Table of Contents
Analysis of The Hindu Editorial 1 : States and the Centre’s fetter of ‘net borrowing ceiling’
Context
In 2023, the central government imposed a ‘Net Borrowing Ceiling’ (NBC) on Kerala, triggering significant debate about fiscal autonomy and state rights under the Indian Constitution. This move led Kerala to approach the Supreme Court, arguing that the NBC violated Article 293, which governs the borrowing powers of states. The case highlights the need to revisit this constitutional provision, especially in light of evolving political and economic circumstances.
Introduction
In a move aimed at limiting states’ financial liabilities, the Centre imposed an NBC on Kerala, capping the state’s borrowing to 3% of its projected Gross State Domestic Product (GSDP) for the financial year 2023-24. This ceiling encompasses all forms of borrowing, including market loans, institutional credit, and public account liabilities. Additionally, the cap extends to borrowing by state-owned enterprises, preventing states from bypassing these restrictions through alternative means.
The implications of this move are far-reaching:
- Impact on Kerala’s Financial Position: Kerala faces severe challenges in meeting its financial obligations, including funding key developmental and welfare programs.
- Political and Legal Controversy: The NBC has fueled political tensions, with Kerala arguing that it undermines its fiscal autonomy.
- Legal Action: Kerala has sought legal recourse from the Supreme Court, claiming that the NBC infringes upon its constitutional right to borrow, as enshrined in Article 293.
- Historical Precedent: This is the first time the Supreme Court will interpret Article 293, making it a landmark case in the context of Indian federalism.
Understanding the Borrowing Powers of the Centre and States
The borrowing powers of the central and state governments are enshrined in Chapter II of Part XII of the Indian Constitution, specifically in Articles 292 and 293:
- Article 292: Allows the central government to borrow against the security of the Consolidated Fund of India.
- Article 293: Grants states the authority to borrow within India, secured by the Consolidated Fund of the State.
However, Article 293(2) adds a layer of complexity. States that owe loans to the Centre require its consent to borrow further. This consent is often subject to conditions, giving the central government substantial discretion in regulating state borrowing.
Historical Context and the Adoption of Article 293
Article 293 draws its origin from Section 163 of the Government of India Act, 1935. During the Constituent Assembly debates in 1949, members raised concerns about the long-term impact of unchecked state borrowing. One member, Ananthasayanam Ayyangar, even suggested the formation of a commission to oversee state borrowings, similar to the Finance Commission. However, a provision that would prevent the Centre from imposing unreasonable conditions on state borrowing was ultimately not included in the Constitution.
Fiscal Responsibility and Budget Management (FRBM) Act and Its Implications
The FRBM Act of 2003 was introduced to ensure fiscal discipline by capping both the Centre’s and states’ fiscal deficits. The Act established a target fiscal deficit of 3% of GDP for both levels of government. The FRBM Amendment Act of 2018 further strengthened these provisions, requiring the central government to reduce the fiscal deficit to below 4.5% of GDP by 2025-26. However, critics argue that the central government’s efforts to limit state borrowing under these provisions undermine state autonomy and create financial hardships for states like Kerala.
The Supreme Court Case: A Battle for Fiscal Autonomy
Kerala’s petition to the Supreme Court revolves around the interpretation of Article 293 and its implications for state fiscal autonomy. The case raises crucial questions:
- How far can the Centre go in imposing borrowing restrictions on states?
- Does the NBC erode the federal balance by placing undue restrictions on state finances?
Given the complexity and significance of these issues, the Supreme Court has referred the matter to a Constitutional Bench. The outcome of this case will likely have a profound impact on India’s federal structure and the relationship between the Centre and the states.
Why Revisiting Article 293 is Crucial
India’s economic and political landscape has evolved significantly since the adoption of Article 293. The provisions under this Article, particularly the Centre’s power to impose conditions on state borrowing, need to be revisited to reflect current realities. The Government of India Act, 1935, from which Article 293 was adopted, included safeguards to prevent unreasonable delays or conditions on state borrowing. Similar safeguards could help ensure a fairer and more balanced approach to Centre-state fiscal relations today.
Strengthening Article 293: A Way Forward
There is a growing consensus that Article 293 needs to be reformed to protect the fiscal autonomy of states while maintaining a responsible fiscal framework for the nation. The following measures could be considered:
- Establishing a Borrowing Commission: A commission akin to the Finance Commission could be tasked with overseeing state borrowing, ensuring that both the Centre and states meet their financial responsibilities.
- Guidelines for Exercising Borrowing Powers:
- Transparency: Clear and open processes for approving or rejecting state borrowing proposals.
- Consultation: Dialogue between the Centre and states before imposing any borrowing restrictions, fostering cooperative federalism.
- Equitable Treatment: Uniform borrowing terms and conditions for all states, avoiding favoritism or bias.
- Respect for Fiscal Autonomy: Ensure that restrictions do not unduly limit states’ ability to manage their finances effectively.
Conclusion
Revisiting and strengthening Article 293 is essential for maintaining a balanced fiscal framework between the Centre and states. Transparent, fair, and consultative processes are critical to promoting cooperative federalism while ensuring that states retain the autonomy they need to manage their financial affairs effectively. A modern approach to borrowing powers, aligned with India’s evolving political and economic needs, will help safeguard both state autonomy and national fiscal discipline, creating a more robust and sustainable financial system for the future.
