Making of Contemporary india

4.1 DECENTRALISATION

• Democratic decentralization is the process of

devolving the functions and resources of the
state from the centre to the elected representatives
at the lower levels so as to facilitate greater direct
participation of citizens in governance.
• Local government, including panchayats, is
a state subject in the Constitution, and
consequently, the devolution of power and authority
to panchayats has been left to the discretion of
states.
• The Constitution mandates that panchayats and
municipalities shall be elected every five
years and enjoins States to devolve functions and
responsibilities to them through law.
• A study for the Fourteenth Finance Commission by
the Centre for Policy Research, shows that all
States have formally devolved powers with
respect to five core functions of water supply,
sanitation, roads and communication, streetlight
provision and the management of community
assets to the gram panchayats.
Issues with Local Governments in India

• Insufficient Funding: The money given to the local

governments is inadequate to meet their basic
requirements.
• Inflexibility in spending the allocated budget. The
use of money is constrained through the imposition
of several conditions.
• There is little investment in enabling and
strengthening local governments to raise their own
taxes and user charges.
• Lack of staff: Local governments do not have the
staff to perform even basic tasks. Furthermore, as
most staff are hired by higher level departments and
placed with local governments on deputation, they
do not feel responsible to the latter; they function as
part of a vertically integrated departmental system.
• Untimely and delayed elections: States often
postpone the elections and violate the constitutional
mandate of five yearly elections to local
governments.
o In Tamil Nadu, panchayat elections have not

been held for over two years now, resulting in

the State losing finance commission grants
from the Union government.
• Local governments are merely acting as an
implementation machinery rather than policy-
making body for local development. Technology-
enabled schemes have further downgraded their
role.
• Corruption: Criminal elements and contractors are
attracted to local government elections, tempted by
the large sums of money now flowing to them. A
market chain of corruption operates, involving a
 partnership between elected representatives and
officials at all levels.
• However, there is no evidence to show that
corruption has increased due to decentralisation.
• Decentralised corruption tends to get exposed
faster than national or State-level corruption. People
erroneously perceive higher corruption at the local
level, simply because it is more visible.
• However, we can keep track of corrupt local
government representatives more easily than those
at the higher levels.
4.2 PANCHAYATI RAJ
73rd Amendment Act was passed in I992, and it took
effect on April 24, 1993. The primary goal of the Act was
democratic decentralisation of power and resources
from the centre to locally elected authorities in order to
encourage public involvement in governance.
73rd Amendment Act (1992) - Constitutional Provisions

• Local governments were provided constitutional

sanction through the 73rd Amendment Act of
1992 which was enforced on 24th April 1993.
• The 11th schedule was added to the constitution
through this amendment which contained 29 subject
matters of the Panchayats.
• This act also added Part IX to the Constitution
which contained provisions from Articles 243 to
243 O.
 • This amendment brought the state governments
under constitutional obligation to adopt the new
system of Panchayati Raj in accordance with the
provisions of the act.
73rd Amendment Act - Salient Features
1. Gram Sabha

• Gram Sabha was the foundation of the

Panchayati Raj System which consisted of the
people registered in the electoral rolls of the village
within the area of the Panchayat.
2. Three-tier System

• The three-tier system of the panchayat was

provided in every state i.e. Panchayat at the village,
intermediate and district level which brought
uniformity in the structure of Panchayati Raj
institutions throughout the country.
3. Election of Members and Chairpersons

• The members of Panchayats at the village,

intermediate, and district levels shall be elected
directly by the people whereas the chairman of
the Panchayat at the intermediate and district
level shall be elected indirectly from amongst the
elected members thereof.
4. Reservation of Seats

• Reservation of seats for SC and ST is provided in

every panchayat in the proportion to their
population. Provision for reservation of 1/3rd of the
 total number of seats are also provided for
women.
• The state legislature has been empowered to make
any provision for reservation in Panchayat at any
level in favor of the backward class.
5. Duration of Panchayat

• Panchayats have been provided for a five-year term

of office at every level. It can however be dissolved
before the completion of its term.
• A panchayat if elected after the dissolution of the
panchayat before shall continue for the remaining
period for which the State Election
Commission dissolved Panchayat would have
continued had it not been dissolved.
6. State Election Commission

• The state election commission has been constituted

and has been endowed with various roles like
superintendence, direction, and control of the
preparation of electoral rolls.
• The conduct of elections to the Panchayats shall
also be handled by the state election commission
7. Finance Commission

