The idea of “One Nation, One Election” made its debut in the first annual report of the Election Commission in 1983. It supported the idea of holding simultaneous elections to reduce expenditure, for effective use of manpower and human resources, and also because frequent elections affected the day-to-day functioning of the government, both at the state level and the Centre, creating hardships for common people.
The topic was revived by the 170th Report of the Law Commission, submitted in 1999. The report underlined the desirability of holding elections to the Lok Sabha and State Assemblies once in five years, but admitted that it could not be achieved overnight in the prevailing circumstances. The proposal, however, gained momentum with the manifesto of the BJP for the 2014 Lok Sabha election, which stated that the party would seek to evolve a method of holding elections to Assemblies and the Lok Sabha simultaneously. In the last few weeks, an array of webinars has been organised by the national spokespersons of the BJP to discuss, dissect and debate this issue, with one such webinar organised on December 27, 2020 by the author of this piece herself, which received an excellent response and was widely attended.
There was a flurry of activities post 1999, after a long hiatus. The 79th Report of Department Related Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice, submitted in 2015, was devoted to studying the feasibility of holding simultaneous elections. It recommended an alternative and practicable method of holding simultaneous elections, which involved holding them in two phases twice in every five-year cycle. NITI Aayog also issued a working paper on the subject in 2017, titled, “Analysis of Simultaneous Elections: The What, Why and How”. It broadly recommended a gradual move to synchronised elections between the Parliament and the State Legislative Assemblies between 2019 and 2024. This was followed by a Draft Report of the Law Commission in 2018, which also recommended holding simultaneous elections, but with some exceptions. The Commission noted that, for holding simultaneous elections, amendments to the Constitution, the Representation of the People Act, 1951 and the Rules of Procedure of Lok Sabha and State Assemblies would be required. Such an exercise would save public money, reduce the burden on the administrative set-up and security forces, and lead to concentration on developmental activities rather than election duties, the Commission said.
Prime Minister Narendra Modi, addressing the All India Presiding Officers Conference via video conference, on 26 November 2020, raised the pitch for “One Nation, One Election” and a single voter list for all polls, in order to prevent the impact of the model code of conduct on development works every few months due to frequent spread-out polls. “One Nation, One Election isn’t just an issue of deliberation but also a need of the country. Elections are held in different places every few months and it hampers the developmental work and all of you know about it. Therefore, it’s a must to have a deep study and deliberation on One Nation, One Election,” said PM Modi. The PM also observed, “Only one voter list should be used for Lok Sabha, Vidhan Sabha and other elections. Why are we wasting time and money?”
Emphasising the need for coordination between all three wings of the state—legislature, executive and judiciary—PM Modi stated that everything, from their role to their decorum, was described in the Constitution itself. “In the 1970s, we saw how there had been an attempt to breach the dignity of the separation of power, but the country got the answer only from the Constitution. After that period of Emergency, the system of checks and balances became stronger and stronger. The legislature, the executive and the judiciary, all three, learned a lot from that period and moved forward,” said Prime Minister Modi at the conference.
While «One Nation, One Election» will result in huge savings, it cannot be achieved without dramatic changes to our Constitution. In England, the king reigns but does not govern. In the US, the President both reigns and governs. In the US, the State Governor, like the President, is elected directly. The Indian President neither governs nor reigns, though he is a very important figure constitutionally and not a mere figurehead, as most would like to believe. We chose to emulate the British cabinet system, restrained by the spirit of collective responsibility. India adopted a quasi-federal setup and is neither unitary like Britain nor fully federal like the US. Members are elected to the Lok Sabha and the Legislative Assembly. The impartiality of the election process requires strict vigil on the part of the Election Commission (EC). Modi has repeatedly asked the presiding officers of elected bodies to ponder over the idea of having one election and one voters’ list to do away with the «Aaya Ram-Gaya Ram» style of politics.
The anti-defection law is special to India. It has, however, not been foolproof. Splits and mergers in political parties over the years have made room for conflict between the Speaker’s jurisdiction and the Court’s role. The prime cause for the instability of elected governments in India in the last few decades must be traced to the decision of the Congress, which misused the power that it enjoyed at the Centre to dismiss State governments run by opposition parties and declare President›s Rule on flimsy grounds. At one stage, nine state governments were dissolved in one stroke under Article 356 of the Constitution by the erstwhile Congress regime. The practice would have continued unabated but for the Supreme Court ruling in the S.R. Bommai case. Destabilisation of elected state governments and ‘resort’ politics deployed by the Congress in last few years, be it in Karnataka, Gujarat or Rajasthan, are a nasty reminder of how frequent elections can be harmful.
Morality is sacrificed at the altar of expediency due to frequent elections. Decades ago, the Charan Singh government had been overthrown within just four months. Vladimir Putin altered the law to enable himself to be the President of Russia till 2036. China went through the one candidate election in an election that had no candidate other than Xi Jinping, thus making a mockery out of what had been a farce to start with anyway. Xi won the elections with 99.86 percent of the votes. India, in sharp contrast, stands out as a country with full allegiance to democratic conventions and «One Nation, One Election», will further strengthen our institutions and socio-economic fabric. This theme has been an abiding one for Prime Minister Narendra Modi. While critics say it is against the principle of co-operative federalism, such criticism is unfounded. An option often suggested by some constitutional experts is that, if it is not possible to conduct simultaneous elections, then all elections falling in one calendar year should be conducted together.
Historically, elections during the first two decades after Independence for the House of the People and State Legislative Assemblies had been held simultaneously, i.e., during 1951-52, 1957, 1962 and 1967. The dissolution of certain Assemblies in 1968 and 1969, followed by the dissolution of the House of the People in 1970 and subsequent general elections in 1971, had disturbed the cycle of simultaneous elections. Indiscriminate use of Article 356 of the Constitution (President’s Rule) by the Nehru-Gandhi establishment had also disrupted the schedule of simultaneous elections.