Analysis of The Hindu Editorial 2 : Calling out exploitative labour dynamics on platforms
Context
India recently witnessed a significant event—a nationwide digital strike led by women gig workers. This strike, organized by the Gig and Platform Services Workers Union (GIPSWU), aimed to bring attention to the exploitative labor practices prevalent in platform-based gig work. It marked the first time such a collective action occurred in India, seeking solidarity from both gig workers and consumers to address the growing issue of labor abuse in the gig economy.
Introduction
The gig economy, with its promise of flexibility and autonomy, has rapidly transformed the job market. However, for many workers, particularly women, this promise has become a façade. This was evident during the recent Deepavali digital strike initiated by women gig workers. Organized by the Gig and Platform Services Workers Union (GIPSWU), this strike was a bold effort to shed light on the harsh realities faced by workers in the gig economy. The movement called for solidarity from both gig workers and the broader public, aiming to challenge the exploitative labor conditions that have become common in many platform-based jobs.
The True Cost of Discounts in the Gig Economy
During festive seasons like Deepavali, consumers are often enticed by an array of discounts from platform companies. But have we ever paused to ask where these discounts come from?
- Source of Discounts: The unfortunate truth is that these discounts are funded by reducing gig workers’ wages. Workers have been vocal in stating that their earnings are slashed, and they are forced to work in conditions that resemble modern-day slavery.
Despite these alarming revelations, the narrative surrounding gig work continues to glorify platform companies as “unicorn” startups that provide employment opportunities for the youth. But is anyone questioning the ethical foundations of these rapid growth models?
Venture Capital and the Exploitation of Workers
The expansion of platform startups is often seen as a marker of economic progress, yet this growth is built on the backs of exploited gig workers. Venture capital firms continue to pour money into these companies, not to support sustainable business practices, but to drive up profits, often at the expense of the workers who keep these platforms running.
A Public Controversy: The Role of CEOs
A notable controversy unfolded in October 2023, when the CEO of a major platform company was publicly challenged by a well-known satirist. The satirist had criticized the company’s services and its treatment of workers, leading to an unexpected backlash. Instead of addressing the issues, the satirist was subjected to bullying by prominent figures who labeled the CEO a “nation’s wealth creator” and dismissed the labor exploitation claims.
This incident raises essential questions:
- Wealth Creation vs. Exploitation: Is the CEO truly a wealth creator, or is the wealth generated by exploiting gig workers?
- Gig Workers’ Role: Why aren’t we recognizing the contributions of gig workers as central to nation-building? Shouldn’t labor exploitation be considered as damaging as any other anti-national act?
Gig Workers: The Backbone of the Economy
It’s a fact that workers in the informal economy contribute over 60% to India’s GDP, yet their struggles often go unnoticed. This is why the women gig workers’ digital strike during Deepavali, dubbed as Black Diwali, was so powerful. The strike garnered widespread media attention and support from citizen groups, yet women workers understand this is just the beginning of a long fight.
- Demands for Fair Employment: These workers are not asking for charity; they demand secure, dignified employment, with fair wages and safer working conditions. However, their demands are often overshadowed by minimal social security schemes that provide little more than token benefits.
The Problem of ‘Auto-Assigned’ Jobs
The gig economy has reinforced old stereotypes, particularly for women. Many women gig workers are limited to jobs traditionally considered “female work” such as beauticians, cooks, and housekeepers. This isn’t just about job selection; it’s about job security, which is often dictated by customer ratings and “auto-assigned” jobs.
- Dystopian Work Conditions: If workers refuse these jobs, they face deactivation, effectively being “terminated” from the platform. This creates a dystopian environment where people are reduced to a set of numbers, constantly rated and judged.
Many of these workers come from vulnerable backgrounds, including single mothers, divorcees, or survivors of domestic violence. Platform companies are fully aware of this and exploit the fact that these women have few other employment options.
The Illusion of Freedom in the Gig Economy
One of the biggest myths perpetuated by the gig economy is that it offers freedom and financial independence. Women are often lured into platform work with the promise of flexible hours that will allow them to balance work and family life. However, the reality is far from ideal.
- Hidden Costs: Behind the supposed flexibility lies a mountain of costs, including transportation, service materials, and platform fees. Women are left with heavy financial burdens while trying to meet unrealistic targets set by the platform algorithms.
Systemic Failures and Digital Patriarchy
India’s lack of regulatory oversight allows platform companies to thrive on exploitative practices. Without strong labor protections or data privacy laws, these platforms continue to escape accountability, leaving workers vulnerable.
- Perpetuation of Patriarchy: This lack of regulation has led to the feminization of labor, where women are trapped in low-wage, insecure jobs. Patriarchal structures remain deeply embedded in the gig economy, preventing women from accessing basic labor rights.
Grassroots Organizing: The Path Forward
The GIPSWU’s digital strike was a significant moment for gig workers in India and around the world. It demonstrated the power of grassroots organizing, showing that collective action can raise awareness and push for meaningful change.
However, the road ahead is long. GIPSWU and other labor organizations must continue to fight for policies and laws that protect workers’ rights, ensuring that gig economy platforms are held accountable for their exploitative practices. It’s only through sustained grassroots efforts that gig workers can hope to negotiate fair working conditions and secure long-term victories.
Conclusion: A Movement for Change
The digital strike by women gig workers is a powerful reminder that grassroots action can challenge even the most entrenched systems of exploitation. As gig workers in India continue to organize and demand better working conditions, they are setting an example for gig workers worldwide. This is not just about labor rights—it’s about human dignity. The fight for fair treatment in the gig economy is far from over, but the women leading this movement are showing that it’s a fight worth having.