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Darkening Prospects: Global Economy to Slow to 2.9 percent in 2019 as Trade, Investment Weaken

MD Staff

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Global economic growth is projected to soften from a downwardly revised 3 percent in 2018 to 2.9 percent in 2019 amid rising downside risks to the outlook, the World Bank said on Tuesday. International trade and manufacturing activity have softened, trade tensions remain elevated, and some large emerging markets have experienced substantial financial market pressures.

Growth among advanced economies is forecast to drop to 2 percent this year, the January 2019 Global Economic Prospects says. Slowing external demand, rising borrowing costs, and persistent policy uncertainties are expected to weigh on the outlook for emerging market and developing economies. Growth for this group is anticipated to hold steady at a weaker-than-expected 4.2 percent this year.

“At the beginning of 2018 the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier in the year ahead”, said World Bank Chief Executive Officer Kristalina Georgieva. “As economic and financial headwinds intensify for emerging and developing countries, the world’s progress in reducing extreme poverty could be jeopardized. To keep the momentum, countries need to invest in people, foster inclusive growth, and build resilient societies.”

The upswing in commodity exporters has stagnated, while activity in commodity importers is decelerating. Per capita growth will be insufficient to narrow the income gap with advanced economies in about 35 percent of emerging market and developing economies in 2019, with the share increasing to 60 percent in countries affected by fragility, conflict, and violence.

A number of developments could act as a further brake on activity. A sharper tightening in borrowing costs could depress capital inflows and lead to slower growth in many emerging market and developing economies. Past increases in public and private debt could heighten vulnerability to swings in financing conditions and market sentiment. Intensifying trade tensions could result in weaker global growth and disrupt globally interconnected value chains.

“Robust economic growth is essential to reducing poverty and boosting shared prosperity,” said World Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu. “As the outlook for the global economy has darkened, strengthening contingency planning, facilitating trade, and improving access to finance will be crucial to navigate current uncertainties and invigorate growth.”

Analytical chapters address key current topics:

The informal sector accounts for about 70 percent of employment and 30 percent of GDP in emerging market and developing economies. Since it is associated with lower productivity and tax revenues and greater poverty and inequality, this is symptomatic of opportunities lost. Reducing tax and regulatory burdens, improving access to finance, offering better education and public services, and strengthening public revenue frameworks could level the playing field between formal and informal sectors.

Debt vulnerabilities in low-income countries are rising. While borrowing has enabled many countries to tackle important development needs, the median debt-to-GDP ratio of low-income countries has climbed, and the composition of debt has shifted toward more expensive market-based sources of financing. These economies should focus on mobilizing domestic resources, strengthening debt and investment management practices and building more resilient macro-fiscal frameworks.

Sustaining historically low and stable inflation is not guaranteed in emerging market and developing economies. Cyclical pressures that have depressed inflation over the past decade are gradually dissipating. The long-term factors that have helped reduce inflation over the past five decades – global trade and financial integration, widespread adoption of robust monetary policy frameworks – may lose momentum or reverse. Maintaining low global inflation may become as much of a challenge as achieving it.

Policies aimed at softening the blow of global food price swings can have unintended consequences if implemented by many governments in uncoordinated fashion. Government interventions can provide short-term relief, but widespread actions are likely to exacerbate food price spikes, with heaviest impact on the poor. For example, trade policies introduced during the 2010-11 food price spike may have accounted for more than one-quarter of the increase in the world price of wheat and maize. The 2010-11 food price spike tipped 8.3 million people (almost 1 percent of the world’s poor) into poverty.

“Designing tax and social policies to level the playing field for formal and informal sectors as well as strengthening domestic revenue mobilization and debt management will be important priorities for policymakers to overcome the challenges associated with informality in developing economies,” said World Bank Prospects Group Director Ayhan Kose. “As the economic outlook dims, such efforts become even more important.”