• The finance commission is constituted by the

governor to review the financial position of the
Panchayats.
• This commission recommends the governor decide
the principles that should govern the distribution of
taxes between the state and the Panchayats. It also
 determines the taxes, duties, tolls, and fees that
may be assigned to Panchayats.
• The provisions with respect to the maintenance of
accounts by the Panchayats and the auditing of
such accounts are done according to the provisions
decided by the state legislature.
•

8. Powers and Functions of Panchayats

• The powers and functions of the Panchayats are

endowed by the state legislature.
• The Panchayats prepare a plan for economic
development and social justice for the people of
the Panchayats.
• It implements the scheme of the Central and State
government for the betterment of the people at the
ground level.
• Panchayats have the power to enhance
employment facilities and undertake development
activities in the area.
9. Finances

• authorize a panchayat to levy and collect taxes,

duties, duties, and fees;
• assign to the Panchayat taxes, duties, duties, and
fees levied and collected by the state government;
• provide grants-in-aid to the Panchayats from the
state's consolidated fund; and
• provide for the establishment of funds to credit all
money of the Panchayats.
73rd Amendment Act (1992) - Background

• Village panchayats had been in use in India for a

long time before the 1992 legislative changes, but
the structure had several inherent flaws such as
the incapacity to serve as a people's government
that could respond to their needs.
• This resulted from a number of causes, including a
lack of funding, irregular elections, and insufficient
representation of the weaker groups, such as
women and scheduled castes and tribes.
• Article 40 of the Indian Constitution's Directive
Principles of State Policy states that the
government must make it easier for gram
panchayats to be established and run efficiently.
• The central government of India passed the 73rd
Amendment Act in 1992 to solve these problems
and enhance local self-government.
• The law was approved by both houses and went
into effect on April 24th, 1993.
73rd Amendment Act (1992) - Objectives

• The main objective of the 73rd Amendment act was

the democratic decentralisation of power and
resources from the centre to elected
representatives at lower levels in order to allow
individuals to participate more directly in
governance.
• The Act empowered state governments to take the
required procedures to establish gram panchayats
 and enable them to function as self-governing
bodies.
• The objective of the 73rd Amendment pertains
to Article 40 of the constitution which requires the
state to organise village panchayats and grant them
the necessary powers and authority to enable them
to function as units of self-government.
• This amendment is based on the Gandhian
Principle of DPSP which recommended grass root
level democracy i.e. people should decide matters
on their own.

• Gandhiji advocated the third level of

government that can understand the problems of
the people of the village at the grassroots level.
4.4 ANTI CORRUPTION MOVEMENTS

• Corruption can be defined as the abuse of

entrusted power for private gain. It can impact a
nation’s development in various ways.
• Impact of Corruption:
• Political Costs: The political costs of corruption are
manifested in weakened public trust in political
institutions, reduced political participation,
perversion of the electoral process, restricted
political choices available to citizens and loss of
legitimacy of the democratic system.
 oEconomic Costs: Corruption reduces
economic efficiency by misallocation of
resources in favour of rent seeking activities,
increasing the cost of public transactions,
acting as an additional tax on business thereby
reducing investment, reducing genuine
business competition
• Regulatory Framework:
• The Lokpal and Lokayuktas Act, 2013 provides
for an establishment of an ombudsman for the
central and state governments (Lokpal and
Lokayuktas, respectively).
• These bodies are required to act independently
from the government and have been empowered to
investigate allegations of corruption against public
servants, which include the prime minister and other
ministers.
• The Central Vigilance Commission though
created in 1964, became an independent statutory
body only in 2003 by an Act of Parliament.
o Its mandate is to oversee the vigilance

administration and to advise and assist the

executive in matters relating to corruption.
The anti-corruption movement in India was a sequence
of demonstrations, strikes, and protests across India that
began in 2011 and aimed to establish a strong law and
enforce a rampant political corruption system. The
movement was primarily aimed at a non-violent society.
It included marches, protests, acts of public
disobedience, rallies, hunger strikes, and social media to
communicate, organise, and raise awareness. The
protests were non-partisan, and the majority of
protesters were opposed to major parties’ efforts to use
them to strengthen their power structures.
Dandi March II in the United States was a 240-mile
Indigenous Movement started against corruption in
India. It started on March 12, 2011, and ended on March
26. It demanded the Lokpal Bill and black money back.
The protest was also held in 40 cities in India, 45 cities
in the USA, and eight other countries worldwide.

