25 December 2020: The Indian Express Editorial Analysis
1) Bury the legacy – Govt. should accept orders on retrospective taxation
GS 3 - Changes in Industrial Policy and their effects on Industrial Growth
- Government should abide by arbitration panel verdicts in Vodafone and Cairn case and end retrospective taxation.
- On Thursday, it was reported that the government has filed an appeal at the Singapore seat of the permanent court of arbitration challenging the judgment in the Vodafone retrospective taxation case.
- Govt. loses the case: The government's appeal comes a day after it lost the arbitration case to Cairn Energy over the retrospective levy of taxes and was asked to pay damages to the tune of $1.2 billion.
- Hinder future investment: This would be a mistake, and would send the wrong signal to the investor community.
WHAT IS THE CAIRN ISSUE?
- Tax demand: The Cairn issue pertains to tax demand on capital gains made by the company in the reorganisation of its business.
- Tax-related investment dispute: The Permanent Court of Arbitration (PCA) at The Hague has maintained that the issue was not a tax dispute, but a tax-related investment dispute, and hence it fell under its jurisdiction.
- Unfair treatment: The court noted that the demand was in breach of fair treatment under the UK-India bilateral investment treaty.
THE VODAFONE CASE:
- In the case of Vodafone, the Singapore seat of the PCA has held that India's retrospective demand of capital gains and withholding tax from the firm was in breach of the guarantee of fair and equitable treatment.
- The Supreme Court held in 2012 that Vodafone's interpretation of the Income Tax Act, 1961 was correct.
- The then finance minister, Pranab Mukherjee, circumvented the ruling proposing an amendment to the Finance Act, giving the tax department the power to retrospectively tax such deals.
THE FINANCE ACT:
- The Finance Act allows the Central govt. to effectively implement financial proposals at the beginning of every financial year. It applies to all the states and UTs in India unless there is an exception mentioned.
- All the financial policies fall under the Finance Act and are assentes by the Indian President.
- The approach has to be one of compliance with the verdict, rather than finding ways to bypass it.
- The government must distance itself from the issue of retrospective taxation that has caused much damage to India's reputation.
The government should accept the orders, and ensure a proper burial to the issue of retrospective taxation.
2) Lawmakers must work - State legislatures have an abysmal record in terms of number of sittings per year
GS 2 - Parliament and State legislature
CONTEXT: THE BURNING ISSUE - LACK OF ATTENDANCE:
- The Kerala government made a recommendation to the governor for summoning the state's legislature for a one-day session to discuss the situation arising out of the farmers' protest in the legislative assembly - Governor turned down it down apparently.
- Earlier this year, the Rajasthan governor had rejected the recommendation of Chief Minister Ashok Gehlot's government to call a session so that he could prove his majority on the floor of the house.
PROCEDDINGS FOR PARLIAMENTARY MEETINGS:
- The Constitution is clear: The government has the power to convene a session of the legislature.
- The council of ministers decides the dates and the duration of the session.
- Their decision is communicated to the governor, who is constitutionally bound to act on most matters on the aid and advice of the government.
- The governor then summons the state legislature to meet for a session. The refusal of a governor to do so is a matter of concern.
- Such events require careful deliberation to prevent them from snowballing into a constitutional crisis.
STATE LEGISLATURE - 'THEN AND NOW':
- In the last 20 years, state assemblies across the country, on average, met for less than 30 days in a year. But states like Kerala, Odisha, Karnataka are an exception.
- The Kerala Vidhan Sabha, for example, has on an average met for 50 days every year for the last 10 years.
- The trend across the country is that legislatures meet for longer budget sessions at the beginning of the year.
- Then for the rest of the year, they meet in fits and spurts and pay lip service to the constitutional requirement that there should not be a gap of six months between two sessions of a legislature.
WHAT ARE STATE LEGISLATURES?
- Legislatures are arenas for debate and giving voice to public opinion.
- As accountability institutions, they are responsible for asking tough questions of the government and highlighting uncomfortable truths.
WHAT WILL LESSER SITTINGS LEAD TO?
- Increase ordinance making power: Lesser number of sitting days also means that state governments are free to make laws through ordinances.
- Bypass scrutiny: With lesser convening of legislatures, there is little time for MLAs to scrutinise laws brought before them.
- No. of working days: Increasing the number of working days for state legislatures is a first step in increasing their effectiveness. One way to do that is by convening legislatures to meet all around the year.
