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GS-II Paper: Share of the State

Context

Last week, the Union cabinet passed an amendment to widen the terms of reference of the 15th Finance Commission.

Background

• The Commission has now been asked to examine the possibility of setting up a mechanism for funding defence and internal security.
• As capital spending on defence continues to fall well short of what is required, it is difficult to contest the premise that it needs to be bolstered.
• But, as the creation of “secure and non-lapsable funds for defence and internal security” may end up reducing the divisible tax pool further, the move could face resistance from states, especially when several of them are arguing for a greater share in tax revenues.

Constitutional Provision

• The Seventh Schedule of the Indian Constitution specifies the separate as well as concurrent responsibilities of the Centre and state governments, with defence falling in the Union list.
• The inability of the Centre to ramp up its spending on defence indicates the limited fiscal space available to it.
• In large part, this is due to an increase in spending on items in the state and concurrent list, and a corresponding decline in spending on items in the Union list.

Reduce fiscal space for states

• In a federal structure, the Centre must address regional imbalances in the delivery of public services.
• But the bulk of this spending is routed through sector-specific transfers or centrally sponsored schemes that curb the autonomy of the states in deciding their own expenditure priorities.
• The added fiscal pressures on the Centre have, in turn, contributed to reduced fiscal space for states.

Conclusion

While the compulsions of the political economy have ensured greater central government spending on items in the state and concurrent lists, the current juncture may well be an opportune moment to rethink the spending priorities of different levels of the government. There is a need, particularly, to address legitimate concerns of states about increasing encroachment by the Centre.

GS-II Paper: Shifting strategic concerns

Context

The U.S. President Donald Trump’s latest gaffe has introduced another thorn in what is now clearly an unsettled India-U.S. relationship. While India’s hand is not as strong as we sometimes believe it to be, there might be opportunities to leverage the international situation further down the road.

Perceived advantage

• If we step back and evaluate the India-Pakistan equation over the past five years, what stands out is that both sides proceeded from a perception that each holds an advantageous position.
• India’s confidence emanated from Mr. Modi’s electoral victory in 2014 that yielded a strong Central government and expectations of stable ties with all the major powers.
• Mostly overlooked in India, Pakistani leaders too have displayed confidence that the international environment was moving in a direction that opened options for Pakistan that were unavailable in the previous decade.
• This included the renewed patterns of Pakistan’s ties with the U.S. and China, with the latter reassuring Pakistan and, most importantly, the Army on their respective strategic commitments and bilateral partnerships.

Pakistan’s leverage

• China’s angle – Historically, U.S. policymakers have always sought to restore the alliance with Pakistan whenever Islamabad’s ties with China became stronger. India has borne the brunt of this recurring geopolitical dynamic.
• Afghan Situation – Much of Pakistan’s contemporary leverage can of course also be traced to the ongoing phase of the Afghan conflict. It fended off the most dangerous phase when U.S. policy might have shifted in an adversarial direction, or instability in the tribal frontier areas might have completely exploded.
• So, both India and Pakistan perceive themselves to be in a comfortable strategic position.

  Need for secure and stable Pakistan

• In sum, both the U.S. and China seek a strong, stable and secure Pakistan that controls its destabilising behaviour because that undermines their wider regional interests. For the U.S., a revisionist Pakistan pulls India inward and away from potential India-U.S. cooperation on Asian geopolitics.
• For China, it undermines its industrial and connectivity projects in Pakistan, while negatively impacting India-China ties.

  India’s Stand

Maintaining that India has the right and the capacity to adopt an active defence posture that is, blocking the flow of cross-border terror by proactive operations on the Line of Control (LoC) along with reserving the option for more ambitious punitive strikes in response to major terrorist attacks on Indian military targets would play an important part in shaping how third parties view Indian interests and thereby assume constructive roles in managing Pakistani behaviour.

Conclusion

If India ever asks third parties to assist in the region, it should be for a cessation of Pakistan’s proxy war in Kashmir and once an atmosphere of peace has been established, to persuade Pakistan to accept the LoC as part of a final territorial settlement similar to the offer by Indira Gandhi in the 1972 Shimla negotiations.

GS-II:Compulsory voting and associated issues

News

The Compulsory Voting Bill, 2019, was introduced by a ruling party MP in Lok Sabha. The Law Commission, in its March 2015 report on electoral reforms, had opposed the idea of compulsory voting.

Compulsory Voting

• Compulsory voting is an effect of laws which require eligible citizens to register and vote in elections, and may impose penalties on those who fail to do so.
• In practice, this appears to produce governments with more stability, legitimacy and a genuine mandate to govern.
• This in turn benefits all individuals even if an individual voter’s preferred candidate or party is not elected to power.

Why need it?

• Voting is often equated in kind to similar civil responsibilities such as taxation.
• The idea of a compulsory voting result in a higher degree of political legitimacy is based on higher voter turnout.

Is India is not ready for 100% voting?

• The government relies on the 255th Law Commission Report, which says “electoral right” of the voter includes the right to “vote or refrain from voting at an election.”
• The Representation of People Act, 1951 – the law that governs elections – too talks of “right to vote rather than a duty to vote”.
• The idea of compulsory voting in India has been rejected time and again on the grounds of practical difficulties.
• However, the issue of compulsory voting is bigger than being just a legal issue.

