Indian Scenario

    Since many years, in India, noteworthy progress has been made in the field of economic development. This, along with a considerable increase in the literacy rate, (from 51.63% to 65.38% in the last decade) has made Indian citizens increasingly aware of their rights.

    Citizens have become more articulate and expect the administration not merely to respond to their demands but also to anticipate them. It was in this climate that since 1996 a consensus had evolved in the Government on effective and responsive administration.

    Department of Administrative Reforms and Public Grievances in Government of India (DARPG) initiated the task of coordinating, formulating and operationalising Citizens’ Charters.

    Guidelines for formulating the Charters as well as a list of do’s and don’ts were communicated to various government departments/organisations to enable them to bring out focused and effective charters.

    For the formulation of the Charters, the government agencies at the Centre and State levels were advised to constitute a task force with representation from users, senior management and the cutting edge staff.

    Principally, an adaptation of the UK model, the Indian Citizens’ Charter has an additional constituent of ‘expectations from the clients’. Involvement of consumer organisations, citizen groups, and other stakeholders in the formulation of the Citizens’ Charter is highlighted to confirm that the Citizens’ Charter fulfills the needs of the users.

    Regular monitoring, review and evaluation of the Charters, both internally and through external agencies, are commanded.

    Till April, 2006, 111 Citizens’ Charters had been articulated by the Central Government Ministries/ Departments/ Organisations and 668 Charters by various agencies of State Governments & Administrations of Union Territories.

    Most of the national Charters are posted on the government’s websites and are open to public scrutiny. The organisations with Citizens’ Charters are advised to give publicity to their Charters through such means as print/ electronic media and awareness crusades.

    Salient Features of a Citizen’s Charter 

    The salient features of a Citizen’s Charter are:

    1. Agreed and published standards for service delivery;
    2. Openness and information about service delivery;
    3. ‘Choice’ and Consultation with users;
    4. Courtesy and helpfulness in service delivery; and
    5. Provision of redressal of grievances.

    Let us elaborate these points:

    Standards: The Charter should lay out explicit standards of service delivery so that users understand what they can reasonably expect from service providers. These standards should be time‐bound, relevant, accurate, measurable and specific. The actual performance vis‐à‐vis the standards adopted must be published and independently validated. The tendency among organizations to develop targets and standards based on their own convenience as opposed to the needs of the citizens must be avoided.

    Information and openness: A key attribute of good service is the availability of relevant and concise information to the users at the right time and at the right place. The Charters should contain, in plain language, full and accurate information about services available, levels and quality of service to be expected, available channels for grievance redressal etc. Handbooks, guides, posters, websites are some of the channels through which information can be provided to citizens.

    Choice and consultation: The Charter should provide choice of services to users wherever practicable. There should be regular and systematic consultation with the users of the service to fix service standards and to ascertain quality of service delivery.

    Courtesy and helpfulness: The Charter can help embed a culture of courteous and helpful service from public servants. In addition, small initiatives such as ‘name badges’, ‘May I help you’ counters etc. can go a long way in building customer confidence.

    Grievance redressal and complaints handling: There is a strong link between the provision of quality service and effective handling of complaints. Firstly, by facilitating and responding to complaints, the causes for complaint can be reduced. Secondly, by identifying ‘trends’ in complaints, the service provider can resolve systemic and recurring problems.

    Problems faced in implementing the Charters

    As indicated, the Citizens’ Charters initiative in India had started in 1997 and the Charters formulated are in embryonic stage of implementation. Introduction of a new thought is always difficult in any organisation. Introduction and implementation of the concept of Citizens’ Charter in the Government of India was much more complicated due to the old bureaucratic set up/procedures and the rigid attitudes of the work force.

    The major obstacles encountered in this initiative were:

    1. The general perception of organisations which formulated Citizens’ Charters was that the exercise was to be performed because there was a direction from the top. The consultation process was minimal or largely absent. It thus became one of the routine activities of the organisation and had no focus.
    2. For any Charter to thrive the personnel responsible for its implementation should have proper training and orientation, as commitments of the Charter cannot be expected to be delivered by a workforce that is unaware of the spirit and content of the Charter. However, in many cases, the concerned staff was not sufficiently trained and sensitised.
    3. Sometimes, transfers and reshuffles of concerned officers at the critical stages of formulation/implementation of a Citizens’ Charter in an organisation severely destabilised the strategic processes which were put in place and hampered the progress of the initiative.
    4. Awareness campaigns to teach clients about the Charter were not conducted systematically.
    5. In some cases, the standards/time norms of services mentioned in Citizens’ Charter were either too negligent or too tight and were impractical and created an unfavourable impression on the clients of the Charter.
    6. The notion behind the Citizens’ Charter was not accurately understood. Information brochures, publicity materials, pamphlets produced earlier by the organisations were mistaken for Citizens’ Charters.

    Deficiencies in the Existing Citizens’ Charters

    1. Lack of awareness and knowledge and inadequate publicity, hence loss of trust among service seekers
    2. No training to the operative and supervisory staff
    3. Lack of infrastructure and initiative
    4. Hierarchy gap between the Officers and the Operative Staff-Need of team effort
    5. Different mind-sets of officers and the Staff- Insensitiveness on the part of the Supervisors and the Staff because they are yet to be sensitized
    6. Staff is not prepared to shoulder the responsibility due to lack of motivation and accountability
    7. Non-revision, complicated and restrictive rules & procedures

    Guidelines for the Citizens’ Charters in India

    1. List all Offices according to type of services they provide to public – Indicate their location, areas they cover, type of services being rendered to public, and phone numbers.
    2. There should be a separate Citizens’ Charter (i.e., Local Citizens’ Charters) for each office covering the services they provide. For example, there should be a separate Charter of the Directorate, its subordinate offices, Hospitals, Schools, etc. according to the particular services they provide.
    3. Mention Service Standards – Step-by-step-Procedure based on ‘Where to go; how to proceed’, simple and easy to fill-in Forms, specimen of duly-filled in forms, documents, fees, etc. required, reasonable time schedule, Do’s & Don’ts, etc., names, addresses and Tele. Nos. of concerned Officials, his alternate for each service, etc.
    4. Minimum documentation, self-attestation and self-declaration.
    5. No duplication – In case desired information and document submitted earlier like proof of residence (if there is no change), birth certificate, etc., it should not be asked again.
    6. If promised services are not provided as per specified time schedule, an effective grievance redressal mechanism (including the provision of compensation to the concerned citizen in order to introduce accountability) should be introduced.
    7. Provision of TATKAL (Immediate) Services if somebody is in urgent need (as in the case of Passport, Railways, etc.) to avoid touts, bribery, etc.
    8. Simultaneous changes in the Performa and other requirements to be effected along with the changes made in the Citizens Charter.
    9. Database of frequently required information, like ownership of property, vehicle, etc., tax and dues paid or pending, etc.
    10. If possible, the services and their related information may be presented in a tabular form.
    11. Salient features of each service should be prominently displayed in simple and easy language at all places likely to be visited by the service seekers.

