The Problem Special Packages

Coalition politics is back at the union level in a substantial way. Formation of Coalition Government paved way for the public discussion on demand of State-specific discretionary grants, or ‘Special packages’

Coalition Politics Is Back At The Union Level In A Substantial Way

• Bharativa Janata Party is dependent on the Janata Dal (United) of Bihar and the Telugu Desam Party of Andhra Pradesh for its parliamentary majority.
• This is in contrast to 2014 and 2019, when de facto single-party governments came to office.
• Formation of Coalition Government paved way for the public discussion on demand of State-specific discretionary grants, or ‘special packages’

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Positive Aspect of Coalition Partners

• Check & Balance: Presence of coalition partners that can act as a check if unitary trends surge 
• Federal tendencies bloom: When single-party dominance at the Union level fades, federal tendencies bloom and when a single-party majority under a strong leader at the Union level prevails, federal tendencies wilt.

Need For Transparency And Stability

• If a healthy federal structure is to be nurtured, the fiscal boundaries, principles of assignment of taxes, and the basis for grants have to be transparent and objective.
• Asymmetric but Transparent: A federal setup can be asymmetric in a country that is characterised by linguistic, cultural, and economic diversity.
  • But issues of asymmetry should be addressed by means of constitutional provisions that have both transparency and stability.

Constitution Has Provisions That Address The Issues Of Specific States

• Articles 371A to H: These provisions are covered in Articles 371A to H (Article 370 for the erstwhile State of Jammu and Kashmir, of course, is abrogated).
• Additional grant under Article 282: They may be need-based, but the need is not the proximate reason for granting a special package, which is an additional grant under Article 282, which falls under ‘Miscellaneous Financial Provisions’
  • Special packages are purely discretionary
    • Result of the bargaining power of some State-level political parties that can tilt the scales of parliamentary majority.
• Article 280 &  Article 275:  The Commission is constituted by the President every five years or earlier to make recommendations regarding the distribution of a share of taxes collected by the Union to the States, and how this is to be distributed among the States, as per Article 280
  • Disbursement of grants to States in need of assistance, as provided in Article 275.

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Issues

• Determines the Extent to which our polity is federal.
  • Constitution has been famously described as having a quasi-federal framework.
  • State of Rajasthan and Others v Union of India, 1977: The Supreme Court has made the succinct observation that our polity is amphibian – it can assume unitary and federal characters depending on whether or not there is an Emergency under Articles 352 and 356 in force 
  • It Determines the Federal Character: Prevailing political environment crucially determines whether federal tendencies bloom or wilt.
• Article 282 almost a factor of four times to Article 280 &  Article 275
  • But the fact now is that the flow of discretionary grants to the States through Article 282 have far overtaken (by almost a factor of four) that of the grants recommended by the Finance Commissions.
• Weaken the foundations of fiscal federalism: Acceding to demands for special packages which are raised by State-brd parties, holding the key to parliamentary majority, will weaken the foundations of fiscal federalism
  • It will result in diverting national resources away from other States, which too may have pressing needs. 
  • If this is allowed to happen, we will see the paradox of federal tendencies wilting instead of blooming when single-party dominance fades.

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