Conclusion

It is evident that increased participation does not necessarily guarantee quality participation or does not make a democracy with compulsory voting more vibrant.There is also a real fear that compulsory voting may lead to more vote buying by candidates especially in a country like India, where we have seen instances of  cash-for-vote scams.Making voting compulsory also kills the option of not voting as a protest.

GS-II: The Companies ( Amendment) Bill,2019

News

Lok Sabha has passed The Companies (Amendment) Bill,2019.

Highlights of the Amendment Bill

• Under the 2013 act , certain  classes of public companies can issues share only in demat form.
• The bill states this may be prescribed for other classes unlisted companies as well.

Re-categorization of Offences

• Under the 2013 Act, there are 81 compoundable offences that carry punishments of a fine or prison terms. These offences are heard by courts.
• The Bill makes 16 of these offences civil defaults, where government-appointed adjudicating officers may levy penalties.
• Some of these offences are the issuance of shares at a discount, and the failure to file annual returns. The Bill also amends penalties for some other offences.

Corporate Social Responsibility

• As of now, companies that are required to budget for CSR must disclose in their annual reports the reasons why they were unable to fully spend these funds.

Debarring auditors

• Under the Act, the National Financial Reporting Authority can debar a member or firm from practicing as a Chartered Accountant for six months to 10 years in case of proven misconduct.
• The Bill amends this punishment to provide for debarment from appointment as an auditor or internal auditor of a company, or performing a company’s valuation, for the same period.

Change in approving authority

• Under the Act, change in period of financial year for a company associated with a foreign company, has to be approved by the National Company Law Tribunal (NCLT).
• Any alteration in the incorporation document of a public company which has the effect of converting it to a private company, too, has to be approved by the NCLT.
• Under the Bill, these powers have been transferred to the central government..

Bar on holding office

• Under the existing Act, the central government or certain shareholders can apply to the NCLT for relief against mismanagement of the affairs of the company.
• The Bill states that in such a complaint, the government may also make a case against an officer of the company on the ground that he is not fit to hold office in the company, for reasons such as fraud or negligence.
• If the NCLT passes an order against the officer, he will not be eligible to hold office in any company for five years.

GS-II : In hate crime fight ,a voice still feeble

Context

At a time when India is reeling under hate lynching, it is sobering to remember that it took the United States Senate 100 years to approve a bill to make lynching a federal crime. Over 200 anti-lynching bills were introduced in the U.S. Congress since 1918, but all were voted down until the Justice for Victims of Lynching Act of 2018 was approved unanimously in 2018.

Problem with Lynching

• Hate lynching is designed as an act to terrorize an entire community. Though the number of murders seems small, these performative acts of violence succeeded in instilling intense fear among all African-Americans for decades.
• Modern technology – video-graphing of mob lynching, widely circulating these images through social media, and celebrating these as acts of nationalist valor have instilled a pervasive sense of every day normalized fear in the hearts of every Indian from the targeted minority community.

Significant statutes

• The Uttar Pradesh Law Commission (UPLC) took the initiative to recommend a draft anti-lynching law.
• Ordinance introduced by the Manipur government last year
• Impunity as a crime: Both the Manipur statute and the UPLC draft create a new crime of dereliction of duty by police officials, holding a police officer guilty of this crime if he or she “omits to exercise lawful authority vested in them under law, without reasonable cause, and thereby fails to prevent lynching”. Dereliction also includes the failure to provide protection to a victim of lynching; failure to act upon apprehended lynching; and refusing to record any information relating to the commission of lynching. This crime carries the penalty of one to three years and a fine.
• The UPLC goes further to include also a new crime of dereliction of duty by District Magistrates.
• The creation of this new crime was also the key recommendation of the Prevention of Communal & Targeted Violence (Access to Justice and Reparations) Bill. Only the creation of such a crime will compel public officials to perform their duty with fairness, in conformity with their constitutional and legal duties, to ensure equal protection to all persons, regardless of their faith and caste.
• Both sensitively and expansively lay down official duties to protect victims and witnesses
• A victim shall have the right to reasonable, accurate, and timely notice of any court proceeding and shall be entitled to be heard at any proceeding in respect of bail, discharge, release, parole, conviction or sentence of an accused, and to file written submissions on conviction, acquittal or sentencing
• Require the Superintendent of Police to inform the victim in writing of the progress in the investigation
• The victim shall have the right to receive a copy of any statement of the witness recorded during investigation or inquiry and a copy of all statements and documents.

Challenges with legislation:

• Text of the United States bill records that at least 4,742 people were lynched in the U.S. between 1882 and 1968, but 99% of all perpetrators remain unpunished
• Madhya Pradesh Cow Progeny Slaughter Prevention Act 2004 limits its scope only to cow-related lynching, and not lynching triggered by other charges. Its proposed amendments do not include any provisions to punish dereliction of duty, protect victim rights or secure compensation. All that it proposes is punishment for any act by a mob which indulges in violence in the name of cow vigilantism from six months to three years of imprisonment and a fine
• Rajasthan has also tabled an anti-lynching bill. This prescribes higher punishments, an investigation by senior police officers, and mandatory compensation but not the critical elements of dereliction of duty or victim rights. Without these, they will make little difference on the ground.