Critical evaluation of the Indian political system
India is in essence a sovereign, democratic, secular state with a profound parliamentary structure of government. On 26 of November 1949, the nation’s constituent adopted the constitution, however, the constitution came into operation in the wake of 1950. According to legal experts, the constitutions advocated and championed for what is defined as a trinity of justice namely liberty, equality, and justice for all Indians. The constitution was structured along with the parameters of enhancing the nation’s socio-economic growth (Baruah 73). Basically, India is governed along the pillars of parliamentary governance which supports democracy, and the government is thus federal in configuration.
In the Indian political configuration, the president is in essence the constitutional leader of the supreme Union of India. However, the Prime Minister is the one who holds the political authority together with the Council of Ministers. Hence, under Article 74 (1) of India’s constitution, the prime minister together with the council of ministers plays the role of aiding the president in executing the powers conferred to him under the constitution (Dash 158). Also, the council of ministers is equally responsible to the House of People (Lok Sabha). Regarding states administration, the governors act as the president representatives.
Similarly for any given state collectively the council of ministers are also responsible for the state’s legislative assembly. This indicates that the constitution allows the sharing of power for both the parliament together with the state legislatures. More the power to alter or modify the constitution rests with the parliament.
With a population that is nearing one billion, with an electorate that is over 705 million, India can be said to be one of the largest democracies in the world. With both its successes and failures, as a democratic state it stands pointed in contrast to her neighbours who have emerged as democratic failures as testified by both Pakistan and Bangladesh which were in essence parts of India before 1947. Also, unlike US political system as well as the British system which have instrumentally stayed in their original form for centuries, the Indian system is more new and dates from India’s attainment of independence. The immediate constitution differs considerably from that of such a country like Japan which has stayed for years without ever being modified. India’s constitution stands as one of the most modified in the world with over 80 simultaneous amendments. Some of these amendments have resulted in long periods of crisis including instances of a hung parliament. Also, as the constitution stipulates members of the Electoral College, 4500 parliamentarians, as well as state legislators, are permitted to participate in the election of the president (Dash 141). Also, the system provides an opening for the vice president who is traditionally elected by India’s members of the Electoral College which in such an instance pools members from both houses. The elected vice president commonly chairs Rajya Sabh or the Upper house. The prime minister is the constitutional head of government. Concerning the selection of ministers, the leader does so under the counsel of the prime minister.
Executive Arm
The president holds the ceremonial role as the head of government and this role is tied and modelled along the lines of British monarch under the scope of encouraging, warning, and advising the state elected government on matters relating to the constitution. This configuration gives the president the honour to return a bill to the parliament if not satisfied or for reconsideration. Also, the president in time of crisis or anticipated political instability can declare a state of emergency and this can equally extend the house beyond the constitutional period of five years.
However, the constitution gives the president the power to wield the supreme authority as the nation’s commander of armed forces. His term is stipulated to be five years. The president thus enjoys such powers as declaring a state of emergency if part or any given region of the country is under or threatened by such instances as external or internal aggression, the collapse of national machinery concerning economy or politics. The vice president is elected under the structure of transferable single vote presentation. On the other hand, the Council of Ministers is defined as the supreme governing entity and is traditionally chosen from the elected parliamentarians. The council is made up of cabinet ministers, their deputies as well as the minister of states. In essence, every division has an officer who acts as the secretary to the government and the role the secretary undertakes is advisory, advising the chosen ministers on matters regarding administration as well as state policies and the overall aspect of good governance. More so, the cabinet secretary has a paramount role in harmonizing the decision making and is under the prime minister.
As India’s constitution allows the parliament stands as the legislative arm of the nation. The legislative arm is made up of the president, the Upper House and the Lower House. Hence, any bill that requires to be consented to become law must attain the consent of the authority of the two houses. Exploring the dynamics of India’s political system, it is evident that the states governance system resembles the union’s system. It ought to be noted that the political systems in the states are anchored with the scope of the legislative assembly along with the legislative council. Concerning the political parties, the constitution recognizes either a national party or a state party. Hence, if a political party happens to be recognized in more than three states it is either in opposition or is the ruling party.
