India is Living Dangerously Beyond its Means 

 

 (Edited Image. Courtesy: RBI)

 

Fiscal Responsibility has proved to be a revolving door for the successive regimes at the Centre. It is a special door from where the economy is unable to either take off to sustainable, double-digit growth or slip into abyss.

Covid-19 pandemic, and the resulting lockdowns, have thus brought fiscal discipline back to square one. The yet-to-stabilize situation has pushed India to the danger zone with estimated fiscal deficit (FD) touching record 9.5% of gross domestic product (GDP) in 2020-21.

The previous peak FD of 8.16% occurred in 2008-09 post global financial meltdown-led fiscal stimulus. This is actual FD computed by CAG and different from what was reported in the budget documents. 

The general government debt (Centre & States’ explicit borrowings) has touched 90% of GDP, well above globally acceptable prudent level of 60%.  The actual debt might be higher by a few percentage points as India does not have accurate, timely data on all government borrowings raised by different tiers of Government. 

The Union Budget for 2021-22, coupled with the report of the 15th Finance Commission (15thFC), offers Modi Government a rare opportunity to start afresh in a challenging milieu. The two documents also serve as trigger for the States to review their fiscal framework. 15thFC has lined up slew of fiscal initiatives for the States. 

Statutory Minimum support price (MSP) is not a weird demand of farmers. It is actually a multi-dimensional fuzzy ball debated superficially by half-knowledge anchors and their guests on cockfight shows. 

No one has disclosed how many committees recommended what and when on statutory MSP over more than 100 years. A timeline of vital recommendations made by major panels has been prepared later in this column to give a touch of White Paper (WP) for giving a new deal to agriculture. 

If farmers-caring Government had cared for facts, it would have first published a WP on why it showed urgency to issue three farm ordinances. It should have rationalized NDA’s & UPA’s indifference towards the need for long-pending legislations, apart from MSP law. 

Of the many pending legislations on agriculture, 5 deserve special mention: a new seed law, new pesticides law, a comprehensive fertiliser law, biotechnology regulatory authority law and agricultural biosecurity legislation. 

Farmers are baffled at the majestic failure of all regimes from British Raj to Modi Government to compute bare minimum economical prices below which sale of vegetables and fruits becomes losing proposition. 

Hence peasants’ justifiable suspicion about Union Government’s offer to set up a committee to study their demand for MSP law. This is because the term MSP has been left out of two new farm laws including one relating to contract farming. The existing rules pertaining to contract farming under Agriculture Produce Market Committee (APMC) Act in few States stipulated MSP-linked private transactions. Prime Minister Narendra Modi was once himself a champion of MSP in transactions between farmers and private entities. This is reflected in the 2011 Report of Chief Minister's Working Group (WG) on Consumer Affairs constituted by UPA regime chaired by Mr. Modi as Gujarat CM.

WG recommended: “Enforce MSP since intermediaries play a vital role in the functioning of the market and at times, they have advance contract with farmers. In respect of all essential commodities, we should protect farmer's interest by mandating through statutory provisions that no farmer-trader transaction should be below MSP, wherever prescribed”.

There are other reasons too for farmers’ distrust over Government’s offer to assure in writing that MSP would not be phased out. First, the Government ruled out enacting such a law in reply to a parliament question raised during July 2019. It was perhaps raised after Commission for Agricultural Costs and Prices (CACP) recommended such a legislation in March 2018. 

  Let Centre-States Clash over Farm Laws Be a Wake-up Call

 

 (Conflict Avoidance. Image Courtesy: taxinidaonline.com)

 

“No Central Government, which is wise, will undertake a conflict over small matters….Can checks govern a country; every check means a conflict and every time a proposition is positively made in the Legislative Assembly and shaped into a policy, a check means an invitation to a public meeting, an invitation to an argument, sides being taken, appeals being made and a lot of misunderstanding. Whereas if they meet together, consult together and dispose of things together, we will not have conflicts and checks….It is only against dangers that checks are provided explicitly but in other matters we envisage a complete harmonious self-governing family working together but if we provide checks in a family, we go with a divorce document even before we marry”.

Alas, this Team India vision of late C. Rajagopalachari, Home Minister, is totally forgotten. His sage words, expounded in provisional Parliament during August 1951, are highly relevant today. 

This is because conflicts of all sorts at all levels have become synonymous with vibrant democracy. This is due to complex inter-play of various factors notably bad governance and clash of rights.

Central policies, schemes and laws are thrust on the Nation as a fait accompli. Crucial bills are rarely referred to time-tested institution of joint committee/ select committee / standing committee of Parliament.

You name a subject & search for it on the Net. And you would find dozens of weblink to documents on conflicts over the searched subject. Every issue ranging from reserving beds for Covid-19 patients to farm laws turns into conflict to be resolved by the judiciary.

The Constitution is supposed to be the ultimate guide for the Nation. In actual practice, the Constitution itself has become the source of friction between the Centre, States and among the States. It needs to be written specially to avoid its misuse by the Centre and to avoid legislative conflicts. What applies to Constitution also applies to Central and State laws that trigger avoidable litigations.

This issue has been aptly addressed by a 2019 study titled ‘Cleaning Constitutional Cobwebs Reforming the Seventh Schedule’ submitted by Vidhi Centre for Legal Policy to 15th Finance Commission. 

For the sake of simplicity, this column would focus on Centre-State legislative conflicts over farm laws & farmers’ protest. Before elaborating on this, we should note that conflict avoidance and resolution has turned out to be the Achilles heel for the NDA Government. This in spite of the fact that Prime Minister Narendra Modi himself is actually aware of conflicts & has spoken wisely on them at certain events.