Regional Outlooks:

East Asia and Pacific: East Asia and Pacific remains one of the world’s fastest-growing developing regions. Regional growth is expected to moderate to 6 percent in 2019, assuming broadly stable commodity prices, a moderation in global demand and trade, and a gradual tightening of global financial conditions. Growth in China is expected to slow to 6.2 percent this year as domestic and external rebalancing continue. The rest of the region is expected to grow at 5.2 percent in 2019 as resilient demand offsets the negative impact of slowing exports. Indonesia’s growth is expected to hold steady at 5.2 percent. The expansion of the Thai economy is expected to slow in 2019 to 3.8 percent.

Europe and Central Asia:  The lingering effects of financial stress in Turkey are anticipated to weigh on regional growth this year, slowing it to 2.3 percent in 2019. Turkey is forecast to experience weak activity and slow to a 1.6 percent pace due to high inflation, high interest rates, and low confidence, dampening consumption and investment. Growth in the western part of the region, excluding Turkey, is projected to slow. Poland is anticipated to slow to 4 percent as Euro Area growth slows. Growth in the eastern part of the region is also anticipated to slow as large economies including Russia, Kazakhstan, and Ukraine decelerate.

Latin America and the Caribbean: Regional growth is projected to advance to a 1.7 percent pace this year, supported mainly by a pickup in private consumption.  Brazil is forecast to expand 2.2 percent, assuming fiscal reforms are quickly put in place, and that a recovery of consumption and investment will outweigh cutbacks to government spending. In Mexico, policy uncertainty and the prospect of still subdued investment is expected to keep growth at a moderate 2 percent, despite the fall in trade-related uncertainty following the announcement of the U.S.-Mexico-Canada Agreement. Argentina is forecast to contract by 1.7 percent as deep fiscal consolidation leads to a loss of employment and reduced consumption and investment.

Middle East and North Africa: Regional growth is projected to rise to 1.9 percent in 2019. Despite slower global trade growth and tighter external financing conditions, domestic factors, particularly policy reforms, are anticipated to bolster growth in the region. Growth among oil exporters is expected to pick up slightly this year, as GCC countries as a group accelerate to a 2.6 percent rate from 2 percent in 2018. Iran is forecast to contract by 3.6 percent in 2019 as sanctions bite. Algeria is forecast to ease to 2.3 percent after a rise in government spending last year tapers off. Egypt is forecast to accelerate to 5.6 percent growth this fiscal year as investment is supported by reforms that strengthen the business climate and as private consumption picks up.

South Asia: Regional growth is expected to accelerate to 7.1 percent in 2019, underpinned by strengthening investment and robust consumption. India is forecast to accelerate to 7.3 percent in FY 2018/19 as consumption remains robust and investment growth continues, Bangladesh is expected to slow to 7 percent in FY2018/19 as activity is supported by strong private consumption and infrastructure spending. Pakistan’s growth is projected to decelerate to 3.7 percent in FY2018/19, with financial conditions tightening to help counter rising inflation and external vulnerabilities. Sri Lanka is anticipated to speed up slightly to 4 percent in 2019, supported by robust domestic demand and investment boosted by infrastructure projects. Nepal’s post-earthquake momentum is forecast to moderate, and growth should slow to 5.9 percent in FY2018/19.

Sub-Saharan Africa: Regional growth is expected to accelerate to 3.4 percent in 2019, predicated on diminished policy uncertainty and improved investment in large economies together with continued robust growth in non-resource intensive countries. Growth in Nigeria is expected to rise to 2.2 percent in 2019, assuming that oil production will recover and a slow improvement in private demand will constrain growth in the non-oil industrial sector. Angola is forecast to grow 2.9 percent in 2019 as the oil sector recovers as new oil fields come on stream and as reforms bolster the business environment. South Africa is projected to accelerate modestly to a 1.3 percent pace, amid constraints on domestic demand and limited government spending.

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Economy

Ports of Pakistan and Gwadar’s Potential as a Transshipment Port

Dr. Anjum Sarfraz

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The oceans play an important role in transportation of cargo in the world over, being the cheapest mode of transportation as compared to rail, road and air. According to International Chamber of Shipping, 90% of world trade is carried by 50,000 merchant ships.  It includes all types of cargo like machinery, vehicles, different types of liquids, construction material, food items, and livestock.  These ships need ports to be docked for loading and discharging of cargo. Countries having all weather deep draught ports, equipped with state of the art cranes and associated equipment to handle cargo efficiently are mammoth source of advancement of economy.

