Daily Editorial Analysis for 7th Sep 2021

GS PAPER II

Spirit of federalism lies in consultation

Why in News

• Various states have raised concerns about Central unilateralism on the subjects of Concurrent List of the 7^th Schedule of the Constitution as because the Union government introduced numerous of laws without taking the States into confidence, thereby undermining the federal principles.

Recent Laws passed by the Parliament

• Farm Laws:
• Agriculture is a subject to Entry 14 of the State List, but without consulting the states, the Parliament passed the farm laws, citing Entry 33 (trade and commerce clause) in the Concurrent List.
• Bombay vs F.N. Balsara case: The Supreme Court held that, if an enactment falls within one of the matters assigned to the State List and reconciliation is not possible with any entry in the Concurrent or Union List after employing the doctrine of “pith and substance”, the legislative domain of the State Legislature must prevail.
• Major Ports Authorities Act, 2021:
• The act was passed by Parliament in 2021, even it was objected by the state Goa, stating that it would lead to the redundancy of the local laws.
• Non-major ports are the part of Entry 31 of the Concurrent List. According to the Indian Ports Act, 1908, which presently governs the field related to non-major ports, the power to regulate and control the minor ports remained with the State governments.
• However, the Indian Ports Bill, 2021, proposes to change the status quo by transferring the powers related to planning, developing and regulating the non-major ports to the Maritime State Development Council (MSDC), which objected by Odisha, Andhra Pradesh, Tamil Nadu and Kerala.
• Electricity (Amendment) Bill, 2020:
• Electricity is the subject to Entry 38 of the Concurrent List.
• The bill proposed amendment seeks to change the regulatory regime with the establishment of a National Selection Committee, dominated by members nominated by the Union government that will make appointments to the SERCs.
• It also proposes to establish Electricity Contract Enforcement Authority (ECEA) as the sole authority for matters regarding the performance of obligations related to the sale, purchase or transmission of electricity.

Cause of concern

• Concurrent List is a cause of grave concern as the balance of the Constitution is now turned on its head.
• Under the Government of India Act, 1935, certain subjects were put in the Concurrent List to maintain the uniformity across the nation.
• But, the subjects in the Concurrent List being transferred to the Union List over a period of time due to the Union government’s high-handedness.

Recommendation of Commissions

• Sarkaria Commission Report: Coordination of policy and action in all areas of concurrent or overlapping jurisdiction through a process of mutual consultation and cooperation is, therefore, a prerequisite of smooth and harmonious working of the dual system.
• The Union government, while exercising powers under the Concurrent List, limit itself to the purpose of ensuring uniformity in basic issues of national policy and not more.
• National Commission to Review the Working of the Constitution, NCRWC (Venkatachaliah Commission): It had recommended that individual and collective consultation with the States should be undertaken through the Inter-State Council established under Article 263 of the Constitution.

Conclusion

• As per S.R. Bommai vs Union of India case, the States are not mere appendages of the Union.
• The Union government should ensure that the power of the States is not trampled with.
• The essence of cooperative federalism lies in consultation and dialogue, and unilateral legislation without taking the States into confidence will lead to more protests on the streets.

GS PAPER III

The long and the short of the NMP

Why in News

Recently, the Ministry of Finance introduced ‘National Monetization Pipeline (NMP)’ to raise ₹6-lakh crore over the next four years by monetising several “core assets”.

Asset Monetization

• Asset monetisation is de facto “privatisation” of government-owned assets by another name.
• According to the NITI Aayog, AM is “transfer of performing assets to unlock ‘idle’ capital and reinvesting it in other assets or projects that deliver improved or additional benefits”.
• The term ‘performing assets’ means to transfer to private entities which can be both, strategic and significant.
• It includes over 26,700 kilometres of highways, 400 railway stations, 90 passenger trains, 4 hill railways, including the Darjeeling Himalayan Railway.

Objective of NMP

• Under the NMP, the Government aimed to lease their assets against upfront or periodic payments, which can result into a major benefit for the central government in the battle of a fiscal crisis.
• It is also aim to raise resources and to work its way out of the fiscal logjam.
• According to NITI Aayog, the “strategic objective of the Asset Monetisation programme is to unlock the value of investments in public sector assets by tapping private sector capital and efficiencies”.

Consequences of asset monetisation on the ordinary citizens

• The assets which given by the government at lease, have all been created through tax-payers public.
• As private companies are mandated, and quite justifiably so, to maximise their profits and to increase the returns enjoyed by the shareholders.
• Therefore, charges borne by the public for using these assets have remained reasonable.
• With private companies to all the major utilities such as power, telecom and gas, the citizens would be double-taxed, to create the assets and higher user charges.

Solution

• To prevent citizens from double-tax, the Government must ensure that, while transferring “performing assets” to the private companies, user charges do not price the consumers out of the market.
• The consumers’ interest can be secured only if the Government can curb profit-maximising tendencies of the companies through regulators.

Conclusion:

• According to NITI Aayog, the “strategic objective of the Asset Monetisation programme is to unlock the value of investments in public sector assets by tapping private sector capital and efficiencies”.
• According to the Government data of 2005-06, 40% of the larger companies had declared that they were not earning any profits, and this figure had increased to over 51% in 2018-19.
• It concluded that, India’s large companies have been exploiting the loopholes for reporting lower profits and to escape the tax net.
• It is yet to assume that the asset monetisation programme would deliver efficiencies.