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11th July – Editorials/Opinions Analyses

CONTENTS

  1. Crime as punishment
  2. Do we need Fiscal Council
  3. In the name of ‘cooperative federalism

Crime as punishment

Background for the news

  • Vikas dubey, who was wanted for the massacre of eight Uttar Pradesh policemen last Friday, was being taken in a police convoy to Kanpur after his arrest yesterday in Madhya Pradesh.
  • The UP police say the car in which Vikas Dubey was travelling overturned and he and other policemen were injured.
  • The criminal snatched a gun from an injured cop and tried to escape. He was surrounded and asked to surrender but he opened fire, forcing retaliatory shooting, in which he was killed.

What is the issue now?

  • His death is officially said to be a sanctioned retribution for the murder of eight policemen few days back.
  • There is no question that crimes such as those Dubey was involved in must be met with exemplary punishment.

Trial vs Retributive justice

  • A fair and transparent trial cannot be dispensed with in order to satisfy cries for vengeance.
  • Social sanction of instant justice by state agents might have leached into institutions that are mandated to enforce the rule of law. Last year, when the Cyberabad police shot dead four people accused in a case of gang rape and murder, people celebrated in the streets.
  • The courts and the National Human Rights Commission have also shown a lenient approach in such cases.
  • tolerating such behaviour, creates an atmosphere of impunity that could lead to murder of innocent people as happened with the custodial deaths in Tamil Nadu.
  • Support for such killings by the police will not make a society more just. Mob justice is no justice at all.

What do we mean by Retributive Justice?

Retributive justice is a system of criminal justice based on the punishment of offenders rather than on rehabilitation. It is a theory of punishment that when an offender breaks the law, justice requires that he or she must suffer in return. It also requires that the response to a crime must be proportional to the committed offence.

Constitutional Conflict

  • Article 21 guarantees the right of life and liberty. Hence, it is the responsibility of the police, being the officers of government, to follow the Constitutional principles and uphold the Right to Life of every individual whether an innocent one or a criminal

Reforms

  • Current laws governing crime, investigation and trial require meaningful reform.
  • Committee for the Reform of criminal law by union home ministry with an apparently short time frame and limited scope for public consultation has caused considerable disquiet among jurists, lawyers and those interested in criminal justice in the country.
  • In 2003, the Justice V.S. Malimath Committee on reforms in the criminal justice system had come up with some far­ reaching suggestions, some of which became part of changes in criminal law.
  • The Justice Verma panel came up with a comprehensive and progressive report on reforms needed in laws concerning crimes against women in 2013

Way forward

  • Justice in any civilised society is not just about retribution, but also about deterrence, and in less serious crimes, rehabilitation of the offenders.
  • The political sanction of “encounter killings” to deliver swift retribution would only be a disincentive for the police to follow due process and may even deter them from pursuing the course of justice. Far from ensuring justice to the victims, bending the law in such cases would only undermine people’s faith in the criminal justice system

Do we need Fiscal Council

Why In news?

The economic disruption caused by the pandemic brought the economy to a standstill. What is needed is government spending. But fear of the market has been holding the government back. It is against this backdrop the idea of Fiscal Council.

What is holding back government from spending

  • The government needs to borrow and spend to engineer economic recovery.
  • But that will mean exponential rise in debt and debt will harm medium-term growth prospects.
  • This is an issue prominently flagged by all the rating agencies in their recent evaluations.
  • It is possibly the fear of market penalties that is holding the government back from more borrowing and spending.

Argument against government stance

  • Many argue that this is no time for restraint.
  • The government should spend more to stimulate the economy by borrowing as may be necessary.
  • At the same time come out with a credible plan for fiscal consolidation post-COVID-19 to retain market confidence.
  • So, here comes the suggestion of establishing some new institutional mechanism for enforcing fiscal discipline, and that institution is fiscal council.

The ideal of establishing Fiscal Council

  • The suggestion of a fiscal council actually predates the current crisis. It was first recommended by the Thirteenth Finance Commission.
  • The idea was subsequently endorsed by the Fourteenth Finance Commission and then by the FRBM Review Committee headed by N.K. Singh.
  • According to the International Monetary Fund (IMF), about 50 countries around the world have established fiscal councils with varying degrees of success.
  • Fiscal Council in these countries is permanent agency with a mandate to independently assess the government’s fiscal plans.
  • It also gives projections against parameters of macroeconomic sustainability and put out its findings in the public domain.

