Exploring India’s Constitutional & Environmental challenges for pole vaulting to Economic security

India’s average growth rate of 6.2% over the past ten years has made it one of the world’s most promising economy. According to IMF predictions, India is expected to become the third largest economy in the world by 2027.

According to Morgan Stanley Report on India 2023, India’s economy will thrive and will be free of any recessional pressures. In addition, India has benefited in terms of FDI and international business because of the geopolitical tensions between China and other nations. On the other hand, India can be seen as an emergent beneficiary of China +1 strategy due to its pro-business environment, massive workforce and production capacity. Textiles, metals, chemicals and semiconductors are potential sectors that can benefit from China plus one strategy.

It is now vital to pay attention to how we capitalize on these opportunities as the geopolitical dynamics of the world are rapidly changing and the Indian economy is facing fresh challenges like sustainable, equitable economic growth, equitable distribution of wealth and democratic efficiency. Authors have chosen to address constitutional and environmental challenges that the Indian economy faces.

The Indian Constitution is the lengthiest written constitution in the world. The Constitution has been ever evolving since its adoption in 1950. Hence, it portrays a blend of rigidity and flexibility through the provision of timely alterations via amendments. India has adopted a parliamentary form of governance and the legislature, executive and judiciary act as three pivotal pillars of governance. The setup is federal in nature but possesses a central bias. This makes assessing central state relations crucial as far as economic public policy making in India is considered.

The Constitution throughout – fundamental rights, directive principles of state (DSP) policy, values enshrined in preamble, the annual financial statement etc. is driving India’s economic policy building. Most of the time, though it acts as a facilitator to balance India’s ideology about economy, it also poses certain challenges creating hindrance in making economic policy decisions.

Here are a few constitutional challenges below attempting to explain with real life examples –

1. Values and the Preamble – With the 42nd amendment, the word ‘socialist’ was added to the preamble. But the idea of democratic socialism existed before in the DPSPs. This idea of socialism aims to end poverty, disease, ignorance and inequality of opportunity. By accepting a mixed economy model, we attempted to ensure equality, free and fair nature of economy. This is viewed as a blend of Gandhian ideas and Marxism to an extent. But socialism has been diluting with the introduction of new economic policy since 1991. The LPG reforms opened our economy and boosted capitalist tendencies in India. The constitutional constraints, idea of welfare state and goal to make India a $5 trillion dollar economy are seen conflicting at times. As the rich get richer, the gap between rich and poor is widening. Mitigating the gap is constitutionally supported but not easily met with capitalist swing. With this achieving economic justice (distributive justice) becomes challenging.
2. Centre-state relations – The relations are segregated as legislative, administrative and financial in nature. Along with allocation of taxing powers, the constitution also talks about restricting taxing powers of the state. This brings in the evident unitary bias in terms of finances and expenditures. Having an upper hand in taxing powers related to subjects in union list and concurrent list, the development of states is marred, dawdled.
   1. GST and its implementation – Currently, the list 1 and list 2 of the seventh schedule contains tax entries. Making an entry of GST in the list 3 (concurrent list) is very much feasible. But this may bring in another constitutional problem. The centre gets precedence in levying taxes thus, compromising the power of the states to levy and collect GST. Though the entry in list 3 will promote the idea of common market and uniformity in the country, it ruptures the idea of financial federalism. Even the establishment of GST council solves this to a limited extent as article 254 gives parliament an authority to override. Also, carving out a separate jurisdiction for both poses a serious challenge. Hence, long term solution to reconcile both constitutionally as well is necessary.
3. Regulatory bodies (statutory and non-statutory, constitutional and extra- constitutional bodies) – Across jurisdictions globally, numerous regulatory bodies are emerging to address consumer protection, market stability, human rights protection etc. India is also following the mechanism and creating numerous regulatory bodies. But these bodies may violate the principle of separation of powers in long run. The honourable Supreme Court has identified separation of powers as a part of basic structure of the constitution. The accountability of these regulatory bodies where executive is answerable to parliament can emerge problematic. Hence, may be this calls for a constitutional amendment measure.
4. Article 14 and Judiciary to the rescue– The judicial contribution to the synthesis and the integration of the Fundamental Rights and the Directive Principles in the judicial process of “constitutionalising” social and economic rights has been crucial to the realization of the Directive Principles not only as a means to effectuate Fundamental Rights but also as sources of law for a welfare state (Krishnan K.P) The legislature at numerous instances has faced difficulty in identifying range of eligible beneficiaries while designing distributive and redistributive economic policies. To attain welfare state, classifying the population is crucial to reach weakest of the weak. But with lacunas in the classification, the honourable supreme court in Ambika mills vs. State of Gujarat has questioned that whether judiciary should force legislature to attain perfection or prefer inaction due to under or over inclusion in economic public policies.

