The Hindu Editorial Analysis- 4th January 2025 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

The looming threat to federalism and democratic tenets

Why in News?

 The government, led by the Bharatiya Janata Party (BJP), has put forward the One Nation, One Election (ONOE) framework. This aims to synchronize the elections for the Lok Sabha (the lower house of Parliament) and State Assemblies. 

Historical Context of Simultaneous Elections

•  After India gained independence, simultaneous elections were the norm. However, this practice was disrupted by the misuse of Article 356, which allows for President’s Rule in states. 
•  The first instance of misusing Article 356 occurred in Kerala in 1959. This episode reflected federal overreach and disturbed the delicate balance in Union-State relations. 
•  B.R. Ambedkar, a key architect of the Indian Constitution, had considered Article 356 a “dead letter.” Despite this, the article has been invoked over 130 times, resulting in the dismissal of several State governments. 

Impact of Defection and Anti-Defection Law

•  Defections can destabilize State governments, leading to unconstitutional changes in regime. 
•  The Anti-Defection Law was introduced through the 52nd Amendment in 1985 to penalize defectors. However, it has loopholes, such as delays in Speaker decisions and allowances for group defections, which undermine its effectiveness. 

Challenges with ONOE Framework

Constitutional and Governance Implications

• Implementing ONOE would necessitate amendments to Articles 83 and 172 of the Constitution. These articles guarantee five-year terms for both Parliament and State Assemblies. 
•  Aligning State election cycles with national elections could either curtail or extend the tenures of State governments. This alignment risks undermining State autonomy and disrupting the federal balance. 

Democratic Concerns

•  Simultaneous elections may hinder voters’ ability to assess State and national governments independently. 
•  Midterm ONOE cycles could result in abbreviated terms for State governments, diluting the democratic principle of “one person, one vote, one value.” 
•  The political instability experienced in the mid-1990s raises concerns that ONOE could lead to frequent elections in short intervals, undermining the argument for cost efficiency. 

Logistical and Administrative Challenges

•  Conducting elections for over 900 million voters across Lok Sabha, State Assemblies, and local bodies would place immense strain on resources and institutions. 
•  The potential for voter fatigue and confusion could diminish the effectiveness of the electoral process. 

Systemic Issues Requiring Attention

• Misuse of Article 356: Despite judicial interventions like the S.R. Bommai case judgment aimed at restoring State autonomy, the misuse of Article 356 persists. 
• Anti-Defection Law Reforms: The loopholes in the anti-defection framework need to be addressed to ensure greater stability within State governments. 
• Strengthening Federalism: India’s federal structure, which acknowledges its diversity and plurality, requires the preservation of State autonomy. The ONOE framework, if implemented without necessary systemic reforms, could centralize power and undermine the federal character of governance. 

Conclusion

•  While the One Nation, One Election (ONOE) framework offers potential fiscal and administrative efficiencies, it also poses significant risks to India’s federal structure and democratic principles. 
•  It is crucial for democratic governance to prioritize federalism and ensure an equitable partnership between the Centre and the States. This approach is essential to preserve the core values of the Constitution and maintain the delicate balance of power that underpins Indian democracy. 

India, cross-border insolvency and legal reform

Why in News?

 The issue of cross-border insolvency in India is complex and needs a strong legal framework. Currently, the system is not very effective, and there are calls for reforms, including the adoption of the UNCITRAL Model Law, to improve how such cases are handled. 

Need for a Reliable Insolvency Framework

•  With the growth of international trade, cross-border insolvency has become more challenging. 
•  A reliable and predictable framework is crucial for economic stability, attracting foreign investment, and facilitating corporate restructuring. 

Historical Overview of Insolvency Laws in India

•  The first insolvency law in India during British rule was the Indian Insolvency Act of 1848. 
•  This was later replaced by the Presidency-Towns Insolvency Act in 1909 for major cities and the Provincial Insolvency Act in 1920 for other regions. 
•  These laws focused on domestic insolvencies and did not address cross-border cases. 

Development of Insolvency Framework Post-Independence

•  After independence, although the need for reforms was recognized, especially by the Third Law Commission in 1964, no significant changes were made until the economic liberalization in the 1990s. 
•  Various committees, such as the Eradi Committee, Mitra Committee, and Irani Committee, recommended adopting the UNCITRAL Model Law on Cross-Border Insolvency. 
•  Eventually, the Insolvency and Bankruptcy Code (IBC) was enacted in 2016, primarily focusing on domestic insolvencies, with some provisions for cross-border issues. 

Challenges in Cross-Border Insolvency

•  The case of Jet Airways (India) Limited vs. State Bank of India in 2019 highlighted the shortcomings of the IBC’s provisions for cross-border insolvency. 
•  Sections 234 and 235 of the IBC were found to be ineffective due to the lack of reciprocal arrangements with other countries and the non-notification of these provisions. 
•  The National Company Law Tribunal (NCLT) referred to these sections as “dead letters,” meaning they exist in law but cannot be enforced in practice. 

Government Initiatives for Reform

•  Various expert committees have recommended adopting the UNCITRAL Model Law to improve the cross-border insolvency framework in India. 
•  The Parliamentary Standing Committee on Finance has supported these recommendations, stressing the need for a robust and effective insolvency framework. 

Current Temporary Solutions and Their Drawbacks

•  Temporary solutions like cross-border insolvency protocols have been used in specific cases, but these are not sustainable long-term. 
•  Such ad hoc methods increase the burden on the judiciary, raise transaction costs, and cause delays, ultimately reducing the value of assets involved. 

Recommendations for Improvement

• Adoption of the UNCITRAL Model Law: This would provide a clear and structured framework for cross-border insolvency, replacing the current temporary solutions and ensuring more predictable outcomes. 
• Modernizing Judicial Coordination: Implementing the Judicial Insolvency Network (JIN) Guidelines and improving court-to-court communication can make the process more efficient and transparent. 
• Expanding NCLT Powers: Empowering the National Company Law Tribunal (NCLT) to recognize and enforce foreign judgments would address current limitations and enhance its role as the primary adjudicating authority in insolvency cases. 

Conclusion

 By adopting these recommendations, India can strengthen its insolvency framework and improve its capacity to manage cross-border insolvency cases effectively.