Calcutta Notebook

Introduce Referendums to Save Democracy


The origins of modern democracy lie in ancient Greece. All the citizens of the small city states would assemble and make the laws and choose the leaders to implement them. The slaves were excluded hence the numbers were small. This method of collective decision making was true democracy but was not workable for even small present day countries where people would have to come in from various places to participate the assembly. The solution to this problem was sought in representative democracy. A number of people nominated their representatives to vote as determined by the people. However, the system has been subverted. The representatives have usurped the power of the people unto themselves. They vote not as per the directions of the people but as per their own personal interests. The people have, truly speaking, been disenfranchised.

The Jerusalem Center for Public Affairs explains how some efforts have been made to overcome this problem. The first example is of Switzerland. Switzerland is divided into small Cantons which could be thought of as being like the ancient City-States of Greece.The Cantons had the traditional practice of assembly of all voters to make fundamental policy decisions. After Switzerland became a federation and it was no longer possible to assemble all the citizens for such decision-making. This the assembly of all voters was replaced with representative democracy. At the same time a system of referendum was introduced to assist representative government. It was organized as a standard constitutional device initiated by the voters or by their representatives under certain set conditions. It was a means whereby voters, exercising their ultimate political sovereignty, could make policy decisions in certain cases. These cases involved changes in the Swiss federal constitution or the constitutions of the cantons. It was also used for approval or disapproval of public policies of an especially controversial nature or around which there were special disagreements; or that had far-reaching implications. If Swiss legislatures had doubts about the acceptability of particular policies, they could recommend taking them to referenda. Or, if large numbers of voters expressed demanded a referendum then a referendum would be held. In such cases, initiation came from outside the government. For the Swiss, the referendum became a tool of governance that was used in tandem with the other tools of democracy.

Referendums have been held in the United States as well. In the late nineteenth century the American states began to introduce provisions for referendums in an effort aimed to improve popular control of governments which were considered to have become captives of special interests. Today, 49 of the 50 states provide for referendums in one form or another. Some States have provisions that the elected representative can be recalled by a referendum.

In recent times we have seen the power of referendums in Britain. The Government called for a referendum to decide whether Britain should remain in the European Union or exit from the same. The ruling Conservative Party was in favour of remaining in the Union. It had called for a referendum thinking that it had clear support of the people. However, the referendum produced the opposite result and Britain is now negotiating the terms of divorce with the European Union. The point is that a representative government can be out of sync with the will of the people on vital issues.

The Vajpayee Government had constituted a Commission to Review the Working of the Constitution. The Commission noted with deep concern that the Government had signed the WTO Treaty without even taking the Parliament into confidence. The Commission had pointed out in a draft paper that"neither the Parliament nor the people of the countrywere taken into confidence before signing (the WTO)agreements having serious repercussions upon the life and lives of the citizens of this country." Thus it had recommended that the power of the Union Government to sign treaties be subject scrutiny by the Parliament or a Committee of the Parliament. The Commission did not recommend holding of referendums. However, the basic point holds. There should be consultation with people where vital questions are concerned.

The solution to this problem can come from empowering the Opposition to call for a referendum. Let it be provided in the Constitution that a referendum will be called every year on an issue which is determined by the Opposition MPs. That will enable the Opposition to go to the people and seek their verdict on some one issue. A popular verdict against the WTO, for example, would have prevented the government from signing the WTO treaty even if it had a majority.I think a referendum on demonetization and GST may have produced an opposite result and prevented the Government from implementing such anti-people policies. I think we must institute the referendums in the light of experiences of Switzerland, United States and Britain.

This is not to say that referendums are trouble free. The people of Colombia rejected a peace deal, and the people of Thailand endorsed a Constitution that curtails democracy. Indeed it is possible that people may not be able to grasp and vote with responsibility. However, I feel we must consider these as exceptions that prove the rule given the longer good experiences of ancient Greece, Switzerland, United States and Britain. The spread of education and internet will only make it more feasible for the people to understand and vote on important issues. People will learn if they make mistakes.

Another argument against referendums is the expenditures. The Budget for 2019-20 has allocated Rs 262 crores for the ongoing elections. Considering the allocations in previous years, the total government expenditure may be about Rs 1,000 crores. This was only 0.05 percent of the annual Budget of Rs1956,000 crores in 2016-17.The benefits from correct implementation of policies such as those of WTO, demonetization and GST would provide much greater benefits than this small cost. I estimate we have lost minimum one percent of GDP for the last 3 years due to demonetisation. At GDP of Rs 19,017,000 crores, this works out to a massive saving of 190,170 crores by incurring an expenditure of only Rs 1,000 crores. In this case this would give us a rate of return of 2000 percent! The time has come to introduce annual referendums and empower the people.

[Formerly Professor of Economics at IIM Bengaluru]

Vol. 51, No. 51, Jun 23 - 29, 2019