    Key lessons

    The following pitfalls need to be avoided:

    1. Since Citizen’s Charters are likely to raise the aspirations of the users of the service, the departments should guard against the tendency to promise more than they can deliver. A realistic assessment of the capabilities of the service provider must be taken into account in drafting the Charter.
    2. A critical review of the current systems and processes in the department should be undertaken to examine whether they are likely to have an adverse impact on the Charter.
    3. Implementing the Charters without the staff owning them will defeat the purpose of the Charter. Motivating the staff and involving them in the preparation of the Charter are extremely important.
    4. The Charters will remain merely a paper exercise of limited value if there is no consultation with the users. Departments should ensure user involvement at all stages of preparation and implementation of the Charter.
    5. Independent audit of results is important after a period of implementation of the Charter.
    6. Complex systems for lodging complaints or poor access to officers for redressal of grievances defeat the purpose and the spirit of the Charter.

    To summarize, A Citizens’ Charter denotes the promise of an organisation towards standard, quality and time frame of service delivery, grievance redressal mechanism, clearness and accountability.

    Based on the foreseen expectations and aspirations of public, Citizens’ Charters are to be drawn-up with care and concern for the concerned service users.

    They allow the service seekers to avail the services of the government departments with minimum inconvenience and maximum speed.

    FAQs

    Why is Citizen’s Charter relevant for the UPSC syllabus?

    It is crucial for topics like governance, public administration, and accountability, covered in GS papers and optional subjects.

    Can questions on Citizen’s Charter appear in the UPSC Prelims?

    Yes, questions may appear in the Polity section, focusing on its principles and role in service delivery.

  • The Cost of Inflation

    The Cost of Inflation

    • The inflation is considered to be bad for an economy mainly because it destroys the purchasing power of the money. When Price rise, each Rupee that you had will but less quantity of goods and services. Therefore, inflation destroys the real income of the people and makes them worse off.
    • The argument is particularly true for a country like India, which has a large informal sector and agriculture sector. Since most of the population is employed in informal and agriculture sector where minimum wage laws and social security benefits do not apply, the people in such sectors suffer the most due to inflation. The wages in these sectors are not indexed for inflation. Thus, when the price rises their wage does not rise, and they lose due to a reduction in real income on the one hand and no rise in wages on the other.

    There is also two associated social cost of inflation.

    • The Shoe Leather Cost

    Suppose in an economy the inflation is rising at the rate of 5% from the past few years. In such a case, everybody will expect the inflation to be 5% in future also. In such a case, all the economic transactions will be done adjusting for 5% inflation. In such an anticipated inflation scenario, the only cost of inflation will be shoe leather cost.

    The Shoe Leather Cost occurs because of the cost associated with holding money during inflation. Since inflation destroys the real power of money, and cash holding does not pay any interest, people will start depositing their money in banks to earn interest rate.

    The less money they hold in cash, the more they have to visit banks or ATMs to withdraw money. Since going to the bank is not free of cost both in terms of time and the transaction cost levied by banks on ATM usage, counter withdrawals, as well as the cost of travel to banks will all add to Shoe Leather Cost.

    • Menu Cost

    Menu cost is another social cost associated with anticipated inflation. The name menu cost is derived from the restaurants business. Menu cost arises because inflation makes the business change their listed price often. The change requires the firm to bear expense related to printing of new catalogues, new price list etc. they also have to incur expenditure on advertisement to inform customers about their new prices.

    Effects of Inflation on Different Sections

    Creditor/lender Debtor/Borrower Pensioner Producers Wealth Holders
    Inflation harms creditors, as they lose in real terms.

    A 1000 RS lent @ 5%, will pay an interest rate of 50. If inflation rises to 10%, the price of goods will be 1100, but after interest, the return will only be 1050.

    		 Inflation benefits the Debtor as they gain in real terms. Inflation harms the pensioners, if their pensions are not indexed to inflation, and loses money. They stand to gain by inflation since the price of goods and services rise faster than the cost of production as wages take time lag to react. They stand to lose due to inflation, as their real returns fall due to rise in prices.

     

    By
    Himanshu Arora
    Doctoral Scholar in Economics & Senior Research Fellow, CDS, Jawaharlal Nehru University

  • Types of Inflation: Demand Pull, Cost Push, Stagflation, Structural Inflation, Deflation and Disinflation

    This is a key topic for UPSC aspirants, as understanding the types of inflation in India is essential for economics and current affairs sections.

    Types of Inflation In India

    In India, inflation can be classified into the following types:

    1. Demand-Pull Inflation: This happens when there’s excessive demand for goods and services, often due to increased consumer spending, economic expansion, or government spending, driving prices up as supply struggles to keep pace.

    2. Cost-Push Inflation: Rising production costs, such as higher wages or increased raw material prices, lead to cost-push inflation. Producers pass these costs onto consumers, resulting in higher prices across the economy.

    3. Stagflation: A rare phenomenon where inflation and unemployment rise simultaneously, stagflation is marked by slow economic growth, often making it challenging for policymakers to manage both inflation and stagnation.

    4. Structural Inflation: Caused by structural challenges in the economy, such as supply chain inefficiencies, market rigidities, or outdated infrastructure, structural inflation often requires long-term policy changes to address root causes.

    Each type requires targeted measures, making inflation management in India complex and multifaceted.

    Causes of Inflation

    Inflation is mainly caused either by demand Pull factors or Cost Push factors. Apart from demand and supply factors, Inflation sometimes is also caused by structural bottlenecks and policies of the government and the central banks. Therefore, the major causes of Inflation are:

    • Demand Pull Factors (when Aggregate Demand exceeds Aggregate Supply at Full employment level).
    • Cost Push Factors (when Aggregate supply increases due to increase in the cost of production while Aggregate demand remains the same).
    • Structural Bottlenecks (Agriculture Prices fluctuations, Weak Infrastructure etc.)
    • Monetary Policy Intervention by the Central Banks.
    • Expansionary Fiscal Policy by the Government.

    Demand and Supply factors can be further sub divided into the following:

     

    Demand Pull Inflation

    • Demand Pull Inflation is mainly due to increase in Aggregate demand. The increase in Aggregate demand mainly comes from either increase in Government Expenditure (Expansionary Fiscal Policy) or by an increase in expenditure from Households and Firms.
    • The root cause of demand pull inflations is- Aggregate demand > Aggregate Supply. This simply means that the firms in the economy are not capable of producing the goods and services demanded by the households in the present time period. The shortages of goods and services due to increase in demand fuels inflation.
    • Imagine what happened when there was an outbreak of swine flu in India. Due to the outbreak of swine flu epidemic in India, the government notified a warning that people should wear Breathing Masks to protect them from the infection. As a result, the demand for mask had risen to a very high level, but the supply being limited as the producers of the mask had no anticipation of the swine flu epidemic. Due to the high demand and limited supply of masks, the prices had risen manifold. The case above captures the mechanism of demand pull inflation.
    • The above example only captures the mechanism of Demand led inflation and that too for a particular product. What happens at Macro level? What fuels inflation in the entire economy? Before answering the question. Let’s understand some basic concept related to the economy:
    • Full Employment Level: Full employment is an economic situation in which all the available resources of the economy are fully utilised, and there exists no further scope of improvement in the economy. The Full employment level represents that economy is operating at its maximum potential. The level of unemployment is minimum, the prices in the economy are stable, resources are fully utilised, whatever firms are producing is getting sold, and there exist no shortages in the economy.

