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Tag Archives | Elections

Reforms in global financial system — Finally

The reforms at International Monetary Fund(IMF) has meant better voting share for India and a voice in global financial system

The IMF’s reform package of quotas and governance became effective on January 26, 2016. As a result of this, India, Russia, China, and Brazil gain entry into the club of 10 largest economies of the world. This review was long pending since December 2010. The delay was attributed to approval by the US Congress which finally gave its nod in December 2015. What do these reforms exactly mean?

First, it is essential to know the origin of IMF. It is an international organisation of 188 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth and reduce poverty around the world. To summarise — it is the lender of last resort for the all the countries in the world. It was formed at the end of World War II as part of international financial system led by the US.

Second, what exactly is ‘quota’? Each member country is assigned a quota — which is a value of its share in the IMF financing system. This is proportional to that country’s impact on the world economy. A country’s quota in the IMF determines its voting power, the amount of financial resources it must provide to the IMF, and its access to IMF financing. It then goes without saying that larger a country’s quota, greater will be its say in the governance of IMF. Quotas are based on a weighted average of GDP, openness, economic variability and international reserves. They are expressed in Special Drawing Rights (SDR), an international reserve asset determined by the value of the US dollar, euro, Japanese Yen and pound sterling. The increase in quota has meant enhanced resources for IMF.

The IMF’s capital has nearly doubled from $ 329 billion to $ 659 billion. Much of this has come because of funding from member countries, especially of G-20, contributed after the financial crisis of 2008. As a result, more than 6 percentage points of quota have been transferred from developed to the the emerging market countries. India and China have increased their voting shares by 0.292 and 2.265 percentage points respectively. India’s increase, though marginal has been enough to place it in the top 10 countries. The developed countries have had a decrease in their voting share from 0.2 to 0.5 percentage points. This redistribution has catapulted China from sixth to third position behind US & Japan. Saudi Arabia’s decrease by nearly a percentage point has placed it below India, Russia and Brazil. This reform will also affect the selection process of Executive Directors,i.e., the governance.

Once the reforms are in place, all positions on the board will be determined by election. In the earlier system, member countries with five largest quotas each appointed an Executive Director. This invariably meant a European as the head of IMF. It had been a common refrain among the developing countries that IMF would always be headed by an European and World Bank by an American. The reforms are reflective of the emerging economic order in the world and reinforce IMF’s legitimacy as a global financial institution.

Guru Aiyar is a Research Scholar at Takshashila Institution and tweets @guruaiyar

Featured Image: IMF by Javier Ignacio, licensed by creativecommons.org

 

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Electoral Reforms – a Much Needed Shot in the Arm

By Sambit Dash

Parliament has been one of the cornerstones of Indian democracy. Through various trials and tribulations it has emerged as a wall which can be punched and spit at, but not be razed. The elections to the Lok Sabha – the house with more muscle, relevance and members – are affairs that have been, more often than not, immaculately managed by the Election Commission of India (ECI). This is no easy feat given that the Indian electorate is the largest in the world. The ECI has also implemented major reforms such as the lowering of the voting age in 1989, the implementation of electronic voting machines, the appointments of booth officers, and the digitization of electoral rolls. Though the pace of reforms has been slow, the ECI has proved to be above petty politics and has received backing from the Supreme Court of India. However many issues still plague the conduct of elections such as the criminalisation of politics, corruption, a lack of transparent funding, archaic laws, and the covert use of muscle and power.

One of the major issues is the criminalisation of politics; 34% of MPs in the 16th Lok Sabha face criminal charges, up from 30% in the 15th. The ECI, in their annual recommendations, have proposed that any person who is accused of an offence punishable with imprisonment for five years or more should be disqualified from contesting elections even during the pendency of the trial, provided that the charges have been framed against him by a competent court. This recommendation has been stonewalled, primarily by the contention that innocent representatives would be unjustly affected by politically motivated charges. However, some headway has been made by the Supreme Court in addressing the criminalisation of politics in Lily Thomas vs. Union of India where it held that a successful conviction would automatically disqualify a candidate or elected representative.

The funding of political parties is another critical area that needs attention, particularly the disclosure of the sources of campaign funds. Currently, India’s richest MP ( and a whopping 82% of MPs have assets worth more than one crore. Wealthy candidates are not a problem per se, but if their wealth can be illicitly used to gain advantages during elections it encourages the wrong kind of candidates. Unfortunately, this does indeed occur as the standards of disclosure during elections are poor. Political parties consequently tend to prefer candidates who can easily contribute towards unreported expenses during elections.

While the Representation of People Act, 1951 requires that candidates report all their individual expenses, political parties as a whole are only required to disclose to tax officials individual contributions above Rs. 20,000. Political parties however, cannot receive any contributions from government companies or any foreign source. The Act initially allowed corporate donations but they were banned in 1968 only to later be permitted by an amendment of the Companies Act in 1985. The amendment permitted corporate donations with riders like full disclosure and a cap of 5% of the average net profit over the last five years of the company. In 1979, new tax exemptions were created in order to increase the level of disclosure of political parties but they were ultimately unsuccessful in improving transparency.

