While defending the principles enshrined in our Constitution, the country’s highest institutions — the legislature and the judiciary — should be guided by pragmatism and common sense. Unfortunately, when one takes an absolutist stance with no care for the practical implications of their actions, there are unintended consequences and economic costs eventually borne by common people in whose name these principles are being defended.
On May 28, 2012, and February 15, 2024, the legislature and the judiciary created history by passing laws and judgments with a retrospective effect. The retrospective tax (2012) was done to safeguard the country’s sovereignty which was threatened by tax avoidance of manipulative large corporations. In the case of the illegality of electoral bonds (2024), it was done to defend democracy from the rapacious intent of large corporations who could potentially manipulate government via “quid pro quo” to divert resources from the needy and downtrodden. Indeed, such lofty ideals of defending sovereignty and democracy from plunderers are so tempting that they often blind the best of us to the economic consequences of good intentions.
In both instances, the troublesome part of the actions was not the ideals or scrapping of the law, but the retrospective nature of its effect. In both cases, bravado and heroism were the driving forces, since practical consequences, which should have been part of the guiding principle, were completely ignored. It is somewhat surprising on the part of the judiciary to have entirely missed an essential feature of the common law. As Justice Antonin Scalia of the US Supreme Court had said, “In the grand scheme of things, whether the right party won is really secondary. Famous old cases are famous, you see, not because they came out right, but because the rule of law they announced was the intelligent one. Common-law courts performed two functions: One was to apply the law to the facts… But the second function, and the more important one, was to make the law.”
The rule of law that the highest court has established through the electoral bonds judgment is that the most powerful institutions can strike at individual rights retrospectively by annulling a law. The practical consequence of such a rule of law is that individuals must become excessively cautious since their actions can be judged illegal in the future.
With the benefit of hindsight, the economic consequences of the retrospective tax law were a big blow to the confidence of private sector investment, since it introduced a nagging fear of expropriation by the government. The practical consequence has been lower levels of private investment and the massive opportunity cost in terms of loss of additional jobs that would have been generated had the taxation law not been retrospectively applied. However, after almost a decade of lost job opportunities and investments, better sense prevailed, and the government scrapped the controversial retrospective taxation law in August 2021.
The government introduced a law on electoral bonds as a legitimate funding source for political parties. There is no denying that Indian elections are a costly affair for political parties. Canvassing for candidates is labour-intensive. Despite new technology and social media, which exponentially enhance the outreach of political candidates, the 970 million Indian electorate craves human touch, which requires resources. Unfortunately, with inter-sectoral differences in growth in the economy, with capital-intensive sectors growing relatively faster than labour-intensive sectors, the latter are subjected to the Baumol cost disease — a relatively well-known phenomenon in economics which in the context of elections would imply that the cost of contesting elections would increase exponentially with faster economic growth. In other words, there would be increasing pressure on political parties to generate funds. In the old system with no electoral bonds, political parties raised funds from anonymous donors with little or no scrutiny. There was an overwhelming perception that a large part of the funding generated by political parties was through illegal means.
Consequently, in India where there is one election or another every year, political parties (national and state) have an unquenchable appetite for funds. The old system encouraged black money and attracted those with the greatest capacity to break law and generate funds. Since the courts have been very worried about the “quid pro quo”, they should have taken the pains to explain how the old system was superior to the electoral bonds scheme in preventing donors from receiving political patronage. After all, from a practical perspective, by scrapping the electoral bond scheme because it was “unconstitutional and manifestly arbitrary”, the highest court has implicitly tilted to the earlier mechanism of unknown and unaccountable political fundraising.
The fundamental difference between government and judiciary is in the accountability of their actions. In an electoral democracy, governments are ultimately accountable to people, and a misjudgement of policies that affect people can result in them being thrown out of power. This happened to the UPA 2 government — bad laws, indecisiveness in framing policies, and perception of favouritism and corruption resulted in a defeat in general elections. More than the courts, people through their votes, check the government’s power. Government actions are scrutinised by Opposition and independent institutions such as the Comptroller and Auditor General, who are expected to monitor every government expense. In essence, there are multiple checks on the actions of the government. However, the judiciary is beyond scrutiny, and it’s unclear to whom they are accountable other than their own conscience.
