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In ParliamentPerspective

Bypassing the statesby MR Madhavan August 16, 2013 4:52 pm

Can Parliament pre-empt state gov ernment re sources through rights laws?

The Food Security Bill is expected to be discussed in Parliament in the next few days. There have

been several critiques ofthis Bill in terms of the coverage of the population, amount of grain, the

mode of subsidy (food versus cash versus vouchers), availability of food grains, the overall cost and

fiscal implications etc. Importantly, in the last few months the chief ministers of Tamil Nadu and

Gujarat have written letters to the Prime Minister on Direct Benefits Transfer and the National Food

Security Ordinance. Among other issues, both letters talk about the roles of the centre and the

state governments.SIGN-UP

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However, there has been little public discussion on the issue of mandatory expenditure related to

statutory rights. Most development programmes and subsidy systems in India have traditionally

been in the form of government schemes. The expenditure required to implement these

programmes has to be approved by the legislature on an annual basis through demands raised in

the annual budgets. Through this process, the legislature expresses its priorities by allocating

financial resources among various competing demands.

The Constitution places the responsibility of allocating resources on an annual basis on the

legislature by stating that all government expenditure (except a few charged items) have to be

approved by the legislature through a vote. The last decade has seen a divergence from thisprinciple by enshrining certain development/subsidy entitlements as statutory rights.

The Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) was passed in 2005,

and provides the statutory right to people living in rural areas to get a job for a certain number of

days every year at a specified rate. The cost is borne by the union government. This right is

justiciable, i.e., any person who fails to get the job on demand can approach the courts for remedy

and compensation. Therefore, Parliament has no choice but to provide for the amount required to

deliver this right. Indeed, if Parliament under-allocates the amount required, and a court rules in

favour of any complainant, the government will be bound to spend the money. This is due to the

Constitutional provision that any expenditure arising from the ruling of a court is a charged item, and
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is not subject to a vote by Parliament.

Of course, if a future Parliament decides to change its priorities, it has the freedom to amend or

repeal the law that mandates the right. However, some of the new laws mandate expenditure by

state governments, and state legislatures may not have the power to undo or modify the statutory

right.

The Right to Free and Compulsory Education Act (RTE) was passed in 2009, and entitles every

child between the age of six and 14 years to elementary education in a neighbourhood school. The

costs for doing so are to be shared by the central and state governments.

Unlike MNREGA, the right to education stems from a fundamental right that was read into the right

to life by the Supreme Court in 1993, and was written into the Constitution as Article 21A in 2002.

Therefore, future Parliaments will have limited freedom to amend the law. Indeed, this fundamental

right differs from the others in the sense that it obliges the state to perform a duty whereas the other

fundamental rights protect people from the actions of the state or other persons.

A second concern is that Parliament has enacted a law that obliges state governments to allocateresources. Given that this is a concurrent list item, state legislatures cannot amend the provisions

to override the central law. The question is whether this infringes on the role of state legislatures to

determine their preferences and allocate funds accordingly.

The National Food Security Ordinance, 2013 and the associated Bill have a similar issue in terms of

the expenditure by state governments. The law provides a statutory right to a certain quantity of

foodgrains (or equivalent cash) to all persons who fall within its coverage criteria. The cost of

procuring, storing and transporting the foodgrains up to the state storage depots are to be borne by

the union government. The cost of the subsequent supply chain is to be borne by the state

governments, although there is an enabling provision that permits the centre to provide financial

assistance. Again, the issue is whether Parliament can pre-empt the role of state legislatures in

allocating the resources of the state.

Purists may argue that the establishment of any statutory body (such as central and state

information commissions) has similar implications, and it has been customary to establish them. The

key difference is in the materiality of the amounts involved. Typically, the establishment of such

bodies requires a few hundreds of million rupees, which would be a small part of the overall budget

(the central budget is now about Rs 16 trillion). These three Acts MNREGA, RTE and the Food

Security Law will together cost between Rs 3 trillion and Rs 4 trillion (estimates for the costs of the

food security law have a wide variation). Therefore, the impact on resource allocation is significant.


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That is, these rights have the effect of pre-empting the resource available to other potential

programmes.

On the receipts side, there is an established system of Finance Commissions determining the

division of resources between centre and states. Also, there has been a contentious debate with

respect to the Goods and Services Tax (GST), with extended negotiations on a framework to reach

a common GST system within the federal framework. The enabling amendment to the Constitution is

still pending before Parliament.

There has been little such debate on the expenditure side. The core concept of the federal

structure and the implications for the role of Parliament and state legislative assemblies to

determine spending priorities need to be discussed in the context of resource-intensive statutory

rights being enacted. The scheduled debate in Parliament on the food security bill is an opportunity

to finesse the various arguments. We will have to see whether our MPs, including those who have,

in the past, voiced their concerns on issues related to the aspirations and rights of states, discuss

this matter.

Photo: Austin Yoder

MR Madhavan is President of PRS Legislative Research.

Tags: Featured federalism Food Security Bill India Law s parliament rights states

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Bypassing the states.pdf