9 Economics Chapter 5 Working of Institutions

Chapter Notes and Summary
How is a Major Policy Decision Taken?
1. A Government Order
(a) On 13th August, 1990, Government of India issued an order. It was called an ‘Office Memorandum’.
(b) This order announced a major policy decision. It said that 27% of vacancies in civil posts and services under Government of India are reserved for Socially and Economically Backward Classes (SEBC).
SEBC is another name for all those who belong to castes that are considered backward by government.
(c) Only persons who belong to backward castes were eligible for this quota of 27% jobs. Others could not compete for these jobs.
Decision Makers
1. President President is Head of State and is highest formal authority in country.
2. Prime Minister Prime Minister is head of government, and actually exercises all government powers.
He takes most of decisions in cabinet meetings.
3. Parliament Parliament consists of two Houses, Lok Sabha and Rajya Sabha. Prime Minister must have support of a majority of Lok Sabha Members.
4. This office memorandum was culmination of a long chain of events.
5. Government of India had appointed Second Backward Classes Commission in 1979. It was headed by BP Mandal. Hence, it was popularly called Mandal Commission.
The commission was to determine criteria to identify socially and educationally backward classes in India and recommend steps to be taken for their advancement.
The commission gave its report in 1980 and made many recommendations. One of recommendations was that
27% of government jobs be reserved for socially and economically backward classes.
For several years, many Parliamentarians and parties kept demanding implementation of commission’s recommendations.
6. In Lok Sabha elections of 1989, Janata Dal in its election manifesto, promised that if voted to power, it would implement Mandal Commission report.
The Janata Dal did form government after this election. Its leader VP Singh became Prime Minister.
7. President of India in his address to Parliament announced intention of government to implement recommendations of Mandal Commission.
On 6th August, 1990, Union Cabinet took a formal decision to implement recommendations.
Next day, Prime Minister VP Singh informed Parliament about this decision through a statement in both Houses of Parliament.
The decision of cabinet was sent to Department of Personnel and Training for issuing necessary orders.
The senior officers, of department drafted an order in line with cabinet’s decision and took minister’s approval. An officer signed order on behalf of Union Government. This was how O.M.No. 36012/31/90 was born on 13th August, 1990.
8. Newspapers and magazines were full of different views and opinions on issue.
It led to widespread protests and counter protests, some of which were violent.
People reacted strongly because this decision affected thousands of job opportunities.
Some felt that existence of inequalities among people of different castes in India necessitated job reservations.
They felt that this would give a fair opportunity to those communities who had so far not been adequately represented in government employment.
Others felt that this was unfair as it would deny equality of opportunity to those who did not belong to backward communities.
They would be denied jobs even though they would be more qualified.
Some felt it would perpetuate caste feelings among people and hamper national unity.
Some persons and associations opposed to this order filed a number of cases in courts. They appealed to courts to declare order invalid and stop its implementation.
9. Supreme Court of India bunched all cases together.
This case was known as ‘Indira Sawhney and others Vs Union of India Case’.
Eleven judges of Supreme Court heard arguments of both sides. By a majority, Supreme Court declared that this order of Government of India was valid. At same time, Supreme Court asked government to modify its original order. It said that well to do persons among backward classes should be excluded from getting benefit of reservation.
10. Accordingly, Department of Personnel and Training issued another Office Memorandum on 8th September, 1993. dispute thus came to an end and this policy has been followed since then.
Need for Political Institutions
1. government is responsible for ensuring security to citizens and providing facilities for education and health to all citizens, collect taxes, etc.
2. It formulates and implements welfare schemes.
3. Some persons have to take decisions on how to go about these activities.
4. Others have to implement these decisions.
5. If disputes arise on these decisions or their implementation, there should be someone to determine what is right and what is wrong.
6. To attend to these, tasks several arrangements have been made in all modern democracies.
7. Such arrangements are called institutions. A democracy works well when these institutions perform functions assigned to them.
8. Constitution of any country lays down basic rules on powers and functions of each institution.
9. Prime Minister and Cabinet are institutions that take all important policy decisions.
10. civil servants, working together, are responsible for taking steps to implement minister’s decisions.