    Inflationary Gap

    The Inflationary gap is a situation which arises when Aggregate demand in an economy exceeds the Aggregate supply at the full employment level.

    Inflation in a Demand-Pull scenario is basically caused by a situation whereby the Aggregate demand for goods and services in the economy rises and exceeds the available supply of the goods and services. In such a situation, the excessive pressure on demand will fuel the inflation in the economy.

    Deflationary Gap

    Deflationary Gap is a situation which arises when Aggregate demand in the economy falls short of Aggregate Supply at the full employment level.

    Cost Push Inflation

    • There exists a situation in an economy where inflation is fuelled up, not because of increase in Aggregate Demand but mainly due to increase in the cost of producing goods and services.
    • The cost can be increased mainly due to three factors:

    Wage Push Inflation Profit Push Inflation Raw Material Push Inflation
    When the employees push for an increase in wages which are not justifiable either on the grounds of employee productivity or increase in the cost of living. In such scenarios, an unwarranted wage increase leads to increase in the cost of production and hence cost push inflation. The firms sometimes decide to increase their profit margins and starts charging higher prices for their product. This phenomenon pushes the price upward and results in Profit Push Inflation. The raw material push inflation also known as supply shock inflation is the main and the most important reason for cost push inflation.

    If for any reason the economy under goes a supply shock in the form of a rise in the price of essential raw materials like crude oil, it will fuel inflation due to rise in the cost of production.
    Wage Push Inflation generally happens during high growth periods. During which workers anticipate a hike in their wages due to rising cost of living. The employer responds to their demand by increasing wages in the hope that he will pass them on to the consumers in the form of higher prices. The Profit Push Inflation generally happens when there are few of single producer producing the goods for the entire market. For Example, during the 1970s, the OPEC countries decided to increase the price of crude oil, this acted as a supply shock for the entire World economy and price of petroleum products (an essential raw material) went up, fuelling inflation.

    Let’s understand Cost Push Inflation with an Example

    Suppose, Indian economy is operating at its maximum potential. Prices are stable, resources are fully utilised, everyone who is willing to work is getting the work (unemployment is at its minimum). In such a scenario people will form the expectation that the future of the economy is good and they planned their saving and investment decision accordingly.

    However, one day the USA decides to attack Iran in order to dismantle their nuclear weapons. As a repercussion of the attack, the crude oil prices around the world start moving up. India who imports 90 percent of its oil imports suddenly find itself in trouble. The rise in crude oil price puts a break on booming Indian economy and cost of essential products start rising (crude oil is a key input for many industries and is a lifeline of transport economy). As a result of increase in cost of production, the manufacturers decide to increase the price of their product. Hence fuelling first round of cost push inflation (Raw material).

    After a lag of sometime, the final consumer gets to know that the prices of the product have increased. The consumer expectations about the future movement of prices will change as he expects prices to rise further in future. To compensate himself against the future price rise, he starts demanding more wages from his/her employer. This will fuel the second round of cost push inflation (wage push).

    Cost Push Inflation/Supply Shock

    Stagflation

    The most important difference between the Demand Pull and Cost Push Inflation is that while in the case of Demand Pull Inflation the overall output in the economy does not fall. Whereas, in case of Cost Push Inflation, along with an increase in prices the output level of the economy also falls.

    The fall in output will cause employment to fall in the economy along with fall in growth. The falling growth along with rising prices makes cost push inflation more dangerous than the demand-pull inflation. The situation of rising prices along with falling growth and employment is called as stagflation.

    Hyperinflation

    Hyperinflation is a situation when inflation rises at an extremely faster rate. The rate of inflation can increase from 50 times to 300 times.

    The effects of hyperinflation can be devastating for the economy. The situation can lead to total collapse of the value of the currency of the economy along with economic crisis and rising external debt and fall in purchasing power of money.

    The major causes of the hyperinflation are; government issuing too much currency to finance its deficits; wars and political instabilities and unexpected increase in people’s anticipation of future inflation.

    When people anticipate that future inflation will rise at a very fast pace, they start consuming more goods and services due to the fear that higher inflation in the future will destroy the purchasing power of money. As a result of this, the demand for goods and services rises and fuels further inflation. The cycle continues and results in a hyperinflation scenario.

    Structural Inflation

    • Structural Inflation is another form of Inflation mostly prevalent in the Developing and Low-Income Countries.
    • The Structural school argues that inflation in the developing countries are mainly due to the weak structure of their economies.
    • They further argue that increase in money supply and government expenditure could explain the inflationary scenario only partially.
    • The Structuralist argues that the economies of developing countries like, Latin America and India are structurally underdeveloped as well as highly volatile due to the existence of weak institutions and imperfect working of markets.
    • As a result of these imperfections, some sectors of the economy like agriculture will witness shortages of supply, whereas some sectors like consumer goods will witness excessive demand. Such economies face the problem of both shortages of supply, under utilisation of resources as well as excessive demand in some sectors.
    • Example: In India, let’s assume that the farmer produces fruits and vegetables at 10000 per quintal. But the final consumer gets the same at 20000 per quintal. The huge disparity between what farmer receives and consumer pays is due to infrastructure and agriculture bottlenecks. The bottleneck arises mainly due to lack of roads, highways, cold chains and underdeveloped agriculture markets. All these increases the cost of transporting goods from farmers to consumers leading to inflation.
    • The major bottlenecks/road blocks of developing economies that fuels Structuralist form of inflation are:

    Deflation versus Disinflation

    Deflation: Deflation is when the overall price level in the economy falls for a period of time.

    Disinflation: Disinflation is a situation in which the rate of inflation falls over a period of time. Remember the difference; disinflation is when the inflation rate is falling from say 5% to 3%.

    Deflation is when, for instance, the price of a basket of goods has fallen from Rs 100 to Rs 80. It’s the reduction in overall prices of goods.

    Reaganomics

    Reaganomics is a popular term used to refer to the economic policies of Ronald Reagan, the 40th U.S. president (1981–1989), which called for widespread tax cuts, decreased social spending, increased military spending and the deregulation of domestic markets. These economic policies were introduced in response to a prolonged period of economic stagflation that began under President Gerald Ford in 1976.

    Back to Basics:

    Headline Inflation versus Core Inflation

    The headline inflation measure demonstrates overall inflation in the economy. Conversely, the core inflation measures exclude the prices of highly volatile food and fuel components from the inflation index.

    The inflation process in India is dominated to a great extent by supply shocks. The supply shocks (e.g., rainfall, oil price shocks, etc.) are temporary in nature and hence produce only temporary movements in relative prices. The headline CPI inflation in India tends to increase whenever there is a surge in food and fuel prices. Since monetary policy is a tool to manage aggregate demand pressures, the response of the policy to such temporary shocks is least warranted according to traditional wisdom.

    Core inflation excludes the highly volatile food and fuel components and therefore represents the underlying trend inflation. The trend inflation drives the future path of overall inflation. Hence, even when food and fuel inflation moderates over time, persistently high inflation in non-food, non-fuel components pose an upward risk to overall future inflation, creating challenges to monetary policy.

    How to Control Inflation

    Let’s understand some basic relationship before proceeding further.

    Money Supply and Interest Rate

    The Money supply in an economy is controlled by the Central Banks. Whenever there is a threat of Inflation, the central bank intervenes to control the money supply to control the inflation.

