Allowing yearly extensions to heads of CBI, ED will compromise their autonomy

GS 2: Statutory/Non-statutory bodies. 

Context: The new law authorising an extension of the services of the heads of the Central Bureau of Investigation(CBI) and the Enforcement Directorate(ED) until they complete a total tenure of five years will seriously compromise the autonomy of those agencies.

  • Significantly, in the case of the present Director of Enforcement, S.K. Mishra, who was appointed for two years in November 2018, his services were extended by an order on November 13, 2020, which amended the original term of appointment from two years to three years.

Problems with the decision:

  • Goes against the spirit Vineet Narain vs Union of India (1997) Judgement: The SC laid down a dictum that the Directors of the CBI and the ED should have a minimum tenure of two years. This was to prevent their sudden transfer out of office if their functioning goes against the interests of the regime of the day. While it did not specifically bar longer terms or extensions, the prospect of getting an annual extension can be an incentive for displaying regime loyalty in the discharge of their duties.
  • Ordinance route: That the changes were brought in through the ordinance route barely 15 days before a Parliament session, raises a doubt.  The government has promulgated two ordinances, for this one for CBI one for ED.
  • Caged Parrot Criticism – Erosion of trust: Given that the central agencies have drawn much criticism for their focus on personages linked to Opposition parties, such a measure will be seen as a reward for guided functioning instead of a necessity to keep ongoing investigations on track.
  • Impact on Independence: A further extension that will take the officers’ services well beyond superannuation, that too one year at a time, will render the heads of two investigating agencies unacceptably beholden to the Government.

Matters in Supreme court:

  • Previously in Mr. Mishra’s case, the Supreme Court declined to interfere with the one-year addition to his original term of appointment(last year November 2020), but also said that:
    • “extension of tenure granted to officers who have attained the age of superannuation should be done only in rare and exceptional cases”.
    • And that the further extension should only be for “a short period”.
    • It also made it clear that no further extension shall be granted to him. It is possible that the
  • A New Petition by Vineet Narayan: He had made the original petition in 1993 in the SC. He contends that ideally, the government should have taken both prior steps: debated the matter in Parliament and allowed the Supreme Court to revisit the matter too.

Conclusion: Even if the government does not give the extension to Mr. Mishra, it does not render the act of authorising year-on-year extensions to future appointees any less detrimental to the public interest. The protection given by a fixed tenure and the use of a high-ranking committee to recommend appointments and transfers were meant to dilute the ‘doctrine of pleasure’ implicit in civil service. However, it may be breached, if the extension allowed in exceptional circumstances becomes the rule.

The debacle of demonetisation: Five years later, it is clear that the policy was neither economically sound nor ethically grounded

GS 3: Economy.

Context: On November 8, 2016, the Prime Minister announced that from midnight, ₹500 and ₹1,000 notes would no longer be legal tender. The total value of the currency affected by this move was 85% hence referred to as demonetisation. A former U.S. Secretary of the Treasury has commented that this was by far the “most sweeping change in currency policy that has occurred anywhere in the world in decades”.

Aim of the Move

  1. Black Money argument: The original argument given for demonetisation was that it would extinguish unaccounted or ‘black’ money. The presumption underlying this was that with unaccounted income inevitably held as cash, owners of these hoards would be hesitant to turn them in to banks as they would have to explain the source.
    • Retort: it was pointed out that unaccounted income is very likely to have been converted into real assets or transferred overseas, the government shifted the narrative. Further, the RBI’s Annual Report of 2019 settled the issue conclusively when it reported that approximately 99% of the affected money supply was deposited into accounts with commercial banks.
  2. ‘Less Cash’ Argument: Government explained that the move was meant to get the economy to run on ‘less cash’.
    • Retort: the ratio of currency with the public to national income has, at 11.5%, remarkably remained the same from 2015-16 onwards. Money seems to remain a chosen medium of exchange for Indians, even if purchases are increasingly being made online. This is because expenditure in India is largely done using savings in Cash, even when using e-commerce.
    • Further, if main reason was less cash then, demonetization should have been done patiently after providing comprehensive financial inclusion through taxation policy and other incentives.
  3. ‘Increasing direct tax’ Argument: it strongly asserted that the move would incentivise direct tax payment and this would raise the government’s revenues sufficiently to allow for greater public investment and the provision of more public services.
    • Retort: The ratio of direct tax collections to the national income rose marginally in 2016-17, but higher rates had been achieved earlier. It continued to rise marginally for two more years, but this cannot confidently be attributed to demonetisation alone. The Goods and Services Tax introduced in 2017 may have nudged potential income tax assesses to comply with the law due to the surveillance that came into force.
    • We can see in the Finance Ministry’s latest ‘Budget at a Glance’ that the trend of a rising direct tax to national income ratio came to an end in 2019-20, and is now lower than it was at the beginning of the decade.

Problems created by Demonetization:

  • Reversing growth acceleration:
    • In 2016-17, India’s economy did register a slight increase in the rate of growth as the growth of the agricultural sector registered a positive swing of over 7%, due to good monsoon.
    • But in the other sectors of the economy, production could have been held back by the cash crunch engineered by demonetisation, thus slowing expansion.
    • Nevertheless, growth of the overall economy did not slow in 2016-17 as much of the services sector held out. However  annual growth has been slowing continuously ever since. 
  • Imposing hardship:
    • Numbers cannot, however, capture the hardship and insecurity that were so casually imposed on the population by the move. The country was thrown into utter chaos with people trying to change their hard-earned small cash savings in banks that were utterly unprepared for the task.
    • The supply chain for farm produce was severely disrupted but a history of informal credit meant that it did not die out entirely. Indeed, India was bailed out by the traditional practices of its business communities, even as the government was ostensibly goading it into modernity.

Conclusion: The Economic survey of 2016-17 had itself pointed out that Demonetisation was potentially a shock in three ways:

  • an aggregate demand shock, because it reduces the supply of money and affects private wealth
  • an aggregate supply shock to the extent that cash is a necessary input for economic activity
  • an uncertainty shock because economic agents face imponderables related to the impact and duration of the liquidity shock.

Perhaps not since Muhammad bin Tughlaq have the people of India been forced to endure as much by the state. The difference is that today India is a democracy.




No comments yet. Why don’t you start the discussion?

Leave a Reply

Your email address will not be published. Required fields are marked *