28 June 2024 : Indian Express Editorial Analysis

1. Big reforms push

(Source: Indian Express; Section: The Editorial Page; Page: 10)

Topic: GS3 – Indian Economy – Government Budgeting

Context:

In most advanced economies, the annual budget is a routine event with minimal impact on the public discourse. However, in emerging markets like India, the budget presentation holds significant importance. This tradition, inherited from colonial times, not only aligns with the British time but also serves a different purpose. While historically the budget was primarily an accounting exercise for the British empire, post-Independence it has evolved to reflect the administration’s economic vision. This vision is particularly crucial at the beginning of a government’s term, as it sets the expectations for economic agents, market participants, and citizens regarding the policy direction over the next five years.

Growth Objectives:

• The 2024-25 budget is anticipated to outline a long-term vision for the Indian economy, focusing on five key elements: growth, employment, manufacturing, public finance, and others.
• The government has already articulated its vision of a “Viksit Bharat,” aiming to transform India into a developed economy by 2047. The critical question is the growth rates required to elevate India’s per capita income from $2,500 to $14,000.
• In 2023, India’s per capita income grew by 9.2% in nominal dollar terms, a substantial achievement. If sustained, this growth rate could see India achieving upper middle-income status by 2030 and higher income status by 2042.
• However, comparing India with countries like Indonesia and Brazil reveals that it may take over 25 years for India to catch up with them if current growth rates persist.
• To accelerate this process, India needs to achieve 10% real GDP growth by enhancing private consumption, investment, exports, and imports, with the budget playing a crucial catalytic role.

Employment and Manufacturing:

• Employment and manufacturing are closely linked and critical for India’s economic growth. There is no inherent tradeoff between services and manufacturing; both sectors are essential.
• Boosting labor-intensive manufacturing is necessary to capitalize on the demographic dividend. Despite being a labor-abundant economy, India’s capital to labor ratio has increased rapidly, driven by factor market reforms.
• The government has initiated several reforms, but the process is complex and challenging in a democratic setup. Effective reforms, such as improving land records digitization and alternative compensation mechanisms, are essential.
• The “China +1” strategy presents an opportunity for India, provided it can effectively implement factor market reforms to attract firms and investors.

Public Finance:

• Globally, monetary policy decisions are based on systematic analysis, while fiscal policy often relies on political considerations. India’s Fiscal Responsibility and Budget Management (FRBM) Act of 2003, reviewed in 2017, aimed to make fiscal policy more scientific.
• Key recommendations included using the public debt-to-GDP ratio as a medium-term anchor and the fiscal deficit as an operational target.
• However, India’s debt-to-GDP ratio remains high, with the central government spending over 40% of its revenues on debt servicing. Reducing this burden is crucial for improving India’s fiscal outlook and potentially achieving a ratings upgrade.
• The introduction of an independent Fiscal Council, as recommended by the FRBM review committee, could enhance fiscal discipline by providing independent forecasts and monitoring fiscal performance.

Broader Economic Reforms:

• The fifth element of the budget’s vision encompasses broader economic reforms, including the development of agricultural markets, improvement of higher education, enhancement of health outcomes, and adherence to carbon limits.
• The 2024-25 budget presents an opportune moment to signal a commitment to these reforms. Achieving 10% real growth is feasible with sustained macroeconomic and political stability, alongside continued investments in physical and digital infrastructure.
• The budget should reflect a renewed commitment to comprehensive reforms, fostering enthusiasm and confidence among economic agents, market participants, and citizens.

Conclusion:

• The upcoming budget is not just a financial document but a strategic vision for India’s long-term economic development. It needs to address growth, employment, manufacturing, public finance, and broader economic reforms to propel India towards becoming a developed economy by 2047.

Budget and Constitutional Provisions

According to Article 112 of the Indian Constitution, the Union Budget of a year is referred to as the Annual Financial Statement (AFS). It is a statement of the estimated receipts and expenditure of the Government in a financial year (which begins on 01 April of the current year and ends on 31 March of the following year). In addition to it, the Budget contains: Estimates of revenue and capital receipts, Ways and means to raise the revenue, Estimates of expenditure, Details of the actual receipts and expenditure of the closing financial year and the reasons for any deficit or surplus in that year, and The economic and financial policy of the coming year, i.e., taxation proposals, prospects of revenue, spending programme and introduction of new schemes/projects.

