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Subject: Polity

  • States must decide on SC/ST quota in promotions: Supreme Court

    The Supreme Court has refused to lay down the criteria for determining the inadequacy of representation for granting reservation in promotions for Scheduled Caste and Scheduled Tribe candidates in government jobs.

    What did the court held?

    • The court stuck firm by the decisions of its Constitution Benches in the Jarnail Singh and M. Nagaraj case that the question of adequate representation of SC/ST communities ought to be left to the respective States to determine.
    • It held ‘cadre’, and not class or group or the entire service, as the unit for the purpose of collection of quantifiable data for giving promotion quotas.

    Why such decision?

    • Determination of inadequate representation depends upon myriad factors of states which this Court cannot envisage.
    • Laying down of criteria for determining the inadequacy of representation would result in curtailing the discretion given to the State governments.

    Quota in Promotions: A timeline

    What was the case?

    • The Union government has been pressing for reservation in promotion proportionate to the population of SCs and STs as per a 1995 judgment by the top court in the RK Sabharwal case.
    • It wants it to be left open to the Centre and states to decide on promotional avenues for SCs and STs.
    • It claims that the condition regarding the collection of quantifiable data to show the inadequacy of representation of SCs/STs is “vague”.
    • Advocates representing the general category have contended that the reservation cannot be for an indefinite period and that it must stop as soon as the upper ceiling has been reached.
    • Further, they have emphasized that reservation in promotion should be cadre-based only after quantifiable data is collected and the creamy layer has been excluded.

    Defying the need for quantifiable data

    • Attorney General sought to convince the court that the roster system, based on the proportionate population of SCs/STs, has been working quite well in all government departments.
    • The condition of collecting quantifiable data on inadequacy of representation of SCs/STs may not be required at all.
    • He urged that there is no need to verify any further or collect quantifiable data after the roster system.

    What is the Nagraj Case?

    • Article 16(4A) of Indian Constitution allows reservations to SCs and STs in promotions, as long as the government believes that they are not adequately represented in government services.
    • In 2006, a Constitution bench’s ruling in the M Nagaraj case made it incumbent upon the state to collect quantifiable data showing inadequacy of representation in public employment.
    • This was to be done in addition to maintaining overall administrative efficiency.

    Related amendments

    • 77th Amendment: It introduced Clause 4A to the Constitution, empowering the state to make provisions for reservation in matters of promotion to SC/ST employees if the state feels they are not adequately represented.
    • 81st Amendment: It introduced Clause 4B, which says unfilled SC/ST quota of a particular year, when carried forward to the next year, will be treated separately and not clubbed with the regular vacancies of that year to find out whether the total quota has breached the 50% limit set by the Supreme Court.
    • 82nd Amendment: It inserted a proviso at the end of Article 335 to enable the state to make any provision for SC/STs “for relaxation in qualifying marks in any examination or lowering the standards of evaluation, for reservation in matters of promotion to any class or classes of services or posts in connection with the affairs of the Union or of a State”.
    • 85th Amendment: It said reservation in the promotion can be applied with consequential seniority for the SC/ST employee.

    Why such demand for quotas in promotion?

    • The Attorney General has said that it is tough for a member of the SC/ST to reach the ‘Group A’ category jobs.
    • The time has come for the apex court to firm up and draw the basis for reservation in promotions for SC/ST candidates to fill up vacancies in top jobs.
    • The Bench referred to records filed before it to note that there was low representation of SC/ST category in Group A jobs.
    • Instead of improving the situation in the Group A ranks, the court said, efforts are on to ensure adequate representation in Groups B and C.
    • This was not fair, it remarked.

     

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  • Govt tweaks spending norms for Contingency Fund of India

    The government has tweaked spending norms for Contingency Fund of India, allowing 40% of the total corpus to be placed at disposal of the Expenditure Secretary.

    What are the proposed changes?

    • Budget 2021-22 proposed to enhance the Contingency Fund of India from ₹500 crore to ₹30,000 crore through Finance Bill.
    • An amount equivalent to 40 per cent of the Fund corpus shall be placed at the disposal of the Secretary, Ministry of Finance, Department of Expenditure.
    • This would serve the purpose of meeting unforeseen expenditure.

    What is Contingency Fund of India?

