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TODAY’S TALK ON EDITORIALS CIVILS360

AUGUST 1, 2017

The dilemmas of delimitation

  • According to Article 81 of the Constitution — as it stood before the Constitution (Forty-second Amendment) Act, 1976 — the Lok Sabha was to comprise of not more than 550 members.
  • Clause (2) of Article 81 provided that for the purposes of sub-clause (a) of clause (1), there shall be allotted to each State a number of seats in the House of the People in such manner that the ratio between that number and the population of the State is, so far as practicable, the same for all States.
  • Further, clause (3) defined the expression “population” for the purposes of Article 81 to mean the population as ascertained at the last preceding Census of which the relevant figures have been published.
  • As result of this mandate, States which took a lead in population control faced the prospect of their number of seats getting reduced and States which had higher population figures stood to gain by increase in the number of seats in Lok Sabha.
  • Before addressing the problem of accommodating the increase in numbers, there are more important questions which require to be debated and answers found.
    • First, the concerns expressed by the States in 1976 which necessitated the freezing of seat allocation on the basis of 1971 population figures would appear to hold good even today and have to be addressed to the satisfaction of all stakeholders.
    • The second question that has to be addressed, which is equally if not more important, is how the Presiding Officers of the Houses/Legislatures will deal with such a large number of members jostling with each other to capture the attention of the Speaker to raise issues in the House.
      • The Speaker’s directions and rulings are not shown proper respect, and disruptions of proceedings aggravate the problem. The sudden increase in numbers will render the task of the Speaker more difficult and onerous.
    • Third, the Zero Hour, Question Hour and the raising matters of urgent public importance, which are warp and woof our democratic fabric, will be subjected to severe strain because the 60-odd minutes which are available in the morning before the normal legislative business of the House begins will require our Parliament and Legislatures to sit for a longer duration each day during the session as well as have more number of sittings in a year than at present

Don’t shoot the messenger

  • More than 15 whistle-blowers have been murdered in India in the past three years.

A wider definition

  • Significantly, in defining who a whistle-blower is, the law goes beyond government officials who expose corruption they come across in the course of their work. It includes any other person or non-governmental organisation.
  • The RTI law has empowered the common man to have access to information from public authorities — which only government officials were earlier privy to — making every citizen a potential whistle-blower.
  • The WBP law has provisions for concealing the identity of a whistle-blower, if so desired.
  • Most notably, the law affords protection against victimisation of the complainant or anyone who renders assistance in an inquiry.
    • This is critical as whistle-blowers are routinely subjected to various forms of victimisation — suspensions, withholding of promotions, threats of violence and attacks. The law empowers the competent authorities to accord them protection, which includes police protection and penalising those who victimise them.
  • Instead of operationalising the WBP law, an amendment Bill, which fundamentally dilutes the law, was introduced in Parliament in 2015 by the Bharatiya Janata Party-led government without public consultation.

Shooting the messenger

  • The amendment Bill seeks to remove immunity provided to whistle-blowers from prosecution under the draconian Official Secrets Act (OSA) for disclosures made under the WBP law. Offences under the OSA are punishable by imprisonment of up to 14 years. Threat of such stringent penalties would deter even genuine whistle-blowers.
  • Further, to ostensibly bring the WBP Act in line with the RTI Act, the amendment Bill says that complaints by whistle-blowers containing information which would prejudicially affect the sovereignty, integrity, security or economic interests of the state shall not be inquired into.
  • In addition, certain categories of information cannot form part of the disclosure made by a whistle-blower, unless the information has been obtained under the RTI Act. This includes what relates to commercial confidence, trade secrets which would harm the competitive position of a third party, and information held in a fiduciary capacity.

Two laws, different objectives

  • The amendments ignore the fact that the two laws have completely different objectives.
  • The RTI Act seeks to provide information to people, while the WBP Act provides a mechanism for disclosures to be made to competent authorities within the government to enable inquiry into allegations of corruption and provide protection to whistle-blowers.
  • Conflating the two laws is inappropriate and would preclude genuine whistle-blowing in several scenarios.
  • If the intention was to ensure that sensitive information pertaining to national security and integrity is not compromised, instead of carving out blanket exemptions the government could have proposed additional safeguards for such disclosures such as requiring complaints to be filed using sealed envelopes to the competent authorities.

The Reserve Bank is off target

  • The RBI has been reconfigured as an ‘inflation-targeting’ central bank.
  • As part of this arrangement, it has been set an inflation target of 4%. Then, somewhat counter-intuitively, it has been given leeway in the form of a band within which the inflation outcome may lie. This band is wide, ranging from 2% to 6%.

Missing the point

  • Under the new arrangement, the RBI cannot be held responsible for what happens to growth as it is to be judged entirely by what happens to inflation
  • Consumer price inflation has now declined to 1.5% in June; though only 0.5% below its lower bound, this inflation rate is far below the targeted 4%. Surely this is a case of missing one’s target by a long shot.

A flawed model

  • The model underlying inflation targeting is that inflation reflects output being greater than the economy’s ‘potential’. The task now is to bring output back to its potential level via an interest rate hike.
  • A problem with the model is that the potential level of output is unobservable. Moreover, the potential is believed to be subject to change by the proponents of the model themselves.
  • To these infirmities, the response given is that it does not matter, as we need only observe inflation to conclude that there is an output gap.
  • Developing countries such as India have an economic structure different from the developed ones of the West for which inflation targeting was first devised. An aspect of this is that agricultural production is subject to fluctuation, and along with this the prices of agricultural goods.
  • Under inflation targeting, the response to rising agricultural prices would be to raise the rate of interest. This may have some desirable impact on inflation but it can come only at the cost of output loss in the non-agricultural sector.

Role of agriculture

  • The role of agricultural prices in driving inflation in India is evident presently.
  • Though the overall consumer price index is rising at 1.5%, that for agricultural commodities is actually falling, reflecting the fall in the relative price of agricultural goods we have referred to.
  • It is to be recognised that even though the RBI cannot directly move agricultural prices, its response to their movement matters. As agricultural price inflation continues to fall, driving down the overall inflation rate, the real rate of interest rises. If the central bank does not respond by lowering the policy rate the real rate of interest will continue to rise, with negative consequences for non-agricultural output. This is exactly what we observe happening of late. We want to avoid a deflationary spiral.