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Subject: Federal System

  • Andhra Pradesh High Court and the CM Row

    The Supreme Court has stayed an Andhra Pradesh High Court order intending to embark on a judicial enquiry into whether there is a constitutional breakdown in the State machinery, requiring a declaration of President’s rule.

    A backfire from the AP High Court

    • Andhra Pradesh CM had earlier sparked controversy by writing to the CJI complaining about a Supreme Court judge for allegedly influencing posting of cases in the State High Court.
    • The alleged Judge is slated to be the next Chief Justice of India, and some judges of the AP High Court have opened sharp criticism over AP CM’s move.

    What did the Supreme Court say?

    • The apex court found the enquiry highly disturbing. Hence it decided to stay the order.
    • Solicitor General Tushar Mehta asked why the High Court “should go into whether there is a constitutional breakdown in the State”.
    • The Solicitor General of the state government argued that it was not up to the High Court to enquire and recommend President’s rule in a State.

    Citations for the President’s Rule in a State

    • President’s rule is the suspension of state government and imposition of direct central government rule in a state.
    • It is Article 356 that deals with the failure of constitutional machinery in a State.
    • This power to impose President’s rule exclusively vests in the Central Executive.
    • Under Article 356, this move can be taken- if the President, on receipt of the report from the Governor of the State or otherwise, is satisfied that a situation has arisen…..
    • The power in this regard, like sending a report either to the President of India or to the Governor of the concerned State or to record a finding in that regard, cannot be exercised by the judiciary.

    How did the AP govt respond?

    • The AP govt said that the High Court’s observation violated the Basic Structure doctrine of the Constitution.
    • Under the constitutional framework, it is not for the courts to decide as to whether there is a constitutional breakdown in a State.
    • The said power has been specifically conferred upon a different constitutional authority – and rightly so.
    • It is needless to mention that the constitutional courts do not have any judicially discoverable and manageable standards to determine if there has been a constitutional breakdown,” the petition contended.

    Back2Basics:

    President’s Rule

    • President’s rule is the suspension of state government and imposition of direct central government rule in a state.

    How it is imposed?

    • President’s Rule implies the suspension of a state government and the imposition of direct rule of the Centre.
    • This is achieved through the invocation of Article 356 of the Constitution by the President on the advice of the Union Council of Ministers.
    • Under Article 356, this move can be taken “(1) If the President, on receipt of the report from the Governor of the State or otherwise, is satisfied that a situation has arisen in which the government of the State cannot be carried on in accordance with the provisions of this Constitution…”

    How long President’s Rule can last

    • A proclamation of President’s Rule can be revoked through a subsequent proclamation in case the leader of a party produces letters of support from a majority of members of the Assembly, and stakes his claim to form a government.
    • The revocation does not need the approval of Parliament.
    • Any proclamation under Article 356 —which stands for six months — has to be approved by both Houses in the Parliament session following it.
    • This six-month time-frame can be extended in phases, up to three years.

    The S.R. Bommai Case

    • R. Bommai v. Union of India (1994) was a landmark judgment of the Supreme Court of India, where the Court discussed at length provisions of Article 356 of the Constitution of India and related issues.
    • The judgement attempted to curb blatant misuse of Article 356 of the Constitution of India, which allowed President’s rule to be imposed over state governments.
    • Article 356 (1) has been deliberately drafted in a narrow language by the Founding Fathers so that political parties in the Centre does not misuse it to subvert federalism, it had noted.
    • The expression used in the Article is ‘if the President is satisfied”, the court had observed.
    • In other words, the President has to be convinced of or should have sufficient proof of information with regard to or has to be free from doubt or uncertainty about the state of things indicating that the situation in question has arisen.
    • The court had stated that although the sufficiency or otherwise of the material cannot be questioned, the legitimacy of inference drawn from such material is “certainly open to judicial review”.

    What it directed?

    • The judgment had explained that in a multi-party political system, chances are high that the political parties in the Centre and the State concerned may not be the same.
    • Article 356 cannot be used for the purpose of political one-upmanship by the Centre.
    • Hence there is a need to confine the exercise of power under Article 356[1] strictly to the situation mentioned therein which is a condition precedent to the said exercise,” the court had said.