11. Supreme Court is an institution where disputes between citizens and government are finally settled.
12. Working with institutions is not easy. Institutions involve rules and regulations. This can bind hands of leaders.
13. Institutions involve meetings, committees and routines;
this often leads to delays and complications.
14. Institutions make it difficult to have a good decision taken very quickly. But they also make it equally difficult to rush through a bad decision. That is why democratic governments insist on institutions.
1. In all democracies, an assembly of elected representatives exercises supreme political authority on behalf of people.
2. In India, such a national assembly of elected representatives is called Parliament.
3. At state level this called Legislature or Legislative Assembly.
Powers of Parliament
1. Parliament is final authority for making laws in any country. Parliaments all over world can make new laws, change existing laws or abolish existing laws and make news ones in their place.
2. Parliaments
(a) All over world exercises some control over those who run government.
(b) In some countries like India, this control is direct and full. Those who run government can take decisions only so long as they enjoy support of Parliament.
3. Parliament controls all money that government has. In most countries public money can be spent only when Parliament sanctions it.
4. Parliament is highest forum of discussion and debate on public issues and national policy in any country.
Parliament can seek information about any matter.
Two Houses of Parliament
1. In most modern democracies large countries divide role and powers of Parliament into two parts. They are called chambers or houses.
2. One House is usually directly elected by people and exercises real power on behalf of people.
3. Second House is usually elected indirectly and performs some special functions.
4. most common work for Second House is to look after interests of various states, regions or federal units.
5. In our country, Parliament consists of two houses. two houses are known as Council of States (Rajya Sabha) and House of People (Lok Sabha).
6. President of India is a part of Parliament although he is not a member of either house.
7. That is why laws made in Houses come into force only after they receive assent of President.
Lok Sabha
1. Lok Sabha is directly elected by people.
2. members are elected for a term of 5 years.
3. council of ministers is responsible to Lok Sabha.
4. It is more powerful than Rajya Sabha.
5. It is also called ‘Lower Chamber.’
Rajya Sabha
1. It is indirectly elected by members of State Legislative Assemblies.
2. Its members have a term of 6 years.
3. It is a permanent body and is not dissolved.
4. One third of its members retire every two years.
5. Twelve members to Rajya Sabha are nominated by President from those persons who have excelled in sports, arts, science, literature and social service.
6. It has 250 members.
7. Vice-President of India is ex-officio Chairman of Rajya Sabha.
Comparison of Powers of Lok Sabha and Rajya Sabha Our Constitution gives Rajya Sabha some special powers over states. But on most matters Lok Sabha exercises supreme power and is more powerful than Rajya Sabha.
e.g., 1. Any ordinary law needs to be passed by both Houses.
But if there is a difference between two Houses, final decision is taken in a ‘joint session’ in which members of both Houses sit together and vote. Because of larger number of members, view of Lok Sabha is likely to prevail in such a meeting.
2. Lok Sabha exercises more powers in money matters.
(a) Once Lok Sabha passes budget of government or any other money related law, Rajya Sabha cannot reject it.
(b) Rajya Sabha can only delay it by 14 days or suggest changes in it.
(c) Lok Sabha may or may not accept these changes.
3. Most importantly, Lok Sabha controls Council of Ministers.
(a) Only a person who enjoys support of majority of members in Lok Sabha is appointed Prime Minister.
(b) If majority of Lok Sabha members say they have ‘no confidence’ in council of ministers, all ministers including Prime Minister have to quit.
(c) Rajya Sabha does not have this power.
Political Executive
1. At different levels of government we find functionaries who take day-to-day decisions but do not exercise supreme power on behalf of people.
2. All these functionaries are collectively known as Executive.
3. They are called Executive because they are in charge of the
‘execution’ of policies of government. Thus, when we talk about government we usually mean Executive.
Political and Permanent Executive In a democracy, two categories make up Executive.
Political Executive
1. It is elected by people for a specific period and is called Political Executive.
2. Political leaders who take big decisions fall in this category.
Permanent Executive
1. people in this category are appointed on a long term basis. This is called Permanent Executive or Civil Services.