Various studies of the international scenario found that a system to ensure simultaneous elections does exist in certain countries. In Germany, Bundestag (i.e. the Lower House) cannot simply remove the Chancellor with a vote of no-confidence, as the opponents must not only disagree with the governance but also agree on a replacement by way of a “constructive vote of no-confidence”. In some countries, including India, in the event of a hung House/Assembly, it is mandated that all efforts must be made by the President /Governor, as the case may be, to install a government that will enjoy the support of the House/Assembly. This would give an opportunity to the largest party, along with its pre-poll or post-poll alliance(s). If, however, a mid-term poll becomes inevitable, the duration of the House/Assembly so constituted should be only for the remainder of the term. In the UK, the Parliament of Westminster introduced a fixed term by enacting the Fixed-term Parliaments Act, 2011, which provides a term of five years for general elections. The Act of 2011 specifies that early elections can be held only if a motion for it is agreed upon either by at least two-thirds of the whole House or without division, or if a motion of no-confidence is passed and no alternative government is confirmed by the Commons within 14 days thereof.
The biggest argument in favour of holding simultaneous elections is therefore the fact that governments do not have to be in election mode all the time, thereby making governance and policymaking more seamless. The Model Code of Conduct prevents governments from announcing new schemes and making appointments. Deputing government employees frequently on election duty hinders public services, including school education as well as the maintenance of law and order and national security. Simultaneous elections will, therefore, reduce time and costs involved in the conduct of elections and curb corruption and illicit financing of elections.
Those who allege that «One Nation, One Election», will be the harbinger of a unitary state are clearly misguided. Again, there are concerns that simultaneous elections will impact the behaviour of voters, as national and local issues may get mixed up and distort priorities, giving unfair advantage to national parties at the expense of regional parties. Such concerns are, however, overdone with no logical basis. Voters today are very aware of both local and national issues and to assume that they will get confused if elections are held simultaneously is an insult to the intelligence of the electorate. True, it may be a tad difficult to find a suitable time slot, given the geographical and administrative diversity relating to weather, agricultural cycle, exam schedule, religious festivals and public holidays in a country as vast as India. However, the positives of simultaneous elections far outweigh any perceived negatives. The sheer logistics involved in holding simultaneous elections, in terms of requisitioning and movement of men, women and material, may make the exercise a mammoth one, but it is manageable.
Accusations that simultaneous elections may result in the misuse of Article 356 or early dissolution of the Lok Sabha or any of the State Assemblies are also simply a figment of imagination of those who do not want «One Nation, One Election». Yes, a large number of amendments to laws, rules and regulations would need to be carried out, making the task very arduous, but it is certainly worth the trouble. Amendments to the Constitution would encompass Articles 83 (Duration of Houses), 85 (Dissolution of the Lok Sabha), 172 (Duration of state legislatures), 174 (Dissolution of state legislatures), 356 (Failure of constitutional machinery) and the Tenth Schedule (to ensure that all disqualification issues arising from defection are decided by the presiding officer within six months). Ratification of the amendments by not less than one-half of the state legislatures may also be required to be taken as a matter of abundant precaution. Amendments to laws would inter alia require changes in the Representation of the People Act, 1951, such as Section 2 (adding a definition of “simultaneous elections”), and Sections 14 and 15 (Notification of general and assembly elections). The Rules of Procedure and Conduct of Business of the Lok Sabha and Assemblies would need to be amended to replace “Motion of No-Confidence” with “Motion of Constructive Vote of No-Confidence”.
In the final analysis, a meeting of minds may be a good beginning in the pursuit of the goal of “One Nation, One Election”. But to take the idea to fruition will require not only the meeting of minds and a political consensus, but also a resolute determination to act in the larger national interest, and courage and conviction, the ability to visualise and the will to execute and successfully implement even the most seemingly difficult initiatives—which is something that Prime Minister Narendra Modi has in abundance. Be it “One Nation, One Tax” or “One Nation, One Ration Card”, the Modi government has repeatedly showcased its ability to think big and ensure that those big ideas are effectively implemented on the ground. “One Nation, One Election” is clearly, therefore, an idea whose time has come.
The writer is an economist, national spokesperson of the BJP and bestselling author of ‘Truth & Dare: The Modi Dynamic’. The views expressed are personal.
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GHULAM NABI AZAD SENDS A STRONG SIGNAL TO CONGRESS HIGH COMMAND
Intense speculation has begun in political circles on whether veteran Congress leader, Ghulam Nabi Azad, is preparing to part company with the grand old party, to float his own regional outfit, in what was once the erstwhile state of Jammu and Kashmir. The conjecture is that like Captain Amarinder Singh before him, Azad, may similarly chalk out his future, which with the Congress, does not appear to be very bright, with Rahul Gandhi calling the shots. While Azad has denied any such move, the support he has received from virtually every top leader of Jammu and Kashmir indicates that he was weighing in the options before him. The astute and perceptive politician in him is at work, and he realizes that it was important to flex his muscles to send a strong message to the central leadership of the party, which is not seemingly receptive to the grassroots situation. Azad, is without any doubt, the senior-most organization man in the party; he has occupied almost all positions in the Congress from heading its youth wing to being general secretary in-charge of most of the states. Besides, he has served in the Union government has worked closely with all the Congress Prime Ministers from Indira Gandhi onwards.
Azad was handpicked by the late Sanjay Gandhi to head the Youth Congress and was given a Lok Sabha ticket from Washim in Maharashtra in 1980 to enable him to make his parliamentary debut. His proximity to Sanjay was such that when Azad got married in March, 1980, Sanjay not only attended the ceremony in Srinagar, but stayed there for three days. Indira Gandhi was very fond of him and later, even Rajiv became dependent on him for several things. P.V.Narasimha Rao trusted his abilities and Sitaram Kesri, who succeeded him as the party president, would always like to have him by his side. Sonia Gandhi was also conscious of his political prowess and would hold consultations with him, as and when she required. However, of late, Azad was finding himself on the political periphery of Congress politics with Rahul Gandhi and Priyanka being wary of the G-23 group within the party. This is why he has in recent interviews expressed his disappointment with the leadership which considered “suggestions made to them as a challenge’’ and that because “they were unaware of the Congress history and tradition’’.
