Content

1. The structural fragility of Union Territories
2. Federalism and India’s human capital

Editorial: The structural fragility of Union Territories

Context:

• The sudden and inexplicable resignations of Congress MLAs from the Puducherry Assembly have turned out to be an ingenious move to topple the Congress government led by V. Narayanasamy. This was done in 2019 with devastating effect in Karnataka.

Relevance:

• GS Paper 2: Functions & responsibilities of the Union and the States; issues and challenges of federal structure;

Mains Questions:

1. The role of individual MPs (Members of Parliament) has diminished over the years and as a result healthy constructive debates on policy issues are not usually witnessed. How far can this be attributed to the anti-defection law, which was legislated but with a different intention? 15 Marks
2. Union Territories having legislatures with ultimate control vested in the central administrator are not workable. Discuss. 15 Marks

Dimensions of the Article

Composition of the legislature

Reasons of Having Legislation in UT’s:

• The first question that arises in the context of these UTs is why the Constitution-makers/ Parliament thought it fit to provide a legislature and Council of Ministers to some of the UTs. The ostensible reason is to fulfil the democratic aspirations of the people of these territories.
• Therefore, the creation of a legislature and a Council of Ministers is logical and in consonance with the policy of the state to promote democracy.

Structural issues: Legislative vs executive

• Article 239A was originally brought in, in 1962, to enable Parliament to create legislatures for the UTs. Look at the composition of the legislature as provided in the Constitution.
• Composition of legislature: It is a body that is elected, or partly elected and partly nominated.
• Council of Minister: There can be a Council of Ministers without a legislature, or there can be a legislature as well as a Council of Ministers.
• Conceptual absurdity: A legislature without a Council of Ministers or a Council of Ministers without a legislature is a conceptual absurdity.
• In our constitutional scheme, a legislature is the law-making body and a legislative proposal is initiated by the government, which is responsible to the legislature.
  • Neither can the legislature exist without a Council of Ministers nor can the Council of Ministers exist without a legislature.
  • Similarly, a legislature that is partly elected and partly nominated is another absurdity.

Issue of nomination

• The issue of nomination of members to the Puducherry Assembly had raised a huge controversy. The Government of Union Territories Act provides for a 33-member House for Puducherry of whom three are to be nominated by the Central government.
  • when the Union government nominated three BJP members to the Assembly without consulting the government, it was challenged in the court.
• The Supreme Court (K. Lakshminarayanan v. Union of India, 2019) held that the Union government is not required to consult the State government for nominating members to the Assembly and the nominated members have the same right to vote as the elected members.

Nomination: Rajya Sabha vs UT’s

• Nomination in Rajya Sabha: There is provision for nomination of members to the Rajya Sabha [Article 80 (i)(a)]. But clause (3) of the Article specifies the fields from which they will be nominated.
  • The purpose of this nomination is to enable the House to draw on the expertise of those eminent members who are nominated and thus enrich the debate in the House.
• Nomination in Puducherry Assembly: In the case of nomination to the Puducherry Assembly, no such qualification is laid down either in Article 239A or the Government of Union Territories Act.
  • This leaves the field open for the Union government to nominate anyone irrespective of whether he or she is suitable.
• Opinion of Supreme Court: The Supreme Court took too technical a view on the matter of nomination and did not go into the need to specify the fields from which those persons could be nominated and also lay down a fair procedure to be followed for nomination of members.

Administrator’s power

• The Lieutenant Governor vs Elected government: As a matter of fact, the UTs were never given a fully democratic set-up with necessary autonomy. The power vested in the administrator, who is known as the Lieutenant Governor in the UTs having a legislature, bear this out.
  • The administrator has the right to disagree with the decisions of the Council of Ministers and then refer them to the President for a final decision.
  • The President decides on the advice of the Union government. So, in effect, it is the Union government which finally determines the disputed issue.
  • The administrator can, in fact, disagree with all crucial decisions taken by the State government when the territory is ruled by a different political party.
  • Section 44 of the Government of Union Territories Act and Article 239 AA(4) (proviso) of the Constitution vests the power in the administrator to express his or her disagreement and refer the matter to the President and then take all actions he or she deems fit in the matter in total disregard of the elected government.
• The Supreme Court Judgement: Although in NCT of Delhi v. Union of India (2019), the Constitution Bench of the Supreme Court had said that the administrator should not misuse this power to frustrate the functioning of the elected government in the territory and use it after all methods have failed to reconcile the differences between him/her and the Council of Ministers, experience tells us a different story.

Way Forward:

• Experience shows that the UTs having legislatures with ultimate control vested in the central administrator are not workable. The redemption for the harried governments of these territories lies in the removal of the legal and constitutional provisions which enable the administrator to breathe down the neck of the elected government.
• So far as the conspiratorial resignation by legislators to bring down their own government is concerned, the political class will have to rack its brains on how to get the better of the predatory instincts of political parties through constitutional or other means.

Editorial: Federalism and India’s human capital

Context

• A decentralised approach and strong local governments can enhance developmental Outcomes.

Relevance:

• GS Paper 2: Devolution of power and finance upto local level.

