Account for the legal and political factors responsible for the reduced frequency of using Article 356 by the Union Governments since mid-1990s.
How Global Capitalism Organizes Economic Zones Today, countries around the world open economic zones within their borders to attract foreign investment, increase economic activity, and grow the local economy. These include Special Economic Zones (SEZs), Free Trade Zones (FTZs), and Export ProcessingRead more
How Global Capitalism Organizes Economic Zones
Today, countries around the world open economic zones within their borders to attract foreign investment, increase economic activity, and grow the local economy. These include Special Economic Zones (SEZs), Free Trade Zones (FTZs), and Export Processing Zones (EPZs) — and are established by both rich and developing countries. These zones are a product of the movement of global capitalism, in which capital, goods, and services cross national lines without restraint. These economic zones are made possible by global capitalism, and this conversation discusses that and their impact on economic development.
The essence of Global Capitalism.
Global capitalism refers to an economic system where private corporations and market forces determine the allocation of resources and the production and distribution of goods and services. It functions on the basis of free trade, easily transported capital, and profit generation. One prominent physical manifestation of these concepts is known as economic zones, which are intended to create favorable conditions for companies and investors in specific areas.
We have also established economic zones to attract foreign investments.
Investor-Friendly: Economic zones are designed to attract foreign investors by providing tax reductions, lower import duties, administrative simplification, and good infrastructure. In fact, examples of slashing taxes and regulating light include China’s Special Economic Zones (SEZs) in Shenzhen and Guangzhou which were created to entice foreign businesses.
Zone Placement: These are often positioned close to porthole, border point, or on the outside of an industrial hub to facilitate international trade. This geographical positioning allows for lower shipping costs and better access to markets — all attractive qualities to foreign companies.
Making Business More Competitive
Cost Reduction Economic zones reduce business costs through cheaper labor, lower taxes, and less red tape. This is vital for labor-intensive or trade-sensitive industries.
Transfer of Technology & Expertise: Economic zones encourage technology and expertise transfer among nations. These companies also enhance the local skill set by introducing new technologies, management techniques, and training programs.
Boosting Regional Growth
Economic Diversification Economic zones promote the establishment of new industries, leading to diversification of the regional economy. This diversification decreases reliance on one particular industry, which lends stability to the region amid economic shocks.
Job opportunities: As businesses and foreign investment enter these zones, they will also create job opportunities that reduce the unemployment rate and poverty rate in the surrounding areas. This is especially important for developing countries where there are few job prospects.
Encouraging Export Growth
Export Oriented: Special economic areas are focused on exports for growth. They offer benefits like tax breaks, duty-free imports of raw materials and streamlined export procedures to businesses that sell products abroad.
Export Infrastructure: Companies in these zones can readily access international markets that increases their sales and hence profitability. This is particularly relevant for emerging markets seeking to solidify their foothold in international trade.
Regulatory Flexibility
Different Economic Rules: Economic zones have a different and often more business-friendly set of economic rules than the rest of the country. Such rules permit greater flexibility in labor laws and environmental standards, making the zones appealing to such companies that are looking for less rigid environments.
Pilot of Economic Changes: These areas serve as a testing ground for new economic policies. Governments can experiment with such reforms in these domains to see whether they work before scaling them up. China’s own zones, for example, were pivotal in experimenting with market reforms that became central to the nation’s economic strategy.
Affecting Economic Growth
Economic Growth
Positive GDP: One of the potential benefits of creating special economic zone can be used to boost the economy of a country, by attracting foreign investments, creating new industries and exporting goods.
Multiplier Effects: These zones can have positive effects for the broader economy. They attract investments and harvest jobs, increasing demand for goods and services, boosting business expansion.
Social Impact
Economic zones are attracted by businesses, providing employment opportunities, particularly for low-skilled workers, thus combating poverty and raising the living standards.
Gains from MNCs presence in these zones also aids in skill development as new training courses and education systems are adopted, allowing the future of the region to flourish economically.
Environmental Concerns
Sustainability Issues: Economic zones developed for growth may lead to environmental degradation, such as pollution and resource depletion. It must be regulation by governments to make this sustainable.
GreenZones: A few countries are creating eco-friendly, or green, zones that are designed to bring economic growth while also nurturing the environment.
Equity and Inequality
Regional Unequal development — Economic zones can create uneven regional development, where some parts of the economy benefit while others are left behind, increasing inequality.
Social Inequality: As the zones generate employment and create an eco-system around them, they may not equally benefit the poor, effectively increasing the rich and poor divide.