He took everyone by surprise by stating that he did not see Congress getting 300 seats in the 2024 Parliamentary polls thus implying that the BJP was going to easily retain power. His thesis is that the weakness of the Congress was the reason why the BJP was strong and unfortunately, there was no one to pay heed to any kind of counsel from senior leaders, who were being viewed with suspicion. Azad has seen the best times with Congress and understands political machinations as much as the best in the business. He has been saying what he has to keep his relevance intact. There are many of his critics, who believe that he could be drifting towards the BJP as Captain Amarinder Singh is doing right now. The insinuation is that the BJP could make him the Vice-Presidential candidate next year or give him an important berth in the Union Cabinet to exploit his tag of former Jammu and Kashmir Chief Minister. However, Azad is no greenhorn and would play the game according to what suits his interests. The G-23 is itself disintegrating and many of those who stood by Azad, are gravitating towards the Congress High Command after being snubbed by Sonia Gandhi at the Congress Working Committee meeting some time ago. The point that needs to be understood is that Azad and others like Kapil Sibal and Manish Tewari are not opposed to the Congress High Command but like most party supporters, concerned over how the party is being run. They are simply demanding wider consultations in devising the strategy and the future blueprint. Having been in the core team, things are simply not going the way they perceive them and hence there is both disappointment and frustration. The onus of utilizing the services of experienced leaders such as Azad and others lies with the central leadership. If it still chooses to ignore them, the consequences would be serious. Therefore, in the best traditions of the party, the decision-making process should be more inclusive from every angle. Otherwise, Congress would continue to struggle in its fight against the BJP.
Eventually, Parliament passes the Dam Safety Bill
The Dam Safety Bill was passed by Parliament on Friday. Although the bill was passed by the Lok Sabha in August 2019, it was cleared by Rajya Sabha last week.
As principal draftsman of the Standing Committee of Parliament on Water Resources on the Dam Safety Bill, 2010, it’s a matter of immense satisfaction that the dam safety legislation has been eventually enacted. The Dam Safety Bill, 2021 was passed by the Rajya Sabha after extensive debate on 2nd December 2021. The Lok Sabha had passed it on 2nd August 2019. Many opposition members in both the Houses demanded that the Bill be referred to the Standing Committee but the Government rejected the demand. The stand of the Jal Shakti Minister, Gajendra Singh Shekhawat, was that the Bill of 2021 was based on the report of the Standing Committee on the Bill of 2010, which formed ‘the backbone’ of the new Bill. The Dam Safety Bill, 2019 piloted by Gajendra Singh Shekhawat during the very first session of the current Lok Sabha incorporated majority of the recommendations of the Committee contained in their 7th Report (15th LS). The Dam Safety Bill, first introduced in the 15th Lok Sabha on 30th August 2010, was referred to the Committee for examination and report. The Committee undertook study visits to some Dam sites, invited public memoranda, heard domain experts, examined official witnesses, stakeholders and finally presented a comprehensive report to Parliament in August 2011.
Dams are critical infrastructure constructed with large investment for multi-purpose uses such as irrigation, power generation, flood moderation and supply of water for drinking and industrial purposes. An unsafe dam constitutes a hazard to human life, ecology and public and private assets including crops, houses, buildings, canals and roads. Therefore, the safety of dams is a matter of great concern to the general public and becomes a national responsibility to take necessary steps to ensure the safety of dams. The Committee found many serious flaws in the Bill. Most glaring of it all, the Bill lacked penal provision, deficient definitional clauses, omission of upstream devastation caused by a Dam, structure of Dam Safety Organisation, the damage likely to be caused by the Dams including landslide or moraine located outside the national territory, etc. All these recommendations and observations have been incorporated in the new legislation and the Minister assured the Parliament that many of the observations of the members would form part of the Rules, exercising the power of delegated legislation under the Dam Safety Act.
It would be worthwhile to recall briefly the history of this much-awaited legislation. The Government of India, keeping in view the importance of the safety of dams and want of a legislative framework regulating dam safety, constituted a Committee in the year 1982 under the Chairmanship of Chairman, Central Water Commission to review the existing practices and to evolve unified procedure for the safety of dams in India. The Committee in its report dated the 10th July 1986 recommended for unified dam safety procedure for all dams in India underlining the necessity of legislation on dam safety. Initial efforts for dam safety legislation were directed towards the enactment of appropriate legislation by some State Governments. The State of Bihar enacted the Dam Safety Act, 2006. Kerala amended its Irrigation Act incorporating a dam safety provision. However, some of the States favoured a uniform dam safety central legislation. The undivided State of Andhra Pradesh and West Bengal adopted a resolution in their Assemblies for an Act of Parliament. Accordingly, the Dam Safety Bill, 2010 was introduced in Lok Sabha on the 30th of August, 2010. The Bill was referred to the parliamentary Standing Committee on Water Resources for examination and report. The Committee submitted its Report on the Dam Safety Bill, 2010, recommending wholesale amendments to the Bill. The Ministry of Water Resources, rechristened Water Power, withdrew the Bill and introduced a new Dam Safety Bill during the 16th Lok Sabha. But with the dissolution of the 16th Lok Sabha, the Dam Safety Bill, 2018 lapsed. The Government introduced the Dam Safety Bill, 2019 in the very first session of the 17th Lok Sabha which has since been passed by the Rajya Sabha also.
The Dam Safety Act, 2021, inter alia, provides for (a) constitution of the National Committee on Dam Safety to discharge functions to prevent dam failure related disasters and to maintain standards of dam safety and to evolve dam safety policies and recommend necessary regulations as may be required for the purpose; (b) establishment of the National Dam Safety Authority as a regulatory body to implement the policy, guidelines and standards for proper surveillance, inspection and maintenance of specified dams and address unresolved points of issues between the State Dam Safety Organisation of two States, or between the State Dam Safety Organisation of a State and the owner of a dam in that State, and in certain cases, such as dams extending in two or more States or dams of one State falling under the territory of another State; (c) constitution of the State Committee on Dam Safety by the State Governments to ensure proper surveillance, inspection, operation and maintenance of all specified dams in that State and ensure their safe functioning; and (d) establishment of the State Dam Safety Organisation in States having specified dams which will be manned by officers with adequate experience in the field of safety of dams. The Act makes it mandatory for every owner of a specified dam to establish operational and maintenance set up to ensure the continued safety of such dams, to earmark sufficient and specific funds for maintenance and repairs of the dams, for undertaking pre-monsoon and post-monsoon inspections and special inspections during and after floods, earthquakes, etc., to carry out risk assessment studies at such intervals as specified by the National Committee on Dam Safety. The law casts an obligation upon the concerned State Dam Safety Organisation to keep perpetual surveillance, carry out inspections and monitor the operation and maintenance of specified dams under its jurisdiction to ensure their safety; and to classify each dam under their jurisdiction as per the vulnerability and hazard classification following the regulations. The National Dam Safety Authority is required to table its Annual Report in Parliament and the State Dam Safety Organisation to submit its Annual Reports on the safety status of dams to the concerned State Legislative and State Disaster Management Authority.