    The mechanism through which the central banks controls inflation depends on interest rate. Interest Rate and Money supply moves in opposite directions. As money supply is increased the interest has the tendency to fall and vice versa.

    But why does it happen?

    Suppose at any given point in time, the economy is suffering from low growth. The central bank intervenes by using its monetary policy tools (Bank Rate, Repo Rate, Statutory Liquidity Rate). The result of such loose monetary policy is increase in money supply in the economy.

    The increased money supply means at any given point in time, there will be excess money in the economy than what the people are willing to hold. What will happen to this excess money? People will not want the excess money to be kept idle in their wallets. So they will try to invest it in alternative financial instruments like Bonds.

    As a result of this, the demand for financial assets (Bonds) will increase which will lead to increase in the price of the bonds. An established relation in financial economics is, as bond price rises, Interest will fall.

    A Fall in interest rate>>> Increase in Investment>>> Increase in output/production>>> increase in employment and national income. Hence end of slowdown.

    1. Government Spending and Interest Rate.

    Fiscal policy affects equilibrium income and the interest rate. An increase in government spending (expansionary fiscal policy) to boost economic activity will lead to increase in interest rate. This happens because, at any given point in time, the economy will have limited saving capacity. When the government increase its spending, it competes with the private sector for these limited saving. In the process, this tend to put upward pressure on the interest rate.

    Monetary Policy and Inflation

    Fiscal Policy and Inflation

     The Relationship Between Inflation and Interest Rate.

    In order to understand the relationship between Inflation and Interest Rate, it is necessary to understand the distinction between Real interest rate and nominal Interest rate.

    Back to Basics: Example, if you decide to deposit all your money (Rs 1 Lakh) in a Bank as Fixed Deposit, Banks will pay you Interest rate @ say 10%. The rate of interest that banks pay you is Nominal Interest Rate. Going by this logic, you will be expected to earn Rs 10,000 as interest on your Fixed deposit in a year. In the second year, you will be having Rs 1,10,000 in your bank account.

    But what about the value or purchasing power of your deposit? Is the money worth Rs 1,10,000 is sufficient for you to buy the same basket of goods that you were purchasing last year? Will Rs 1,10,000 will buy you the same amount of goods, less amount of goods or more amount of goods will all depend on the rate of inflation in the economy.

    Let’s say, the inflation rate in the economy during the period is 20%. What will be the value of your deposit at 20% inflation rate?

    The real value in terms of goods that can be purchased from Rs 1,10,000 is actually much less than what it used to be a year ago. The basket of goods that had cost Rs 10,0000 in the previous year is now costing Rs 1,20,000. But the bank has paid you only Rs 1,10,000 in return. The interest rate of the bank has failed to beat the inflation in the economy. Therefore, the real interest adjusted after inflation that the banks have paid you on your deposit is actually negative 10%.

    Real Interest Rate= Nominal Interest Rate – Inflation Rate.

    -10 = 10 – 20

    FAQs

     

    By
    Himanshu Arora
    Doctoral Scholar in Economics & Senior Research Fellow, CDS, Jawaharlal Nehru University

  • Inflation in India: CPI, WPI, GDP Deflator, Inflation Rate

    Inflation in India

    Understanding Inflation

    Back to Basics: In 1947, when India got independence, the Indian economy was suffering from low growth, poverty and resource shortages. The salary of an average Indian was very low. Ask your Grand Parents ‘how much they use to earn in the 1950’s?

    Today, an average Indian earns 100 times more than what his grandparents use to earn. Does it mean that the standard of living of the people has also risen 100 times? Before reaching to such a conclusion, one must remember that the prices of goods and services in the economy has also risen.

    In 1950’s a Delhi-Mumbai air ticket cost in some hundreds, today it cost in thousand. Similarly, the price of Wheat was in few Paisa; it cost around Rupee 50/kg. Therefore, it is not clear from income, that whether the standard of living of people have risen or not.

    To compare the salary of your grandparents to yours, we need some measure of purchasing power or price. The meaningful measure that can perform the task is “Consumer Price Index”.

    Consumer Price Index: CPI is used to monitor changes in the cost of living over time. When the CPI rises, the average Indian family has to spend more on goods and services to maintain the same standard of living. The economic term used to define such a rising prices of goods and services is Inflation.

    Inflation: Inflation is when the overall general price level of goods and services in an economy is increasing. As a consequence, the purchasing power of the people are falling. For example, if the inflation rate is 4 percent, then a basket of goods (food, clothing, footwear, tobacco, electricity etc) that costs Rs 100 in year 2016-17 will cost Rs 104 in the year 2017-18. As more money is required to purchase the same basket of goods and services, we say the value of money/purchasing power has fallen.

    Inflation Rate: Inflation Rate is the percentage change in the price level from the previous period. If a normal basket of goods was priced at Rupee 100 last year and the same basket of goods now cost Rupee 120, then the rate of inflation this year is 20%.

    Inflation Rate= {(Price in year 2 – Price in year 1)/ Price in year 1} *100

    Whole sale Price Index: WPI is used to monitor the cost of goods and services bought by producer and firms rather than final consumers. The WPI inflation captures price changes at the factory/wholesale level.

    The WPI and CPI are different indices and are used for different purpose.

    1. The WPI and CPI use different basket of goods to calculate the inflation.
    2. The weights assigned to food, fuel, manufacturing items etc. are different. For example, the weight of food in CPI is far higher at 46% than in WPI at 24%.
    3. The WPI inflation does not capture price changes of services but the CPI does.

    GDP Deflator: Another important measure of calculating standard of living of people is GDP Deflator. GDP Deflator is the ratio of nominal GDP to real GDP. The nominal GDP is measured at the current prices whereas the real GDP is measured at the base year prices. Therefore, GDP Deflator reflects the current level of prices relative to prices in a base year. Example, In India the base year of calculating deflator is 2011-12.

    The Difference

    Consumer Price Index GDP Deflator
    CPI reflects the price of goods and services bought by the final consumers. GDP deflator reflects the price of all the goods and services produced domestically.
    Example: Suppose the price of a satellite to be launch by ISRO increases. Even though the satellite is part of the GDP of India, but it is not a part of normal CPI index, since we don’t consume satellite. The price rise of the ISRO satellite will be reflected in GDP deflator.
    Similarly, India produces some crude oil, but most of the oil/petroleum is imported from the West Asia, as a result, when the price of oil/petroleum product changes, it is reflected in CPI basket as petroleum products constitute a larger share in CPI. The price change of oil products is not reflected much in the GDP deflator since we do not produce much crude oil.
    The CPI compares the price of a fixed basket of goods and services to the price of the basket in the base year. The GDP deflator compares the price of currently produced goods and services to the price of the same goods and services in the base year. Thus, the group of goods and services used to compute the GDP deflator changes automatically over time.

    Producer Price Index

    PPI measures the average change in the sale price of goods and services either as they leave the place of production or as they enter the place of production. It estimates the change in average price that producer receives. PPI measure the average change in the prices received by the producer and excludes any type of indirect taxes. Moreover, PPI includes services also.

    The PPI measure the price changes from the perspective of the seller and differs from CPI which measures price changes from buyer perspective.