Seaports are also instrumental for generating employment opportunities through effects associated with these like crew for operations and personnel  to work in repair workshops for sea going ships and different types of  harbor vessels such of tugs, pilot boats, dredging vessels, and  different  types of other equipment .  Logistics activities such as storing, distribution, container stacking, food arrangements for employees. Personnel for inspection and custom requirements. Ports attract investors to establish industries in the vicinity to import raw material and export finished goods. It is observed that large cities are located closer to the bigger ports. Infect ports can be the real pillars of economic development of a country.

Major considerations for a port are; less adverse weather affects, bigger ships (deep draught and longer in length) can be docked, efficiently handling of loading and unloading of cargo.   In addition back yard area to handle cargo should have sufficient space. Hinterland connections should facilitate smooth flow of cargo to and from the port. Pakistan has about 1120 Km coast with three commercial ports. Karachi port was developed in 1887 and is being operated by Karachi Port Trust (KPT).  It has a total 33 berths. Out of these, three oil piers for handling liquid cargo like different types of oil, molasses etc. Ships up to 12.5 meters draught can be berthed. Out of remaining 30, three each on East and West wharves are for handling containers which have been leased to Pakistan International Container Terminal (PICT) and Karachi International Container Terminal (KICT) following Land Lord Port Policy. 

These companies install their own cranes, other equipment and have their own employees for operations. The ownership remains with the Port Authorities. Container carriers up to 11.5 m draught can be docked. Remaining berths can handle bulk carriers and other type of ships having comparatively shallow draught up to 10 meters.   The recently built extension of Karachi port has quay wall of 1500 meters which can dock mostly container ships up to 16 meter draught.  These berths have been given on lease to South Asia Pakistan Terminal (SAPT) for operations. It is a modern facility equipped with state of the art cranes and other associated equipment.  Karachi port has handled 55million tons of cargo in 2017-18, which was about 55% percent of the total cargo of Pakistan. However, this port is now in the center of the busy city Karachi, therefore cargo flow to and from the port has become very problematic. Alternate routes needs to be explored. It is suggested that a pipe line for liquid cargo from oil piers at Kemari to an appropriate location outside limits of Karachi may be constructed. From here oil tankers may load the liquid cargo for upcountry. For containerized and other cargo a separate road may be built from Karachi port to link high way. In the meantime only smaller 6 to 8 wheeler trucks may be allowed to take cargo to a separately built yard outside the limits of Karachi from where bigger trucks can take the cargo to and from up country.

The second port is Bin Qasim which is also located in Karachi. It has seven berths; ships up to 12 meters draught can be docked. It is being operated by Port Qasim Authority (PQA). It was initially built to provide iron ore to Karachi Steel Mills. Now it can handle all types of cargo including containers, oil and Liquefied Natural Gas (LNG).  In the year 2017-18 it has handled 45 million tons of cargo which was 45 % of the total cargo.  Bin Qasim port has sufficient spaces to build new berths when required. Its   connection with hinterland is not posing problems because it is located well outside the main city. These two ports are meeting the requirements to handle all types of import and export of Pakistan which is presently around 100 million tons and have capacity to meet future requirements as well.

3.The third commercial port is Gwadar which is located on the Western edge of the coast in the province of Balochistan about 533 km from Karachi. It occupies a strategic location at the entrance of Persian Gulf overlooking the Arabian Sea. It is just outside the choke point, Straits of Hormuz, where 17 million barrels of oil passes every day. In 1997 the government appointed Task Force identified this fishing harbor to be developed as a commercial port.   The project could not be started due to economic sanctions after nuclear detonation in May 1998. It started in 2002 and first phase was completed 2007.  It has 1000 meter quay wall to dock 14.5 meter draught ships. It has 3 multipurpose berths one RO – RO facility and one service berth.  First ship was docked carrying 70,000 metric tons of wheat in March 2008.   Originally it was built to supplement other two ports.