Thus, exploring India’s political system it can be argued that the system calls for rebuilding. This can be allied to the fact that India lacks strong political systems as those witnessed in some parts of Europe and America. In essence, politics in this country are extremely rough and devastative corrupt. Political assassinations are common as is testified by the assassination of Mahatma Gandhi in the wake of 1948, PM Indira Gandhi in 1984 as well as the assassination of PM Rajiv Gandhi in 1991. Also communal, regional and caste tensions persist in creating a hostile environment concerning India’s politics and this has sometimes moved towards causing tension and instability regarding the nation’s democratic as well as secular ethos. Hence, in recent years the political system has witnessed a rapid change and emerging challenges due to the emergence of the popular Right to Information activists across the nation. The RTI has played a noble role in compelling the government including its justice system to rethink dealing with corrupt institutions and this has resulted in the killing of many RTI activists who are growing by day by the government. Despite the external challenges the nation’s political system stands out and is said to be vibrant concerning its neighbours.
The Indian federal constitution influence on the Indian business environment
the federal government plays a critical role in providing a healthy environment in which both state and union economy can flourish and sustains the needs of the nation. Thus, it would be instrumental to point out that the federal constitution stands as the guardian of the Indian people. Regarding such aspects as the business environment, the constitutions clearly define what a business environment is and what is to be found or involved in the given environment. And this demonstrates why India continues to be a global economic centre. The federal constitution recognizes that the nation’s social, political and economic life depends on individual and corporate interaction. Thus, the people, resources, climatic conditions as well as the available materials that surround the Indian citizens form the broader aspect of the business environment. Thus, the constitution has provided the opposite legislations which are designed to protect business interests including the manner the diverse financial activities are executed. This demonstrates why the constitution forbids racketeering, money laundering, individual and corporate corruption as well as smuggling to have a vibrant and healthy business environment.
To ascertain the business environment is suitable and friendly to investors the constitution is thus designed to provide unique provisions which are purposely anchored in protecting the investors in times of changing fortunes as well as cushion the local investors from foreign exploitation. Thus, the federal constitutions can be said to have provided legal grounds on which competitive business can be executed, provision for legal aspects regarding technology transfer including providing diverse economic clauses which are in essence provided to sustain a healthy business environment in case of changing economic trends or in case of inflation the business organizations are protected against such. In such an observation the federal constitution has an elaborate stipulation concerning tax. It ought to be noted that all governments depend on tax for the effective running of their diverse agencies. Thus, in regard to the federal constitution, the scope of tax is considerably explored, and this has a considerable effect on the manner businesses are operated.
It is evident that the way the constitutions touches on the diverse threads involving tax is instrumental. However, despite the constitutional provisions on taxis, India has a complex tax system. it ought to be noted that its tax policies though developed to enhance progression lack the profound aspects of sustainability. Thus, lack of adequate administrative resources the impact of the constitution is simply not significant. What is mostly talked of is the manner the federal constitution has failed in establishing sustainable tax policies. Hence, the federal constitution has a phenomenon clause that prohibits the taxation of agricultural products or income. This clause considerably has influenced the manner economic progression flows. Exploring the federal constitution influence on the matters pertaining to tax it would be instrumental to argue that the constitution touches on both federal and state dynamics in regard to tax stipulation. This is thus reflected in nations market-oriented financial reforms. Some of these reforms are correlated to foreign trade as well as a reduction in various taxes imposed on both local and foreign investors. However, the positive aspects influenced by the restructuring of tax policies are being infringed by the federal bulky bureaucracy, corruption, labour market stringency including regulatory and foreign speculation controls.
About environmental law, the federal constitution cannot be said to have played a significance role. Consider the fact that in 1986 the federal constitution allowed for the enactment of environment protection act the scope of this act was projected in compelling the federal government to guard and equally enhance quality environmental aspects designed to curb instances of pollution from all possible sources. This thus influenced the manner both state and federal governments handle environmental issues. Also, the influence of federal constitution on environment law is considerably felt within the realm of manufacturing, storage as well as import of hazardous resources. The federal constitutions profoundly provide concrete legal procedures of protecting both flora and fauna including properties.