    • Contingency is a negative event which may occur in future, like recession or pandemic.
    • The Constitution has a provision for a contingency fund. Its corpus is always kept intact.
    • Article 267 of the Constitution mandates formation of a corpus under Contingency Fund of India to deal with any emergency situation.
    • It is placed at the disposal of the President of India.
    • Government cannot withdraw funds from it without authorization of the Parliament.
    • And the corpus has to be replenished with the same amount later.

    Management of the fund

    • The fund is held by the Department of Economic Affairs on behalf of the President of India and it can be operated by executive action.
    • The fund can be increased through a Finance Bill when Parliament is in the session.
    • Or through Ordinance if the House is not in session and situation warrants.
    • Withdrawal from the fund takes place with the approval of the Secretary of Department of Economic Affairs, in terms of the Contingency Fund of India Act, 1950.
    • An amount equivalent to 40% of the corpus has now been placed at the disposal of the Expenditure Secretary.
    • All further Contingency Fund releases beyond this limit will require the approval of the Expenditure Secretary in addition to the Economic Affairs Secretary’s approval.

    Back2Basics:

    Consolidated Funds of India

    • The provision for this fund is given in Article 266(1) of the Constitution of India.
    • The government meets all its expenditure from this CFI.
    • It receives money from:
    1. Direct and indirect taxes Loans taken by the Indian government
    2. Returning of loans/interests of loans to the government by anyone/agency that has taken it
    • The government needs parliamentary approval to withdraw money from this fund.
    • Each state has its own Consolidated Fund of the state with similar provisions.
    • The Comptroller and Auditor General of India audits these funds and reports to the relevant legislatures on their management.

    Public Account of India

    • All other public money (other than those covered under the Consolidated Fund of India) received by or on behalf of the Indian Government are credited to this account/fund.
    • It is constituted under Article 266(2) of the Constitution.
    • This is made up of:
      1. Bank savings account of the various ministries/departments
      2. National small savings fund, defense fund
      3. National Investment Fund (money earned from disinvestment)
      4. National Calamity & Contingency Fund (NCCF) (for Disaster Management)
      5. Provident fund, Postal insurance, etc.
      6. Similar funds
    • The government does not need permission to take advances from this account.
    • Each state can have its own similar accounts.
    • CAG makes audit of all the expenditure from the Public Account of India.

     

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  • The strength of our republic

    Context

    A republic is made robust and kept alive by its people. In its current form, the Indian republic marks 73 years of maintaining a dynamic balance.

    Directly elected representation

    •  It is to the credit of our people that today we have a pyramidal three-layered elected representative system that governs us.
    • This system today has over 3 million elected representatives (a million of them women), over 4,000 elected to the state legislatures and over 500 in the Parliament.
    • This scale of directly elected representation, perhaps, can be seen nowhere else in the world.

    Moral and spiritual basis of the Constitution

    • In Pilgrimage to Freedom, K M Munshi writes, “our Constitution has a moral background — to secure justice for every section of our society; as also a spiritual basis — to preserve and protect all religions in the exercise of their functions”.
    • The challenges continue in securing justice for every section of our society.
    • The Backward Classes, the Scheduled Castes and the Scheduled Tribes and the poor across all categories clamour for better opportunities and affordable justice.
    • What Munshi calls the spiritual basis of our Constitution in having to preserve and protect all religions is also seen under stress.
    • When the right to practise one’s religion is denied or threatened, the silence of the thinking public or the media weakens that constitutionally embedded protection.

    Challenges posed by social media

    • Through the power of technology and its capacity to broadcast at mass scale, an otherwise useful tool, social media, has become a challenge and sometimes a threat to one or several of the rights enshrined in our Constitution.
    • Curtailing them to protect the rights of citizens is seen as trampling upon the right to free speech.
    • Without any action, the damage caused to social harmony by such rampant false news can result in people losing faith in the Constitution itself.