2. Persons working in Civil Services are called civil servants.
3. They remain in office even when ruling party changes.
4. These officers work under Political Executive and assist them in carrying out day-to-day administration.
Political Executive More Powerful than Permanent Executive
1. civil servant is usually more educated and has more expert knowledge of subject than ministers.
2. advisors working in Finance Ministry know more about economics than finance minister, but minister has final say on most matters because in a democracy will of people is supreme. minister is elected by people and thus empowered to exercise will of people on their behalf.
3. ministers are finally answerable to people for all consequences of their decisions. That is why ministers take all decisions.
Prime Minister
1. Prime Minister is most important political institution in country.
2. President appoints Prime Minister. But President cannot appoint anyone he likes.
3. President appoints leader of majority party or a coalition of parties that commands a majority in Lok Sabha as Prime Minister.
4. Prime Minister does not have a fixed tenure. He continues in power so long as he remains leader of majority party or coalition. After appointment of the
Prime Minister, President appoints other ministers on advice of Prime Minister.
5. Prime Minister is usually from party or coalition that has majority in Lok Sabha.
6. Prime Minister is free to choose ministers as long as they are members of Parliament.
7. Sometimes, a person who is not a member of Parliament can also become a minister. But such a person has to get elected to one of Houses of Parliament within
6 months of appointment as minister.
Council of Ministers Council of Ministers is official name for body that includes all ministers. It usually has 60 to 80 ministers of different ranks.
Cabinet Ministers Cabinet Ministers are usually top-level leaders of ruling party or parties who are in charge of major ministries.
Cabinet is thus inner ring of council of ministers. It comprises about 20 ministers.
Ministers of State with Independent Charge These ministers are usually in-charge of smaller ministries.
They participate in cabinet meeting only when specially invited.
Ministers of State
1. They are attached to and required to assist cabinet ministers.
2. Since it is not practical for all ministers to meet regularly and discuss everything, decisions are taken in cabinet meetings.
3. That is why Parliamentary democracy in most countries is often known as cabinet form of government. cabinet works as a team.
4. ministers may have different views and opinions but everyone has to own up to every decision of cabinet.
5. No minister can openly criticise any decision of government, even if it is about another ministry or department.
6. Every ministry has secretaries, who are civil servants. secretaries provide necessary background information to ministers to take decisions.
7. cabinet as a team is assisted by Cabinet Secretariat. This includes many senior civil servants who try to co-ordinate working of different ministries.
Powers of Prime Minister
1. As head of government, Prime Minister has wide ranging powers.
(a) He co-ordinates work of different departments.
(b) His decisions are final in case disagreements arise between departments.
(c) He exercises general supervision of different ministries.
(d) All ministers work under his leadership.
(e) Prime Minister distributes work to ministers.
(f) All ministers are appointed by president on advice of Prime Minister.
(g) He also has power to dismiss ministers.
(h) When Prime Minister quits, entire ministry quits.
2. If cabinet is most powerful institution in India, within cabinet it is Prime Minister who is most powerful.
3. powers of Prime Minister have increased so much that Parliamentary democracies are sometimes seen as Prime Ministerial forms of government.
4. Prime Minister controls cabinet and Parliament through party.
5. extent of power wielded by a Prime Minister also depends on personality of person holding that position.
6. However, in recent years rise of coalition governments have imposed certain constraints on power of Prime Minister. Prime Minister of a coalition government cannot take decisions as he likes. He has to accommodate different groups and factions in his party as well as among alliance partners.
1. President is Head of State. In our political system, Head of State exercises only nominal powers.
2. President of India is like Queen of Britain, whose functions are to a large extent ceremonial.
3. President supervises overall functioning of all political institutions in country so that they operate in harmony to achieve objectives of state.