Hence, the federal constitution asserts that it is the supreme duty of the government to protect and equally improve the environment in addition to safeguarding the natural resources such as forests including the country’s wildlife. More so, this compels the government to impose a compulsory obligatory to each and every citizen to be conscious of the environment and to purposely protect the same environment diligently. Thus, the manner the federal constitution has tackled the issue environment is quite evident in the manner the citizens treats the aspects of protecting forestry,lakes, wildlife and other natural features is concerned. And that is why the stipulations of the federal constitution have been backed by such popular acts, notifications and rules. Bhopal Gas tragedy, for instance, compelled the formulation of the environment protection act-1986. more so, in the light of human rights, the federal constitution has considerably influenced and equally played a central role in enhancing a profound sense to India’s populace in regard to environment. Considering the influence of the federal constitution in regard to the expectations of foreign investor’s expectations the federal constitution has managed to effectively provide the much-needed reprieve for investors. The nation’s investment rules, and procedures have undergone a substantial transformation since the current economic reforms were initiated a decade ago. The core objective of the constitutional provision was to provide an investor friendly environment. Thus, in regard to the expectation of the foreign investors who are willing or have invested in India, the federal constitution have provided the opposite legislation of making running business in India to be enjoyable and profitable. This can be allied to the manner the nation has managed to anchor itself as the most sought investment centre by foreign investors.
Though, some years back the expectations of the investors remained unfulfilled the federal constitution have allowed for a number of economic changes to be made in order to facilitate a smooth operation of foreign investors. Note that the foreign investors expect to invest where they feel that their interests will be protected and they are entitled to healthy business competition including fair taxation (Mo 144). Thus, exploring the federal constitution the scope of foreign investment is well addressed and the expectation of the investors defined. This is since emerging global business platforms are calling for well-established commerce regulations. The purpose of such stipulations is linked to ascertaining that the economic activities undertaken are legally protected. Thus, the expectations of investors whether on direct investment, labour, taxation and production aspects are ascertained of positive and vibrant market. Equally, the increasing FDI inflows in the country illustrates that the federal constitution has played a central role in enhancing and improving the investment processes.
Hence, portfolio investors as well as round-tripping foreign investments have continued to contribute to India’s economy (Khindira 109). In essence, what the federal constitution has done is to prepare the ground for the investors to realize their anticipations without fear of government protectionism as well as rigid bureaucracy. Equally, the federal constitution has influenced the manner foreign investors are allowed to exploit the cushion of tax routes. This has considerably allowed for the progression of foreign investors across the nation. Another notable thing is that since the wake of 2009 and the subsequent constitutional amendments in regard to economic reforms the rate of foreign investors have increased. And this has adequately addressed the issue of long-term investment in the country. The constitutional changes and the economic reforms can be said to be the influence behind the expansion of foreign investments in the country. What this illustrates is that investor perception of India has taken a new dimension due to the economic changes which have been successfully stipulated under the federal constitution (Mo 107).
The best way to structure the investment paying particular attention to the various permissions, competition law and tax issues arising including repatriation of profits
As an investor, it is paramount to note that every government has its unique parameters which are established in order to allow a healthy business competition. More so, under the nation’s constitution, there are core parameters employed to provide the given investor with the apposite investment environment. Regarding planning to invest in India, it would be apposite to start that this country has one of few superior investment platforms in the world. In essence, this platform is designed to promote and compel foreign investors to enter into her extreme market. This entrance is permitted either as foreign direct investment or equally as foreign institutional investments. Because the Indian government have over the last two years liberated its economic statutes including the lifting of restrictions on all foreign investment. I believe that entering India’s manufacturing sector through foreign direct investment automatic approval would be the most suitable. The scope of doing so would involve ascertaining that incase the company intends to transfer some of its shares to another firm would be smooth. Thus, considering that the anticipated investment is not linked to defence or arms-oriented industry, it would be thus wise to note that the provision of automatic route allows 100% investment in all sectors except in such sectors which calls for direct vetting and approval of the federal government. In all other cases the government allows 30 days of making intimation to RBI (Reserve Bank of India) before the investment is launched.
The best investment thus would entail investing in a non-industrial sector this would help in attaining the benefits and recommendations of FIPB (foreign investment promotion board). Also, this would facilitate the federal clearance of the anticipated investment in the region. Thus structuring an investment that is directly related to such industries as pharmaceuticals or food processing would be considerable. This is since the government involvement would entail being involved in the given investment and this would ascertain the firm has the government assurance and protection. Also, in such a situation, India’s federal government have of late established ECB (external commercial borrowing) and the purpose of this entails securing bank loans, provision of both fixed and floating bonds and this would considerably help incase the anticipated investment calls for further funding we can borrow from other private sectors (Khindira 86).