    Conditions for Prez Rule

    • Where after general elections to the assembly, no party secures a majority, that is, Hung Assembly.
    • Where the party having a majority in the assembly declines to form a ministry and the governor cannot find a coalition ministry commanding a majority in the assembly.
    • Where a ministry resigns after its defeat in the assembly and no other party is willing or able to form a ministry commanding a majority in the assembly.
    • Where a constitutional direction of the Central government is disregarded by the state government.
    • Internal subversion where, for example, a government is deliberately acting against the Constitution and the law or is fomenting a violent revolt.
    • Physical breakdown where the government willfully refuses to discharge its constitutional obligations endangering the security of the state.

  • N.K. Singh calls for a fresh look at the Seventh Schedule

    Fifteenth Finance Commission chairman N.K. Singh has called for a fresh look at the Constitution’s Seventh Schedule, which forms the basis for allocating subjects to the Centre and States.

    Try this PYQ:

    Q.Which of the following provisions of the Constitution of India have a bearing on Education?

    1. Directive Principles of State Policy
    2. Rural and Urban Local Bodies
    3. Fifth Schedule
    4. Sixth Schedule
    5. Seventh Schedule

    Select the correct answer using the codes given below:

    (a) 1 and 2 only

    (b) 3, 4 and 5 only

    (c) 1, 2 and 5 only

    (d) 1, 2, 3 4 and 5

    Why such calls by Mr NKS?

    • Singh said these issues needed urgent consideration to reinforce trust in fiscal federalism.
    • He urged a review of both the Seventh Schedule and Article 282 of the Constitution so as to give more flexibility to States in implementing centrally sponsored schemes.
    • Many have argued that the trust between various forms of government is waning.
    • Since the farmers’ agitation, these are seen through the prism of suspicion and mistrust.

    Q. The federal organisation of powers under the Constitution’s Seventh Schedule needs review. In light of this, examine the problems faced by the distribution and suggest the challenge the review would face.

    What is the Seventh Schedule?

    • This Schedule of the Indian Constitution deals with the division of powers between the Union government and State governments.
    • It defines and specifies the allocation of powers and functions between Union & States. It contains three lists; i.e. 1) Union List, 2) State List and 3) Concurrent List.

    The Union List

    • It is a list of 98 (Originally 97) numbered items as provided in the Seventh Schedule.
    • The Union Government or Parliament of India has exclusive power to legislate on matters relating to these items.

    The State List

    • It is a list of 59 (Originally 66) items.
    • The respective state governments have exclusive power to legislate on matters relating to these items.

    The Concurrent List

    • There are 52 (Originally 47) items currently in the list.
    • This includes items which are under the joint domain of the Union as well as the respective States.

  • Digital Voter ID Card and its benefits

    The Election Commission (EC) is keen to make the Elector’s Photo Identity Card or EPIC available in electronic form.

    Try this PYQ:

    Q.Regarding DigiLocker, sometimes seen in the news, which of the following statements is/are correct?

    1. It is a digital locker system offered by the Government under Digital India Programme.
    2. It allows you to access your e-documents irrespective of your physical location.

    Select the correct answer using the code given below.

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

    Digital Voter ID Card

    • The digital voter card is not expected to look too different from its physical form.
    • It will be available as a PDF file and can be downloaded on one’s phone or computer.
    • The soft copy may also have a QR code that will carry the voter’s enrolment details such as name and date of birth and address.
    • This is still just a proposal and needs to be approved by the Election Commission.

    How to avail it?

    • To avail this facility, an eligible voter will have to provide her mobile number or email address to the EC machinery at the time of applying for enrolment in the voters’ list.
    • Once her name is included in the electoral roll, she will be intimated through an SMS or email.
    • The new voter can then download the Voter Card through OTP (One Time Password) authentication.
    • Existing voters may have to re-verify their details with the EC (similar to the Bank KYC process) and provide their email or mobile phone number to get their cards in the electronic form.

    Benefits offered

    • An electronic card will help the EC save costs on printing and distributing a hard copy of EPIC.
    • The EC feels that voters too will find it useful to have the PDF file of her voter card on her phone.
    • This will do away with the necessity of first producing a voter’s slip on the day of voting.

  • New Parliament Building

    PM would on December 10 lay the foundation stone for the new Parliament building, which would be a symbol of “Atmanirbhar Bharat” and a “temple of democracy” for Independent India.