Now it has taken shape as key component of the China Pakistan Economic Corridor (CPEC).    It has been leased to China Overseas Port Holding Company (COPHC) for 40 years. It is designed to handle cargo of Chinese Western province, Xinjiang and at a later stage cargo of land lock countries, Afghanistan, Turkmenistan, Uzbekistan, and Tajikistan. Presently cargo of Afghanistan is being handled by Karachi and port Qasim. Gwadar port is ready for operation about 11 years before but it has not been operated to its optimum capacity yet. Mainly because the designed road and rail infrastructure up to Khunjerab pass has not been fully developed.  However it meets the requirements to be operated as a Transshipment Port in addition to CPEC cargo. 

The transshipment concept refers to the shipment of containers/ goods to an intermediate port before being taken to the final destination.  It plays a critical role due to infrastructure limitations in smaller sea ports and shipping lines strategies to have minimum ports of calls of their bigger ships.  Now days an average, a container is handled 3 to 4 times between the first port of loading and the final port of discharge.  The concept of transshipment operation is increasing very fast. Gwadar port because of its strategic location closer to Persian Gulf, ability to handle deep draught ships, short access channel of only 4.7 km long, comparatively low cost labor, sufficient area to stack containers and other cargo, can be equipped to operate as a transshipment port. Bigger ships coming and going to Persian Gulf, and bound for Indian Ocean littorals can discharge their cargo at Gwadar and smaller ships can take these to the ports of destination.

It is pertinent to mention that Singapore area wise is a small country, but its Port of Singapore is the world’s biggest transshipment port as well as the busiest port after Shanghai. It handled 36.6 million containers in 2018. The government of Pakistan Ministry of Maritime Affairs may consider the possibility of operating Gwadar as a transshipment port. It will certainly act as source of enhancement of economy and to provide job opportunities especially to residents of Balochistan.   

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Economy

Uber & the Neoliberal State

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Everyday in my local papers, I read stories with headlines like “Subway Ridership Dropped Again in New York as Passengers Flee to Uber.”  AMNY, in its daily Tweet compilation section, generally devotes at least half of its selections to posts bashing the subway and bus system.  In the midst of the hangover that was last week’s Uber IPO (in which it immediately lost 8% of its value), it would be appropriate to contemplate the intersection of Uber (and its ugly stepsister Lyft) and the government.

In the shadow of the Great Depression and WWII, under the Administrations of the multimillionaire Franklin Roosevelt and the no-nonsense Republican Dwight Eisenhower, the federal government invested the equivalent of football fields full of cash on infrastructure projects like the Interstate Highway System (which cost half a trillion in today’s dollars).  States and cities likewise undertook great transportation schemes.  Between the 1920s and 1960s, Robert Moses funded 413 mi. of parkways and 13 bridges for NYC through, among other things, local tolls. 

This spirit of investing in the mobility of American citizens and goods gradually died off with the rise of neoliberalism in the 1970s and 1980s; federal spending for transportation infrastructure spending has been in decline since Lyndon Johnson’s Great Society.  The sea change was most spectacularly evidenced on Oct 22 1981, when President Reagan fired and blacklisted 11,345 striking federal air traffic controllers. Cue to the present… The American Society of Civil Engineers has given America’s infrastructure a dismal grade of D+ since 2013.  Trump on the 2016 campaign trail said that, “Our airports are like from a third world country.”

Governmental abdication in regards to public transportation has created a vacuum that the private sector is now trying to fill. This is problematic for many reasons. Bereft of the full-time employee status and union membership of public transit employees, Uber and Lyft drivers, as “independent contractors”, are treated like sharecroppers, with no minimum wage or pension/healthcare plans.  Infrastructure underfunding leads to lost opportunities for construction companies and their suppliers, which costs the economy money and jobs.  Uber and Lyft, by contrast, contribute nothing to the roads, tunnels and bridges that they use, other than tolls and the income that they don’t shield via elaborate tax evasion schemes… That and a nearly threefold increase in congestion, which hurts shipping and personal drivers’ commutes. Safety laws are frequently broken by Uber and its drivers, who undergo nothing more than a basic background screening, and receive no substantive training, prior to being hired.  The secluded, close-quarters nature of the rideshare template has led to many incidences of sexual assault and harassment for drivers and riders alike (by contrast, bus and yellow-cab drivers are generally shielded from their clients by bulletproof glass).