India is the 2nd most populous state in equally the 4th greatest economy is also the most promising investment market in the world today. Taking the advantage of the seamless economic reforms tailored to deregulate the economy of the nation it would be thus essential to pay attention to various investments procedures. The current economic reforms being witnessed have provided a stable level ground for competition, the objective of the principles etched on the issues regarding the competition are linked to controlling monopoly and protectionism. Thus, it is thus advisable to understand that though the current government has enacted stringent legal provisions to deal with aspects of competition law, it can be argued that the current market is being influenced by faceless cartels which are operating from within and outside the country.
Concerning the competition law, it is evident India’s competition law is formed along with the EU Competition law which outlaws’ business monopoly, abuse of dominants market position as well as in-trading practices which are unhealthy for fair play in business. Exploring the recent stipulations of Indian competition law, it is evident the law is also tied to dealing with issues touching on mergers, acquisition as well as corporate partnership. The scope of this legislation is to give weaker investors a fair share of market. Equally, the legislation concerning competition tackles what the law defines as anti-trust activities among investors. Thus, the competition legislation has paved a broader path for enhancing transparency in such areas as Take Over Code including capital disclosure. However, it is evident that the core objective of competition law is for key purpose of guarding the consumers by ascertaining healthy rivalry in the market. In essence, the law is against anti-competitive contracts as well as abuse of dominant market. To reinforce the purpose of competition law the government enacted the competition act and all investors are expected to operate within this provision.
Thus, it would be thus essential to examine the underlying factors affecting the business operations such as the apparent competitors, the legal requirements of sustaining a competitive market segment among other issues. Similarly, it would be thus instrumental to consider the government’s tax provisions. Because India is a member of ASEAN it becomes crucial to understand that when investing in its territories there are a number of issues pertaining to taxation that must be addressed. some of these issues touch on value-added tax, import and customs duty, as well as corporate tax, in as far as we are to invest in this country the government have the lowest tax rates on foreign direct investment. More so, concerning the repatriation of profits there are two core features that any given investor is allowed to consider; the significance but relative power of government, and the government’s desire to attract investors from other countries (Khindira 71). This allows for competitive bargaining ground for investors for the government is compelled to offer low tax rates. However, repatriation of profits the government discourages it if the investor happens to be a member of ASEAN or AMCs.
Exploring the core stipulations tied to investing in this nation, the government recognizes two types of business namely, private or public corporation. Each type of business carries its own unique legal provisions as far as regulations and licensing are concerned. Also, private companies seem to attract higher taxation rates than those entities under the umbrella of public investment (Sen 120). Also these firms are examined to determine if they hold either limited or unlimited liabilities. Hence, this shows why corporations or foreign investments incorporated in India including their subsidiaries are regulated under the stipulations advocated under the Companies Act of 1956 and this act borrows much of its stipulations from UK Companies Act.
The importance of anti-money laundering legislation in India
Anti-money laundering legislation plays a central role as far as financial crimes are concerned. In India, money laundering is considered to be an economic crime and that is why the government found it wise to enact a number of bills that are purposely designed to prevent this vice. The significance of this legislation lies in that it helps in preventing proceeds suspected to be from crime to be injected into the state’s economy. Also, this legislation has paved channels that have proved to be significant in fighting any aspects of funding terrorist activities in the country. Thus the anti-money laundering bill can be said to be enhancing proper economic activities in the country. The scope of money laundering if encouraged could destabilize the nation’s economy due to extreme transfer of currencies and this could interfere with the countries economy. It is from such observation we note that the legislation asserts that any individual who acquires, possess, transfer, owns any proceeds allied to crime, or knowingly gets linked to any transactions linked to crime proceeds either expressly or indirectly, or conceals any crime proceeds is liable for an economic crime linked to money laundering.
Thus, any foreign company intending to invest in this country can overcome any instances which can be translated as money laundering by adhering to the laid economic legislations. The prevention of money laundering bill act-1990 compactly prohibits any act of injecting or transferring any proceeds suspected from crime into the country’s economy. Thus, the foreign firms are expected to follow the laid down economic procedures in order to avoid falling into the trap of money laundering. So, the investing companies ought to avoid investing or concealing any financial activities which can be translated as acts of money-laundering. India’s anti-money laundering act prohibits any individual or corporation from participating in any crime, by violating this requirement the law declares the offender to have committed the offence of money laundering. The act thus defines money laundering as any act that involves transferring large amounts of illegally obtained funds and giving it a face to appear as if from a legitimate source (Sen 82).
