Editorial 1: One Election, Many solution
Recent context:
- In Bharat, the world’s largest democracy, the concept of One Nation, One Election has been a topic of fervent debate for several years.
- In recent times, it has gained currency with the Union government concretising plans in this direction.
- The proposal of One Nation, One Election calls for holding simultaneous elections for the Lok Sabha and state legislative assemblies, emphasising the need for consensus in the national interest.
Recommendation for One nation, One election
- Election Commission of India had proposed synchronised elections in 1983.This was mooted again by the Law Commission of India more than two decades ago in 1999
- Idea of One Nation, One Election, which was also endorsed by the Parliamentary Standing Committee twice — in 2015 and 2018.
- Recently, Centre has set up a committee headed by former President Ramnath Kovind to study the proposal.
Concern with respect to election on regular interval
Higher public expenditure and costly:
- One of the most pressing issues facing the Indian electoral system is the staggering cost incurred in each election cycle.
- With elections being held at different levels of government throughout the year, India’s election machinery is perpetually active.
- Conducting elections, securing polling stations, deploying security forces, and the logistics involved are costly endeavours.
- Therefore, the financial burden imposed by frequent general elections is huge. If expenses of state assembly elections, by-elections, local bodies and panchayat polls are added to this, the annual election expenditure becomes astronomical.
Regular engagement of human resources:
- Beyond the monetary cost, comes the question of logistics and the toll it takes on human resources.
- Frequent elections require human resources, including police personnel, administrative staff drawn from various departments, teachers and lecturers, who are often deployed for election duties.
Disruption in developmental activities:
- Engagement of human resources in elections in regular interval results in the disruption of regular government work and hampers development projects. It also cuts into the academic schedules of schools and colleges
Promotes Political polarization
- Frequent elections tend to breed political polarisation as politicians are in a perpetual election mode, focusing on short-term gains rather than long-term policy planning.
- It is observed that this leads to policy paralysis in state after state and prevents governments from effectively addressing pressing issues.
Lead to Fatigue and time consumption of voters
- Voters are often subjected to multiple elections in a single year, leading to fatigue, indifference and potential disengagement.
Advantages with respect to one nation, one election
- As massive effort required in the conduct of elections and the repercussions of frequent elections on the administration and citizens at large. Therefore, ONOE has following advantages
- Enables the government to concentrate on governance once the elections are over.
- Due to frequent election, entire attention of the country becomes focused on these elections. As elective presentative gets deeply involved with these elections, as nobody wants to lose
- Along with it , it put extra burden on administrative machineries at various levels in varying degree which compromise the India’s growth and deliverances of services.
- It provides government to take major policy decision:
- As new key decisions are not taken during elections due to the code of conduct. Therefore, key policy decisions get delayed both at the Centre and in the states and local bodies..
- even when no fresh policy decision is necessary, implementation of ongoing projects gets derailed during election periods as the political executive as well as government officials would be engaged with election duties, neglecting routine administration.
- Therefore, simultaneous election will result in code of conduct once in five years and major policy decisions can be taken rest of governance duration
- Check on political corruption: one of the main reasons for political corruption is frequent elections. An enormous amount of money has to be raised at every election. Election expenses of political parties can be reduced drastically if elections are held simultaneously
- There would be no duplication of fundraising. This would save the public and business community from a lot of pressure for election donations, multiple times.
- Reduction in election expenditure ( Saving of pubic money):
- Expenses incurred by the EC can be reduced if elections are held simultaneously. As the EC would have to invest a considerable amount of money initially to put in place the necessary infrastructure.
- Reduce the burden of armed forces: As, a large number of police personnel and para-military forces are engaged to ensure that elections are conducted peacefully. This involves massive redeployment, involving huge costs. Such deployment can be curtailed with simultaneous elections.
- Check on defection of MP and MLAs: elections are held only at specific periods, horse trading by elected representatives could come to an end, by and large. Today, even with the anti-defection law in force, loopholes lead to horse-trading.
- Promotes coordination among political parties
- One of the key advantages of holding simultaneous elections is that they encourage political parties to work together.
- They would be forced to find common ground and consensus on crucial national and state-level issues, as the electorate would evaluate their performance on a broader scale.
- This could result in more collaborative policy making and a better, more harmonious understanding of issues
- Helpful in checking on populist policy of government:
- frequent elections lead to governments taking policy decisions to woo the electorate at every election. Even though this cannot be stopped fully, the frequency with which governments have to announce freebies will come down.
- Save time and less fatigue of the voters:
- Synchronised elections would cut voter fatigue and make them participate more pro-actively in elections.
- The same electoral rolls can be used for all the elections. This will save a tremendous amount of time and money spent in updating electoral rolls.