    Try this MCQ first:

    Q.The architecture of the present Parliament House of India is inspired from:

    a) Ekattarso Mahadeva Temple

    b) Virupaksa Temple

    c) Dilwara Temples

    d) Brihaddeswara Temple

    The new Parliament Building

    • The building, to be constructed by Tata Projects Ltd. would have a built-up area of 64,500 square metres over four floors and would be built adjacent to the existing building over 22 months.
    • Artisans and sculptors from across the country would contribute to the new building, showcasing the diversity and making it a symbol of “Atmanirbhar Bharat”.
    • The building would have modern equipment, be earthquake-safe and accommodate up to 1,224 MPs during joint sessions in the Lok Sabha chamber.
    • The Lok Sabha and the Rajya Sabha chambers themselves would accommodate 888 and 384 MPs respectively.

    Issues with the old building

    • The existing British-built Parliament building, built in the 1920s, was designed for the Imperial Legislative Council and not for a bicameral Parliament.
    • The building has been modified over the years, including in 1956 when two floors were added.
    • While the number of Lok Sabha seats has remained 545 based on delimitation carried out on the basis of the 1971 Census, it is likely to increase after 2026 as the number of seats has been frozen till then.
    • The sources said the Lok Sabha and the Rajya Sabha halls are packed and would not be able to accommodate additional seats when the number of seats goes up.

    Back2Basics: Parliament House (Sansad Bhavan)

    • The Sansad Bhavan is the seat of the Parliament of India. It houses the Lok Sabha and the Rajya Sabha which represent lower and upper houses respectively in India’s bicameral parliament.
    • The existing building draws inspiration from Ekattarso Mahadeva Temple (in M.P.) and was built under the British empire for its Imperial Legislative Council in 1927.
    • The opening ceremony, which then housed the Imperial Legislative Council, was performed on 18 January 1927 by Lord Irwin, Viceroy of India.
    • Following the end of British rule in India, it was taken over by Constituent Assembly of India which was succeeded by the parliament of India once Constitution of India came into force in 1950.
    • In the 2010s, a proposal was introduced to revamp Central Vista and re-build or relocate a number of administrative buildings which initiated a program expecting completion in 2024.

    Architectural details:

    • Originally called the House of Parliament, it was designed by the British architects’ Edwin Lutyens and Herbert Baker in 1912-1913.
    • It was held as part of their wider mandate to construct a new administrative capital city for British India.
    • The perimeter of the building is circular, with 144 columns on the outside.
    • The building is surrounded by large gardens and the perimeter is fenced off by sandstone railings (jali).
    • Construction of the House began in 1921 and it was completed in 1927.

  • One nation One election

    Prime Minister once again raised the pitch for “One Nation, One Election” and a single voter list for all to prevent the impact of the model code of conduct on development works due to frequent elections.

    Try this question:

    Q.Discuss how a common electoral roll and simultaneous elections are ways to save the enormous amount of effort and expenditure on Elections in India. Also discuss the centralizing tendency behind the idea.

    Elections in India

    • Currently, elections to the state assemblies and the Lok Sabha are held separately — that is whenever the incumbent government’s five-year term ends or whenever it is dissolved due to various reasons.
    • This applies to both the state legislatures and the Lok Sabha. The terms of Legislative Assemblies and the Lok Sabha may not synchronize with one another.
    • For instance, Rajasthan faced elections in late 2018, whereas Tamil Nadu will go to elections only in 2021.

    Simultaneous Elections

    • But the idea of “One Nation, One Election” envisages a system where elections to all states and the Lok Sabha will have to be held simultaneously.
    • This will involve the restructuring of the Indian election cycle in a manner that elections to the states and the centre synchronize.
    • This would mean that the voters will cast their vote for electing members of the LS and the state assemblies on a single day, at the same time (or in a phased manner as the case may be).

    Birth of the Idea: A backgrounder

    • Simultaneous elections are not new to India. They were the norm until 1967.
    • But following dissolution of some Legislative Assemblies in 1968 and 1969 and that of the Lok Sabha in December 1970, elections to State Assemblies and Parliament have been held separately.
    • The idea of reverting to simultaneous polls was mooted in the annual report of the Election Commission in 1983.
    • The Law Commission’s Report also referred to it in 1999.
    • After PM floated the idea once again in 2016, the NITI Aayog prepared a working paper on the subject in January 2017.

    What are the proposals under it?

    There were two proposals to conduct elections synchronization in two batches.

