GS Paper: GS2-09.Appointment to various Constitutional posts; Constitutional Bodies(powers, functions and responsibilities); Statutory, Regulatory and Quasi-judicial bodies

Context

Ever since the Allahabad High Court urged the Election Commission of India to consider banning all political rallies or postponing the upcoming Assembly elections due to the increasing threat of Omicron, the focus of debate has shifted to the EC.

Why and when does the Election Commission clubs the elections?

• To avoid the influence of result: As per practice, the EC clubs all elections that are so close to each other to ensure that the results in one state do not influence the voters in the state going to the polls soon after.
• Earliest date: The earliest due date of a state determines the poll dates for all the clubbed states.
• No delay allowed: The EC cannot delay an election even by a day, although it can advance it by up to six months.
• The Assembly elections of five states are due in the early months of 2022, four of these in March itself — Goa (by March 15), Manipur (March 19), Uttarakhand (March 23) and Punjab (March 27).
• The fifth — UP — is due by May 14.
• Goa being the earliest, we must have all five elections completed before March 15.

Why EC cannot postpone the elections?

• Violation of Constitution: Postponing elections is not in the Election Commission’s hands at all and would be a violation of the constitutional mandate that gives every Vidhan Sabha a fixed term.
• As soon as the term is over, the House stands dissolved automatically.
• The term of the House cannot be extended except in an emergency declared by Parliament, which the Constitution restricts to only two situations — war and breakdown of law and order.
• In the seven decades of our electoral history, this has happened only three times — in Assam, Punjab and Jammu and Kashmir — in insurgency situations.

Way forward: Strict enforcement of guidelines

• Before the Bihar elections of 2020, the EC had issued detailed guidelines based on its observation of other countries that conducted elections that year, like South Korea and Sri Lanka.
• Reduction of the number of electors: These guidelines included the reduction of the number of electors per polling booth from 1,500 to 1,000, to prevent over-crowding, which required the addition of 33,797 auxiliary polling stations.
• Covid-sensitive capacity building: The guidelines also included Covid-sensitive capacity-building of election officials.
• Postal ballot option: The ECI also extended the postal ballot option to senior citizens over the age of 80, Covid-positive patients, persons with disabilities and voters in essential services.
• Virtual campaigning: Virtual campaigning was also encouraged to stop election rallies contributing to Covid.
• Besides the standard social distancing and sanitising norms, voters were provided with gloves to touch the EVMs.
• To avoid crowding at the counting centres, the counting tables were reduced from 14 to seven per assembly constituency.

Consider the question “What are the challenges in postponing the Assembly elections beyond the fixed terms of the Assembly? Suggest the way forward.”

Conclusion

This election is an opportunity for the EC to redeem its image. More importantly, it must guard itself against the trap of postponing the polls under any persuasion.

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The article explains the innovative approach adopted by the Fifteenth Finance Commission in devolution of funds.

Steep hike in grants

• Local governments are the closest to the people at the grassroots level. 
• They provide critical civic amenities such as roads, water and sanitation, and primary education and health.
• With this in view, the Fifteenth Finance Commission (FFC) has recommended grants of Rs 4,36,361 crore from the Union government to local governments for 2021-26.
• This is an increase of 52 per cent over the corresponding grant of Rs 2,87,436 crore by its predecessor for 2015-20.

Innovation in recommendations

1) Scaling of capacities in municipalities

• The Commission has recommended Rs 8,000 crore as performance-based grants for incubation of new cities and Rs 450 crore for shared municipal services.
• This is designed to foster innovations in urban governance to transform our cities with speed and scale.
• There is an urgent need for synergistically combined area-based development to spur economic growth and job creation, and decongesting through the development of satellite townships.
• Separately, the massive scaling of capacities in municipalities, particularly the 4,000-odd smaller ones, cannot be done by building capacities in each one of them, but through institutional and technological innovations, without compromising their autonomy.
• The shared municipal services model, with mobile internet, maps, platform thinking, and outsourced services all taken together, can help us fast-track the creation of municipal capacities at scale.
• This is one of the innovations in the FFC recommendations.

2) Allocation covers all three tiers of panchayats

• Of grants for all local governments with 90 per cent weightage on population and 10 per cent on area remains unchanged from the Fourteenth Finance Commission.
• For panchayats, the FFC allocations cover all the three tiers — village, block, and district — as well as the Excluded Areas in a state exempted from the purview of Part IX and Part IX-A of the Constitution.
• Funds to all three can improve functional coordination and facilitate the creation of assets collectively across smaller jurisdictions.
• This is the second new aspect of the FFC recommendations.