    National Housing Banks: Residex

    It is India’s first housing price index which is an initiative of the National Housing Bank undertaken at the behest of Ministry of Finance. The index was formulated under the guidance of Technical Advisory Committee. It was launched in 2007 and updated periodically with 2007 as base year. The coverage of Residex expands to 26 cities.

    Initially, NHB RESIDEX was computed using market data, which 2010 onwards, was shifted to valuation data received from banks and housing finance companies (HFCs). Thereafter, data was sourced from Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) from 2013 to 2015.

    The scope has been widened under NHB RESIDEX brand, to include housing price indices (HPI), land price indices (LPI) and building materials price indices (BMPI), and also housing rental index (HRI).

     

    By
    Himanshu Arora
    Doctoral Scholar in Economics & Senior Research Fellow, CDS, Jawaharlal Nehru University

     

  • Salient features of the Representation of People’s Act

  • Electoral reform decisions by Supreme Court

    The following Supreme Court judgments were directed towards bringing electoral reforms:

    1. Persons in Custody to be debarred from contesting elections

    As per the 2004 judgment of the Patna High Court in Jan Chaukidari v Union of India — upheld by the Supreme Court on 10 July 2013— all those in lawful police or judicial custody, other than those held in preventive detention, will forfeit their right to stand for election.

    The judges relied on the Representation of the People Act (RPA), which says that one of the qualifications for membership of Parliament or State legislature is that the contestant must be an ‘elector’. Since Section 62(5) of the Act prevents those in lawful custody from voting, the reasoning goes, those in such custody are not qualified for membership of legislative bodies.

    Reasoning Against the Judgement

    For a person to be qualified for the membership of legislature, Representation of People Act, 1951 states that one has to be an ‘elector’ as defined in Section 2(e). Section 2(e) defines an elector as “a person whose name is entered in the electoral roll of that constituency and who is not subject to any of the disqualifications mentioned in section 16 of the RP Act, 1950.”

    As the law mentions Section 16 of RPA, 1950 as the basis of disqualification from being an elector, the SC relied on Section 62(5) which does not define ‘elector’ and only debars a person in jail from voting, not from contesting an election. Thus Section 62(5) distinguishes between an ‘elector’ and ‘voter’. The Supreme Court’s judgement effectively amends the law passed by the Parliament.

    2. MPs, MLAs to be disqualified on date of criminal conviction 

    In Lily Thomas v. the Union of India, the Supreme Court declared Section 8 (4) of the Representation of the People Act, 1951, (RPA) which allowed legislators a three-month window to appeal against their conviction — effectively delaying their disqualification until such appeals were exhausted — as unconstitutional.

    Section 8 of the Representation of People Act, 1951 deals with disqualification on conviction for certain offences: A person convicted of any offence and sentenced to imprisonment for varying terms under Sections 8 (1) (2) and (3) shall be disqualified from the date of conviction and shall continue to be disqualified for a further period of six years since his release.

    But Section 8 (4) of the RP Act gives protection to MPs and MLAs as they can continue in office even after conviction if an appeal is filed within three months.

    The Bench found it unconstitutional that convicted persons could be disqualified from contesting elections but could continue to be Members of Parliament and State Legislatures once elected.

    Reasoning Against the Judgment:

    The constitution enlists the disqualification criteria in Article 102(1) includes office of profit, unsound mind undischarged insolvency and citizenship.

    This article also empowers the Parliament to make law specifying any other criterion for disqualification. In accordance with the constitutional mandate, the Parliament enacted the RPA 1951, mentioning the disqualification criteria in Section 8.

    The Supreme Court has given two reasons for its verdict:

    1. First, it held Section 8(4) to be in violation of Article 102, and its corresponding provision for the States, Article 191, of the Constitution. A careful reading of the article 102 clearly empowers the Parliament to define the criterion for disqualification by enacting a law and none of the five clauses of Article 102(1) are attracted to invalidate Section 8(4).
    2. Second, the Supreme Court has held that Parliament had no legislative competence to enact Section 8(4). This reasoning, too, is difficult to accept because Entry 72 to List 1 of the 7th Schedule in the Constitution specifically allows Parliament to legislate on elections to Parliament or the State legislatures. It is well-settled that legislative entries in the Constitution are to be widely construed, and in any case Parliament has residual power to legislate under Entry 97 to List 1.

    3. Voter’s right to cast negative vote

    With a view to bringing about purity in elections, the Supreme Court on Friday held that a voter could exercise the option of negative voting and reject all candidates as unworthy of being elected.

    The voter could press the ‘None of the above’ (NOTA) button in the electronic voting machine. The court directed the Election Commission to provide the NOTA button in the EVM.

    The NOTA option would indeed compel political parties to nominate sound candidates. The bench noted that giving right to a voter not to vote for any candidate while protecting his right of secrecy is extremely important in a democracy.

    Such an option gives the voter the right to express his disapproval of the kind of candidates being put up by the parties. Gradually, there will be a systemic change and the parties will be forced to accept the will of the people and field candidates who are known for their integrity.

    The right to cast a negative vote will foster the purity of the electoral process and also fulfill one of its objectives, namely, wide participation of people. Not allowing a person to cast a negative vote would defeat the very freedom of expression and the right to liberty.

    The Bench held that Election Conduct Rules 41(2) and (3) and 49-O of the Rules were ultra vires Section 128 of the Representation of the People Act and Article 19(1)(a) of the Constitution to the extent they violate secrecy of voting.

    4. The VVPAT Ruling

    Supreme Court (SC), in the case of Subramanian Swamy vs Election Commission of India (ECI), has held that VVPAT (Vote Verifiable Paper Audit Trial) is “indispensable for free and fair elections”.

    In accordance to that, the Supreme Court has directed the ECI to equip Electronic Voting Machines (EVMs) with VVPAT systems to “ensure accuracy of the VVPAT system”. The Court directed the government to provide the key financial assistance to the ECI to cause VVPAT systems to be deployed along with EVMs.

    Reiterating the stand of the Delhi High Court in an earlier judgment, the Apex Court maintained that costs and finances cannot and should not be a deterrent to the conduct of free and fair elections.

    This ruling is obviously a victory for accountable voting in India, but it leaves a few questions unanswered. While this was an exclusive prerogative of the Executive to decide the manner in which fair and efficient elections can be held, but in this case the court not only decided the mechanism but also asked the government to allocate funds.

    5. Ruling on election manifesto

    On a petition filed by an advocate S Subramaniam Balaji, challenging the state’s decision to distribute freebies, the Supreme Court said that freebies promised by political parties in their election manifestos shake the roots of free and fair polls, the, and directed the Election Commission to frame guidelines for regulating contents of manifestos.

    It was stated in the petition that the freebies amounts to bribery under Section 123(1). The Supreme Court rejected the contention that the promises made by a political party are violative of Section 123(1) of the RPA. The provisions of the RPA place no fetter on the power of political parties to make promises in the election manifesto, the court held.

    Secondly, the court held that the concept of state largesse is essentially linked to the Directive Principles of State Policy. Whether the state should frame a scheme, which directly gives benefits to improve the living standards or indirectly does so by increasing the means of livelihood, is for the state to decide and the role of the court is very limited in this regard.

    It held that judicial interference was permissible when the action of the government was unconstitutional and not when such action was not wise or when the extent of expenditure was not for the good of the state.

