Monday, Nov 28, 2022

Coercive federalism on display

It is evident that the Modi government will use its brute majority and pass the amendments, irrespective of the views of state governments, dealing another blow to federalism.

Parliament monsoon session, parliament session, Banking Regulation Act, Essential Commodities Act, APMC Acts, Freedom of Contract, india parliament session, lok sabha, rajya sabha, monsoon session new bills, p chidambaramThe Monsoon Session of the Parliament will begin from Monday.

Both Houses of Parliament will begin their delayed Monsoon Session tomorrow. It will be a physical attendance-only session. Some days ago, the Chairman of the Rajya Sabha rejected my suggestion to allow virtual attendance by Members who are unable to be physically present.

Even if the attendance is satisfactory, the atmosphere will be unreal. I suppose the Houses will observe the form of parliamentary democracy with the spirit absent and the soul missing.

One Nation, One Everything

The main business of the Houses will be pending Bills and the 11 Ordinances promulgated during the inter-session period. It is beyond comprehension that when the nation faces multiple crises — the economic collapse, the raging pandemic and the threat from China — why the government is making an insidious attempt to alter Centre-State relations in key areas. The Ordinances are part of the pet theory of the Prime Minister that there must be One Nation, One Everything. The theory cuts at the very root of the Constitutional compact between the states and the Union that India will be a Union of States, and federalism — sharing of legislative and executive powers — will be the fundamental principle.

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Over the years, states have ceded too many powers to the Union government. All parties have governed India and all parties are to be blamed. Mr Narendra Modi has taken the usurpation of States’ powers to a new high and the assault is continuing through executive action and legislation. Look at some of the new Ordinances.

Banking (Regulation) Act

Today, banks, some non-banking finance companies (NBFCs) and all major financial intermediaries are regulated by the Banking (Regulation) Act. The RBI is the regulator. It is already overburdened. The record of the RBI as a regulator is mixed: under its watch major scams have taken place. The only significant financial intermediary that is under the control and supervision of state governments is the Cooperative Bank. In most states, there are District Central Cooperative Banks (DCCBs) and Urban Cooperative Banks (UCBs). They are the district apex banks and re-finance member cooperative banks. Some DCCBs and UCBs are legendary and have rendered yeoman service, some are bad apples. Good or bad, there is a state government with enough powers to regulate them. Why should that position be altered? Through the Ordinance, the Modi government has brought all DCCBs and UCBs under the Centre’s control and designated the RBI as the regulator. Power has been taken to alter the membership structure and the financial structure of the cooperative bank, which may result in transfer of control and management to strangers and predators. The motive behind the Ordinance is that all major financial intermediaries should be under the control of the Central government and all those who are in the management of DCCBs and UCBs (elected directors) should be obliged to the Central government. The Ordinance is a naked aggression on states’ rights.

Essential Commodities Act

I hold the view that the Essential Commodities Act (EC Act) belonged to the age of shortages and controls. It has really no place when India is surplus in food grains and has the capacity to produce essential goods according to demand. Yet, it cannot be denied that there is hoarding and black-marketing, taking advantage of seasonal shortages or floods or droughts. That is why the EC Act remains on the statute book and gives adequate powers to the state government to regulate the trade, including imposing stock limits for various intermediaries. If the Central government desired to liberalise the law further, it could circulate a policy paper or enact a Model Act and commend them to the states. Nothing of that kind would satisfy the Modi government’s overreach. Through the Ordinance, the powers of the state governments to ‘regulate’ have been circumscribed and the power to fix ‘stock limits’ has been rendered illusory. Through a Proviso and an Explanation clause, the Ordinance has rendered the concept of ‘stock limit’ illusory and meaningless. If the Ordinance became an Act, the hoarders will celebrate.

APMC Acts and Freedom of Contract

I hold the view that Agriculture Produce Marketing Committee (APMC) Acts must be amended from time to time and marketing of agricultural produce must be gradually liberalised. The way to achieve this goal is through model laws and persuasion, not through legislative fiat. Through the Ordinance, the Central government has overridden the state-legislated APMC Acts. The worst affected are Punjab, Haryana, Madhya Pradesh, Chhattisgarh and any other state that has invested heavily in public procurement and assuring MSP to the farmers. The suspicion is that the Modi government is attempting to implement the controversial recommendations of the Shanta Kumar Committee that will have the effect of diluting public procurement, the public distribution system, the MSP principle and food security. The companion Ordinance on Freedom of Contract does not oblige the purchaser to pay not less than the MSP for the produce, deepening the suspicion that MSP will be done away with. Punjab farmers are on the streets protesting the Ordinances, the Punjab Legislative Assembly has unanimously rejected the two Ordinances. The Akali Dal voted for the resolution. Chhattisgarh has demanded withdrawal of the Ordinances. Haryana and Madhya Pradesh are inexplicably silent. It is evident that the Modi government will use its brute majority and pass the amendments, irrespective of the views of state governments, dealing another blow to federalism.

One Nation, One Everything will eventually destroy One Nation.

First published on: 13-09-2020 at 04:00:41 am
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