Environmental challenges:

Over time, environmental degradation will continue to pose challenges for the Indian economy and its growth. The economy has experienced impacts of climate change on in terms of reduced agricultural production, increased health costs, damaged infrastructure, and energy and water crisis. Nonetheless, it is anticipated that these crises would worsen over time. According to the report of IPCC 2022, India being a tropical country is identified as one of the global hotspots for climate change. It claims that India will be the biggest sufferer because of climate change.

Though India is suggesting its willingness to contribute to mitigating global climate change, the demographic composition and population structure based on economic parameter like per capita income, human development index, population below poverty line etc. makes bringing the change at grass root level a strenuous job. Sustainability and eco-friendly living appear lucrative but these ideas are too fancy for population struggling with making their ends meet. The concept of sustainability and its implementation is yet to penetrate the middle and lower income groups which form the largest chunk of the Indian population.

Problem of inclusivity: As per a World Bank report, the environmental degradation costs India $80 billion per year or 5.7% of its economy. Hence, Environmental sustainability needs to be an inclusive process and cannot be performed in isolation. The inclusion is a challenge as practicing sustainability itself is yet extravagant. Even middle-class families at times may not be able to afford products that are promoted as being environmentally friendly – cloth pads, collapsible steel glasses, recycled plastic bags, bamboo toothbrushes, earthenware for cooking etc. The concept of sustainability has been in Indian traditions since the rig Vedic times but new emerging horizons of achieving sustainability attached to western concepts is making its adaptation a costly affair. Hence, to reduce our carbon footprint and attain sustainable future, sustainability needs to be affordable, available and accessible for all.

Approached towards economic public policy making

Usage of appropriate public policy tools: There are multiple tools designed for effective public policy making and implementation. The tools can allow to achieve economic stability and security in globalised world. The precise application of PESTLE analysis -Political, Economic, Social, Technological, Legal and Environmental analysis can help to formulate comprehensive and holistic policies. This renders space for post implementation analysis and update existing policies. The scope for updating and provision for eliminating incongruous policy elements brings in much required agility in policy making approach. To tackle newly emerging global challenges and assure economic security for the nation, the policy outlook needs to be economically feasible, politically acceptable and socially realistic.

AAA framework & environmental sustainability: The Affordability, Availability and Accessibility (AAA) framework is widely felicitous if used. But somehow, this approach lags behind in the field of environment sustainability. AAA will allow environment sustainability to be common man’s commodity. Currently, it’s restricted to certain classes and hence, responsible consumerism is not evolving as an all-inclusive idea. If environmental sustainability penetrates at the lowest rung, India will be in a better position to tackle environment and climate change negotiations at a global level. The GDP loss due to environmental degradation cost will be minimised thus, allowing economy to pole vault.

Utilizing policy windows: The occurrence of crisis leads to emergence of policy windows. These windows allow modifications, alterations or complete revamping of policy outlooks. Policy windows, if not noticed and used may disappear. These give space to address gaps, loopholes in policy making. The COVID pandemic portrayed weaknesses of our health systems. Addressing them with increased budgetary allocations was a prompt response to a policy window. Such responses permit us to enhance economic security and stability.

Harshada Abhyankar

Ms. Harshada Abhyankar is an economic graduate and pursuing Masters in Public Policy from Gokhale Institute. She has keen interest in writing, wildlife, and governance.

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Rushikesh Mule

Mr. Rushikesh Mule is pursuing Masters in Public Policy from Gokhale Institute. He has keen interest in law, governance and policy.

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