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Archive for March, 2011

Indian Railways – where is it headed?

March 14th, 2011 No comments

The general discussion on the Railway Budget concluded in Parliament this week. During the discussion, several MPs made a reference to two important documents tabled by the Railway Minister in 2009 – the ‘White Paper’ on Indian Railways and the 2020 Vision document.

The documents provide good insight into the operational and financial performance of Railways over the previous five years. They also throw light on the challenges that confront the Railways today. It emerges that Railways has relied heavily on increasing utilization of existing assets to manage the increase in demand. The system is otherwise severely constrained by lack of adequate capacity.

Scenario so far (2004-09)

Growth in traffic and earnings

Rail transport demand is linked to the growth in GDP. As a result, the two main businesses of Railways – Passenger and Freight – have both seen significant increases in traffic in recent years.

Passenger traffic has grown at an average rate of 10% each year. Earnings have increased at a slightly higher pace, implying that most passengers have been spared increases in fare. Standalone, passenger operations have continued to be loss making. Freight traffic has grown too, but at a lower rate of about 7% and unlike the passenger segment, freight fares have increased significantly over these years.

Freight forms the backbone of Railways’ revenues. Even today, it continues to account for almost two-thirds of total earnings. However, Railways’ market share in freight has decreased steadily over the past few decades – it dropped from 90% in 1950-51 to less than 30% in 2007-08. The main reasons for this decline are high pricing (to subsidize passenger travel) and lack of sufficient infrastructure. Railways are unable to provide time-tabled freight services. In addition, there are no multi-modal logistics parks that could have provided door-to-door cargo services.

Infrastructure constraints

Since 1950-51, route-kms have increased by just 18% and track-kms by 41%, even though freight and passenger output has gone up almost 12 times. Specific issues include:

  • Common corridor for both freight and passenger traffic – With freight trains on the same corridor, operating fast passenger trains becomes extremely difficult.
  • Concentration of traffic – More than half the total traffic moves on the golden quadrilateral and its diagonals; large parts of these sections are now already saturated.
  • Limited capacity for production of rolling stock, particularly locomotives and EMUs.

The above constraints require investment in network and capacity augmentation, including dedicated freight corridors. Hence, a substantial increase in funding is necessary. The Vision 2020 document planned to deploy Rs 14 lakh crore in the next 10 years towards development of rail infrastructure.

Recent trends (as presented in the Budget 2011)

This year’s budget presented the actual financial performance in 2009-10, the provisional performance in 2010-11 and the targets for 2011-12 (Details can be accessed here). It also highlighted achievements on other metrics, including growth in traffic and augmentation of infrastructure (See ‘Status of some key projects proposed in 2010-11).

On financials, 2009-10 was a bad year for Railways. Figures show a high Operating Ratio of 95.3%. Operating Ratio is a metric that compares operating expenses to revenues. A higher ratio indicates lower ability to generate surplus. The 2009-10 Operating Ratio is the highest since 2002. According to the Railways Minister, this can be partly attributed to higher payout in salaries and pension due to implementation of Sixth Pay Commission recommendations.

Growth in passenger traffic remained high in 2010-11, at 11%. However, growth in freight traffic slowed down to 2%. Again, passenger fares remained untouched, but freight fares were increased.

Railways, in 2011-12, targets an increase of 8% in both passenger and freight traffic. Financials are expected to improve. An amount of Rs. 57,630 crore has been budgeted as net plan outlay for investment in infrastructure. Last year, this figure was Rs 41,426 crore.

In her opening remarks during the Budget speech in Parliament, the Minister commented that Railways forms an important backbone of any country. Lets hope it is headed in the right direction!

Do we need the MPLAD Scheme

March 9th, 2011 3 comments

Bihar became the first state to scrap the MLA Local Area Development Fund scheme (MLALAD).  According to news reports, Nitish Kumar, Bihar’s Chief Minister, is planning to replace it with the CM Area Development Programme, which would be implemented at the District level.  The schemes would be selected by a district selection committee headed by the minister-in-charge and MLAs and MLCs of that district as members.  The implementation shall rest with a body of engineers, headed by Engineer-in-chief.  The district magistrates would only monitor implementation and contractors would be chosen through open tendering in which a representative of the Comptroller and Auditor General of India (CAG) would be present.  The state government would allocate funds as per requirement.