The Bill witnessed lively debates in both the Houses. Some Members questioned the legislative competence of the Union Government to enact a law on ‘water’ which is a State subject under the 7th Schedule to the Constitution and also sought clarification for not incorporating a part of the Preamble of the 2010 Bill in the Bill of 2019 which read: “And whereas Parliament has no power to make laws for the States concerning any of the matters aforesaid except as provided in Articles 249 and 250 of the Constitution”. Also the reference to Resolutions passed by the Legislative Assemblies of (undivided) Andhra Pradesh and West Bengal that Dam Safety should be regulated by law made by Parliament. The Minister referred to the recommendation of the Standing Committee on Water Resources to modify the Preamble suitably, dam safety being an inter-state matter. This view was fortified by some lawyer members invoking the doctrine of pith and substance and justified the legislative competence of Parliament to enact the legislation in accord with the recommendation of the Water Resources Committee of Parliament. The Minister allayed the fear of erosion of legislative powers of the States by stating that the legislation purely deals with dam safety and matters allied and incidental without impinging upon the ownership of Dams, the water impounded, its use, or the hydropower generated by them. He also made it categorically clear that there was no question of the Union Government taking over the control, maintenance and ownership of Dams. Anyone refusing to comply with the directions issued under the Dam Safety Act will be punishable with imprisonment of up to one year, or a fine, or both. If the offence leads to the loss of lives, the imprisonment will raise to two years. Every dam owner has to provide a dam safety unit to inspect the dam before and after the monsoon session, during and after every earthquake, flood, or any other calamity or sign of distress.
India has currently 5,745 large dams, of which 393 are over 100 years old and more than 25 percent of dams are 50 years old. Aging dams and dam failures can cause colossal damage to life and property not only downstream but also upstream if sluice gates are not opened timely to prevent water impounding upstream and consequential damage. A dam may be constructed in a particular location of a State but it has consequences and safety implications for the upstream and downstream States, apart from environmental hazards. In exercise of its legislative power under Article 246 read with Entry 56 and Entry 97 of the Constitution and the dire long felt need for dam safety, Parliament has filled a long-felt void by enacting the Dam Safety legislation.
The writer is the ex-Additional Secretary, Lok Sabha, and serviced the Standing Committee on Water Resources under the Chairmanship of Dip Gogoi, 15th Lok Sabha which examined the Dam Safety Bill, 2010. Views expressed are the writer’s personal.
GOVERNMENT MUST ENSURE THAT PARLIAMENT FUNCTIONS
It is an accepted fact that it is the responsibility of the government and the treasury benches to ensure that Parliament functions smoothly. For this to happen, the ruling dispensation has to take into account the concerns of the Opposition and accommodate their views as far as possible. It has been the practice that before the commencement of any session, the government in consultation with the opposition lists out an agenda so that important matters are sorted out and the necessary Bills are passed. In the latest instance, a confrontation has built up from day one after 12 Rajya Sabha MPs were suspended for their alleged unruly conduct on the last day of the previous session. The 2 members have claimed that they were not provided any opportunity to defend themselves and explain their position and the suo-moto action against them was against all principles of natural justice. There is no doubt that the House in Parliament is supreme and can take any decision. Similarly, the presiding officers also have immense power to implement rules in the event of disruptions and unbecoming behaviour.
But equally important is that to have smooth functioning, excessive punishment is not the only answer. The charge against the government is that it was the one which was causing disruptions so that there can be no meaningful discussions on vital issues and this was a step aimed at diverting the country’s attention from burning matters like price rise, unemployment, and poor state of the economy. The Opposition has been complaining constantly that there have been procedural lapses while enacting legislative business. For instance, when the Farm Laws were passed in Rajya Sabha by voice vote, the objective was to deny the Opposition a division which was demanded to ascertain who all were for the motion and who all were against it. This right cannot be taken away under any Parliamentary procedure, especially when such an important matter is being sought to be passed. The Farm laws, therefore, lacked the legitimacy which would have been there if there had been threadbare discussion on this matter. Similarly, when the Farm Laws were annulled, again the decision was taken by a voice vote in the upper House without any discussion taking place.
The central point was that the enactment of the laws had resulted in country-wide protests and over 700 farmers lost their lives during this long agitation. Somebody had to be held accountable for the loss of these valuable lives. The official stand has been that when the Cabinet had given its concurrence to repeal the earlier legislation, where was the need for any discussion. It has also been stated that no compensation is to be given to the families of those who died and there was no record of these deaths. The issue has resulted in a deadlock and both inside Parliament and outside, many do not subscribe to the government’s stand.
The entire subject has been clumsily handled and therefore it is contributing to continuous social unrest in some states. The presiding officer of the Rajya Sabha has maintained that the suspension of 12 MPs would be revoked if they express regret which they are unwilling to. Questions are also being raised why no action was taken against Congress member Pratap Singh Bajwa, who was also seen in video clips standing on the table and hurling papers at the Chair. Was Bajwa ignored because there are elections in Punjab? There is also a technical aspect of the suspensions which were recommended by a committee set up by the House. Therefore, the action can only be rescinded by the House and not the presiding officer. There have been instances in the past when suspension or expulsion has taken place even though, Parliament is not normally the place where punishment can be handed out and it is done only in exceptional cases. During Atal Behari Vajpayee’s tenure, Sonia Gandhi was suspended following a Privilege issue and her suspension was revoked with retrospective effect when the UPA came to power. In the Janata Party era in the late 1970s, Indira Gandhi was expelled from the Lok Sabha soon after getting elected from Chickmaglur in a by-election defeating Veerendra Patil. She was charged with having scant regard for the constitution and suppressing democracy during the emergency. The latest matter needs to be resolved as early as possible since there is very little time left in this session, and if things continue the way they are, it is democracy that would bear the brunt.