    Constitution as a living, dynamic process

    • Our Constitution is the most amended of all constitutions in the world.
    • If there are more than 100 amendments made to the Constitution, there are more than 1,500 laws that have been repealed because they have outlived their times.
    • These deadwood laws, by remaining on paper, occasionally became a weapon in the hands of rent-seekers.
    • Their removal, as a part of administrative reform, has kept the role of the executive transparent and accountable.
    • That the Constitution is always evolving is best exemplified by the 101st amendment which rolled out the Goods and Services Tax.
    • his amendment brought in a unified indirect tax regime by subsuming most of the indirect taxes of the Centre and the states.
    • Yet to complete five full years, the GST Council has stood the test of challenging times even in its initial years.
    • It augurs well for cooperative federalism.

    Conclusion

    Our Constitution has served us well in these seven decades. Several republics in the post-imperial era have rejected their earlier constitutions and tested new ones. It is the people who can keep the republic robust and alive.

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  • A festival to salute India’s vibrant democracy

    Context

    This year we are celebrating our 73rd Republic Day. The Constitution has been our guiding force in the journey of the nation as a mature democracy among comity of nations.

    Historical background

    • The Constituent Assembly undertook intensive deliberations over a period of two years, 11 months and 18 days spread over 11 sessions, during which the Constitution of India took shape.
    • Our Constituent Assembly played a dual role after Independence, given the insurmountable task of nation-building.
    • Our Constituent Assembly had performed the functions of the provisional Parliament of India in the interval between the time our Constitution was enforced and the day when the new Parliament was formed following the first General Elections (October 25, 1951-February 21, 1952).
    • The Constituent Assembly of India acted as the first Parliament of independent India.

    Role of the Parliament

    • Representative institutions and democratic traditions have always been an integral part of our rich heritage
    • Our Parliament has been playing a pivotal role in the all-round development of the nation by adopting many parliamentary devices for ensuring free and fair discussions and dialogue.
    • We have to ensure that our institutions and governance ensure inclusivity and the participation of our population in our developmental journey, particularly our women, Scheduled Castes, Scheduled Tribes and all other marginalised sections become equal partners in our growth story.

    Ensuring the best legislative practices

    • Repository of the proceedings: To ensure that best legislative practices are shared, a national portal is being planned to serve as a repository of the proceedings of Parliament and all State/Union Territory legislatures in the country.
    • Research support is being provided to Members to help them participate better and meaningfully in matters brought before Parliament.
    • Review of the laws to make them relevant: It is also time in the journey of our nation to take stock and review laws that were enacted during the pre-Independence era so as to make them more relevant to our current requirements and future challenges.

    Conclusion

    Republic Day is an occasion for people’s representatives and all citizens of this proud nation to reaffirm faith in the ideals enshrined in our Constitution.

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  • Suspension of MLAs

    • Some legislators were suspended for one year by the Maharashtra Assembly for alleged disorderly conduct.
    • The unusually long period of suspension has been questioned by the Supreme Court, which is hearing a challenge to the Assembly’s action.

    A case in apex court

    • The court has reserved its judgment after hearing elaborate arguments.
    • The main question before the court is whether suspension for a whole year is valid.

    Suspending MLAs: A fact check

    • Each state has their individual rules for the conduct of assembly. These rules provides for the suspension of MLAs.
    • Under Rule 53 of the Maharashtra Legislative Assembly Rules, 1960, only the Speaker has the power to suspend MLAs indulging in unruly behavior.
    • Therefore, the motion to suspend cannot be put to vote as this would allow the Government to suspend as many Members of Opposition as it sees fit.

    Constitutional ground behind this suspension

    • The Court referred to Article 190 (4) of the Constitution which says that if for a period of 60 days, a member of a House, without its permission, is absent; the House may declare his or her seat vacant.
    • Suspension of MLAs beyond this period would lead to their disqualification.

    What did the Supreme Court observe?

    • Suspension of the MLAs would amount to punishing the constituencies as a whole.
    • Each constituency has equal amount of right to be represented in the House, observed the court.
    • The apex court observed that any state cannot create a constitutional void, a hiatus situation for any constituency.
    • It said the House cannot suspend a member beyond 59 days.

    What does the State government say?

    • Counsel for the State government has argued that there is no limitation on the power of the legislature to punish for breach of privilege or disorderly conduct in the course of its proceedings.
    • Once the power to punish a member for disorderly conduct is recognized, there can be no judicial review of the manner in which it is exercised.
    • Further, during suspension, a member continues to hold office, but only loses their voice in the legislature.