The MPLAD and MLALAD scheme was introduced in December 1993 by former Prime Minister, P.V. Narasimha Rao to enable legislators to execute small works of a local nature to meet the urgent needs of their constituents.  Under the scheme, each legislator may identify projects and sanction upto Rs 2 crore per year for public works in their constituencies.  The scheme was mooted after MPs demanded that they should be able to recommend certain development projects in their constituencies.  The projects include assets building such as drinking water facilities, primary education, public health sanitation and roads.  The initial amount allocated was Rs 5 lakh per year to each MP.

It has however not been smooth sailing for the scheme.  Besides the many implementation lapses (as pointed out by the Standing Committee on Finance in 1998-1199, the CAG and the Planning Commission), the constitutionality of the scheme has been questioned by various scholars and experts.

In 2002, the National Commission to Review the Working of the Constitution recommended immediate discontinuation of the MPLAD scheme on the ground that it was inconsistent with the spirit of federalism and distribution of powers between the centre and the state.  Former MP, Era Sezhiyan in a booklet titled ‘MPLADS – Concept, Confusion and Contradictions’ also opposed the scheme and recommended that it be scrapped since it ran contrary to the Constitutional provisions which envisaged separate roles for the Executive and Legislature.  However, the Committee on MPLADS in its 13th Report and its 15th Report stated that there was nothing wrong with the scheme per se except some procedural infirmities and recommended among other things a change of nomenclature to the Scheme for Local Area Development.  The debate continued with the 2nd Administrative Reforms Commission’s report on “Ethics in Governance” taking a firm stand against the scheme arguing that it seriously erodes the notion of separation of powers, as the legislator directly becomes the executive.  However, in response to a Writ Petition that challenged the constitutionality of the MPLAD scheme as ultra vires of the Constitution of India, in May 2010, a five-judge bench of the Supreme Court ruled that there was no violation of the concept of separation of powers because the role of an MP in this case is recommendatory and the actual work is carried out by the Panchayats and Municipalities which belong to the executive organ.  There are checks and balances in place through the guidelines which have to be adhered to and the fact that each MP is ultimately responsible to the Parliament.

Meanwhile, some MPs are pushing for hiking the amount allocated under the scheme to Rs 5 crore.  However, no decision has been reached yet.  The Ministry of Statistics and Programme Implementation has suggested that a single parliamentary committee be formed comprising of members of both Houses of Parliament to monitor MPLAD schemes.

While the question of constitutionality of the MPLAD scheme may have been put to rest by the Supreme Court ruling, other issues related to implementation of the scheme still remain.  Unless problems such as poor utilisation of funds, irregular sanction of works, delay in completion of works are tackled in an efficient manner, the efficacy of the scheme will remain in doubt.

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Can compensation be paid for crimes against the state?

March 4th, 2011 3 comments

In a recent judgement (Judgement on Feb 23 – Baldev Singh and Ors. V. State of Punjab), the Supreme Court reduced the sentence of three persons convicted of rape from 10 years to 3 and a half years, and also asked the three convicts to pay a fine of Rs 50,000 each to the victim.   In reducing the sentence, the court drew from the provision in S. 376 (punishment for rape) of the Indian Penal Code which allows the court to reduce the sentence for “adequate and special reasons”.

There have been a number of past cases where the Supreme Court has reversed High Court decisions reducing sentences under this provision for not giving suitable reasons.  In 2007, the Supreme Court struck down a decision of the Karnataka High Court which had reduced the sentence of a convicted rapist to 3 and a half years.  The High Court had stated that the sentence should be reduced since the accused was “a young boy of 18 years belonging to Vaddara Community and Illiterate”.  The Supreme Court stated that there is a legislative mandate to impose a sentence for not less than 10 years.  Only in exceptional cases, for “adequate and special reasons” can a sentence less than 10 years be imposed.  It overturned the Karnataka High Court decision saying that there was an “absence of any reason which could have been treated as “special and adequate reason”".