Following this incident, Anna Hazare asked to form a

joint government and civil society representatives
committee to draft a solid anti-corruption law. However,
India’s Prime Minister, Manmohan Singh, turned down
Hazare’s request. As a result, on April 5, 2011, Anna Ji
began a hunger strike in Delhi’s Jantar Mantar. It was
part of India Against Corruption campaign. He stated
that the fast would last until the law was passed. Hazare
did not allow politicians to remain with him, and those
who attempted to join him were expelled. Protests have
spread to other Indian cities like Mumbai, Bangalore,
Ahmedabad, and Chennai. Prominent people from
sports, Bollywood and business had lent their support to
Anna Hazare’s anti-corruption campaign. The
government was at odds with activists, reiterating that
the drafting committee is led by a minister appointed by
the government rather than a member of civil society, as
demonstrators wanted to prevent the government from
undermining the bill and members.
In the same month, Baba Ramdev announced the
formation of the Bharat Swabhiman Andolan, an anti-
corruption movement. However, the movement gained
traction only after major Union Ministers met with
Ramdev in early June to consider his concerns. Ramdev
supported Anna Hazare’s anti-corruption movement,
and he led the second big protest in New Delhi’s Ramlila
Maidan on June 4 to raise awareness about the need for
a law-abiding black repatriation law. He also demanded
that tax-free money be declared a national treasure and
that international banks’ money laundering is considered
a crime against the government. This was also a part of
India Against Corruption campaign. On June 5, police
raided the Ramlila Maidan, detained Ramdev, and
evacuated his supporters after using tear gas and tear
gas canisters. Following his detention, on June 6, the
Indian National Human Rights Commission requested
that the Union Home Secretary, the Delhi City Police
Commissioner, and the Delhi Secretary-General report
the incident within two weeks. These human rights
violations infuriated Anna Ji, who responded by going on
another hunger strike. Protests were held in Bangalore,
Hyderabad, Chennai, Jammu, Mumbai, Lucknow, and
Nepal.
4.5 WOMEN RESERVATION
The demands for special concessions and privileges to
women are matters of right and not of charity or
philanthropy. When reservation for women in
panchayats was announced, some people supported it
but some others said that it would generate a spirit of
denigration.

At the panchayat level, one-third seats were reserved for

women by making an amendment (73rd) in the
Constitution. Later on, a separate clause was added
reserving one- third of seats for the SC and ST women
within the SC and ST quotas. This means that if there
are 100 seats in a local body, of which 23 seats are
reserved for the SCs/STs, then 7 or 8 of these (23)
seats would be reserved for SC/ST women.

WOMEN RESERVATION BILL

• The Bill was introduced in the Rajya Sabha in May

2008 and was referred to a standing committee. In
2010, it was passed in the House and transmitted
finally to the Lok Sabha. However, the Bill lapsed
with the 15th Lok Sabha.
• Origin:
• The original idea for this bill originated from a
constitutional amendment which was passed
back in 1993.
• The constitutional amendment stated that a
random one third of village council leader, or
Sarpanch, positions in the gram
panchayat should be reserved for women.
• The Women's Reservation Bill was launched as
a long term plan to extend this reservation to
Lok Sabha and state legislative assemblies.
• About the Bill:
• The bill seeks to reserve 33% seats in Lok Sabha
and all state legislative assemblies for women.
• Reserved seats may be allotted by rotation to
different constituencies in the state or union
territory.
• Reservation of seats for women shall cease to
exist 15 years after the commencement of this
Amendment Act.
• Need:
o According to Global Gender Gap Report
2021, India has declined on the political
empowerment index by 13.5 percentage
points, and a decline in the number of
women ministers, from 23.1% in 2019 to
9.1% in 2021.
o It is acknowledged even by the government's
Economic Surveys that women's
representatives in Lok Sabha and the
legislative assemblies are abysmally low.
o The various surveys do indicate that women
representatives from Panchayati Raj have
worked commendably in the development
and overall well-being of society in villages
and many of them would definitely want to work
on the larger scale, however, they face
various challenges in the political structure
prevalent in India.
 ▪ Challenges include lack of proper political
education, low financial power of women in
society, sexual violence, manifestations of
insecure patriarchy, uneven distribution of
household work between men and women,
etc.
▪ The phenomenon of Panchayat Patis –

husbands (or other male relatives) using

women as proxies in PRIs and wielding the
real power – is prevalent.
• Significance:
o Women’s political empowerment is premised
on three fundamental and non-negotiable
principles:
▪ The equality between women and men.