PYQ: One of the intended objectives of Union Budget 2017-18 is to ‘transform, energize and clean India’. Analyse the measures proposed in the Budget 2017-18 to achieve the objective. (250 words/15m) (UPSC CSE (M) GS-3 2017)

Practice Question:  Discuss the significance of the annual budget presentation in emerging markets like India, and elaborate on the key elements that should be included in the 2024-25 budget to achieve long-term economic growth and stability. (250 words/15 m)

 2. The challenge for Om Birla

(Source: Indian Express; Section: The Ideas Page; Page: 11)

Topic: GS2 – Polity – Parliament

Context:

The recent election of Om Birla as the Speaker for the 18th Lok Sabha concluded with a voice vote, bringing an end to the excitement over the choice. According to Article 100 of the Constitution, decisions in the House are determined by a majority vote of the members present and voting. Although voice voting is a common practice in legislatures, it is not explicitly recognized by the Constitution. If the Opposition had wished to challenge the voice vote result, they could have requested a formal vote, but they chose not to do so.

What are the Key Facts About the Speaker in India?

• The Speaker is the constitutional and ceremonial head of the House.
• Each House of Parliament has its own presiding officer.
• There is a Speaker and a Deputy Speaker for the Lok Sabha and a Chairman and a Deputy Chairman for the Rajya Sabha.
• The Speaker is assisted by the Secretary-General of the Lok Sabha and senior officers of the Secretariat on parliamentary activities, practice and procedure.
• In the absence of the Speaker, the Deputy Speaker discharges the functions.A member from the panel of Chairmen presides over the House in the absence of both the Speaker and the Deputy Speaker. However, member of the panel of chairpersons cannot preside over the house, when the office of the Speaker or the deputy speaker is vacant.

Election:

• The House elects its presiding officer by a simple majority of members present, who vote in the House.
• Usually, a member belonging to the ruling party is elected as speaker whereas deputy speaker is elected from opposition party.
• There are also instances when members not belonging to the ruling party were elected to the office of the Speaker.
• GMC Balayogi and Manohar Joshi belonging to the non-ruling party served as the Speaker in the 12th and 13th Lok Sabha.
• When the Lok Sabha is dissolved, the Speaker remains in his office till the first meeting of the new assembly when the new speaker is elected.

Removal:

• The Constitution has given the Lower House authority to remove the Speaker if needed.
• The House can remove the Speaker through a resolution with notice of 14 days, passed by an effective majority (more than 50% of the effective strength (total strength-vacancies) of the house present and voting) as per Articles 94 of the Indian Constitution.
• The Speaker can also be removed on getting disqualified from being a Lok Sabha member under sections 7 and 8 of the Representation of the People Act, 1951.
• A speaker can also give his resignation to a Deputy Speaker.

Sources of Power and Duties:

• The Speaker of the Lok Sabha derives his powers and duties from three sources:
  • Constitution of India,
  • Rules of Procedure and Conduct of Business of Lok Sabha,
  • Parliamentary Conventions (residuary powers that are unwritten or unspecified in the rules)

Provisions to Ensure Independence and Impartiality of Speaker:

• He is provided with a security of tenure. He can be removed only by a resolution passed by the Lok Sabha by a effective majority.
• His salaries and allowances are charged on the Consolidated Fund of India and thus are not subject to the annual vote of Parliament.
• His work and conduct cannot be discussed and criticised in the Lok Sabha except on a substantive motion.
• His powers of regulating procedure or conducting business or maintaining order in the House are not subject to the jurisdiction of any Court.
• He cannot vote in the first instance. He can only exercise a casting vote in the event of a tie. This makes the position of speaker impartial.
• He is placed at sixth rank in the order of precedence along with the Chief Justice of India.

Consensus and Partisanship:

• Historically, Speakers have been elected through consensus, emphasizing their role as representatives of the entire House, not just the ruling party. In the early days of the Republic, leaders chose Speakers of great stature who embodied impartiality and objectivity, inspired by British traditions.
• Over time, however, the selection of the Speaker has become increasingly partisan. Ruling parties prefer their own candidates in the role, as the Speaker holds significant power in the House, including certifying money bills, referring bills to committees, and deciding on parliamentary questions and defections.
• These powers can provide advantages to the ruling party, making the Speaker’s impartiality crucial yet challenging to maintain.