    • One proposal was to make the shift to simultaneous polls in a phased manner, where general elections, of few States and UT may be synchronised in 2019.
    • For such a synchronization to happen, besides political consensus and extension of term up to six months in some states, amendments to the Constitution have to be made.
    • Elections to the remaining States and UTs with will be synchronised by the end of 2021.
    • Thereafter, elections to the Lok Sabha, all the State Legislative Assemblies and Union Territories (with legislatures) will be held simultaneously from 2024.

    Advantages of simultaneous elections

    • Reduce cost: The cost of an election has two components – one, expenditure incurred by the Election Commission and two, expenditure incurred by the political parties. A large number of government employees and public buildings are diverted from their regular responsibilities for election duties. Supporters of the simultaneous elections argue that it will reduce election expenditure in terms of finance and reduce diversion of human resources for election duties.
    • Reduce disruption due to MCC: Model Code of Conduct (MCC) comes into operation during election season. MCC is seen as an obstacle to the government service delivery mechanism. Simultaneous elections may reduce such disruption.
    • Reduce populism: During elections, political convenience takes precedence over public interest. To lure voters, political parties concede to popular demands without any consideration to public interest. Simultaneous elections reduce such opportunity for political parties.
    • National prespective: Simultaneous election promotes national perspective over the regional perspective. This is important for the unity of the country.
    • Strengthen National parties: Since it promotes national perspective, simultaneous elections strengthen national parties. This reduces mushrooming growth of political parties based on narrow vote bank politics.
    • Strengthens federalism: Simultaneous elections bring States on par with the Center. If the elections are to be held simultaneously once in five years, the elected state governments cannot be dismissed easily. This reduces the anomalies created by the Article 356 (President’s Rule) of the Indian constitution and hence, it strengthens federalism.
    • Stability: The simultaneous election once in five years provides stability to the governments. It allows the government to take difficult and harsh decision in larger public interest.

    Arguments against simultaneous elections

    • No guarantee that expenditure of the political parties will reduce: Simultaneous elections may reduce the expenditure incurred by the Election Commission. But there is no guarantee that expenditure of the political parties will reduce. Political parties may spend entire fund at once rather than in phases.
    • Reduce importance of state elections: Center and States are equal and sovereign within their jurisdiction. Simultaneous elections may reduce the importance of state elections. Thus it affects the concept of federalism.
    • Violates Article 83(2) and Article 172 : Article 83(2) and Article 172 of the Constitution requires that the Lok Sabha and State legislatures be in existence for five years from the date of its first meeting, “unless dissolved earlier”. Simultaneous elections ignore this phrase, as there would be no opportunity to dissolve Lok Sabha or State Assemblies.
    • Negates NCM: A government can be in power as long as it enjoys the confidence of Parliament. Simultaneous elections can work only if governments last for a fixed tenure of five years regardless of confidence of Parliament. It negates the concept of ‘no confidence motion’ – an important tool for legislative control over the executive.
    • Keep Government on toes: Elections are an important part of representative democracy. Simultaneous elections with fixed tenure of five years curtail people’s right to express their confidence or displeasure on the government.
    • Ignores diversity: Simultaneous elections will relegate local issues or issues of state importance to the background. This completely ignores the diversity of the country.
    • Logistical challenge: Holding simultaneous election once in five years may also face logistical challenges. For the free and fair conduct of the elections, security forces need to be deployed in large numbers. Given the current strength of security personnel, this may be a challenging task.

    Way forward

    • There needs to be a consensus and all hands on the deck to see whether the country suits for simultaneous elections.
    • All political parties should at least cooperate in debating this issue, once the debate starts, the public opinion can be taken into consideration.
    • India being a mature democracy, can then follows the outcome of the deliberation.

    Shekhawat solution

    • The former vice-president Bhairon Singh Shekhawat proposed a solution. He called for a review of provisions of the no-confidence motion.
    • He suggested that no-confidence motion must mandatorily be accompanied by an alternative government formation plan. This prevents premature dissolution of Lok Sabha on account of political instability.
    • But critics point out that, this solution will take away people’s right to elect or dismiss a government.

    Conclusion

    • The constitution of India has essentially prescribed a federal structure of state governance.
    • As we are aware that there are several levels of government such as Lok Sabha and the Rajya Sabha besides, state governments, Municipal Corporations and the Panchayats, which are forms of local governance.
    • As a result the entire power is not concentrated with one government.
    • But One Nation, One Election can lead to such concentration of power in a single hand.
    • So the new government needs to ensure such vast power is not gathered by a single domain through One Nation, One Election.