Councils Mandate

  • As per model suggested by the FRBM Review Committee the fiscal council’s mandate will include, but not be restricted to,
    • Making multi-year fiscal projections.
    • Preparing fiscal sustainability analysis.
    • Providing an independent assessment of the Central government’s fiscal performance and compliance with fiscal rules.
    •  Recommending suitable changes to fiscal strategy to ensure consistency of the annual financial statement.
    • Taking steps to improve quality of fiscal data, producing an annual fiscal strategy report which will be released publicly.

Argument against Fiscal Council

1) Lack of demand for accountability

  • The government is required to submit to Parliament a ‘Fiscal Policy Strategy Statement’ (FPSS) to demonstrate the credibility of its fiscal stance.
  • The problem clearly is the lack of demand for accountability.
  • So, another instrumentality such as a fiscal council for the supply of accountability cannot be a solution.

2) Adding more to noise than signal

  • The fiscal council will give macroeconomic forecasts for the budget, and if the Ministry decides to differ it is required to explain why it has differed.
  • Both the Central Statistics Office (CSO) and the RBI give forecasts of growth and other macroeconomic variables, as do a host of public, private and international agencies.

Why should there be a presumption that the fiscal council’s forecasts are any more credible or robust than others?

  • It should be better to leave it to the Finance Ministry to defend its numbers rather than forcing it to privilege the estimates of one specific agency.
  • Besides, forcing the Finance Ministry to use someone else’s estimates will dilute its accountability.
  • If the estimates go awry, it will simply shift the blame to the fiscal council.

3) Issues with the role as watchdog

  • Another argument made in support of a fiscal council is that in its role as a watchdog.
  • It is said that it will prevent the government from gaming the fiscal rules through creative accounting.
  • But there is already an institutional mechanism by way of the Comptroller and Auditor General (CAG) audit to check that.

Way forward

  • The way forward could be to start small and scale it up if it proves to be a positive experience.
  • A week before the scheduled budget presentation, let the CAG, appoint a three-member committee for a five-week duration.
  • The committee should have the limited mandate of scrutinising the budget after it is presented to Parliament for its fiscal stance and the integrity of the numbers and give out a public report.
  • The committee will be wound up after submitting its report leaving no scope for any mission creep.

Conclusion

Adding one more bureaucratic institution to ensure fiscal would not help. Following the existing framework could ensure the same.


In the name of ‘cooperative federalism

Why in news?

Fault lines in the Centre-State fiscal relations have widened due to COVID.

Centre-state tussle

  • The tussle for the rights of States has been focused on Article 356.
  • Partial behaviour by the Governors, regional party governments were politically destabilised.
  • Little was done to implement the report of  Justice R.S. Sarkaria Commission on Centre-State relations.
  • The new fault line in the Centre-State relation could be over the way report of 14th Finance Commission is being implemented.
  • This began well before COVID-19, but the pandemic and its economic disruption have brought things to an edge.

Issues over the implementation of 14th Finance Commission report

  • The 14th Finance Commission report in 2015 promised devolution of more finances to the States. As part of the process, States would have new responsibilities, especially in the social sector.
  •  The Goods and Services Tax (GST) regime was also justified as a grand bargain that would eventually leave all States better off. In reality, tax devolution to States has been consistently below 14th Finance Commission projections.
  • One reason for this has been the economic slowdown, and lower-than-expected GST collections. The shortfall in GST collection for 2018-2019 was 22% when compared to projections. Payments to the States have been delayed as well.
  • There is a ₹6.84 lakh crore gap between what the 14th Finance Commission promised to States and what they have received.

Need to revisit the FRBM provisions

  • Due to pandemic, the fiscal deficit for States, collectively, is inevitably going to breach the projection of 2.04%.
  • As per provisions of the Fiscal Responsibility and Budget Management (FRBM) Act, the GSDP can actually accommodate a

fiscal deficit of 3%. Now, post-pandemic, this limit will be crossed.

  • The FRBM has an “escape clause” that allows for a one-time relaxation of the fiscal deficit threshold up to 0.5% in a time of exigency.
  • The escape clause has been utilised by the Centre but it has proven insufficient in addressing the current crisis.
  • Fiscal policymakers and technocrats agree that the rigidity of the FRBM has to be revisited. It should allow for greater flexibility and consultation as to when and how the “escape clause” can be applied.

Conclusion

Centre government needs to be more considerate of the financial woes of the State and try to deliver on the recommendations of the 14th Finance Commission report.

Thank you!

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