    The court, however, agreed with the appellant that distribution of freebies of any kind undoubtedly influenced all people. “Freebies shake the root of free and fair elections to a large degree,” it said.

    Considering that there was no enactment that directly governed the contents of the election manifesto, the court directed the E.C. to frame guidelines for the same in consultation with all the recognised political parties. The court also suggested the enactment of a separate law for governing political parties.

    6. Stay on caste-based rallies in UP

    The Allahabad high court stayed caste-based rallies in Uttar Pradesh, a move that will block off a key avenue that the major political parties use to expand their support base, especially before elections.

    The Lucknow bench of the high court sent a notice staying caste-based rallies to four major political parties, the Union and the state governments, and the Election Commission. The four parties are the Congress, the Bharatiya Janata Party (BJP), the Samajwadi Party (SP) and the Bahujan Samaj Party (BSP).

    Holding political rallies by certain groups to address issues specific to them and seeking to win their electoral support is a common practice in the country, most prominently in Uttar Pradesh, where two of the major parties have specific caste bases.

    The petitioner said there had been a spurt of such rallies in the state, damaging social unity and harmony, and that they were against the spirit of the Constitution.

    There is no legal bar to a caste rally, as long as no law is violated. In fact, Article 19(1)(b) of the Constitution gives citizens a Fundamental right to assemble peacefully.

    A political party can call a meeting of a caste, for example, of Dalits to discuss the problems facing that community, and there is no law barring such a meeting. The aforementioned decisions of the Supreme Court and the Allahabad High Court may be perceived as making or amending the law, a function that is in the domain of the legislature.

    7. Ruling on nomination Papers

    The Supreme Court on 13th Sep, 2013 ruled that returning officer can reject nomination papers of a candidate for non-disclosure and suppression of information, including that of assets and their criminal background.

    The apex court said that voters have fundamental right to know about their candidates and leaving columns blank in the nomination paper amounts to violation of their right.

    The court passed the judgment on a PIL filed in 2008 by NGO Resurgence India, a civil rights group, which detected a trend among candidates of leaving blank the columns demanding critical information about them.

    The Election Commission had supported the NGO’s plea that no column should be allowed to be left blank which tantamount to concealing information and not filing complete affidavit.

    It had also taken a stand that the returning officer should be empowered to reject the nomination papers of a candidate who provides incomplete information by leaving some columns blank in the affidavit.

    To summarize, The Representation of the People Act postulates the provisions for the allocation of seats in, and the demarcation of constituencies for electoral purposes, the House of the People and the Legislatures of States, the qualifications of voters at such elections, the preparation of electoral rolls, the manner of filling seats in the Council of States to be filled by representatives of Union territories and matters connected therewith.

  • Model Code of Conduct: Evolution, Enforcement, Effects, Legal Status

    Free and fair elections form the bedrock of democracy. This envisages a level playing field for the contestants and an equal opportunity for all parties for presenting their policies and programmes to voters. In this context, the Model Code of Conduct (MCC) gains relevance.

    The need for MCC is felt for the following reasons:

    1. to provide a level playing field for all political parties, keep the campaign fair and healthy, avoid clashes and conflicts between parties, and ensure peace and order.
    2. to ensure that the ruling party, either at the Centre or in the states, does not misuse its official position to gain an unfair advantage in an election.

    The MCC is a set of norms for conduct and behavior on the part of the Parties and candidates, in particular.

    The uniqueness of the MCC is the fact that this was a document that originated and evolved with the consensus of the political parties.

    The origin of the MCC dates back to 1960 when the MCC started as a small set of Dos and Don’ts for the Assembly election in Kerala in 1960.

    The Code covered conducting of election meetings/processions, speeches, slogans, posters and placards. In 1962 Lok Sabha General Elections, the Commission circulated this code to all the recognized political parties and the State Governments were requested to secure the acceptance of the Code by the Parties.

    The Model Code of Conduct was consolidated and issued in the current form in 1991.

    Evolution of the MCC and its implementation since 1967

    1. In 1968, the Election Commission held meetings with political parties at State level and circulated the Code of Conduct to observe minimum standard of behavior to ensure free and fair elections.
    2. In 1971-72, during General Election to the House of the People/State Legislative Assemblies the Commission circulated the Code again.
    3. At the time of general elections to some State Assemblies in 1974, the Commission issued the code of conduct to the political parties in those States.
    4. The Commission also suggested constituting committees at district level headed by the District Collector and comprising representatives of political parties as members for considering cases of violation of the code and ensuring its compliance by all parties and candidates.
    5. For the 1977 Lok Sabha general election, the Code was again circulated to the political parties.
    6. In 1979, Election Commission, in consultation with the political parties further amplified the code, adding a new Section placing restrictions on the “Party in power” so as to prevent cases of abuse of position of power to get undue advantage over other parties and candidates.
    7. In 1991, the code was consolidated and re-issued in its present form.

    Effects of Application of MCC

    1. The present code contains guidelines for general conduct of political parties and candidates (no attack on private life, no appeal to communal feelings, discipline and decorum in meetings, processions, guidelines for party in power – official machinery and facilities not to be used for electioneering, prohibition against Ministers and other authorities in announcing grants, new schemes etc.).
    2. Ministers and those holding public offices are not allowed to combine official visits with electioneering tours.
    3. Issue of advertisements at the cost of public exchequer is prohibited.
    4. Grants, new schemes / projects cannot be announced. Even the schemes that may have been announced before the MCC came into force, but that has not actually taken off in terms of implementation on field are also required to be put on hold.
    5. It is through such restrictions that the advantage of being in power is blunted and the contestants get the opportunity to fight on more or less equal terms.

    Enforcement

    MCC has got the judicial recognition of the highest court of land. The dispute over the date when the Model Code of Conduct should come into force, the issuance of the press release by EC announcing the poll dates or the date of actual notification in this regard was resolved in the Union of India V/s Harbans Sigh Jalal.

    The apex court gave the ruling that the Code of Conduct would come into force the moment the Commission issues the press release, which precedes the notification by a good two weeks. This ruling lay at rest the controversy related to the dates of enforcement of MCC. Thus the MCC remains in force from the date of announcement of elections till the completion of elections.

    MCC a hindrance in developmental activities?

    One often gets to hear the complaint that the MCC is coming in the way of developmental activities. However, even during the short period when MCC is in operation, the ongoing development activities are not stopped and are allowed to proceed unhindered, and only the new projects, etc. which have not taken off on the ground that have to be deferred till the completion of elections.

    If there is any work that cannot wait for any reason (relief work on account of any calamity, etc), the matter can be referred to the Commission for clearance.

    Legal status of conduct. In what way can the MCC be made more effective?

    The Model Code of Conduct does not a have a statutory backing and it is more a consensus driven code arrived at after consultation with all political parties to ensure free and fair elections and to see that the ruling party does not misuse its dominant position.

    The Parliamentary Standing Committee on Law and Justice recommended in its 2013 report that statutory status be accorded to the MCC.

    The committee held that most of the stipulations of the MCC are already contained in various laws and are therefore enforceable like the violation of secrecy of voting, causing enmity among communities, the prohibition of public meetings 48 hours prior to the conclusion of polls, besides other offences, are covered by the Representation of People Act, 1951.