GDP growth: Making of a V-shaped recovery
Recent economic indicators show that India has recovered completely from the Covid induced jolt, and this speaks volumes about Prime Minister Narendra Modi’s Atmanirbhar Bharat initiative, that has withstood the ravages of the pandemic, without buckling in.
India’s economy continued to expand in the July-September 2021 quarter, marking the fourth consecutive quarter of growth. India’s GDP grew 8.4%, year on year (YoY) in September quarter, against a contraction of 7.4% during the same period last year. Effectively speaking, GDP at Constant (2011-12) Prices in Q2 of 2021-22 (2QFY22) is estimated at Rs 35.73 lakh crore, as against Rs 32.97 lakh crore in Q2 of 2020-21 (2QFY21) and Rs 32.38 lakh crore in the previous quarter (1QFY22). 2QFY22 real GDP growth at 8.4% was in fact, slightly ahead of consensus expectations. The higher growth among other things can be attributed to nine consecutive quarters of over 3% agriculture growth, which has had a multiplier effect on consumer spending.
A large part of the growth upside was also driven by spending on public administration, education, health, etc. Overall, the sharp turnaround from the COVID second wave was visible across all segments, making the growth broad based in the September quarter. Investment growth remained strong even when compared to 2QFY20 (pre-Covid) levels. Growth will be well supported in 3QFY22 too, on account of festive season and better performance from the Services’ sector. Momentum remains well on track for a full year GDP growth of 9.5% in 2021-22 (FY22), which is what RBI and global rating giant, S&P are projecting too.
With a new COVID variant (Omicron),starting to spread globally, uncertainty on its impact on the global economic scenario may weigh upon things a tad bit, but on the flip side this would essentially imply that rate increases globally, and will be more calibrated and not happen any time soon, assuming they happen at all to start with. No Central Bank would want to nip the greenshoots that have taken root,by raising interest rates wantonly at this stage, despite the temptations, given that headline inflation and bond yields globally have been on the rise of late. India, in fact, has done far better than global peers on the inflation front. Annualised inflation in the UK is 5 6% and 6.2% in the U.S.A— with inflation in USA the highest ever since 1990. In India, retail inflation in October 2021 was 4.48% and food inflation 0.85%,after a reading of 4.35% and 0.68% respectively, in September 2021. While the RBI would continue with an accomodative stance, it will possibly wait for some more clarity before moving decisively on rates, though a reverse repo rate hike in February 2022 cannot be completely ruled out. RBI’s excellent job in reining in bond yields at around the 6.35% levels and thereby keeping a lid on government’s borrowing costs needs a special mention. In USA, yields have gyrated wildly from a low of less than 0.5% in 2020,to a high of over 1.74% in 2021.
The Q2 GDP growth data at a healthy 8.4% apart, the nominal GDP in September quarter stood at 17.5%. While worldwide, the US is possibly into the 6th Covid wave as per experts, and Europe in last few weeks has also seen a big surge in COVID numbers. India, on the other hand, has done a commendable job on this front, with over 125 crore vaccines administered. Both daily and weekly positivity rates are less than 1% and over 64 crore COVID tests have been conducted already. Multiple levers in the economy like Infra spend, low-interest rates, rising demand in the real estate sector and growing consumer demand are going to aid the GDP growth in the coming quarters. From the GVA perspective, farm, construction and public administration & defense services (PADS) grew faster than expected. The sharp increase of 17.4% in PADS was a big surprise in the 2QFY22 numbers. Farm economy continues to display remarkable consistency, with agri growth of 4.5% in September 2021 quarter, after an equally strong 4.5% growth in the June 2021 quarter too. Importantly, the broad story remains intact. While capacity utilization levels have improved, private investment is also on the mend, as corporates and banks are gradually shedding risk aversion, despite some nagging headwinds. High commodity prices and global supply bottlenecks posed a challenge for the Manufacturing sector worldwide. Tax collections aid government finances and it is here that the Modi government has seen big support from buoyant tax realisations. Fiscal deficit was contained at 36.3% of budget estimate (BE) in first half of this financial year, even while expenditure picked up. The multi-year low, fiscal deficit ratio can be attributed to robust revenue growth, outpacing expenditure rise, during first half of the fiscal. Capital expenditure at 45.7% of the target,also showed encouraging trend in line with the government’s focus on asset creation.
The economic activity in Q2 FY22 received favorable support from recovery in Manufacturing and Construction. The gradual removal of lockdown, good monsoon year and the rapid pace of vaccinations helped boost consumer confidence. The risk arising due to the Omicron variant are unlikely to be an obstacle to growth, going forward. Continued low interest and easy liquidity policy will help sustain the tempo.
Mining, Construction and Real Estate showed considerable growth in 2QFY22,at 15.4%, 7.5% and 7.8% respectively. A good monsoon year reflected well with high agricultural output. Private consumption is likely to pick up traction, as we complete normalization. The private capex will likely catch up with government spending and aid growth even further. Gross fixed capital formation (GFCF) grew by a solid 11% in 2QFY22, after a massive 55.3% growth in 1QFY22. The data will have a positive bearing on the RBI’s MPC meeting next week. The low interest, excess liquidity policy has been paying good dividends, across most major economies. Going forward, the way countries across the globe handle rising inflation and movement of crude oil prices, will have an impact on the growth rate across the globe. India— with a bumper crop, with food production in excess of 303 million tonnes in FY2021, the highest food output ever in the last seven decades— enjoys some inherent natural advantages which most large economies don’t.