▪ Women’s right to a full development of

their potential.
▪ Women’s right to self representation and

self-determination.
o There is a gender gap in political decision-

making, and women leaders need to come out

more in numbers to impact position
decisions and inspire teenage girls to
contribute to nation-building.
• Issues:
• It has been argued that it would perpetuate the
unequal status of women since they would not
be perceived to be competing on merit.
• It is also contended that this policy diverts
attention from the larger issues of electoral
reform such as criminalisation of politics and inner
party democracy.
 • It restricts the choice of voters to women
candidates.
• Rotation of reserved constituencies in every
election may reduce the incentive for an MP to
work for his constituency as he may be ineligible to
seek re-election from that constituency.
4.6 NEP SINCE 1991
The New Economic Policy (NEP) of India was
launched in the year 1991 under the leadership of P. V.
Narasimha Rao. The New Economic Policy was
undertaken by Finance Minister Manmohan Singh as an
answer to the economy the nation was facing in the
1990s. This was in line with the International Monetary
Funds (IMF) regulations to lend to India. The credibility
of the country's economy was decreasing, with no
country willing to lend loans. This period also saw a
decrease in the foreign exchange reserves of the
country. This is also known as the LPG Model of growth.

• t is a set of policy measures that

emphasized liberalization, privatization, and its
outcome was globalization.
• It included various policy measures such
as stabilization measures (to control inflation and
the correct balance of payments) and various
structural reform measures (to improve the
efficiency of the economy and increase international
competitiveness by removing rigidity in various
economic segments).
• New economic policy was undertaken in view of the
1991 financial crisis that arose due to reasons like
 the gulf war that pushed up oil prices and lower
remittances from the gulf, foreign reserves at an
all-time low, hyperinflation occurring at the same
time.
Objectives of New Economic Policy

• To make the entry of the Indian economy into the

field of ‘Globalization and to give it a new thrust on
market orientation.
• NEP was envisioned to bring down the rate of
inflation.
• To increase the economic growth rate and build
significant foreign exchange reserves.
• To enable economic stabilityand to remove
market restrictions that are impediments to growth.
• Increase the inflow of international goods, services,
capital, human resources, and technology, by
removing restrictions.
• Sectors reserved for the government were reduced
so as to increase the participation of private players
in various sectors of the economy.
Branches
Branches of New Economic Policy
Liberalization

Liberalisation was begun to put an end to these

limitations, and open multiple areas of the economy.
Though some liberalisation proposals were prefaced in
the 1980s in areas of export-import policy, technology
up-gradation, fiscal policy, and foreign investment,
industrial licensing, and economic reform
policies launched in 1991 were more general. There are
a few significant areas, namely, the financial sector,
industrial sector, foreign exchange markets, tax reforms,
and investment and trade sectors that gained
recognition in and after 1991.

Liberalisation in India
Since the adoption of the New Economic Strategy in
1991, there has been a drastic change in the Indian
economy. With the arrival of liberalisation, the
government has regulated the private sector
organisations to conduct business transactions with
fewer restrictions.

For the developing countries, liberalisation has opened

economic borders to foreign companies and
investments. Earlier, the investors had to encounter
difficulties to enter countries with many barriers.These
barriers included tax laws, foreign investment
restrictions, accounting regulations, and legal issues.
Economic liberalisation reduced all these obstacles and
waived a few restrictions over the control of the
economy to the private sector.

Objectives

• To boost competition between domestic businesses

 • To promote foreign trade and regulate imports and
exports
• To improve the technology and foreign capital
• To develop a global market of a country
• To reduce the debt burden of a country
• To unlock the economic potential of the country by
encouraging the private sector and multinational
corporations to invest and expand
• To encourage the private sector to take an active
part in the development process
• To reduce the role of the public sector in future
industrial development
• To introduce more competition into the economy
with the aim of increasing efficiency
Reforms under Liberalisation

• Deregulation of the Industrial Sector

• Financial Sector Reforms
• Tax Reforms
• Foreign Exchange Reforms
• Trade and Investment Policy Reforms
• External Sector Reforms
• Foreign Exchange Reforms
• Foreign Trade Policy Reforms
Impact of Liberalisation
Positive Impact of Liberalisation in India
Free flow of capital: Liberalisation has enhanced the
flow of capital by making it affordable for the businesses
to reach the capital from investors and take a profitable
project.
Diversity for investors: The investors will be benefitted
by investing a portion of their business into a diversifying
asset class.