The privatization of transit also creates a commuter caste system, in which affluent citizens can spend $20 on a quick Uber ride to work, while poorer people must rely on perpetually-delayed trains, anxiously waiting on train platforms that are often literally falling apart due to neglect.  This problem extends far beyond rideshare apps.  For years, Elon Musk has been unsuccessfully trying to sell various municipalities on the concept of the experimental hyperloop, a pricier, less efficient version of a subway.  Hyperloop trains of the future will supposedly be able to travel at 700 mph… but they can only carry 28 people at a time!  So Musk wants cities to potentially invest billions to construct underground tunnel networks that only a couple hundred people a day max would be able to use, let alone afford, considering the pricy ticket fees that would probably be necessary in order to generate electricity for the hyperloop’s futuristic maglev-vacuum operating system.  Bullet trains also operate on a maglev system, but the cost gets spread out to over a thousand customers per trip, instead of just 28.  Emulating Musk, fellow billionaire Jeff Bezos just unveiled his space exploration company Blue Origin’s lunar lander prototype.  The fact that NASA is, due to chronic underfunding, being outpaced by Blue Origin and Elon Musk’s SpaceX, is not only a national disgrace, but a matter of concern for the welfare of humanity as a whole.  If space travel becomes monopolized by a handful of billionaires, it could eventually lead to the scenario envisioned by sci-fi dystopias like Elysium, wherein only the rich will be allowed to escape our dying planet, while the poor masses are left behind.

In regards to public transportation (and many other fields), the US is quickly falling behind China.  The Middle Kingdom has over 19,000 mi. of high-speed rail (much of it built just this past decade); the US has just 2% of that total and much of it is contained to an old NYC-DC Acela line that is woefully obsolete. Eight new airports get built in China every year, meaning that China’s total stockpile of airports will double by 2035.  The last American international airport was built last century and many existing airports, like the infamous LaGuardia, are falling apart due to underfunding.  The nation famous for its cyclists also boasts the world’s largest elevated bike lane; by contrast, bike lanes are a very controversial issue in American cities, where its staunch-individualist detractors decry them as Communist plots.

This growing disparity is being fuelled by the two nation’s different appropriations models.  China realizes the importance of central planning in regards to major infrastructure projects.  Investing in high-speed rail might not be “profitable” if measured solely by ticket revenue, but it pays for itself in the long-term by spurring urban development, construction contracts and employment, and increased tax revenues from workers now able to access better jobs and commerce.  Not to mention that traffic accidents, often the result of crumbling and obsolete road infrastructure, is the #8 cause of fatalities worldwide, including 32,000 a year in the US.  The American mindset is more myopic, focused only on short-term viability for investors.  This was encapsulated by Trump’s infrastructure plan, which focused on subsidies for corporations and localities… the same model that has been failing America’s infrastructure for decades.

It’s clear that the Uber-ization of public transportation is an inadequate and unsustainable solution.  The corporate model is solely predicated on short-term growth and the exploitation of its workforce.  In order to keep up with fellow superpower China, the US must take a centralized approach to maintaining and upgrading its faltering subways, trains, airports, bridges, roads and waterways.  Roosevelt’s Works Progress Administration employed about 9M Americans in the construction of some of the world’s most successful infrastructure projects, such as 29,000 new bridges, at the height of the US’ greatest financial crisis. People like Bernie Sanders and Alexandria Ocasio-Cortez are looking to emulate this past success by enacting a Green New Deal, which would employ millions of Americans in constructing sustainable infrastructure.  Likewise, it would be a boon for construction firms, industrial goods suppliers like Caterpillar, shipping-oriented companies like Amazon and urban-based businesses as a whole.  America must invest itself, in its people, in its future.

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Economy

Convergence Of Competitive Markets And Indian Elections

Joseph Abraham

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If competition is a key component of a flourishing economy, it is equally true that competition in electoral politics and elections is a powerful force for the healthy growth of a vibrant democracy enhancing legitimacy of political parties and their responsiveness to the aspirations of the electorate.