This dictates that the foreign firms investing in India must avoid being involved or being duped to take part or be compelled to help in transferring illegally made wealth. This can be achieved by establishing solid financial procedures which are beyond any reproach or suspicion. For instance, any transfer of funds can be done transparently also accountability is essential in as far as the firm’s operations are concerned. Thus, to avoid the pitfalls of money laundering the interested foreign investors are advised to set their priorities and more inform the government on the nature of their business including the manner their operations are to be funded. This is set to establish if the firm is being controlled by external or internal forces linked to any criminal activities. In essence, any foreign firm anticipating investing in India must comply with the stipulations defined under PML (Amendment Act 2009); as well as with PML (Amendment) Act 2005), this legislation compels the investors, as well as the financial institutions including their intermediaries to compactly verify the real identity of their client and also maintain records of the manner funds, are transferred.
The protections offered by Indian federal competition law to a foreign investor
Investing in India is one of the best experiences any investor can think of. Exploring the diverse challenges faced by foreign investors, the Indian government has of late established a number of measures that are set to protect the interests of foreign investors. Some of these measures are designed to prohibit competition agreements, acquisitions as well as mergers which are done to beat the rivals. Also, prohibition of abuse of dominant market position has stood out as one of core protections offered by the government in protecting foreign investors. Equally, provision of low tax rates to foreign investors has helped in boosting their faith in Indian government. Another issue that the government have considered and effectively backed in order to guard the foreign investors entails regulating combinations, enacting merger-control regulations, and voting rights including checking on mergers. Thus, the enactment of the Competition Act is designed to check on these issues in order to provide foreign investors with a healthy business environment.
Basically, the competition law provides that each and every investor have a right to access the provisions provided by the government. Thus, what the law offers to the foreign investors is a guarantee that their interests would be treated as is with the local investors. This means that the law allows the foreigners to compete fairly with the local and this has resulted in the enactment of legal stipulations prohibiting formation of cartels. The objective of this stipulation is to protect the business interests and to enhance healthy competition while prohibiting market monopoly.
On a similar provision is the incorporation of corporate law this law is equally tied to the provision of sound business environment. Thus, in regard to the scope of competition law, corporate law also helps in streamlining the manner the foreign investors are allowed to deal with such issues as tax concerning land, buildings as well as the general ownership of business premises. What this demonstrates is that foreign investors are given tax exemption as one of the key protections on the anticipated investment. Also, the constitutional control on corporate protectionism is another essential protection that has given the foreign investors equal footage in the market as is with the local investors (Sen 200). However, to sustain a viable and balanced market the competition law has a certain clause that forbids the foreign investors to undertake certain measures which are only reserved for the native investors. More so, the legal stipulations highlighted by the competition law have strongly catered for the massive flow of foreign investors into India.
Therefore, it can be argued that the impact of competition law concerning foreign investors is not intentional but by design (Khindira 58). The law protects foreign investment equities, and the law allows for the relaxation of certain clauses which have played an integral role in sustaining foreign direct investment. Hence, this can be attributed to the reason the federal government have relaxed and eased some of the earlier legislation which was unhealthy for the foreign investors.
In essence, the competition law has provided a dynamic reprieve for foreign investors by allowing foreign financial investors to compete with the local investors. However, as is standing now, the competition law has some clauses which are in a way hostile to foreign investors. For instance, foreign capital investors are not cushioned against instances of inflation as is with the local investors. (Burnett 204)
In conclusion, the competition law has at least provided a secure path where foreign investors can tread without risking their investments. However, the diverse provisions available demonstrate that foreign investors are adequately protected from any private or civil challenges within the realm of the anticipated investment.
Works cited
Baruah, Aparajita. Preamble of the Constitution of India. Eastern Book Co, 2000.
Burnett, Robin. Law of International Business. NY: Federation Press, 2000.
Dash, Shreeram Chandra. The Constitution of India. Chaitanya Publishers, 1969.
Khindira, Tony. Khindira on Business Law.NY: Lexis Nexis India, 2003.
Mo, John. International Commercial Law. Butterworths, 2000.
Sen, Sarbani. Popular Sovereignty. Oxford: OUP, 2007.