3) Focus on metropolitan governance

• The FFC calls for a focus on urban agglomerations (UAs) that include urban local bodies, census towns and outgrowths.
• In 2011, out of the total urban population of 377 million, 61 per cent lived in UAs.
• The FFC has emphasised the need to focus on the complex challenges of air quality, drinking water supply, sanitation, and solid waste management in the million-plus UAs and cities.
• Thus, for 2021-26, there is a Million-plus Challenge Fund of Rs 38,196 crore that can be accessed by million-plus cities only through adequate improvements in their air quality and meeting service level benchmarks for drinking water supply, sanitation, and solid waste management.
• This focus on metropolitan governance through substantive but 100 per cent outcome-based grants is the third innovation.
• For ULBs other than the million-plus category, the total grants are Rs 82,859 crore.
• The grants to local governments, both urban (less than a million category) and rural, contain a mix of basic, tied as well as performance grants.

4) Entry-level conditions

• The efficiency, smooth functioning and accountability of local bodies have been plagued by:
• (i) lack of readily accessible and timely audited accounts,
• (ii) absence of timely recommendations of State Finance Commissions and suitable actions thereon,
• (iii) inadequate mobilisation of property tax revenues (especially in ULBs).
• Finance Commissions in the past have drawn pointed attention to these issues, but with limited success.
• These entry-level conditions for availing any grants and their applicability to all local governments is the fourth innovation.

Consider the question “Examine the innovative approach adopted by the Fifteenth Finance Commission for the devolution of funds to panchayats and municipal bodies.”

Conclusion

Hopefully, over the next five years, through a partnership among the Union, states, and local governments, in the spirit of cooperative federalism, these recommendations and innovations will catalyse progress in the accountability and effectiveness of local governments in India.

The article analyses the recommendations of fifteenth Finance Commission and their implications for the federalism in India.

Major recommendations accepted by the government

• Report of the fifteenth Finance Commission (XVFC) was laid before the Parliament.
• The finance minister announced the acceptance of its recommendation of retaining the share of states in central taxes at 42 per cent.
• She also stated that on its recommendation revenue deficit grants of Rs 1.18 lakh crore to the states have been provided for in the budget.
• Some of the recommendations, however, have far-reaching implications on government finances, both of the Centre and the states.
• Keeping in view the extant strategic requirements for national defence in a global context, XVFC has, in its approach, recalibrated the relative shares of the Union and the states in gross revenues receipts.

Issues with the recalibration for national defence

• Recalibration enables the Union to set aside resources for special funding on defence.
• The states have been made to pay Rs 7,000 crore to bridge [the] Centre’s gap between projected budgetary requirements and budget allocation for defence and internal security defence.
• But this is an expenditure that the Centre is obliged to fund.
• For the first time, a finance commission has carved out resources meant for distributable statutory grants and dipped into the states’ revenue share, as against the tax share, in order to finance the Centre’s exclusive expenditure obligation.
• What has been done is not in line with the system envisaged in the Constitution.
• This move will eventually put the fiscal federal system under systemic strain.
• In operational terms, too, this move is a significant departure.
• So far, the Centre has been used to pre-empting resources from the kitty to be distributed among the states but only to finance expenditures in areas earmarked for states.
• This was done through the centrally-sponsored schemes, but at least the states’ money was being used in the states, even if on a discretionary rather than a criteria basis.
• Now, with this move of earmarking and financing of funds for sectors, it is the states’ money that is being used to finance the Centre’s expenditure.
• This is certainly not cooperative federalism.

Changes in horizontal distribution: More weightage to efficiency and performance

• In horizontal distribution, the criteria used by successive finance commissions for devolving taxes across states have always been linked to need — based on equity, tempered by efficiency.
• From 92.5 per cent of funds to a state being devolved based on need and equity, the XVFC has reduced these two components to 75 per cent.
• The remaining 25 per cent are to be devolved on considerations of efficiency and performance.
• This is the lowest weightage for equity, making the XVFC transfers potentially the least progressive ever.

Structural changes not taken into account

• The Finance Commission has not even made any serious effort to review the existing scheme of transfers in light of the changed federal landscape.
• The existing criteria for the devolution have evolved in, and for, a production-based tax system.
• The XVFC should have reformulated the distributional criteria for a consumption-based tax system [GST].
• The structural change from production to consumption will make a significant difference to distribution as well as the need, nature and distribution of equalising grants.
• This is the same manner in which the revenue deficit grants have been carried forward.
• Ideally, the “gap-filling” approach should have been redesigned in light of the compensation law providing a minimum-guaranteed revenue of 14 per cent to every state.

Consider the question “For the first time, a finance commission has carved out resources meant for distributable statutory grants and dipped into the states’ revenue share, as against the tax share, in order to finance the Centre’s exclusive expenditure obligation. What are the issues with this move?”

Conclusion

The Fifteenth Finance Commission report is not aligned with the new landscape of federalism and does not address the key issues.