In Baldev Singh’s case, the Supreme Court said:

1.  The fact that the incident is an old one (the incident took place in 1997) is a circumstance which fits into “adequate and special reasons” for reducing a sentence.

2. The parties have entered into a compromise among themselves.

The issue is whether this judgement has gone beyond the legislative mandate, and whether it has adhered to the principles laid down by earlier decisions of the Supreme Court.  In 2007, the Supreme Court itself stated that for a crime like rape, strong reasons have to be given to reduce the sentence envisaged by the legislature.  Moreover, the provision does not envisage the settlement of a crime by payment of compensation to the victim of a crime.  A criminal act is seen in law as a crime against the whole of society (which is why the state’s prosecution agency, and not the victim, goes to court against alleged criminals).  Therefore, criminal actions such as rape (or murder, robbery, kidnapping etc.) cannot be “settled” by the payment of compensation under the Indian Penal Code.  In this light, it should be interesting to see whether the State files an appeal against this judgement.

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How to move beyond disruptions in Parliament

March 3rd, 2011 2 comments

The demand for a JPC has been accepted by the government. But disruptions in Parliament continue to plague its functioning. The speaker of Lok Sabha and the chairman of Rajya Sabha routinely ask the members who rush into the well to return to their seats, but if the members do not heed their pleas, the House is adjourned. This kind of behaviour by MPs, and the reaction of the House’s presiding officers, raises some very fundamental questions.

Every well-functioning institution has a set of rules that are designed to ensure its effective functioning. Thus our Parliament is governed by detailed rules meant to enable the smooth functioning of both Houses. The speaker is endowed with enormous powers to enforce discipline. For a variety of reasons, the speaker may choose not to use the measures at her disposal. But such a lack of enforcement of rules makes the rulebook irrelevant, and gives the impression that any group of MPs can hold Parliament to ransom. And all this is to the detriment of the institution, and a weakening of the authority of and respect for the office of speaker.

There have been suggestions to move Question Hour to a later time. But that may turn out to be a mere band-aid if core issues remain unaddressed. The real question is this: Do MPs feel that there is adequate opportunity for them to raise issues they are concerned about? Do they feel there is enough opportunity for them to oversee the work of the government, or to be effective as policy-makers? If the answer is yes, then there is a strong case for the rulebook to be used effectively to discipline disrupting MPs. But if there is a general acknowledgement that there is not enough opportunity for MPs to raise issues, then there is a need to change the rules of the House.

Many of the rules that are currently in the book were framed at a time when Parliament met for an average of 140 days a year. They were also mostly framed at a time when there were just a handful of political parties, and Lok Sabha TV did not telecast Parliament proceedings live and countrywide. But since then some things have obviously changed, which have also altered the incentive structure for some MPs, and thus how they behave in Parliament. And our rules of procedure have not woken up to this changed environment.

It would be naïve not to acknowledge that “politics” plays a big role in why MPs disrupt proceedings. In a healthy democracy, it is to be expected that parties might opportunistically exploit whatever chances may become available to them. But that would become a very costly habit indeed if the proceedings of the House are brought to a standstill every so often, and no solution is found to change this behaviour.

At another level, it can be argued that disruptions are actually symptomatic of a larger problem of effectiveness. Instead of just looking at the issue of disruptions in isolation, there is a need to take a fresh look at the multiple roles of Parliament, the changes in the internal make-up of Parliament, the changes in India’s external environment, and the changes in citizens’ expectations from their representatives. This will result in a more comprehensive solution and will help build systems that will increase the effectiveness of the institution in every possible way.

The idea is not to attempt to solve problems that are intensely political in nature, by throwing technocratic solutions at them. So perhaps an appropriate thing would be to first find a way to collectively acknowledge and articulate the frustration of several MPs, of the presiding officers, and of millions of people across the country. This will take us an important step forward.

It would indeed be a terrible collective failure if Parliament cannot find a way out of the mess it appears to be in, and other arms of our governance system feel the need to step in to stem the decline. There is no time to waste, not on the floor of the House, and certainly not in finding a solution to Parliament’s ongoing paralysis. Fortunately, we will also be able to learn from the experiences of any number of other well-functioning parliaments around the world. It is hoped that the speaker and the Rajya Sabha chairman come together soon to find a viable process that will bring in the changes urgently needed to enable Parliament to become a more effective institution.