  • Punjab’s claim over Chandigarh

    Earlier this month, Haryana Dy. CM said it would be better if both Haryana and Punjab agreed on Chandigarh as a Union Territory and make their independent capitals and Benches of High Courts.

    Try answering this

    Q.The linguistic re-organization of Indian states in the post-Independence period has prevented its balkanization, unlike our neighbourhood. Comment.

    Why was Chandigarh created?

    • Chandigarh was planned to replace Lahore, the capital of erstwhile Punjab, which became part of Pakistan during the Partition.
    • In March 1948, the Government of (India’s) Punjab, in consultation with the Centre, approved the area of the foothills of the Shivaliks as the site for the new capital.
    • From 1952 to 1966 (till Haryana was carved out of Punjab), Chandigarh remained the capital of Punjab.

    How did it become a shared capital?

    • At the time of reorganization of Punjab in 1966, the city assumed the unique distinction of being the capital of both Punjab and Haryana.
    • Even as it was declared a union territory and was placed under the direct control of the Centre.
    • The properties in Chandigarh were to be divided into 60:40 ratio in favour of Punjab.

    Punjab’s claim

    • The-then PM Indira Gandhi had announced that Haryana, in due course, would have its own capital and Chandigarh would go to Punjab.
    • As per documents submitted in the Lok Sabha, the Centre had even issued a formal communication is this regard on January 29, 1970, almost three years after Haryana came into being.
    • Again, in 1985, under the Rajiv-Longowal accord, Chandigarh was to be handed over to Punjab on January 26, 1986, but the Rajiv Gandhi government withdrew at the last minute.

    Haryana’s counter-claim

    • As per the 1970 documents, the Centre had considered various alternatives for settling the matter, including dividing the city.
    • But that wasn’t feasible since Chandigarh was built as a planned city to serve as the capital of one state.
    • Haryana was told to use the office and residential accommodation in Chandigarh only for five years till it shifts to its own new capital.
    • The Centre had offered Rs 10 crore grant to Haryana and an equal amount of loan for setting up the new capital.
    • In 2018, Haryana CM suggested setting up a special body for the development of Chandigarh, but the Punjab CM rejected it, saying the city “indisputably belonged to Punjab”.

  • Inter state water Sharing disputes

    The article highlights the issue of challenges facing the water governance in India, how need for more coordination between the Centre and the States.

    Objectives of the two bills

    • Interstate River Water Disputes Amendment Bill 2019 and the Dam Safety Bill 2019 were passed by Lok Sabha and awaits Rajya Sabha nod.
    • The Interstate River Water Disputes Amendment Bill 2019 seeks to improve the inter-state water disputes resolution by setting up a permanent tribunal.
    • The Dam Safety Bill 2019 aims to deal with the risks of India’s ageing dams, with the help of a comprehensive federal institutional framework comprising.
    • The other pending bills also propose corresponding institutional structures and processes.

    Challenges to the federal water governance

    • The agenda of future federal water governance is not limited to the above cited issues.
    • These include emerging concerns of long-term national water security and sustainability, the risks of climate change, and the growing environmental challenges, including river pollution.
    • These challenges need systematic federal response where the Centre and the states need to work in a partnership mode.
    • Greater Centre-states coordination is also crucial for pursuing the current national projects — whether Ganga river rejuvenation or inland navigation or inter-basin transfers.

    Challenges to water governance

    • Water governance is perceived and practiced as the states’ exclusive domain, even though their powers are subject to those of the Union under the Entry 56 about inter-state river water governance.
    • The River Boards Act 1956 legislated under the Entry 56 has been in disuse.
    • No river board was ever created under the law.
    • The Centre’s role is largely limited to resolving inter-state river water disputes by setting up tribunals for their adjudication.
    • Combined with the states’ dominant executive power, these conditions create challenges for federal water governance.
    • This state of affairs puts the proposed bills at a disadvantage.

    Bridging the water governance gap

    • Each bill proposes their own institutional mechanisms and processes leaning on closer Centre-state coordination and deliberation.
    • The disputes resolution committee and dam safety authority rely on active Centre-states participation.
    • Segmented and fragmented mechanisms bear the risks of the federal water governance gap.