4. President is not elected directly by people.
5. All Members of Parliament (MPs) and Members of State Legislative Assemblies (MLAs) elect President.
6. A candidate standing for President’s post has to get a majority of votes to win election.
7. This ensures that President can be seen to represent entire nation.
Powers of President
1. All government activities take place in name of President.
2. All laws and major policy decisions of government are issued in President’s name.
3. All major appointments are made in name of President.
4. He appoints Chief Justice of India, Judges of Supreme Court and High Courts of states.
5. He appoints Governors of states, Election Commissioners and Ambassadors to other countries, etc.
6. All international treaties and agreements are made in name of President.
7. President is Supreme Commander of Defence Forces of India.
The President exercises all these powers only on advice of Council of Ministers.
Legislative Powers of President
1. President can ask Council of Ministers to reconsider its advice.
2. A bill passed by Parliament becomes a law only after President gives assent to it.
3. President can send bill back to Parliament for reconsideration. But if Parliament passes bill again, he has to sign it.
24 Special Powers of President
1. When a party or coalition of parties secures a clear majority in elections, President has to appoint the
leader of majority party or coalition that enjoys majority support in Lok Sabha as Prime Minister.
2. When no party or coalition gets a majority in Lok Sabha, President exercises his discretion. President appoints a leader who in his opinion can muster majority support in Lok Sabha.
3. In such a case, President can ask newly appointed Prime Minister to prove majority support in Lok Sabha within a specified time.
Presidential System
1. Presidents all over world are not nominal executives like President of India.
2. In many countries of world, President is both Head of State and Head of Government.
3. President of United States of America is most well known example of this kind of President.
4. US President is directly elected by people.
5. He personally chooses and appoints all ministers.
6. law making is still done by legislature, (called Congress in US) but President can veto any law.
7. Most importantly, President does not need support of majority of members in Congress and neither is he answerable to them.
8. He has a fixed tenure of 4 years and completes it even if his party does not have a majority in Congress.
9. This model is followed in most of countries of Latin America and many of ex – Soviet Union countries.
10. Given centrality of President, this system of government is called ‘Presidential form of government’.
11. In countries like ours that follow British model, Parliament is supreme. Therefore, our system is called Parliamentary system of government.
1. All courts at different levels in a country put together are called judiciary.
2. Indian judiciary consists of a Supreme Court for entire nation, High Courts in states, District Courts for each district and courts at local level.
3. India has an integrated judiciary. This means Supreme Court controls judicial administration in country.
4. Its decisions are binding on all other courts of country.
Powers of Supreme Court
1. It can take up disputes.
(a) Between citizens of country.
(b) Between citizens and government.
(c) Between two or more State Governments.
(d) Between governments at union and state level.
2. It is highest court of appeal in civil and criminal cases.
It can hear appeals against decisions of High Courts.
3. It controls judicial administration in country. Its decisions are binding on all other courts of country.
Independence of Judiciary
1. Independence of judiciary means that it is not under control of executive.
2. judges do not act on directions of government or according to wishes of party in power. That’s why all modern democracies have courts that are independent of legislature and executive. India has achieved this.
Appointment of Judges
1. senior judges of Supreme Court select new judges of Supreme Court and High Courts. So there is very little scope for interference by political executive.
2. Once a person is appointed as judge of Supreme Court or a High Court, it is nearly impossible to remove him or her from that position.
Removal of a Judge A judge can be removed only by an impeachment motion passed separately by two thirds (2/3rd)
members of two Houses of Parliament.
All above points reflect Independence of Indian Judiciary.
Constitutional Powers of Judiciary
1. Supreme Court and High Courts have power to interpret Constitution of country.
2. They can declare invalid any law of legislature or actions of executive, whether at union level or at state level, if they find such a law or action is against Constitution.
3. They can determine constitutional validity of any legislation or action of executive in country, when it is challenged before them. This is known as judicial review.
4. Supreme Court has also ruled that core or basic principles of Constitution cannot be changed by Parliament.
5. judiciary acts as guardian of Fundamental Rights. citizens can approach courts to seek remedy in case of violation of their rights.
Public Interest Litigation Anyone can approach courts if public interest is hurt by actions of government. This is called Public Interest Litigation. (PIL)
1. courts intervene to prevent misuse of government’s power to make decisions.
2. They check malpractices on part of public officials.
That is why judiciary enjoys a high level of confidence among people.

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