     

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  • How to fix the anti-defection loophole

    Context

    It is time that we took a fresh look at the Tenth Schedule to our Constitution.

    Shortcomings of the anti-defection law

    • Partisan nature of Speaker: Paragraph 3 of the Tenth Schedule was omitted by the Constitution (91st Amendment) Act, 2003, which came into effect on January 1, 2004.
    • Paragraph 3, as it existed prior to the amendment, protected defectors as long as one-third of the members of a political party formed a separate group. 
    • In the context of small assemblies, one-third of the members could easily be cobbled together.
    • Often, the speaker of the assembly was seen to be collaborating with the political party in power to protect the defectors under the one-third rule.
    • Such partisan conduct of the speakers is at the heart of a non-functional Tenth Schedule.
    • The seeming political bias of the speakers acting as tribunals is apparent from how disqualification petitions are dealt with.
    • We have seen this happen in Manipur, Goa, Madhya Pradesh, Uttarakhand and other jurisdictions.
    • Allowing two-third members to merge with another party: After the omission of paragraph 3, paragraph 4 allowed for the protection of defecting members provided two-thirds of the members of the legislative party merged with another political party.
    • This provision has invariably been misused.
    • Constitutional flaw in provisions of paragraph 4: Third, there is a constitutional flaw in the manner in which the provisions of paragraph 4 have been enacted.
    • Paragraph 4(1) stipulates that a member of the house will not be disqualified from his membership where his original political party merges with another political party and he claims that he and other members have become members of the other political party or a new political party is being formed by such merger.
    • However, paragraph 4(2) provides that such a merger would be deemed to have taken place only if not less than two-thirds of the members of the legislative party agreed to such a merger.
    • This allows for clandestine corruption where two-thirds of the members of the legislative party are bought over, by means fair or foul, to either topple governments or to strengthen a razor-thin majority of the party in power.
    • This makes the entire provision unworkable and unconstitutional.
    • Prolonging the proceedings: We have witnessed situations where, even though the provisions of paragraph 4 are not ex-facie attracted, the speaker of the assembly makes sure that the proceedings are interminably prolonged so that the term of the assembly comes to an end before the proceedings under the Tenth Schedule against those ex-facie defectors have been concluded.

    Need for urgent attention to Article 164(1B)

    • This allows for the toppling of governments by inducements of various kinds.
    • The motivation is that a fresh election allows the disqualified member to be re-elected.
    • He then becomes a member of the assembly once again, as its term is not over and can also be appointed a minister.
    • Under Article 164(1B), such a defection has no real consequences.

    Way forward

    • 1] Ensure impartiality of Speaker: Speakers, when elected must resign from the party to which they belong.
    • At the end of their term, there should be a cooling-off period before they can become members of any political party.
    • 2] Omit Paragraph 4 through Amendment: Paragraph 4 of the Tenth Schedule should be omitted by moving a constitutional amendment.
    • 3] Make disqualification for 5 years: All those disqualified under paragraph 2 of the Tenth Schedule should neither be entitled to contest elections nor hold public office for five years from the date of their disqualification.
    • Article 164(1B) should be omitted by moving a constitutional amendment.
    • Set time limit to decide petition for disqualification: All petitions for disqualification of members under paragraph 2 of the Tenth Schedule should be decided, by adopting a summary procedure, within a period of three months.

    Consider the question “Has anti-defection law succeeded in curbing the defections and ensuring the stability of the elected governments? Give reasons in support of your argument.”

    Conclusion

    If our polity wants to get rid of open corruption, it needs to take urgent steps to plug existing loopholes that have made the Tenth Schedule unworkable.

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    Back2Basics: Article 164(1B)

    • A member of the Legislative Assembly of a State or either House of the Legislature of a State having Legislative Council belonging to any political party who is disqualified for being a member of that House under paragraph 2 of the Tenth Schedule shall also be disqualified to be appointed as a Minister under clause (1) for duration of the period commencing from the date of his disqualification till the date on which the term of his office as such member would expire or where he contests any election to the Legislative Assembly of a State or either House of the Legislature of a State having Legislative Council, as the case may be, before the expiry of such period, till the date on which he is declared elected, whichever is earlier.

  • Keeping the spirit of federalism alive

    Context

    Conscious recognition of the federal character of our polity is essential to protect our national character.