During the July-September 2021 quarter, Trade, Hotels, Transport, Communication & Services related to Broadcasting sector,grew at 8.2%.Public Administration, Defence & Other Services grew at 17.4% during the July-September quarter, against 5.8% during the previous quarter. Government Final Consumption Expenditure (GFCE) came in at Rs 3.61 lakh crore in the second quarter of the fiscal year (2QFY22), against Rs 4.21 lakh crore in the previous quarter. GDP at current prices grew 17.5%.GDP at Current Prices in Q2 2021-22 is estimated at Rs 55.54 lakh crore, as against Rs 47.26 lakh crore in Q2 2020-21, showing a growth of 17.5%, as compared to 4.4% contraction in Q2 2020-21 (2QFY21). Private final consumption expenditure grew to Rs 19.48 lakh crore in the July-September 2021 quarter, up from Rs 17.83 lakh crore in the previous quarter. Manufacturing sector grew by 5.5% in the September quarter while the Construction sector grew by 7.5%. Both the sectors posted a healthy growth, which bodes well for the economic trajectory going forward.
India’s GDP at Constant (2011-12) Prices in Q2 2021-22 (2QFY22) is estimated at Rs 35.73 lakh crore, which is higher than the Rs 35.66 lakh crore seen in the first quarter of 2019-20 (1QFY20), signalling that India has recovered completely from the COVID induced jolt, which speaks volumes about Prime Minister Narendra Modi’s Atmanirbhar Bharat initiative,that has withstood the ravages of the pandemic,without buckling in.
A robust Construction sector, recovery in Contact-intensive services and pickup in government spending are supporting the Services’ sector, adding to the overall momentum. India’s Eight Core Sector data recorded 7.5% growth during the month of October 2021. Eight Core Sector data came in at 15.1% during the April-October period, which is again a good news.
After lagging the recovery during the initial phases, Q2 of this fiscal year, saw Services’ activity playing catch up. Relative control over new infections and a phenomenal increase in vaccination drive, helped improve Services’ activity. Indeed, while few supply shortages weighed on Manufacturing, the Services’ recovery scaled greater heights. Consumer and business optimism are improving sharply, leading to an uptick in job creation across sectors. Revenue Receipts up to October 2021 stand at 12.59 lakh crore against the budget estimate (BE) of Rs 17.88 lakh crore,which is 70.5% of BE. The fiscal Deficit for the April-October period stands at 36.3% of the budget estimate of Rs 15.07 lakh crore. Fiscal deficit during the same period last year stood at 119% of the budget estimates.
The gross value added (GVA) in Q2FY22 has grown by 8.5%, as compared to a decline of 7.3% in the same quarter last year. In Q1 of FY22, the GVA had sharply surged by 18.8%.
Private Final Consumption Expenditure (PFCE) in the July-September 2021 quarter rose by 8.61%,year on year,after a solid rise of 19.35% Q1FY22. The gap between GDP and GVA was driven by higher tax revenue collection and lower subsidy pay-outs.
The sharp 10.1% growth in Services, in 2QFY22, the biggest sector in India’s economy, is reflective of overall momentum.
In fact, Services’ PMI accelerated to a 10.5 year high in October 2021. This came about even as local companies increased prices of their final products due to costly raw materials, driven by rising input and commodity prices globally. Interestingly, unlike their Manufacturing counterparts, Services’ companies hired more hands, resulting in job generation reaching the highest level after the pre-Covid period of February 2020.
Services’ PMI index rose to 58.4 in October 2021,from 55.2 in September 2021, which clearly signals that the third quarter of the current fiscal year of 2021-22,may witness even higher GDP growth. PMI numbers, both for Manufacturing and Services, for October 2021,endorse the fast-paced,V shaped economic recovery that is underway.
GST collections of over Rs 1.3 lakh crore each, in October and November,bode well. In fact,the GST revenue in November 2021 is the 2nd highest monthly collection,ever since GST came into effect in July 2017.
According to respondents of the PMI Services’ survey, ongoing improvements in demand boosted growth in sales and subsequently in output. New work intakes increased at an accelerated rate, the strongest since July 2011.Companies linked sales growth to better underlying demand and successful marketing. Firms were able to secure a healthy intake of new work, despite charging more for their services. Output prices rose at a solid rate, again, the strongest since July 2017. Anecdotal evidence suggests that additional cost burdens were passed on to clients, reflecting the fact that purchasing power is back. Composite PMI reading in October 2021 came in at 58.7, the highest since January 2012, compared to 55.3 in September 2021.
Data by the Controller General of Accounts showed that the Central government spent 52.4% of its total expenditure target by October 2021, against 54.6% during the same period a year ago. However, the government exhausted only 36.3% of the year’s fiscal deficit target due to robust growth in revenue receipts. In effect, the Modi government has managed the growth versus inflation conundrum very effectively, without indulging in unwanted fiscal profligacy. The Dun & Bradstreet, Composite, Business Optimism Index (BOI) for ongoing quarter, stands at 94.6, up 27.4% compared to the September quarter. Data shows five out of six Optimism indices have registered an increase in ongoing quarter, as compared to September quarter. Arun Singh, Global Chief Economist at Dun & Bradstreet says, the GDP growth during the October-December quarter of 2021 (3QFY22) is likely to be much stronger, as the BOI has surged to an almost eight-year high.
The survey shows that around 79% of the respondents expect the volume of sales to increase in the December 2021 quarter, compared to 67%,in the quarter before. 62% of the respondents expect an increase in net profits in December 2021 quarter, compared to 48% in the September 2021 quarter. In fact, the business optimism levels in the ongoing quarter are at their highest ever levels since second quarter of 2014, as per Dun & Bradstreet, based on vital parameters like rate of hiring of new employees, output prices, and inventory levels. Clearly, if the 20.1% GDP growth in the June 2021 quarter was the harbinger of renewed economic momentum, the continued traction across all sectors and user segments in the September quarter cements the belief that the making of a V-shaped recovery in India, is now a full-blown one, for more reasons than one. The mega vaccination drive under the astute leadership of Prime Minister Modi, has been one of the key drivers of this “feel good” factor, that is now translating into hard numbers.
The writer is an Economist, National Spokesperson of the BJP and the Bestselling Author of ‘Truth & Dare-The Modi Dynamic’. Views expressed are the writer’s personal.