    Besides, impersonation at voting, offering inducements to voters, or accepting gratification to do something they never intended, amount to bribery under the Indian Penal Code.

    On the basis of the above, the Standing Committee contends that the MCC as a whole could not be construed merely as voluntary in its application. Furthermore, since most of its provisions are enforceable, the remaining stipulations in the MCC should also be accorded statutory backing.

    Another reason for the above recommendation by the Standing Committee is the absence of an immediate appeal mechanism against the decision of the returning officer to cancel the nomination of a candidate. In this case, the decision can only be challenged in the High Court after the announcements of election results.

    The logic against Legal status to MCC

    1. The decision making power will go to the Judiciary and thus the swiftness, expedition and promptness in dealing with the cases of violation of MCC will be gone.
    2. If the model code of conduct is converted into a law, this would mean that a complaint would lie to the police/Magistrate. The procedures involved in judicial proceedings being what they are, a decision on such complaints would most likely come only long after the election is completed.
    3. The legal codification of these norms would be a potential nightmare, exposing the entire electoral process to needless litigation. The broad objectives of MCC are best achieved by oversight of an impartial election watchdog.

  • Administrative machinery for the conduct of elections in India

    Part IV provide for delegation of functions of Election Commission i.e. the functions of the Election Commission under the Constitution, the Representation of the People Act, 1950, and Representation of the People Act, 1951 Act or under the rules made there under may be performed also by a Deputy Election Commissioner or by the Secretary to the Election Commission on the basis of directions as may be given by the Election Commission in this behalf.

    Chief Electoral Officer: The Election Commission of India nominates or designates an Officer of the Government of the State/Union Territory as the Chief Electoral Officer in consultation with that State Government/Union Territory Administration.

    Chief Electoral Officer of a State/ Union Territory is authorized to supervise the election work in the State/Union Territory subject to the overall superintendence, direction and control of the Election Commission.

    District Election Officer: The EC nominates an Officer of the State Government as the District Election Officer in consultation with the State Government.

    The district election officer is authorized to coordinate and supervise all work in the district or in the area within his jurisdiction in connection with the conduct of all elections to Parliament and the Legislature of the State subject to the superintendence, direction and control of the chief electoral officer.

    With the previous approval of the Election Commission, DEO provides a sufficient number of polling stations for every constituency the whole or greater part of which lies within his jurisdiction, and publishes a list showing the polling stations so provided and the polling areas or groups of voters for which they have respectively been provided.

    Observer: The Election Commission may nominate an Observer who shall be an officer of Government to watch the conduct of election or elections in a constituency or a group of constituencies. Earlier, the appointment of Observers was made under the plenary powers of the Commission.

    But with the amendments made to the Representation of the People Act, 1951 in 1996, these are now statutory appointments. They report directly to the Commission. The Observer has the power to direct the returning officer for the constituency or for any of the constituencies for which he has been nominated, to stop the counting of votes at any time before the declaration of the result or not to declare the result if in his opinion booth capturing has taken place.

    In case of stopping the counting of votes or non-declaration of result, a report shall be sent by the Observer to the EC, which issue appropriate directions.

    Returning Officer: The Election Commission of India nominates or designates an officer of the Government or a local authority as the Returning Officer for each of the assembly and parliamentary constituencies in consultation with the State Government/Union Territory Administration.

    Same person can be appointed as the returning officer for more than one constituency. In addition, the Election Commission of India may appoint one or more Assistant Returning Officers for each of the assembly and parliamentary constituencies to assist the Returning Officer in the performance of his functions in connection with the conduct of elections. Every such person must be an officer of Government or of a local authority.

    Every assistant returning officer, subject to the control of the returning officer, is competent to perform all or any of the functions of the returning officer except functions which relate the scrutiny of nominations unless the returning officer is unavoidably prevented from performing the said function. While Returning officer may always include an assistant returning officer in performing any function which he is authorized to perform him.

    It is the general duty of the returning officer at any election to do all such acts and things as may be necessary for effectually conducting the election in the manner provided by RPA, 1951and rules or orders made there under.

    Presiding Officer: The district election officer appoints a presiding officer for each polling station. If a polling officer is absent from the polling station, the presiding officer may appoint any person who is present at the polling station other than a person who has been employed by or on behalf of, or has been otherwise working for, a candidate in or about the election, to be the polling officer during the absence of the former officer, and inform the district election officer accordingly.

    Same person can be the presiding officer for more than one polling station in the same premises. It is the general duty of the presiding officer at a polling station to keep order thereat and to see that the poll is fairly taken.

    Polling Officer: A polling officer performs all or any of the functions of a presiding officer based upon his direction. 

    If the presiding officer is absent from the polling station due to illness or other unavoidable cause, his functions shall be performed by such polling officer as has been previously authorized by the district election officer to perform such functions during any such absence. It is the duty of the polling officers at a polling station to assist the presiding officer for such station in the performance of his functions.

    The returning officer, assistant returning officer, presiding officer, polling officer, and any other officer appointed so and any police officer designated for the time being by the State Government, for the conduct of any election shall be deemed to be on deputation to the Election Commission during the election period and such officers shall be subject to the control, superintendence and discipline of the Election Commission.

  • Process of election to Parliament, State Legislatures in India

    When the term of the legislature is over, or the legislature has been dissolved and new elections have been called, the Election Commission puts into effect the machinery for holding an election.

    In case of Lok Sabha elections have to be concluded before the limit of 6 months that is stated by the Constitution as the maximum possible duration of the last session of dissolved Lok Sabha and the recalling of new House.

    Schedule of elections is usually announced by the Election Commission in a major press conference a few weeks ago before the formal process starts. The model code of conduct immediately comes into effect after such an announcement.

    Formal process of an election starts with calling electorates to elect members of concerned legislature. As soon as notifications are issued, candidates can starts filling their nomination in the constituencies from where they wish to contest.

    These are scrutinized by returning officer of the concerned constituency, after last date for filling the nomination is over (that is about a week). Validly nominated candidates can withdraw from the contest within two days from the date of scrutiny. About two weeks, before actual poll date, is given to contesting candidates for political campaign.

    For national election polling is held on a number of days, this is because of the vast magnitude of operations involved and massive size of electorates. A separate date for counting is fixed and result is declared for every constituency by the concerned returning officer.

    The complete list of the members elected is compiled by the commission and it issues an appropriate notification for due constitution of house. This marks the completion of election process.

    It is necessary for a candidate to make and subscribe an oath or affirmation before an officer authorized by the election commission (Returning Officer or Asst. Returning officer).

    The candidate, in person, is required to make the oath or affirmation immediately after presenting his nomination paper and in any case not later than the day previous to the date of scrutiny.

    In the case of a candidate confined in a prison or under preventive detention, the superintendent of the prison or the commandant of the detention camp in which he is so confined or is under such detention is authorized to administer the oath and in the case of candidate confined to a bed in a hospital or elsewhere owing to illness or any other cause, the medical superintendent in charge of the hospital or the medical practitioner attending on him is similarly authorized.

    If the candidate is outside India, the Indian Ambassador of High Commissioner or diplomatic consular authorized by him can also administer oath/affirmation.

    Election Campaign

     

     

    The campaign is the period when the political parties put forward their candidate and argument with which they hope to persuade people to vote for their candidates and parties.