    Federal spirit and ideas in Indian Constitution

    • Conscious of the differential needs of the populations of different states, the drafters of the Constitution made provisions for an equitable share of powers and responsibilities among different levels of governments. 
    • The lists in the 7th Schedule of the Constitution — Union, state and concurrent — are an example of this division, wherein each level of government has its own sphere, enabling context-sensitive decision-making.
    • Local self-government: Later, institutions for local self government were added through the 73rd and 74th amendments, which strengthened grass roots democracy.
    • Division of responsibility: Article 246 and Article 243 G provide for this division of responsibilities.
    • Finance Commission: Article 280 provided for the constitution of Finance Commission to define the financial relationship and terms between the Union and states.
    • Inter-State Council: Article 263 provided for the establishment of an Inter-State Council for smooth transition of business between the Union and states and resolution of disputes.
    • The inter-state tribunals, the National Development Council and other informal bodies have served as vehicles of consultations between the Union, states and UTs.
    • Rajya Sabha: Apart from these institutions and the Rajya Sabha, the Constitution makers also left much scope for consultative and deliberative bodies so as to strengthen the spirit of cooperation and federalism.

    Steps against the spirit of federalism

    • The Planning Commission has been scrapped.
    • The Inter-State Council has met only once in the last seven years while the National Development Council has not met at all. 
    •  The tenure of the 15th Finance Commission was mired in controversy and many states expressed apprehensions about devolution.
    • The GST has already taken away much of the autonomy available to states and has made the country’s indirect tax regime unitary in nature.
    • Article 370 was removed without consulting the state legislature.
    • Parliament legislated on “agriculture”, entry no. 14 in the state list, to enact the three contentious farm laws, overstepping its jurisdiction and imposing a law on the states.
    •  The New Education Policy has been flagged as encroaching on the federal nature of the polity.
    •  The BSF’s jurisdiction was extended in Assam, West Bengal and Punjab without any consultation with the concerned states.
    • The constitutional office of governor has come under scrutiny several times for encroaching on the powers of state executive and legislature.

    Conclusion

    It should be underlined that Article 1 of our Constitution declares that “India that is Bharat is a union of states”, and that devolution of powers is necessary in such a setting.

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  • Supreme Court upholds validity of OBC quota in NEET admissions

    The Supreme Court has pronounced its decision upholding the constitutional validity of providing 27% quota to Other Backward Classes (OBC) in NEET All India Quota (AIQ) seats for UG and PG medical courses.

    What is the issue?

    • The petitioners, several NEET aspirants, had argued that since the top court had limited reservation to 50% in the Indira Sawhney judgment, the government should have first applied to the court before tinkering with the quota calculations.
    • The court further confirmed that there was no need for the Centre to have got the prior consent of the Supreme Court before introducing OBC quota in the AIQ seats under NEET.
    • The court reasoned that material affluence of certain individual members of a socially backward group or ‘creamy layer’ could not be used against the entire group to deny it the benefits of reservation.

    What is the background of this case?

    • The government introduced OBC/EWS quota before the counselling of NEET counselling.
    • The candidates applying for NEET PG were not provided any information on the distribution of the seat matrix.
    • Such information is provided by the counselling authority only after the counselling session is to begin.

    Key observations of the Apex Court

    • The SC has held that reservation is not at odds with merit.
    • It observed that ‘merit’ could not be narrowed to the limit of success in open competitive exams.
    • Merit of a person is a sum total of “lived experiences” and his or her struggle to overcome cultural and social setbacks, observed the SC.

    Why is this a landmark judgment?

    • Merit cannot be reduced to narrow definitions of performance in an open competitive examination, which only provides formal equality of opportunities , said the SC.
    • Current competencies are assessed by competent examinations but are not reflective of excellence, capability and potential of an individual.

    Major justifications for Reservations

    • Exams did not reflect how social, economic and cultural advantages that accrued to certain classes contributed to their success in them, the court noted.
    • Examinations are not a proxy for merit.
    • Merit should be socially contextualized and re-conceptualized.
    • Reservation is not at odds with merit but furthers its distributive impact, Justice Chandrachud observed.