Democracy and Political Governance Issues
Corruption and Rent-Seeking: Special economic zones may become prey to corrupt practices where the financial incentives they provide to the entrepreneurs are misused, and they might also help in inefficient utilization of resources.
Separate Note: National governance structures are not designed for zones, making coordination more challenging. Lack of coordination gives rise to inefficiency and hampers development.
Conclusion
Economic zones play a crucial role in global capitalism as they aim to attract foreign investors, enhance competitiveness, and develop areas. Despite their great benefits for the economy, they are also associated with challenges and potential downsides. Governments and policymakers must make sure that these zones plan and operate in ways that support sustainable, fair economic development as one of the main drivers or purpose behind their existence. Striking a balanced approach is crucial for these zones to effectively enable developing nations to transition to global economy and ensure sustained economic growth in the long run.
See less
Introduction Article 356, or "President's Rule," of the Indian Constitution enables the President to assume the administration of a state if the government is not functioning. This is a controversial rule that the central government can misuse. Since mid-1990s, the imposition of Article 356 has seenRead more
Introduction
Article 356, or “President’s Rule,” of the Indian Constitution enables the President to assume the administration of a state if the government is not functioning. This is a controversial rule that the central government can misuse. Since mid-1990s, the imposition of Article 356 has seen a decline. This discussion examines the legal and political factors that have led to this decline.
Legal Factors
SW2023-A9 | Supreme Court Ruling (S. R. Bommai v. Union of India, 1994)
One of the major legal developments that had put a cap on the abuse of Article 356 is the Supreme Court’s 1994 judgement in S. R. Bommai v. Union of India. The court ruled that the invocation of President’s Rule necessitates the establishment of the failure of the government of a state. It also established judicial review, allowing the Supreme Court to judge the legality of such decisions. The ruling had made it difficult for the central government to use of Article 356 without strong justification.
Judicial Scrutiny and Later Cases
In the aftermath of the Bommai ruling, courts have adopted a more alert and vigorous stance towards the validity of grounds on which President’s Rule should be invoked. Many subsequent cases have only strengthened the principles established in Bommai, leading to a more cautious application of Article 356. The risk that any ruling could be overturned, and a new judicial intervention, has deterred the central government.
Legal Reforms and Guidelines
The central government was forced to issue clarification on the procedure for invoking Article 356 in the wake of the Bommai verdict. Under the new guidelines, the Governor must now report to the President in detail the situation and provide evidence of government failure. These processes have improved transparency and enhanced the legal structure applied to the action of Article 356.
Political Factors
Multi-Party Coalition Governments
Since the mid-1990s, the bjp only controls a portion of the government, the rest under the control of a coalition of other parties. These coalitions are more heterogeneous and less centralized than single-party governments. Since they need the support of regional parties, they do use Article 356 (clamp down on states) with caution. Antagonising coalition partners makes trouble and so the centre is loath to impose President’s Rule.
The Politics of State autonomy and Regional Hegemony
I have access to data until October 2023. States can be more proactive in asserting their rights under the Constitution, very often galvanizing public and political support against the imposition of President’s Rule. This assertiveness makes it political risky for the central government to use Article 356 without strong justification.
Public and Media Watchfulness
A key function of the media is to hold the central government accountable. The media has audited the implementation of individuals leaving the measures under Article 356. Negative media coverage and public outpouring has given the central government reason to hesitate to invoke President’s Rule.
Consequences And Effects Of Political Actors
Because implementing President’s Rule could make political fallout – e.g., a loss of voter trust, and credibility. In a democracy, such actions could hurt the central government in the elections. Moreover, political parties are cognizant of these adverse impacts and thus, frequently pursue alternative approaches to remedy governance challenges.
Shifts in the Political Scene
India’s political landscape has been transformed since the mid-1990s. The decline of single-party dominance and the rise of regional and caste-based politics have made it far harder for the central government to justify recourse to President’s Rule. The Lok Sabha and the Rajya Sabha comprise of diverse political interests who would not let the central government take such an action easily.
Conclusion
There have been both legal and political reasons, which has led to a decline in the application of Article 356 since the mid-1990s. Separated by law, S. R. Bommai v. Union of India and closer court scrutiny have made the central government more accountable, and the process more transparent. On the political front, the emergence of coalition governments and increasing state autonomy have made the application of President’s Rule more cautious. Public and media scrutiny also forces the government to proceed carefully. These developments have made for a more robust democracy with a better balance of power between the central government and the states.
See less