Historical Context:

• The office of the Speaker originated in 13th century England, amidst conflicts between the House of Commons and the monarchy.
• The Speaker, who communicated the Commons’ decisions to the King, often faced imprisonment or execution for defending the House’s interests.
• This led to the tradition of the Speaker-elect showing reluctance when being escorted to the Chair, symbolizing the potential risks of the role.
• The Speaker’s duty to protect MPs’ interests was famously exemplified by Speaker William Lenthall’s defiance of King Charles I in 1642, establishing a legacy of impartiality and courage.

Challenges for the 18th Lok Sabha:

• The 18th Lok Sabha presents significant challenges for the Speaker, particularly with an Opposition holding 234 MPs.
• While party leaders may praise a Speaker’s past achievements, the political dynamics of the House will test their ability to maintain order and fairness.
• Running the House smoothly requires wisdom, tact, and an unwavering commitment to impartiality.
• The authority of the Speaker is rooted in their absolute and consistent impartiality, as highlighted by parliamentary experts MN Kaul and SL Shakdhar.
• This impartiality is essential for upholding the dignity and functionality of the Parliament.

Importance of Impartiality:

• The impartiality of the Speaker is not merely a formality but a foundational principle of their office. MPs expressed their concern for the Speaker’s impartiality during the recent election, reflecting their understanding of its importance.
• India’s democratic system relies heavily on the Speaker’s ability to remain unbiased.
• Ensuring this impartiality is vital for maintaining confidence in the parliamentary process and preventing it from becoming a contentious issue in the future.
• The Speaker must balance the interests of all parties and act with fairness and objectivity to preserve the integrity of the House.

Constitutional Provisions Related to Speaker/Deputy Speaker

Article 93/178: Appointment of the Speaker and Deputy Speaker of the Lok Sabha/ Legislative Assembly. Article 94/179: Vacation/resignation/removal from the offices of Speaker and Deputy Speaker of the Lok Sabha/Legislative Assembly. Article 95/180: Power of the Deputy Speaker or other person(s) to perform the duties of the office of or to act as the Speaker of the Lok Sabha/Legislative Assembly. Article 96/181: The Speaker or the Deputy Speaker not to preside while a resolution for his removal from office is under consideration. Article 97/186: Salaries and allowances of the Speaker and Deputy Speaker. Judicial Provisions Related to Speaker/Deputy Speaker In Kihoto Hollohan versus Zachilhu case, 1993, the Supreme Court declared that the decision of the presiding officer is not final and can be questioned in any court. It is subject to judicial review on the grounds of malafide, perversity, etc Supreme Court in Keisham Meghachandra Singh vs The Hon’ble Speaker Manipur Legislative Assembly & Ors Case, 2020, ruled that Speakers of assemblies and the Parliament must decide disqualification pleas within a period of three months except in extraordinary circumstances. In Nabam Rebia vs Deputy Speaker Case, 2016, the SC held that a speaker will be disabled from deciding disqualification petitions under the anti-defection law (10th schedule of the constitution) if a notice for their removal is pending. In other words, this judgement stopped a Speaker facing removal notice from deciding disqualification pleas against members of legislatures under anti-defection law. Also, in 2023, the Supreme Court in Subhash Desai v Principal Secretary, Governor of Maharashtra Case, 2023, directed the Maharashtra Assembly Speaker, to set a timeline for deciding pleas for the disqualification of MLAs.

PYQ: With reference to Deputy Speaker of Lok Sabha, consider the following statements: (2022)   1) As per the Rules of Procedure and Conduct of Business in Lok Sabha, the election of Deputy Speaker shall be held on such date as the Speaker may fix. 2) There is a mandatory provision that the election of a candidate as Deputy Speaker of Lok Sabha shall be from either the principal opposition party or the ruling party. 3) The Deputy Speaker has the same power as of the Speaker when presiding over the sitting of the House and no appeal lies against his rulings. 4) The well-established parliamentary practice regarding the appointment of Deputy Speaker is that the motion is moved by the Speaker and duly seconded by the Prime Minister. Which of the statements given above are correct?   (a) 1 and 3 only (b) 1, 2 and 3 (c) 3 and 4 only (d) 2 and 4 only Ans: (b)

Practice Question:  Examine the role and significance of the Speaker in the Lok Sabha, particularly in the context of maintaining impartiality and fairness. Discuss the historical evolution of the Speaker’s office and the challenges faced by the Speaker in the contemporary political landscape of India. (250 words/15 m)