Last week, the Supreme Court asked the government about the status of criminal cases pending against elected ministers, underlining the importance of breaking from the history of law-breakers becoming law-makers. The court recommended setting up fast-track courts to deal with the cases, but that is unlikely to be an effective strategy, unless complemented with reforms to improve governance and bring transparency in campaign financing.
Criminalization refers to the use of criminal activities by politicians; either by direct malfeasance or by indirectly recruiting someone. It is not a new phenomenon; the first instances of “booth-capturing” were reported in 1957, and involved hired goons who would mobilize or suppress turnout, or vote on behalf of disenfranchised voters. In return for their work, politicians would protect these criminals from prosecution.
From such petty engagement with elections, goondas and gangs have come a long way to contest elections themselves. Milan Vaishnav, author of When Crime Pays: Money And Muscle In Indian Politics, calls this an example of vertical integration.
Until the late 1960s, the re-election rates of incumbents were high. Hence goons were relatively assured of political favours after they helped a politician win the election. As political competition increased, the uncertainty around re-election of incumbent candidates also increased. This led to the entry of criminals in politics in order to maximize control over their own survival and protection. Many goons who had not been involved in politics joined it as a competitive response as they feared missing out on opportunities, or a crackdown by a competing gang.
Vertical integration does not explain why political parties chose to field such ruffians; criminality of the candidates could have brought bad press.
That process began with Indira Gandhi banning corporate financing of elections in 1969. This eliminated the most important legal source of campaign finance and pushed financing underground. At the same time, the costs of contesting elections kept increasing due to a rising population, increasing political competition—the number of political parties increased from 55 in the 1952 general election to 464 in 2014—and the trend of giving freebies for votes.
This led parties to a competitive search for underground financing, and they played into the hands of criminals and racketeers who had the means to acquire and dispose of large amounts of cash without detection. Thus parties fielded tainted candidates because they could contest an election without becoming a burden on the party’s limited coffers.
Data from the last three general elections shows that the strategy was an electoral success as candidates with criminal cases were three times more likely to win than a “clean” candidate.
The root of the problem lies in the country’s poor governance capacity. On the one hand, India has excessive procedures that allow the bureaucracy to insert itself in the ordinary life of people; on the other hand, it appears woefully understaffed to perform its most crucial functions.
The density of allopathic doctors, nurses and midwives is 11.9% per 10,000 residents in India (2014), at half of the benchmark set by the World Health Organization (WHO). Furthermore, the density is ten times larger in urban areas than villages. Despite internal security concerns—from Maoist violence to religious extremism and organized crime—there is a 30% shortfall in personnel of the Intelligence Bureau.
India has the lowest number of police officers per capita—122.5 per 100,000 people—of any G20 member state, and the vacancy rate stands at 25%. Vacancy rates are 37% for high courts and 25% for local courts.
This scarcity of state capacity is the reason for the public preferring ‘strongmen’ who can employ the required pulls and triggers to get things done—someone who can enforce contracts, deal with the police when they get into trouble, handle the government babus while procuring a licence or help get admission to a government hospital for treatment. Sometimes these politicians align on communal lines as well, promising to serve the interests of a caste or religious community. Criminality, far from deterring voters, encourages them because it signals that the candidate is capable of fulfilling his promises and securing the interests of the constituency.
Fast-track courts are necessary because politicians are able to delay the judicial process and serve for decades before prosecution. But it is obvious that this will do little to break down the symbiotic relationship between politicians and criminals on the one hand, and the dependence of voters on strongmen on the other. Prosecuted politicians can field their relatives in the contest, thereby retaining power within the family.
The reform needs to change the incentives for both politicians and voters. First, bringing greater transparency in campaign financing is going to make it less attractive for political parties to involve gangsters. Thus, either the Election Commission of India (ECI) should have the power to audit the financial accounts of political parties, or political parties’ finances should be brought under the right to information (RTI) law. Second, broader governance will have to improve for voters to reduce the reliance on criminal politicians. That requires a rationalization of bureaucratic procedures and an increase in state capacity to deliver essential public goods like security of life and contracts, and access to public utilities. Standing alone, fast-track courts for politicians will be ineffective in cleansing Indian politics.
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.