    Constitutionality of the decision

    • The court held that the power of the State governments to provide reservations under Article 15 (4) and (5) of the Constitution was not an “exception” to Article 15 (1).
    • It enshrines the mandate that “the State shall not discriminate against any citizen on grounds only of religion, race, caste, sex, and place of birth or any of them”.
    • The court held that the power of the State government to craft reservations for the OBC amplified the principle of “substantive equality” manifested through Article 15 (1).

    Implications: Victory for States

    • In a significant victory for States such as Tamil Nadu, the court confirmed their power to make “special provisions” and provide reservations in educational admissions, whether in aided or unaided institutions.
    • TN provides government jobs for the advancement of “any socially and educationally backward classes of citizens or for the SCs and STs”.

     

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  • The Question of OBC Reservation in Local Bodies

    The latest order in Rahul Ramesh Wagh v. State of Maharashtra &Ors makes it mandatory that the principles laid down by the Supreme Court for providing reservation to OBCs in local bodies shall be followed across the country.

    Let us understand the Case

    • Maharashtra had constituted a Commission to ascertain the backwardness of OBCs in June 2021.
    • But without waiting for an empirical report, an ordinance was promulgated to amend the Maharashtra Zilla Parishads Act, Panchayat Samitis Act and the Maharashtra Village Panchayat Act.
    • They were aimed to conduct local body elections with OBC reservation.
    • This was struck down by the Supreme Court.

    The latest case arose out of the challenge made to the ordinance promulgated on the teeth of the Supreme Court judgments by the Governor of Maharashtra to conduct the local body elections by providing 27% reservation to OBCs.

    What did the SC observe now?

    • Reservation to OBCs in local body elections without empirical base can no more be sustainable in law.
    • The latest order in RR Wagh v. State of Maharashtra & others makes it mandatory that the principles laid down by the Supreme Court for providing reservation to OBCs in local bodies shall be scrupulously followed across the country.

    Which principles is the apex court talking about?

    • A five-judge Constitution Bench in the K. Krishnamurthy (Dr.) v. Union of India (2010) judgment said that barriers to political participation are not the same as barriers to education and employment.
    • Though reservation to local bodies is permissible, the top court declared that the same is subject to three conditions:
    1. to set up a dedicated Commission to conduct empirical inquiry into the nature of the backwardness in local bodies
    2. to specify the proportion of reservation required to be provisioned local body-wise
    3. such reservation shall not exceed aggregate of 50% cap of the total seats reserved for SCs/STs/OBCs taken together
    • This is famously referred as ‘Triplet Test’.

    Major takeaways of K. Krishnamurthy Case

    In this case, the Supreme Court had interpreted Article 243D(6) and Article 243T(6), which permit reservation by enactment of law for backward classes in local bodies respectively.

    • It held that barriers to political participation are not the same as that of the barriers that limit access to education and employment.
    • However, for creating a level playing field, reservation may be desirable as mandated by the aforementioned conditions.
    • Above articles provide a separate constitutional basis for reservation, as distinct from what are conceived under Article 15 (4) and Article 16 (4) which form the basis for reservation in education and employment.

    Reception of the Krishnamurthy Judgment

    • The Indian political class usually displays apathy to the law declared by the courts as contrary to the enacted law.
    • The 2010 judgment was not acted upon and the constitutionality of the enacted reservation was challenged.
    • This resulted in the 2021 judgment of a three-judge Bench of the Supreme Court.

    What can be concluded from the aspirant’s perspective?

    • Maharashtra Legislative Assembly passed a resolution to stall the local body elections in the wake of the judicial interference.
    • Elections, undoubtedly, must be held on time.
    • Since Judiciary does not usually interfere into Elections, States often seek to bypass the OBC reservation issues.

    Conclusion

    • Had the governments stuck to the law as mandated by Article 141 of the Constitution, this quandary wouldn’t have arisen.
    • Much of the judiciary’s time could have been saved.
    • Rule of law is not just a set of letters, but it has to be followed in spirit.

    Back2Basics: Article 141 of the Constitution

    • It stipulates that the law declared by the Supreme Court shall be binding on all Courts within the territory of India.
    • Thus, the general principles laid down, by the Supreme Court are binding on each individual including those who are not a party to an order.