Mains Questions:

1. Investing in human capital through interventions in nutrition, health, and education is critical for sustainable growth. Discuss. 15 Marks

Dimensions of the Article:

• Status of human capital formation in India:
• The Government Measures
• Role of democratic decentralization
• Several imbalances
• Way Forward

Status of human capital formation in India:

• India’s human capital indicators remain low. In the World Bank’s Human Capital Index, the country ranked 116th.
• The National Family Health Survey-5 for 2019-20 shows that malnutrition indicators stagnated or declined in most States.
• The National Achievement Survey 2017 and the Annual Status of Education Report 2018 show poor learning outcomes.

The Government Measures

• The National Health Policy of 2017 highlighted the need for interventions to address malnutrition.
• NITI Aayog’s National Nutrition Strategy, the Poshan Abhiyaan was launched, as part of the Umbrella Integrated Child Development Scheme.
• The latest Union Budget has announced a ‘Mission Poshan 2.0’ and the Samagra Shiksha Abhiyan has been the Centre’s flagship education scheme since 2018.
• Government expenditure on Human Capital: India spends just 4% of its GDP as public expenditure on human capital (around 1% and 3% on health and education respectively) — one of the lowest among its peers.

Role of democratic decentralization

• International experience suggests that one reason why these interventions are not leading to better outcomes may be India’s record with decentralization.
  • Globally, there has been a gradual shift in the distribution of expenditures and revenue towards sub-national governments.
  • These trends are backed by studies demonstrating a positive correlation between decentralization and human capital.
• 14th Finance Commission: In recent years, India has taken some steps towards decentralisation. The Fourteenth Finance Commission increased the States’ share in tax devolution from 32% to 42%, which was effectively retained by the Fifteenth Finance Commission.
• 7th Schedule of the constitution: In India, three tiers of government are envisaged, with the Constitution dividing powers between the first two tiers — the Centre and the States, as per the three lists under the Seventh Schedule.
  • While public health is in the State List, the broader subject of economic and social planning is in the Concurrent List.
  • In 1976, education was shifted from the State List to the Concurrent List through the 42nd Amendment.
  • The placement of a subject in the Concurrent List, in effect, indicates the presence of overarching considerations that warrant the Centre’s involvement.
• Fiscal Federalism: Fiscally, while the Constitution assigns the bulk of expenditure responsibilities to States, the Centre has major revenue sources.
  • To address this vertical imbalance, the Constitution provides for fiscal transfers through tax devolution and grants-in-aid.
  • In addition, the Centre can make ‘grants for any public purpose’ under Article 282 of the Constitution.
  • While fiscal transfers that are part of tax devolution are unconditional, transfers under grants-in-aid or Centrally Sponsored Schemes (CSSs) can be conditional.
  • Therefore, the increase in the States’ share of tax devolution represents more meaningful decentralisation.

Several imbalances

• The 73rd and 74th Amendments bolstered decentralisation by constitutionally recognising panchayats and municipalities as the third tier and listing their functions in the Eleventh and Twelfth schedules, respectively.
  • These include education, health and sanitation, and social welfare for panchayats, and public health and socio-economic development planning for municipalities.
  • However, the Constitution lets States determine how they are empowered, resulting in vast disparities in the roles played by third-tier governments.
• Centrally Sponsored Schemes have formed a sizeable chunk of intergovernmental fiscal transfers over the years, comprising almost 23% of transfers to States in 2021-22. But its outsized role strays from the intentions of the Constitution.
• Article 282 of the Constitution is listed as a ‘Miscellaneous Financial Provision’, unlike Articles 270 and 275, which fall under ‘Distribution of Revenues between the Union and the States’.
• Constitutional expert Nani Palkhivala had characterised it as more of a residuary power, opining that grants-in-aid under Article 275 as per Finance Commission recommendations are the more appropriate, regular route.
• The Supreme Court in Bhim Singh vs Union of India had observed that “Article 282 is normally meant for special, temporary or ad hoc schemes”.
• A functionally and fiscally empowered third tier would not only be more in keeping with the constitutional spirit, but also lead to better outcomes. But ironically, States, too, have been responsible for centralization. Many States do not clearly demarcate or devolve functions for panchayats and municipalities.
• The collection of property tax, a major source of revenue for third-tier governments, is very low in India (under 0.2% of GDP, compared to 3% of GDP in some other nations).
• The Constitution envisages State Finance Commissions (SFCs) to make recommendations for matters such as tax devolution and grants-in-aid to the third tier.
  • However, many States have not constituted or completed these commissions on time, and hence, the Fifteenth Finance Commission has recommended no grants after March 2024 to any State that does not comply with the constitutional provisions pertaining to SFCs.

Way Forward

• The Centre needs to rethink the nature of its actions. It should play an enabling role, for instance, encouraging knowledge-sharing between States.
• For States to play a bigger role in human capital interventions, they need adequate fiscal resources.
• States should rationalize their priorities to focus on human capital development. The Centre should refrain from offsetting tax devolution by altering cost-sharing ratios of CSSs and increasing cesses.
• The unconditional nature of these vertical transfers should be effectuated in spirit. Concomitantly, the heavy reliance on CSSs should be reduced, and tax devolution and grants-in-aid should be the primary sources of vertical fiscal transfers.
• Panchayats and municipalities need to be vested with the functions listed in the Eleventh and Twelfth Schedules.
• Leveraging the true potential of our multi-level federal system represents the best way forward towards developing human capital.