Impact on agriculture: In this area, the cropping

designs have experienced a huge change, but the
impact of liberalisation cannot be accurately measured.
Government’s restrictions and interventions can be seen
from the production to the distribution of the crops.

Negative Impact of Liberalisation in India

The weakening of the economy: An enormous
restoration of the political power and economic power
will lead to weakening the entire Indian economy.

Technological impact: Fast development in technology

allows many small scale industries and other businesses
in India to either adjust to changes or shut their
businesses.

Mergers and acquisitions: Here, the small businesses

merge with the big companies. Therefore, the
employees of the small companies may need to
enhance their skills and become technologically
advanced.
PRIVATISATION
Privatisation can suggest several things including the
migration of something from the public sector to the
private sector. It is also used as a metonym for
deregulation when a massively regulated private firm or
industry becomes less organised. Government services
and operations may also be (denationalised) privatised.
In these circumstances, private entities are tasked with
the application of government plans or the execution of
government assistance that had earlier been the vision
of state-run companies. Some instances involve law
enforcement, revenue collection, and prison
management.

Privatisation of the public sector companies by selling off

parts of the equity of PSEs to the public is known as
disinvestment.

Objectives of Privatisation

Providing strong momentum for the inflow of FDI

• Privatisation aims at providing a strong base for the

inflow of FDI.
• The increased inflow of FDI improves the financial
strength of the economy.
Improving the efficiency of public sector
undertakings (PSUs)

• The efficiency of PSUs is improved by giving them

the autonomy to make decisions.
• Some companies were given special categories of
Navratna and Miniratna

GLOBALISATION
The term globalisation refers to the integration of the
economy of the nation with the world economy. It is a
multifaceted aspect. It is a result of the collection of
multiple strategies that are directed at transforming the
world towards a greater interdependence and
integration.

It includes the creation of networks and pursuits

transforming social, economical, and geographical
barriers. Globalisation tries to build links in such a way
that the events in India can be determined by the events
happening distances away.

Effect of Globalisation in India

India is one of the countries that succeeded significantly
after the initiation and implementation of globalisation.
The growth of foreign investment in the field of
corporate, retail, and the scientific sector is enormous in
the country.
It also had a tremendous impact on the social,
monetary, cultural, and political areas. In recent years,
globalisation has increased due to improvements in
transportation and information technology. With the
improved global synergies, comes the growth of global
trade, doctrines, and culture.

Globalisation in the Indian economy

Indian society is changing drastically after urbanisation
and globalisation. The economic policies have had a
direct influence in forming the basic framework of the
economy.

Economic policies established and administered by the

government also performed an essential role in planning
levels of savings, employment, income, and investments
in the society.

Cross country culture is one of the critical impacts of

globalisation on Indian society. It has significantly
changed several aspects of the country, including
cultural, social, political, and economical.
However, economic unification is the main factor that
contributes maximum to a country’s economy into an
international economy.

Advantages of Globalisation in India

Increase in employment: With the opportunity of
special economic zones (SEZ), there is an increase in
the number of new jobs available. Including the export
processing zones (EPZ) centre in India is very useful in
employing thousands of people.

Another additional factor in India is cheap labour. This

feature motivates the big companies in the west to
outsource employees from other regions and cause
more employment.

Increase in compensation: After globalisation, the

level of compensation has increased as compared to the
domestic companies due to the skill and knowledge a
foreign company offers. This opportunity also emerged
as an alteration of the management structure.

High standard of living: With the outbreak of

globalisation, the Indian economy and the standard of
living of an individual has increased. This change is
notified with the purchasing behaviour of a person,
especially with those who are associated with foreign
companies. Hence, many cities are undergoing a better
standard of living along with business

development.

4.7 Impact of Globalisation

Outsourcing: This is one of the principal results of the

globalisation method. In outsourcing, a company recruits
regular service from the outside sources, often from
other nations, that was earlier implemented internally or
from within the nation (like computer service, legal
advice, security, each presented by individual
departments of the corporation, and advertisement).

As a kind of economic venture, outsourcing has

increased, in recent times, because of the increase in
quick methods of communication, especially the growth
of information technology (IT).

Many of the services such as voice-based business

processes (commonly known as BPS, BPO, or call
centres), accountancy, record keeping, music recording,
banking services, book transcription, film editing, clinical
advice, or teachers are being outsourced by the
companies from the advanced countries to India.