- Maintain a calendar: In many mature democracies, a fixed calendar of sittings of legislatures, with breaks in between, is announced at the beginning of the year. It allows the government to plan its calendar for bringing in new laws. It also has the advantage of increasing the time for debate and discussion in the legislative assembly.
- Politics avoidance: With the legislature sitting throughout the year, it gets rid of the politics surrounding the convening of sessions of a legislature.
The blame for the decline in the sitting days of the state legislatures rests with the government and hence it should take some serious measures to put back the state legislature's working into the right track because continuous and close scrutiny by legislatures is central to improving good governance in the country.
3) Saving the public University
GS 2 - Issues relating to education
There are 55 central universities in the country. There are many facilities which are held for them in the country. These universities are the crown jewels of the academic system.
FACILITIES FOR UNIVERSITIES:
- Funding: They are endowed with land, extensive funding from the central government.
- Security of tenure: Faculty of these universities have the security of tenure, and also their job fully protects free speech. Hence they are the most vocal among academics.
- Some universities in the country focus on all the major branches of learning, cross-disciplinary research, solve complex modern problems, can genuinely take place.
- But there is a long line of students waiting for admission in these universities.
- In recent years, six vice-chancellors (VCs) of central universities have been dismissed, another five have been charge-sheeted also.
- The energy from many universities is going out of the system.
- As well as the responsibility of innovation has switched to new and innovative private universities.
- Not any single new private university has been able to create a university with the full range of humanities, social, natural sciences and the professional disciplines till now.
- Hence if we want to save academia in India, central universities must be saved.
STRUCTURE OF UNIVERSITIES:
- All 55 central universities are governed by a separate Act.
- Visitor: President of India is the Visitor of the university.
- Chancellor: On the behalf of President, the Ministry of Education recommends an eminent citizen as the chancellor, whose role is mostly formal.
- Search committee: The Ministry also constitutes a search committee for interviews with multiple candidates and also comes up with a list of three candidates. From this list, the government picks a VC. As well as through a different process, a senate or court is chosen. So this committee is the governing council (GC) of the university.
- In the search committee nominees come from various stakeholders: government, faculty, students, and citizens.
- Executive council: The work of the university is carried out by the executive council chaired by the VC. Vice-Chancellor appoints the registrar.
- Finance committee: It is headed by a chief finance officer, who is often a civil servant on secondment to the university. It is designed to maintain financial checks and balances.
- The Governing Council has no say in the selection of the VC and it also meets only once a year.
- The governing council of Delhi University, called the Senate, has 475 members, probably a world record.
- In theory, the vice-chancellor presents and gets approval for the annual plan of the university from the governing council.
- But in general, after much debate, the plan is approved. After that, there is the minimal direction from the governing council.
- So the number of failures is increasing.
- While Indian Institute Of Management Bill 2017 limits the members of the governing council to 19.
- These members will be eminent citizens, with broad social representation and an emphasis on alumni.
- This governing council will choose the director, provides strategic direction, raises resources, and monitors his or her performance.
- The director will have full autonomy with accountability within the guidelines provided by the governing council.
- Example of Harvard: The Harvard University was a government university until 150 years ago, that was dying a slow death.
- When university's governance was reformed by the creation of empowered board then it comprised its most successful alumni.
- After these reforms this small provincial university became world-class.
- The reason for its reform is dynamism, oversight, and resources. So it is happened due to governance.
- Restructure: It is important for the governing councils of all central universities, IITs, and all other central institutions, to be restructured by an Act of Parliament.
- Presentation of eminent alumni: The most eminent alumni of these institutions must be brought on their boards of the universities.
- As an example: IIT Delhi has just announced a billion-dollar endowment campaign which is spearheaded by its most successful alumni.
- Among these alumni, over a dozen have created Unicorns or billion-dollar companies.
- So the presentation of these alumni in the governing council not only will raise this money, but it will also be spent well. As well as they will promote world-class innovations.
In the words of poet Rahim:
Ek saadhe sab sadhai, sab saadhe pat jaaya,
Rahiman mool hi seenchiye, phoole phale aghai.
- Meaning of these lines is that if you achieve one big thing, everything gets achieved, but if you try and fix everything at once, then nothing gets fixed. If we consider it in the example of the plants, water the roots, and the whole plant prospers and yields flowers and fruits.
- So that if we reform the governance system of these universities, the IITs and other public institutions, then they will be truly blossom.