Viewed from the Indian perspective, there is a striking identity between the rights of consumers in the free market economy and the rights of voters in our political democracy. Equally noteworthy is the identity of the fundamental principles governing the rule of law in the free market system, the institutional arrangements for safeguarding consumer rights and the rule of law of elections and the regulatory environment for monitoring the functioning of a free and fair electoral democracy. The free market system ensures the best available goods and services are offered to the consumer at the optimal price following the principles of free market competition without restrictive and unfair trade practices enforced through the Consumer Protection Act1986 and the Competition Act 2002. 

 In the democratic system, the voters are given the right to elect the best available persons as people’s representatives through conducting elections in a free and fair manner which forms the bedrock of democracy. This is ensured by the Election Commission through the enforcement of the Guidelines of Model Code of Conduct for political parties and candidates during elections mainly with respect to speeches, polling day, polling booths, portfolios, election manifestos, processions and general conduct. Thus, while the role of a Referee in the free market system in India is played by the Consumer Disputes Redressal Forum and Competition Commission of India, the rules of  free and fair elections in  political democracy are enforced by the Election Commission of India.    

In a market economy, competition facilitates a host of benefits: awareness and market penetration, higher quality at same prices, increase in demand and consumption through competitive pricing, product differentiation, upgradation and innovation, improvements in efficiency of production at optimal levels by minimising cost and losses and increasing customer service and satisfaction. Competition in politics and elections elevates the voter to a pivotal role in democracy as that given to the consumer in a market driven economy. Electoral candidates vie for votes by promising reforms such as better governance, greater socio-economic equity and positive measures for poverty alleviation.

Each political party through its campaigns, manifesto and other propaganda machinery strives hard to win the maximum number of voters in electoral democracy transforming it as a political free market system with fierce competition  between the players similar to the efforts of sellers in the  free market economy to attract the maximum number of customers.

A   free market system across the globe,  is characterised by the existence of not only the  most efficient firms but also several  inefficient ones who are unable to produce the best quality goods and services  at lowest prices and even  those resorting to fraudulent ,  restrictive and unfair trade practices. Similarly, in political democracy and elections around the world,  besides politicians and parties with high degree of integrity and democratic values, there are those with criminal records, adopting ideologies prejudiced by notions of  race,  caste, colour, gender and religion based politics, and those charged with allegations of vote buying etc. which continues to undermine the democratic process.

Consumer Rights in a Free Market Economy

In India,  the interests of the  consumer in the market economy from restrictive, unfair and anti-competitive trade practices by firms  is safeguarded through several strong legal provisions which inter alia includes  the enactment of the  Consumer Protection Act 1986  and the Competition Act 2002. In addition, consumers rights in the economy are further protected through The Indian Contract Act, 1872, The Sale of Goods Act, of 1930 and  The Agriculture produce Act of 1937.   This is further strengthened by the establishment of supportive quasi-judicial institutional arrangements i.e the Consumer Disputes Redressal Commission at the National, State and District level as well as the Competition Commission of India.

The main objective of the competition law of India is to promote economic efficiency using competition as one of the means of assisting the creation of market responsive to consumer preferences. The advantages of perfect competition are three-fold: allocative efficiency which ensures that costs of production are kept at a minimum and dynamic efficiency which promotes innovative practices.

To achieve its objectives, the Competition Commission of India endeavours to do the following:

  • Make the markets work for the benefit and welfare of consumers
  • Ensure fair and healthy competition in economic activities in the country for faster and inclusive growth and development of the economy.
  • Implement competition policies with an aim to effectuate the most efficient utilization of economic resources.
  • Develop and nurture effective relations and interactions with sectoral regulators to ensure smooth alignment of sectoral regulatory laws in tandem with the competition law.
  • Effectively carry out competition advocacy and spread the information on benefits of competition among all stakeholders to establish and nurture completion culture in Indian economy.