ANDHRA’S FINANCIAL STATUS QUO IS RINGING DANGER BELLS
Nowadays, the State of Andhra Pradesh has become a peculiar State, performing outside the purview of the accounting practices and even it adheres the Constitutional violations by diverting VAT on Liquor to Government incorporated Corporation instead of transfer to the Consolidated Fund by a special GO for raising additional Loans outside the FRBM limits— it is nothing but a mere window dressing of accounting practices and systems as a bad precedent for future of the country and most particularly the state itself. After careful examination of Financial Statements for the second quarter of the current financial year 2021-22, several key indicators of Andhra Pradesh financial adversity have been exposed with danger bells.
Estimated revenue collections and revenue expenditure in the budget and actuals thereof is very much vital in any Government since revenue surplus or deficit plays the crucial role for serving the capital expenditure for the future revenue-generating assets for the country or state; then it serves the interest on debts which impacts primary deficit and thereafter very much important component Fiscal Deficit arrives out of the impact of the all together above. Hence, Revenue Deficit is the root cause of all the other liking heads in the FINANCIAL Statements. Generally, revenue surplus for any State indicates a positive performance, and at least those states, which minimize the gap between revenue collections and revenue expenditure to register the shorter revenue deficit are also reasonably good.
As far as Andhra Pradesh is concerned, first indicator, Total Revenue Collections, estimated in the Budget for the Financial Year 2021-22 was Rs. 1,77,196.48 Crores and Estimated Total Revenue Expenditure was 1,82,196.54 Crores, Hence Estimated Revenue Deficit for the whole year was Rs. 5000.06 Crores. Total Revenues had registered for Rs. 64,871.99 Crores by September where the whole year estimated revenue was, it means, only 36.61% of the current financial year total revenue achieved after the lapse of 50% period in the year. But, the actual revenue deficit for the first two quarters of the current financial year has registered as Rs. 39,933.22 Crores, which means nearly 800% of the actual revenue deficit has emerged in the first six months itself when compared with the whole financial year’s revenue deficit. In these circumstances, we can predict that how worse the situation of Andhra Pradesh in the next 6 months.
Second indicator i.e the Capital Expenditure Targets are concerned, Andhra Pradesh had not achieved the target of 45% of the total Capital Expenditure estimated in the Budget for the financial year 2021-22 of Rs. 31,119.38 Crores in the second quarter of the current financial year to avail the additional loan as an incentive allowed by the Union Government based on the performance of creating future revenue-generating assets by incurring the targeted Capital Expenditure. Although, first-quarter target to incurring 15% of the Capital expenditure was achieved, it had not attained in the second quarter due to the lenient approach of the State Government in the exercise of Financial factors.
Apart from this, the State government had utilized the insurance premium, which was paid by the Women in the Self Help Groups for Rs. 2,100 Crores and LIC had openly declared in the newspaper advertisement that they were withdrawing the Agreement with Andhra Pradesh Government to pay future obligations to the beneficiaries since the State Government of Andhra Pradesh violated the terms and conditions and declared that the future obligations will be cleared by the nodal agency of the State Government Department SERP. Further, Recently the State government of Andhra Pradesh had incorporated Andhra Pradesh State Financial Services Corporation as an NBFC. Unfortunately, the State government had issued a direction to divert their bank deposits from every State Government Corporations, Departments, Boards etc., which are maintained in the Scheduled Banks to AP Financial Services Corporation forcibly— it causes the damage of independence of the respective Corporations, Departments, Boards as those funds have been diverting for unproductive expenditure which may hurt the actual system of the activity. And many experts have been questioned that Whether AP Financial Services Corporation is the reserve bank of Andhra Pradesh. There is an agitation of NTR Health University employees is going on against to transfer of Rs. 400 Crores of University-Corpus fund to the AP Financial Services Corporation from the Scheduled Bank. Ironically, State Government is expressing that Deposits in the Scheduled Banks are unsafe, whereas the people of Andhra Pradesh are in a feeling that the present approach of the State Government is not safe.
The financial destructive methods implemented by the State under the leadership of YS Jagan Mohan Reddy had cautioned by the CAG in their Report. The series of illegitimate and unconstitutional practices since the inception of YSRCP led State Government leads to Economic Nuclear explosion now. The State needs to repay 1.10 lack crores in the next seven years but the condition of the State is: it requires to raise debts even to repay the interest. As per the past expectation, the Revenue Deficit of the State should have reached zero by 2021, but the actual Revenue Deficit was registered for Rs. 36,000 Crores due to huge unproductive expenditure had been incurred. Further, the State Government was eligible to provide a guarantee on loans for Rs. 5,600 Crores only, But the same has crossed for Rs. 1.00 lack crores and the Government is trying to give guarantee for additional 1.00 lack crores where the gap in State Government Guarantees is eligible up to 90% as per norms, but State government has amended it up to 180%.
At present financial precarious condition has been emerged as Total Revenues and Debts are not serving the Budgetary Allocations other than the unproductive and illegitimate expenditure with corrupt practices. On the one hand, Total Debts had been registered for Rs. 39,914 18 by September where the whole year estimated debt was 37,029.79 Crores, it means more than 100% estimated debts for the financial year 2021-22 had crossed in the first two quarters itself without future revenue-generating productive assets through Capital expenditure and on the other hand, We can notice the Unconstitutional methods in the financial practices harm the state Brand Image, such as recent Order by the State Government to transfer the VAT on Liquor revenue to Beverage Corporation to raise debts. After analyzing the facts in the September month CAG report, danger bells of the AP State Financial Health have been ringing in all parameters and it needs remedial measures with immediate effect to put the things in order, otherwise, future financial damage to the state is unimaginable.
Controlling, addictive AI needs immediate attention
At the core of the concerns are the nature and design of algorithms that influence our choices. Online consumption, for instance, is not a free choice. Algorithms prod, poke and drive the consumer into a narrow set of choices which they may not have selected otherwise.
Can we govern the ungovernable? Should we even try to contain the advance of algorithms? These difficult questions don’t have a simple answer. However, what is clear is that the world needs a strong governance structure to shape the impact of algorithms and AI on our lives.
