The Problem of Special Packages

  • July 8, 2024
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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The Problem of Special Packages

Sub: Polity

Sec: Federalism

  • Coalition Politics Returns:
    • Bharatiya Janata Party (BJP) relies on Janata Dal (United) of Bihar and Telugu Desam Party of Andhra Pradesh for a parliamentary majority.
    • Contrast to 2014 and 2019 when single-party governments were in power.
  • Revival of State-Specific Grants:
    • Demand for State-specific discretionary grants or ‘special packages’ has resurfaced in public discussion.
    • Single-party dominance provided a check on such practices, but coalition politics revives them.
  • Federal Structure and Fiscal Policies:
    • A healthy federal structure requires transparent fiscal boundaries, principles of tax assignment, and grant distribution.
    • The Constitution provides for addressing specific States’ issues through Articles 371A to H (Article 370 for Jammu and Kashmir is abrogated).
  • Nature of Special Packages:
    • Special packages are discretionary and often result from political bargaining power rather than genuine need.
    • Granted under Article 282 (‘Miscellaneous Financial Provisions’).
  • Impact on Fiscal Federalism:
    • Election outcomes influencing fiscal distribution contradicts the principles of fiscal federalism.
    • Allocation of funds should be through the Finance Commission, constituted every five years as per Article 280.
  • Double-Engine Sarkar and Its Implications:
    • The term describes when the same political party governs both Union and State levels.
    • The coalition now requires negotiations with smaller parties for political stability.
  • Federal Tendencies in Polity:
    • The Constitution is quasi-federal, but assumes a federal character outside emergencies.
    • Supreme Court has noted that polity can be both unitary and federal based on the situation (State of Rajasthan and Others v Union of India, 1977).
  • Determining Fiscal Distribution:
    • Concerns about the divisible pool of Union taxes and States’ shares.
    • The 16th Finance Commission must balance interests of States and the Centre.
  • Discretionary Grants and Fiscal Federalism:
    • The Finance Commission is responsible for recommending grants to States in need.
    • Discretionary grants under Article 282 have far outpaced those recommended by the Finance Commission.
    • Acceding to special package demands weakens fiscal federalism and diverts resources from other needy States.
  • Potential Consequences:
    • Federal tendencies might wilt instead of blooming when single-party dominance fades if special packages become common practice.

Key Constitutional Articles

  • Article 280: Finance Commission
    • Purpose: Provides for the constitution of a Finance Commission by the President every five years.
    • Functions:
      • Recommends the distribution of the net proceeds of taxes between the Union and the States, and among the States themselves.
      • Determines the principles that should govern grants-in-aid of the revenues of the States out of the Consolidated Fund of India.
      • Any other matter referred to the Commission by the President in the interests of sound finance.
  • Article 275: Grants from the Union to Certain States
    • Provision:
      • Allows for grants-in-aid from the Union to any State that is in need of assistance, as determined by the Parliament.
      • The grants can be charged on the Consolidated Fund of India.
  • Article 282: Expenditure Defrayable by the Union or a State out of its Revenues
    • Purpose:
      • Allows the Union or a State to make any grants for any public purpose, even if it is not within their legislative competence.
    • Usage:
      • Grants under this article are often used for discretionary purposes, such as special packages.
  • Articles 371A to H: Special Provisions for Specific States
    • Purpose: Provide special provisions for specific States to address unique circumstances and needs.
  • Article 371A: Special Provisions for Nagaland – Safeguards the religious and social practices, customary laws, and the administration of civil and criminal justice of the Naga people.
  • Article 371B: Special Provisions for Assam – Ensures equitable distribution of legislative and executive powers between the Union and the state government.
  • Article 371C: Special Provisions for Manipur – Ensures autonomy over the administration and laws related to land and its resources.
  • Article 371D: Special Provisions for Andhra Pradesh – Provides equitable opportunities in education and public employment.
  • Article 371E: Special Provisions for Sikkim – Safeguards ownership rights over land and resources and preserves its unique cultural identity.
  • Article 371F: Special Provisions for Mizoram – Safeguards religious and social practices, customary laws, and administration of civil and criminal justice.
  • Article 371G: Special Provisions for Arunachal Pradesh – Safeguards its religious and social practices, customary laws, and administration of civil and criminal justice.
  • Article 371H: Special Provisions for Goa – Ensures equitable opportunities in education and public employment and safeguards its Konkani language and culture.
  • Article 371I: Special provisions for the state of Maharashtra and Gujarat – Providing for equitable opportunities in education and public employment for certain regions.
  • Article 371J: Special Provisions for Karnataka – Ensures equitable opportunities in education and public employment for certain regions.
Polity The Problem of Special Packages