- It will also make it easier for the citizen as they would not have to worry about their names missing from electoral rolls once they are enlisted and save their time to cast their votes.
- Thus, capital saved in simultaneous election could be better allocated to critical sectors like healthcare, education and infrastructure development
Conclusion:
- Fewer election cycles mean less disruption in government work, allowing bureaucrats and elected officials to focus on governance.Saving precious work hours leads to higher productivity and more efficient resource allocation and project implementation.
- Therefore, there is a need for consensus on the issue of synchronised elections in national interest. The concept of One Nation, One Election promotes the idea that the nation’s interests should prevail over narrow political gains.
- It encourages parties to come together for the greater good and work towards a more stable, efficient, and accountable democracy.
Editorial 2: In with the World
Recent Context:
- India’s rise as a coveted investment destination and a global economic power house is now on the horizon.
- As recently, JP Morgan has decided to include India in its Government Bond Index-Emerging Markets (GBI-EM) index.
About the Government bond inclusion in GBI-EM:
- Nearly two dozen Indian government bonds with a combined notional value of$330 billion will be eligible for listing.
- “Total flows could top $45-50 billion over the next 12-15 months alone once India is part of the third key bond indices.
- However, actual annual flows may vary, depending on the under- lying macro dynamics and momentum of active as well as passive flows.
So, will this PM Index inclusion automatically lead to India's inclusion in these indices?
- ‘There are two other notable global bond indices — the FTSE EM Index and the Bloomberg Barclays EM bond index.
- And the procedural requirements and conditionalities are more stringent and these may be contingent upon tackling operational hurdles such as custody and settlement, clarity on taxation and Euroclear.
- However, there is no denying that once the Indian government bonds are included in the above benchmark bond index, it will impart positive momentum and catalyse larger portfolio inflows on a sustainable basis.
So, what does this inclusion mean?
1. First it is widely understood that India is a large importer of commodities.
- However, ‘what is under-appreciated is that India is also a huge importer of global capital and hence the country's economic as well as business cycles are susceptible to greater gyrations in global capital markets in general and the US interest rates and the dollar in particular.
2. Second, the move will help ease the constraints around the financing of India's twin deficits — the fiscal and current account deficits — by providing an alternate source of funds. It will structurally help lower India's risk premia and the cost of funding which has long been a bugbear for borrowers.
- It will also deepen India's bond markets, increase: liquidity, widen the ownership of G-Secs and lower the pressure on yields.
- Importantly, it will make the exchange rates table, lowering the hurdle rate for FIIs investing in India. The Indian currency will benefit from the resultant higher confidence of investors.
3. “Third, corporates will benefit as the entire yield curve will move a notch lower, bringing down the cost of financing sustainably over time.
- Corporate bond spreads will now narrow and remain in check due to positive sentiments and flow momentum.
4. Fourth, the commercial banking sector will face less pressure to absorb a majority of government bonds and hence the balance sheets will have more wherewithal to lend to the needy private sector segments in the economy.
5. Fifth, India is currently on its way to building the infrastructure that it sorely needs. This is vital for creating the infrastructure back- bone for realising the manufacturing-led ‘growth ambitions.
- With public debt having risen faster and lagging the savings rate, bond inclusion can provide a source of long-term sustainable source of financing through investment in government securities.
- Importantly, the timing of inclusion and the macro backdrop s interesting The external environment has tuned more hostile .The 10-year US treasury yield has risen rather sharply, and the US Fed remains hawkish. Yet another US government shutdown looms, posing a potential risk for markets.
- Moreover, the global trade and geopolitical backdrop remains uncertain.
Whether the inclusion in the global indices will make India automatically entitled to huge resultant inflows.
- No, the underlying macroeconomic scenario will always matter more and there remain challenges that one should not lose sight of.
- For one, the announcement of entry into the bond index will put the spotlight squarely on government finances and fiscal responsibility from hereon.
- Importantly, this is at a delicate juncture as India's electoral calendar will not get bust with five state elections and then the general election.
- Rising crude oil prices pose a headache for the fisc and any relief via petrol or diesel price cuts or other sops will become tougher.
- Further, reliance on foreign funds for funding domestic deficits entails significant macro risks as was seen during the global financial crisis and the taper tantrum episodes.
- The inclusion will also expose Indian debt markets to greater volatility and link it to the vagaries of passive flows which allocate capital based on the weightage assigned by the index provider.
- Further, several operational hurdles will need to be ironed out —the ability to clear and settle Indian debt on an international platform like Euroclear, repatriation of funds, and tax complexities including removing or lowering the capital gains tax compared to what domestic investors would pay.
Conclusion:
- Therefore, over time, the ongoing reform process, easier market access and transparency will shape and hasten the country's integration into global markets, paving the way for a land- scape of unparalleled market development, long-term capital inflows, and innovative financial products.