At the core of the concerns are the nature and design of algorithms that influence our choices. Online consumptions for instance is not a free choice. Algorithms prod, poke and drive the consumer into a narrow set of choices which they may not have selected otherwise.
“It is important to have ways to oversee the operations of these systems to ensure they are helping, not harming, humanity. The flurry of governance frameworks over the past two years has been crucial in helping leaders to better understand the issues surrounding AI, including potential for fairness and discrimination, disparate impact, and the associated issues of transparency and accountability,” says a recent report by World Economic Forum (WEF). “But much more innovation in the realm of AI governance is needed if we are to keep pace with both the advancement and application of AI-based systems,” says the report titled The AI Governance Journey published in November.
Until recently unfair market practice in the retail sector largely revolved around predatory pricing. In some cases, it involved using market muscle to prevent rivals from expanding their consumer base.
Today, unfair market practices are often baked into the business model using tech-based platforms of e-commerce companies. Anti-trust authorities in most free-market economies including India are trying to peek under the hood of the engines that run e-commerce sales.
Parts of the unfair play in digital markets are easier to see. Some e-commerce companies own a big chunk of a seller and therefore find it in their interest to promote that particular seller.
Other parts of unfair trade practice involve using algorithms that allow collusion between seemingly independent companies or manage reactive pricing which can hurt smaller sellers. The e-commerce may say that algorithms don’t choose for the consumer; consumers choose for themselves. However, the facts say otherwise.
The question now is not whether consumers choose or not. The question is what is their choice? Are the options available to the consumers open and fair? More importantly, do the sellers have equal access to the consumers in the market. Today this paradigm is often decided by the software robots who run the digital markets.
“It will be important to monitor developments in the application of machine learning and Artificial Intelligence to ensure they do not lead to anti-competitive behavior or consumer detriment, particularly in relation to vulnerable consumers,” says the Competition and Markets Authority (CMA) of the UK. There are examples where an e-commerce site has shown different prices to different customers depending on their location. A CMA paper notes, “It has been alleged that Staples’ website displayed different prices to people, depending on how close they were to a rival brick-and-mortar store belonging to OfficeMax or Office Depot.” Similar investigations are required in India and other emerging economies to ensure that algorithm-triggered personalized pricing does not become harmful.
Another type of antitrust activity takes place when online rivals decide to use the same pricing algorithm to align the prices of different products. When questioned by regulators or anti-trust authorities, e-commerce companies like to say that the decision taken by an algorithm is not their responsibility. However, authorities including the Competition Commission of India are challenging this.
At their root, anti-trust or anti-monopoly laws aim to ensure that consumers and sellers have the freedom to choose and compete on fair terms. A few sellers should not be allowed to dominate any market to the extent that other sellers are destroyed and therefore consumer choice is undermined.
Most regulators struggle to find proof of such activity as the level of sophistication is increasing constantly. Some are already unleashing their own algorithms to track and understand the pricing software of e-commerce companies. While companies collude on pricing, governments are collaborating on curbing online malpractices. The legal liability of an algorithmic decision will be interpreted as the legal liability of an entity of an individual. Anti-trust activities of algorithms should not go unchallenged in any economy.
Similar governance rules are needed for the algorithms used by social media giants. Privacy and data protection are often the key issues when debating the regulation around social media giants. However, an important dimension that needs more attention is the algorithms that decide, define, and drive online user behavior.
Even as various countries across the world battle social media giants for lack of transparency and accountability, some governments have begun to question the algorithms too.
The US Senate Judiciary Committee recently held hearings on “Algorithms and Amplification: How Social Media Platforms’ Design Choices Shape our Discourse and Our Minds.”
Like many countries, the US is concerned about the algorithms which are designed to addict. “… This advanced technology is harnessed into algorithms designed to attract our time and attention on social media, and the results can be harmful to our kids’ attention spans, to the quality of our public discourse, to our public health, and even to our democracy itself,” said Sen. Chris Coons (D-DE), chair of the Senate Judiciary’s subcommittee on privacy and tech
In the same way that India has the social media intermediary rules and laws, US has the Section 230 of the Communications Decency Act which offers some immunity for website platforms from third-party content.
The Senate hearings could lead to amendments in Section 230. Another Senator at the hearing said that the business model of “these companies is addiction.”
A legislation called ‘Don’t Push My Buttons Act’ has been introduced in the Senate with Tulsi Gabbard as the bill’s lead co-sponsor. The law would require that platforms with more than 10 million users should get user permissions before offering them content based on past behavior.
Basically, this means that companies can’t access our behavior and drive us further into similar content. This behavior is believed to be particularly harmful during Brexit conversations. Rather than allowing people to explore and stumble upon new content and alternate views on a subject, the algorithms drove users into more of the same. Effectively, it created online echo chambers and prevented people from absorbing other ideas.
The same principle can apply to consumer products or services. Algorithms can drive consumers to certain brands, categories while reducing choice and therefore hurting competition.
The laws will seek changes in Section 230 and remove the protection offered to the giants if they persist with addictive algorithms. Companies including Facebook, Google, and Twitter have testified at the Senate hearings on addictive algorithms.
While the hearings are focused on US citizens, governments in other countries should also be alert about the consequence of addictive algorithms. As the government of India is establishing the rules of play for social media giants, it will be important to scrutinize and question addictive algorithms. With an addressable market of over a billion users, the tech giants will invest a lot of resources to increase their users. The variety of languages and users in the country lend themselves to using algorithms that use personal data for greater effect.
India has to put in place legislation and rules which seek more clarity and transparency from technology companies. Domestic and global companies that use consumer behavior data to enhance addictive behavior must be scrutinized and controlled.
Currently, the intermediary guidelines focus mostly on content management and grievance redressal. However, the underlying software engines that influence online consumer behavior need oversight too.
The WEF report has made some suggestions for the future. The world needs, “Standards providing a framework for responsible AI. Standards for measuring bias, fairness and related technical details – Processes and tools for assessing AI systems.” The regulation of algorithms that define AI and thus our choices will have to be made at several levels. From Multilateral to national to local, depending on the sector, geography, and usage.
The writer is the author of ‘India Automated: How the Fourth Industrial Revolution is Transforming India’. Views expressed are the writer’s personal.
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