This post appeared as an article in the Indian Express on March 3, 2011 as ‘Speaking out of turn‘.

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Politics of defection

March 1st, 2011 1 comment

In a recent judgement, the Karnataka High Court upheld the disqualification of five independent MLAs from the Assembly. These MLAs, who had previously served as Ministers in the Yeddyurappa government, were disqualified along with 11 others after they withdrew their support to the government.

The disqualifications raise some important questions on the working of the anti-defection law. While the law was framed in 1985 with the specific intent of ‘combating the evil of political defections’, over the years several unanticipated consequences have come to the fore. The primary among these is the erosion of independence of the average legislator.

The need for an anti-defection law was first felt in the late 1960s. Of the 16 States that went to polls in 1967, Congress lost majority in eight and failed to form the government in seven. Thus began the era of common minimum programmes and coalition governments. This was accompanied with another development – the phenomenon of large scale political migrations. Within a brief span of 4 years (1967-71), there were 142 defections in Parliament and 1969 defections in State Assemblies across the country. Thirty-two governments collapsed and 212 defectors were rewarded with ministerial positions.

Haryana was the first State where a Congress ministry was toppled. The Bhagwat Dayal ministry was defeated in the Assembly when its nominee for speakership lost out to another candidate. Congress dissidents defected to form a new party called the Haryana Congress, entered into an alliance with the opposition and formed a new government under the Chief Ministership of Rao Birender Singh (also a Congress defector). Haryana thus became the first State to reward a defector with Chief Ministership.

Another Haryana legislator, Gaya Lal, defected thrice within a fortnight. The now well know terms ‘Aya Ram’ and ‘Gaya Ram’ that are often used to describe political turncoats owe inspiration to him.

It was to address this issue that the anti-defection law was passed in 1985. This law amended the Constitution and added the Tenth Schedule to the same. The Supreme Court, in Kihota Hollohon vs. Zachilhu (1992), while upholding the validity of the law held that decisions of disqualification shall be open to judicial review.  It also made some observations on Section 2(1) (b) of the Tenth schedule. Section 2(1) (b) reads that a member shall be disqualified if he votes or abstains from voting  contrary to any direction issued by the political party. The judgement highlighted the need to limit disqualifications to votes crucial to the existence of the government and to matters integral to the electoral programme of the party, so as not to ‘unduly impinge’ on the freedom of speech of members.

This anti-defection law has regulated parliamentary behaviour for over 25 years now. Though it has the advantage of providing stability to governments and ensuring loyalty to party manifestos, it reduces the accountability of the government to Parliament and curbs dissent against party policies. In this context, Manish Tewari’s private member bill merits mention:  he suggests that anti-defection law be restricted to votes of confidence and money bills.  Such a move will retain the objective of maintaining the stability of the government while allowing MPs to vote freely (subject to the discipline of the party whip) on other issues.

This brings us to the question – Is the anti-defection law indispensable? Is defection peculiar to India? If not, how do other countries handle similar situations?

It is interesting to note that many advanced democracies face similar problems but haven’t enacted any such laws to regulate legislators. Prominent cases in UK politics include the defection of Ramsay Macdonald, the first Labour Prime Minister, in 1931. He defected from his party following disagreements on policy responses to the economic crisis. Neither Macdonald nor any of his three cabinet colleagues who defected with him resigned their seats in the House of Commons to seek a fresh mandate.

Australian Parliament too has had its share of defections. Legislators have often shifted loyalties and governments have been formed and toppled in quick succession. In the US too, Congressmen often vote against the party programme on important issues without actually defecting from the party.

India might have its peculiar circumstances that merit different policies.  But, the very fact that some other democracies can function without such a law should get us thinking.

Sources/ Notes:

[1] PRS Conference note: The Anti-Defection Law – Intent and Impact

[2] Column by CV Madhukar (Director, PRS) titled ‘Post-independents’ in the Indian Express