    Way forward

    • The massive central assistance (Rs 3.6 lakh crore- Centre and states together) through  Jal Jeevan Mission (JJM), is an opportunity to open a dialogue with the states to address this governance gap.
    • Globally, federated systems with comparable organisation of powers have used similar investments to usher key water sector reforms.
    • The symbiotic phase of implementing JJM can be productively used to engage in a dialogue with the states about the larger water resources management agenda, beyond the mission’s goals.
    • The Centre can work with the states in building a credible institutional architecture for gathering data and producing knowledge about water resources.

    Consider the question “Water governance in the country requires greater Centre-State coordination to deal with the current issues as well as future challenges. In light of this, examine the challenges and suggest the strategies to deal with it.”

    Conclusion

    Bridging the governance gap between the Centre and State and creation of institutional framework is at the heart of addressing the future challenges to the federal water governance in the country.

    Back2Basics: River Board Act 1956

    • The act to provide for the establishment of River Boards for the regulation and development of inter-state rivers and river valleys.
    • It empowers the Central Government, on a request received in this behalf from a State Government to establish a River Board for advising the Governments on regulation or development of an inter-State river or river valley or any specified part thereof.

  •  Assam-Mizoram Boundary Dispute

    The recent violence and tension on the Assam-Mizoram border underline the differences the two States have had since 1972 when Mizoram was carved out of Assam as a Union Territory.

    Try answering this:

    Q.Assam has had boundary problems with almost all of its north-eastern neighbours. Discuss.

    *Also note the states bordering Assam.

    What is the Dispute?

    • Mizoram was carved out of Assam as a Union Territory in 1972. In 1987, it became a full-fledged state.
    • The two states have sparred over where the border lies in the past, leading to the occasional violence.
    • The disagreement stems from differing views on which border demarcation to follow.
    • Mizoram’s perception of the border is based on an 1875 notification that flows from the Bengal Eastern Frontier Regulation Act of 1873.
    • The Act demarcated the Lushai Hills from the plains and valleys in the North East, restricting free travel between the two zones. The hills were deemed to be “excluded areas”.
    • Assam, for its part, goes by a 1933 notification by the state government that demarcated the Lushai Hills, as Mizoram was then known, from the province of Manipur.

    The Assamese problem

    • Assam has had boundary problems with all its north-eastern neighbours, except Manipur and Tripura that had existed as separate entities.
    • The primary reason is that the other States, a part of Assam during the British rule, have contested the boundaries since they became States, beginning with Nagaland in 1963.
    • Assam has accepted several recommendations of border commissions set up by the Supreme Court, but other States have been sticking to “historical boundaries” that go back to the period before 1826.
    • However, the border residents have to bear the brunt of the unrest unless an acceptable solution is arrived at.

  • 15th Finance Commission submits report to President

    The 15th Finance Commission, chaired by NK Singh, on Monday submitted its final report for 2021-22 to 2025-26 to the President.

    Try this PYQ:

    With reference to the Finance Commission of India, which of the following statements is correct?

    (a) It encourages the inflow of foreign capital for infrastructure development

    (b) It facilitates the proper distribution of finances among the Public Sector Undertakings

    (c) It ensures transparency in financial administration

    (d) None of the statements (a), (b) and (c) given above is correct in this context

    Key recommendations that would feature in its final report:

    • A separate defence and national security: The viability of creating a separate defence and national security fund as suggested by the Centre.
      • States would keenly await these recommendations as it may translate into a lower share of funds for them.
    • GST compensation dues to States: The panel is also expected to factor in unpaid GST compensation dues to States for this year, while working out State’s revenue flow calculations for the years beyond 2022.

    Formula that decides a State’s share:

    Weight in 15th FC Parameters Weight in 14th FC
    15 (2011 Census) Population 27.5 (17.5 – 1972, 10 – 2011 Census)
    15 Area 15
    10 Forest and Ecology 7.5
    45 Income Distance 50
    12.5 Demographic Performance –
    2.5 Tax Effort

    What is the Finance Commission?

    • The Finance Commission (FC) was established by the President of India in 1951 under Article 280 of the Indian Constitution.
    • It was formed to define the financial relations between the central government of India and the individual state governments.
    • The Finance Commission (Miscellaneous Provisions) Act, 1951 additionally defines the terms of qualification, appointment and disqualification, the term, eligibility and powers of the Finance Commission.
    • As per the Constitution, the FC is appointed every five years and consists of a chairman and four other members.
    • Since the institution of the First FC, stark changes in the macroeconomic situation of the Indian economy have led to major changes in the FC’s recommendations over the years.