In the last four decades, various committees have proposed tackling these issues through state funding. In 1972, a Joint Parliamentary Committee on Amendments to Election Laws had suggested that the state should bear the expense of funding candidates. In 1978, the Tarkunde Committee also suggested the same but in part. The Dinesh Goswami Committee (1990) suggested that the state should fund elections by providing campaign material, travel expenses, airtime in the media, etc. rather than money. The Law Commission Report of 1999 also proposed partial state funding. However, political parties have not reached any consensus on these proposals as smaller parties believe state funding will be advantageous to bigger parties.

An alternate route to achieving transparency is to bring political parties under the ambit of the Right to Information Act, 2005 (RTI Act). However, despite attempts to do so this has not been functionally achieved. In June, 2013, the Central Information Commission declared that six national parties qualified as ‘public authorities’ under the RTI Act and would thus have to comply with its provisions. None of the parties challenged the decision in any forum, yet they have still failed to reply to any queries, or appear before the CIC. This is not surprising given that major parties like the BJP and Congress ‘officially’ spent only Rs 714 Cr and Rs 516 Cr respectively in all elections in 2014.

Apart from removing criminals from politics and revising how election campaigns are funded, many other reforms are still needed. These include disallowing a person from contesting from two seats (as Prime Minister Modi did in the latest elections); increasing the security deposits of candidates; regulating advertisements (both surrogate as well as government-sponsored) and exit/opinion polls in the media; maintaining and auditing the accounts of political parties; and finally, revising the composition of the ECI.

Political parties will themselves not be the harbinger of these reforms as maintaining the status quo is in their interests. It is thus the duty of civil society and advocacy groups to mount pressure on the government of the day to implement these reforms. Electoral reforms are one of the few measures which can address multiple ills in India. Elections are the glacier from which the stream of democracy flows; reforming how they are conducted will be a shot in the arm for Indian democracy.

Sambit Dash is an alumnus of Takshashila’s public policy course, the Graduate Certificate in Public Policy.

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Mexico: Return to the “perfect dictatorship”?

Nivedita Kashyap

Between the French elections in April and the US elections in November, the Mexicans voted for their new president on the first of July. Mexico has a presidential system of government and four parties were in the fray, each with a candidate for the post – the PAN, the PRI, the PRD, and the New Alliance. The official election results showed Enrique Peña Nieto from the PRI (Partido Revolucionario Institucional in Spanish) in the lead with 38.2 percent of votes followed by Andres Manuel López Obrador from the PRD with 31.6 percent of votes and Josefina Vázquez Mota from the incumbent PAN with 25.4 percent of votes.

López Obrador, however, has refused to accept the results accusing Peña Nieto’s campaign of electoral fraud and of paying the major media outlets for a favorable coverage. López Obrador’s allegations of widespread vote buying were accompanied by reports of thousands of people rushing to grocery stores to redeem gift cards that they said were given to them by Peña Nieto’s PRI ahead of the elections. Since the results have been announced, thousands of protestors have taken to the streets to protest what they call the “media legitimisation of the electoral fraud”.  These have been led by Mexico’s very own protest movement marshaled via social media, called the “#YoSoy132” (I am 132). The hash tag emphasizes the movement’s connection to Twitter, where it was a trending worldwide topic for days.

Despite the lead in the election results, Peña Nieto cannot declare himself as the president-elect because according to Mexico’s electoral laws, this can only happen when all allegations against the candidate have been first resolved by the Electoral Tribunal of Mexico. Indeed, Barack Obama has been criticised for congratulating Peña Nieto prematurely.

If Peña Nieto is sworn in as the president of Mexico in December this year, he will bring his party, the PRI, to power after 12 years in the opposition. The PRI ruled Mexico for 71 years between 1929 and 2000 and has often resorted to repression of dissent, vote-rigging and corruption to get its way. The outgoing PRI president handpicked his successor in consultation with the party bosses. This had prompted the Nobel Laureate Mario Vargas Llosa to call the government under the PRI “the perfect dictatorship”.

The presumed president-elect, Peña Nieto, has sought to distance himself from the old PRI, stating in his first op-ed after the results were declared that his win does not mean a return to the old ways of his party and reaffirming his commitment to democracy. However, the deep discontent among Mexicans persists with the mostly young protestors drawing inspiration from the Occupy movement, the Indignados of Spain and the Arab Spring in demanding “real democracy” for Mexico.

With many movements demanding democracy all over the world, a very interesting initiative  called the Globalbarometer Surveys (GBS) needs to be highlighted. This project seeks to “develop a global intellectual community of democracy studies surveying ordinary citizens”. The GBS surveys three continents with the help of five regional networks covering Europe, Africa, East and South Asia, Central and South America, and the Middle East. In an event last year in Bangalore, “The Multiple Meanings of Democracy” some interesting trends from the various country surveys were discussed.

The Latinobarómetro, which is based in Chile, has carried out regular surveys of opinions, attitudes and values in Latin America since 1995. Every year they publish a detailed report in Spanish offering a broad view of popular opinion in the eighteen major countries of Latin America, focusing on Latin American citizens’ political opinions and their satisfaction with their governments. Their 2011 report reveals that Mexicans are the least satisfied with the way democracy works in their country among all eighteen countries surveyed.

Latinobarómetro does offer some hope to the Mexicans’ desire to democratise their country. The graph below (made using data made available online by Latinobarómetro) shows a steady fall in the support for an authoritarian regime among Mexicans. It is now up to the new government to ensure that that the number of Mexicans increasingly indifferent to who governs them change their minds.

 

Nivedita Kashyap works at a research based think tank in Bangalore.

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