     

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  • Democratise and empower city governments

    Context

    The “State Finances, Study of Budgets of 2021-22” report, correctly identify the role of the city governments in meeting the challenges the pandemic has thrown up, the report also points to the draining of resources.

    What the RBI report says about the role of local governments

    • The report highlights the frontline role played by the third-tier governments by implementing containment strategies, healthcare.
    • Due to this, their finances have come under severe strain, forcing them to cut down expenditures and mobilise funding from various sources.
    • Need for functional autonomy: The RBI further commented that the functional autonomy of civic bodies must increase and their governance structure strengthened.
    • Empowering financially: This could happen by ‘empowering them financially through higher resource availability.
    • The RBI did echo the recommendations of the 15th Finance Commission report on local bodies that emphasised city governance structures and financial empowerment.
    • Limited coverage of property tax: The RBI report also highlights the limited coverage of property tax and its failure in shoring up municipal corporation revenues.
    • Organisation for Economic Co-operation and Development (OECD) data show that India has the lowest property tax collection rate in the world — i.e., property tax to GDP ratio. 

    Issues faced by city governments

    • During the pandemic, while leaders from the Prime Minister to Chief Ministers to District Magistrate were seen taking a call on disaster mitigation strategies, city mayors were found missing.
    • The old approach of treating cities as adjuncts of State governments continues to dominate the policy paradigm.
    • The general approach towards urban empowerment has remained piecemeal in India.
    • The first intervention to understand ‘the urban’ (though there are references in the Five Year plans) and plan with a pan-Indian vision took place in the 1980s when the National Commission On Urbanisation was formed with Charles Correa as its chairperson.
    • Another important intervention was in the first half of the 1990s with the Constitution 73rd and 74th Amendments. 
    • The latter refers to urban reforms — empowering urban local bodies to perform 18 functions listed in the 12th Schedule.
    • However, there is no mention of financial empowerment.
    • The only exception to the rule has been the people’s plan model of Kerala where 40% of the State’s plan budget was for local bodies (directly) with a transfer of important subjects such as planning, etc.

    How to achieve functional autonomy for city government

    • This should happen with three F’s: the transfer of ‘functions, finances and functionaries’ to city governments.
    • There are nearly 5,000 statutory towns and an equal number of census towns in India.
    • Nearly 35% of the population lives in urban centres.
    • And, nearly two-thirds of the country’s GDP stems from cities and almost 90% of government revenue flows from urban centres.
    • Before value-added tax and other centralised taxation systems, one of the major earnings of cities used to be from octroi.
    • But this source of revenue collection was taken away by the State and the central governments.
    • Instead, finance commissions recommended grants to urban local bodies based on a formula of demographic profile. 
    • In such a situation, it is difficult for the towns to sustain their ability to perform their bare minimum functions, especially with the latest Pay Commission recommendations.
    • This has resulted in burdening people more with taxes and further privatisation/outsourcing of the services of the municipalities.
    • The often-cited example is how cities in the Scandinavian countries manage their functions well — from city planning to mobility to waste management.
    • But the truth is that a chunk of the income tax from citizens is given to city governments.
    • A committee formed by the Ministry of Housing and Urban Development to review the 74th constitutional amendment recommended that 10% of income tax collected from the cities was to be given back to them as a direct revenue grant from the central government.

    Way forward

    • 1] Cities must be treated as important centres of governance, where democratic decentralisation can bring in amazing results.
    • There will be transparency and adequate participation of the people.
    • 2] Cities should not be considered as entrepreneurship spaces where the sole driving force is to make them competitive to attract investments.
    • 3] The resources required for quantitative and qualitative data must be immediately provided to the cities to ensure a disaster risk reduction plan keeping vulnerable communities in mind.
    • 4] A piecemeal approach such as the concept of ‘smart cities’ must be shunned altogether.
    • This approach further widens the gap between different sets of people.
    • 5] Leadership in the cities must be elected for a term of five years. 
    • Likewise, the third F, i.e., functionaries, must be transferred to the cities with a permanent cadre.

    Consider the question “The functional autonomy of civic bodies must be increased and their governance structure strengthened. This could happen by ‘empowering them financially through higher resource availability’. Comment.” 

    Conclusion

    Thus, in this exercise by the RBI, the good part is that there has least been a mention of cities, with local bodies as important centres of governance.

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