    Constitutional Provisions

    Several provisions to bridge the fiscal gap between the Centre and the States were already enshrined in the Constitution of India, including Article 268, which facilitates levy of duties by the Centre but equips the States to collect and retain the same.

    Article 280 of the Indian Constitution defines the scope of the commission:

    1. The President will constitute a finance commission within two years from the commencement of the Constitution and thereafter at the end of every fifth year or earlier, as the deemed necessary by him/her, which shall include a chairman and four other members.
    2. Parliament may by law determine the requisite qualifications for appointment as members of the commission and the procedure of selection.
    3. The commission is constituted to make recommendations to the president about the distribution of the net proceeds of taxes between the Union and States and also the allocation of the same among the States themselves. It is also under the ambit of the finance commission to define the financial relations between the Union and the States. They also deal with the devolution of unplanned revenue resources.

    Why need the Finance Commission?

    • As a federal nation, India suffers from both vertical and horizontal fiscal imbalances.
    • Vertical imbalances between the central and state governments result from states incurring expenditures disproportionate to their sources of revenue, in the process of fulfilling their responsibilities.
    • However, states are better able to gauge the needs and concerns of their inhabitants and therefore more efficient at addressing them.
    • Horizontal imbalances among state governments result from differing historical backgrounds or resource endowments and can widen over time.
    • The first FC was established in 1951 by Dr B.R. Ambedkar, the then-incumbent law minister, to address these imbalances.

    Important functions

    • Distribution of net proceeds of taxes between Center and the States, to be divided as per their respective contributions to the taxes.
    • Determine factors governing Grants-in-Aid to the states and the magnitude of the same.
    • To make recommendations to the president as to the measures needed to augment the Fund of a State to supplement the resources of the panchayats and municipalities in the state on the basis of the recommendations made by the finance commission of the state.
    • Any other matter related to it by the president in the interest of sound finance.

    Members of the Finance Commission

    • The Finance Commission (Miscellaneous Provisions) Act, 1951 was passed to give a structured format to the finance commission and to bring it to par with world standards.
    • It laid down rules for the qualification and disqualification of members of the commission, and for their appointment, term, eligibility and powers.
    • The Chairman of a finance commission is selected from people with experience of public affairs. The other four members are selected from people who:
    1. Are, or have been, or are qualified, as judges of a high court,
    2. Have knowledge of government finances or accounts, or
    3. Have had experience in administration and financial expertise; or
    4. Have special knowledge of economics

  • Who is a Star Campaigner?

    The Election Commission (EC) has revoked the status of a veteran leader and former Madhya Pradesh CM as a star campaigner for the party.

    Try answering this question:

    Q.Ceiling on election expenses ends up being counterproductive and encourages candidates to under-report their expenditure. Critically analyse.

    Who is a Star Campaigner?

    • A star campaigner can be described as persons who are nominated by parties to campaign in a given set of constituencies.
    • These persons are, in almost all cases, prominent and popular faces within the party.
    • There is no specific definition according to law or the Election Commission of India.
    • Star campaigners for a party will not exceed 40 where it is a recognised political party.
    • For parties that are deemed unrecognized, the number of star campaigners will not be more than 20.

    Their purpose

    • Actors, celebrities and senior political party members are the ones who are nominated to be star campaigners.
    • This is based on the premise that a popular face, someone that the common voter can immediately identify and side with, can rake in more votes for that political party.

    How much does a star campaigner cost?

    • Section 77 (b) of The Representation of People’s Act, 1951 says that most of the expenses incurred by the campaigner “shall not be deemed to be an expenditure in connection with the election”.
    • In other words, all expenses will be borne by the respective political party.
    • For example, expenses borne by star campaigners on account of travel by air or by any other means of transport shall not be deemed as expenditure in connection with the election.
    • The manual to the Model Code of Conduct states that for the benefit of availing Section 77 (1) of The RP Act, a permit for the mode of transport for every star campaigner will be issued centrally and against their name.
    • It is also mandatory for this permit to be stuck on a prominent and visible place on the vehicle.

    A case for PMs

    • The MCC states that if the star campaigner is a PM or a former PM, then expenses incurred for bullet-proof vehicles required by centrally appointed security personnel will be borne by the government.
    • If another political dignitary accompanies this candidate, then 50 per cent of expenses incurred for security arrangements will be borne by the candidate.