Voters Rights in a Political Democracy

As a free market economy cannot sustain consumer rights without supportive legal and institutional framework, there is little doubt that for the survival of a free and fair democracy, the rule of law should prevail and it is necessary that the best available persons should be chosen as people’s representatives for proper governance of the country (Gadakh Yashwantrao Kankararao v Balasaheb Vikhepati lAIR 1994 SC 678). India isa sovereign, socialist, secular democratic republic. Democracy is one of the inalienable basic features of the Constitution of India and forms parts of its basic structure (Kesavanand Bharati v State of Kerala and Others AIR 1973 SC 1461). The concept of democracy, as visualised by the Constitution, pre-supposes the representation of the people in Parliament and State Legislatures by the method of election (N.P.Punnuswami v Returning Officer Namakka lAIR 1952 SC 64).

 Accordingly, in India,  in the  realm of political democracy and elections, the interests of the voters and electorate  is safeguarded through the Constitution of India,  Representation  of the People’s Act 1950 and 1951,Presidential and Vice Presidential Elections Rules 1974, Registration of Electors Rules 1960 and Conduct of Elections Rules 1961.

In India, the above legal provisions of elections and voting under political democracy    are administered and further supplemented by the Election Commission’s directions and instructions on all aspects. The underlying principle of  parliamentary democracy enforced by the Election Commission of India  is to ensure free and fair elections for which there are three pre-requisites: (1) an authority to conduct these elections, which should be insulated from political and executive interference, (2) set of laws which should govern the conduct of elections and in accordance whereof the authority charged with the responsibility of conducting these elections should hold them, and (3) a mechanism whereby all doubts and disputes arising in connection with these elections should be resolved. The Constitution of Indi has paid due attention to all these imperatives and duly provided for all the three matters.

The Constitution has created an independent Election Commission of India in which vest the superintendence, direction and control of preparation of electoral rolls for, and conduct of elections to, the officers of president and Vice President of India and Parliament and State Legislatures (Article 324). A similar independent constitutional authority has been created for conduct of elections to municipalities, panchayats and other local bodies (Articles 243 K and 243 ZA) along with legal and institutional provisions for  settlement of disputes relating to elections.

Model Code of Conduct in India

Election Commission of India  has laid down a set of guidelines for conduct of political parties and candidate during elections. The main points of code of conduct are:

  1. The government may not lay any new ground for projects or public initiatives once the Model Code of Conduct comes into force.
  2. Government bodies are not to participate in any recruitment process during the electoral process.
  3. The contesting candidates and their campaigners must respect the home life of their rivals and should not disturb them by holding road shows or demonstrations in front of their houses. 
  4. The election campaign rallies and road shows must not hinder the road traffic.
  5. Candidates are asked to refrain from distributing liquor to voters.
  6. The Code hinders the government or ruling party leaders from launching new welfare programmes like construction of roads, provision of drinking water facilities etc or any ribbon-cutting ceremonies.
  7. The code instructs that public spaces like meeting grounds, helipads, government guest houses and bungalows should be equally shared among the contesting candidates. These public spaces should not be monopolized by a few candidates.
  8. On polling day, all political party candidates should cooperate with the  poll-duty officials at the voting booths for an orderly voting process. Candidates should not display their election symbols near and around the poll booths on the polling day. No one should enter the booths without a valid pass from the Election Commission.
  9. There will be poll observers to who any complaints can be reported or submitted.
  10. The ruling party should not use its seat of power for the campaign purposes.
  11. The ruling party ministers should not make any ad-hoc appointment of officials, which may influence the voters in favour of the party in power.
  12. Before using loud speakers during their poll campaigning, candidates and political parties must obtain permission or license from the local authorities. The candidates should inform the local police for conducting election rallies to enable the police authorities to make required security arrangements. 

Conclusion

In a wider sense, both free markets and democratic elections are run on the basis of a set of rules with respective regulatory bodies enforcing the rules of the game. While there is a strong element of political centralization in the decision making process of elections, free market system is tilted more towards the principle of economic decentralisation. However, the consumer and the voter whose rights are legally and institutionally safeguarded remain as the principal beneficiaries of both systems- the economic and political. Thus free markets and democracy have identical underlying objectives of maximising welfare of the people. The convergence of the political economy of free markets and elections therefore highlights the democratic principles governing the welfare of citizens.

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