Democracy has strengthened in the country. Far-reaching electoral reforms have been introduced by subsequent governments to make it more accountable, including voter ID, EVMs etc. Consequently, we witnessed a revolutionary change in women voters’ turnout and dramatic decline in electoral violence. The people’s court severely penalised the perception of unfair corporate influence on government policy, as we witnessed a near wipeout of the biggest and oldest party in the general elections of 2014. We are confident overall, that ordinary people are good judges of character and don’t need patronising. As an important step towards judicial accountability, the highest court should gauge public opinion about the courts and conduct a nationwide survey through an independent entity. The survey could highlight the nature and extent of justice-poverty, particularly among the most vulnerable.
In conclusion, the retrospective nature of making laws and unleashing political witch-hunting is a gross violation of individual rights. The economic consequence of this act would be an erosion of people’s faith that they and their property are protected from mighty and powerful institutions of the country. In such an atmosphere, private investment and property don’t enjoy legal protection as the rule of law promulgated is that individual rights can be retrospectively violated for some lofty ideals. The highest court should have deliberated alternatives to safeguard democracy from undue corporate influence. In an electoral democracy, political parties can be penalised in the people’s court if they are unhappy with undue benefits to some at the expense of many. But, then, who will make the judiciary accountable?
Ravi is Member, Economic Advisory Council to Prime Minister of India and Kapoor is at Indian Statistical Institute, Delhi
Tavleen Singh writes: Modi as a Congress role modelSubscriber Only
In BJP bastion, voters flag: 'Missing oppn not healthy’Subscriber Only
Diljit Dosanjh's journey to being Amar Singh ChamkilaSubscriber Only
Odisha to Cambodia – how Indians were duped by dishonestSubscriber Only
Chital population up, a tiny Andaman island struggles to keepSubscriber Only
Behind the immersive art exhibition app for Apple’s Vision ProSubscriber Only
Abu Abraham's cartoons: a mind more wicked than any search
The Satwik-Chirag interviewSubscriber Only
Retrospective nature of law-making and subsequent political witch-hunting leads to erosion of people’s faith in system
9
1
09.04.2024
While defending the principles enshrined in our Constitution, the country’s highest institutions — the legislature and the judiciary — should be guided by pragmatism and common sense. Unfortunately, when one takes an absolutist stance with no care for the practical implications of their actions, there are unintended consequences and economic costs eventually borne by common people in whose name these principles are being defended.
On May 28, 2012, and February 15, 2024, the legislature and the judiciary created history by passing laws and judgments with a retrospective effect. The retrospective tax (2012) was done to safeguard the country’s sovereignty which was threatened by tax avoidance of manipulative large corporations. In the case of the illegality of electoral bonds (2024), it was done to defend democracy from the rapacious intent of large corporations who could potentially manipulate government via “quid pro quo” to divert resources from the needy and downtrodden. Indeed, such lofty ideals of defending sovereignty and democracy from plunderers are so tempting that they often blind the best of us to the economic consequences of good intentions.
In both instances, the troublesome part of the actions was not the ideals or scrapping of the law, but the retrospective nature of its effect. In both cases, bravado and heroism were the driving forces, since practical consequences, which should have been part of the guiding principle, were completely ignored. It is somewhat surprising on the part of the judiciary to have entirely missed an essential feature of the common law. As Justice Antonin Scalia of the US Supreme Court had said, “In the grand scheme of things, whether the right party won is really secondary. Famous old cases are famous, you see, not because they came out right, but because the rule of law they announced was the intelligent one. Common-law courts performed two functions: One was to apply the law to the facts… But the second function, and the more important one, was to make the law.”
The rule of law that the highest court has........
© Indian Express
visit website
login
who are we?
contact us
qosheapp
Toi Staff
Gideon Levy
Belen Fernandez
Tarik Cyril Amar
Rami G Khouri
Mort Laitner
Bradley Blankenship