    Candidates are given a week to put forward their nomination. These are scrutinized by the Returning Officers and if not found in order can be rejected after a summary hearing.

    The official campaign lasts at least two weeks from the drawing up of the list of nominated candidate and officially ends 48 hours before polling closes.

    During the election campaign, political parties and contesting candidates are expected to abide by the model code of conduct evolved by the election commission on the basis of a consensus among political parties.

    The model code lays down broad guidelines as to how the political parties and candidates should conduct themselves during the election campaign.

    It is intended to maintain the election campaign on healthy lines avoid clashes or conflict between political parties and their supporters and to ensure peace and order during the campaign period and thereafter until the results are declared. The model code also prescribes guidelines for the ruling party either at the centre or in the state so that a level field is maintained and ensures that ruling party does not use its official position for election campaign.

    The model code also prescribes guidelines for the ruling party either at the centre or in the state so that a level field is maintained and ensures that ruling party does not use its official position for election campaign.

    Once an election has been called, parties issue manifesto detailing the programmes they wish to implement if elected to government, the strength of their leaders and weaknesses of opposite party and their leaders.

    Voting procedure

     

     

    Voting is by secret ballot.

    Polling stations are usually set up at public institutions such as schools and community halls.

    To enable as many electors as possible to vote the officials of election commission try to ensure that there is a polling station within two kilometer of every voter, and that no polling station should have to deal with more than 1500 voters.

    Each polling station is open for at least 8 hours on the day of the election.

    Electronic Voting Machine

     

     

    An EVM is a simple electronic device used to record votes in place of ballot papers. EC took a decision to use only EVMs in 2004 Lok Sabha elections. SC has passed a judgement to equip all EVMs with VVPAT (Voter Verifiable Paper Audit Trail).

    It has following advantages over traditional voting mechanism:

    1. It eliminates the possibility of invalid/doubtful vote which in many cases are the root causes of controversies and election petitions.
    2. It makes the process of counting of votes much faster than the conventional system.
    3. It is eco-friendly as it reduces the use of paper.

    Election expenses

    According to the section 77 of RPA, 1951, every candidate contesting in election to the House of the People or to the Legislative Assembly of a State, shall, either by himself or by his election agent, keep a separate and correct account of all expenditure in connection with the election incurred or authorized by him or by his election agent.

    Currently the limits on expenditure by candidates are as follows:

      1. Lok Sabha elections: maximum of 70 lakhs; for north eastern and hilly states – 54 lakhs rupees.
      2. State assembly election: maximum of 28 lakhs; for north eastern and hill states – 20 lakhs rupees.

    Every contesting candidate at an election shall, within thirty days from the date of election of the elected candidate or, if there are more than one elected candidate at the election and the dates of their election are different, the later of those two dates, lodge with the district election officer an account of his election expenses which shall be a true copy of the account kept by him or by his election agent.

  • Procedure of registration of political parties with Election Commission

    Any association or body of individual citizens of India calling itself a political party should make an application to the Election Commission for its registration as a political party.

    Every such application, duly signed by the Chief Executive Officer of the association or body (Secretary or any other designation) must be presented to the Secretary of the Election Commission.

    It must contain the following particulars, namely:

    1. the name of the association or body;
    2. the State in which its head office is situated;
    3. the address to which letters and other communications meant for it should be sent;
    4. the names of its president, secretary, treasurer and other office-bearers;
    5. the numerical strength of its members, and if there are categories of its members, the numerical strength in each category;
    6. whether it has any local units; if so, at what levels;
    7. whether it is represented by any member or members in either House of Parliament or of any State Legislature; if so, the number of such member or members.

    The application must be accompanied by a copy of the memorandum or rules and regulations of the association or body and such memorandum or rules and regulations must contain a specific provision that the association or body shall bear true faith and allegiance to the Constitution of India as by law established, and to the principles of socialism, secularism and democracy, and would uphold the sovereignty, unity and integrity of India.

    After considering all the particulars as aforesaid in its possession and any other necessary and relevant factors and after giving the representatives of the association or body reasonable opportunity of being heard, the Commission decides either to register the association or body as a political party, or not so to register it; and the Commission communicates its decision to the association or body. The decision of the Commission is final.

    Every political party may accept any amount of contribution voluntarily offered to it by any person or company other than a Government company, but no political party can accept any contribution from any foreign source.

    The treasurer or any other person authorized by the political party must prepare a report in each financial year listing the contribution in excess of twenty thousand rupees received by such political party from any person or company (Other than Government) in that financial year.

    This report must be submitted to the Election Commission before the due date for furnishing a return of its income of that financial year. If the political party fails to submit a report then it shall not be entitled to any tax relief.

    A recognized political party shall either be a National party or a State party. A political party shall be treated as a recognized National party, if, and only if:

    1. If it secures six per cent of valid votes polled in any four or more states at a general election to the Lok Sabha or to the legislative assembly; and, in addition, it wins four seats in the Lok Sabha from any state or states; or
    2. If it wins two per cent of seats in the Lok Sabha at a general election; and these candidates are elected from three states; or
    3. If it is recognised as a state party in four states.

    At present there are 6 national parties in the country namely BJP, BSP, CPI, CPM, INC and NCP. A political party, other than a National party, shall be treated as a recognized State party in a State or States, if, and only if:

    1. If it secures six per cent of the valid votes polled in the state at a general election to the legislative assembly of the state concerned; and, in addition, it wins 2 seats in the state assembly; or
    2. If it secures six per cent of the valid votes polled in the state at a general election to the Lok Sabha from the state concerned; and, in addition, it wins 1 seat in the Lok Sabha from the state concerned; or
    3. If it wins three per cent of seats in the legislative assembly at a general election to the legislative assembly of the state concerned or 3 seats in the assembly, whichever is more; or
    4. If it wins 1 seat in the Lok Sabha for every 25 seats or any fraction thereof allotted to the state at a general election to the Lok Sabha from the state concerned; or
    5. If it secures eight per cent of the total valid votes polled in the state at a General Election to the Lok Sabha from the state or to the legislative assembly of the state. This condition was added in 2011.

    The status of national or state party is contingent on the performance of a political party’s performance the respective elections. Thus the number of National or State parties vary depending on the assembly or General elections.

    The candidates of recognized parties are entitled for free supply of certain materials like such number of copies of electoral rolls, as finally published under the Representation of the People Act, 1950 and such other material as may be prescribed.

    The Central Government in consultation with the Election Commission can decide items to be supplied to the recognized political parties.

    Other exclusive benefits enjoyed by recognized parties are

    1. Free airtime on Doordarshan and All in Radio for election campaign.
    2. A recognized party needs not to have to get his nomination paper subscribed by at least 10 voters in his constituency.
    3. The name of the candidates nominated by the recognized party are organized in alphabetical order and printed on the top of Ballot paper followed by candidates nominated by registered party and independent candidates.
    4. If a candidate nominated by a recognized party passes away before the commencement of the polling then the election shall be adjourned and the political party concerned will be given one week time to re-nominate a candidate and there after the election process will be completed.
    5. Recognized political parties are entitled to the allotment of symbols given for its exclusive use.
    6. The proposed amendments to the Representation of People act, 1951 for the introduction of state funding of election provides for extending financial assistance only to the recognized party.