Are brand-name drugs clinically superior to generic drugs?

When a drug comes first in the market the parent company can sell it exclusively under a brand name for a certain number of years. This time period depends on how many years left in the drug patent and the type of exclusivity granted and the time approved by the Food and Drug Administration (FDA). When the patent of exclusivity expires the other manufacturers can begin making the generic product. It is a common misconception that branded drugs are more effective than generic drugs. Misconception ranges from manufacturing standard that they are weaker to efficacy and just that drugs don’t work. The truth is both are similar.

The generic product is sometimes cheaper than the branded product. This is why some generic product gets a bad repo. There is a basic misperception that the generic products are not as good as the branded products because they are low priced. Before the company manufactures and market the generic drugs in the United States it must submit an Abbreviated New Drug Application or ANDA to the FDA. The application includes data proving the generic product is both pharmaceutically equivalent and bio equivalent to that of the branded product.

Pharmaceutical ingredients means the generic drugs contains the same drug compound as the innovator drug as well as having the same strength, the same route of administration, same dosage form and extent of absorption. To achieve bioequivalence the generic product must have the same effect as that of the brand drug. This means that the compound has the same action in the body in the same amount of time. This does not mean that they are same in every way and that is because of the excipients. Excipients are the inactive ingredients in a drug product, or the stuff that’s not the active drug molecule. Let’s say we take a 10 mg tablet of a popular allergy medication. If you weigh the tablet on a scale it will be definitely heavier than 10 mg that because 10 mg is relatively tiny. It is nearly impossible to make drug tablet so small. For eg a quarter table spoons of salt weighs around 1500 mg. 10 mg is less than10 grains of salt. Some drugs use less than 10 mg of active ingredients. Therefore the drug manufacturers will use approved compound to build up tablets such as lactose, starch, microcrystalline cellulose to bulk up tablets. Other excipients might help tablets disintegrate in the digestive tract, or provide flavoring and coloring and the list goes on. Generic and brand drugs will always have the same active ingredients but their excipients may vary. One or the other may have slightly more or fewer types of inactive ingredients depending on their manufacturing processes. The coloring agents usually also differ so that the products can distinguish themselves but even if the ingredients list may not be exactly the same between the brand and generic. The generic manufactures may still prove that their product is entirely bioequivalent if not then an adjustment to the excipients needs to be made.

In the late 1960’s an outbreak of intoxication occurred in Australia among patients taking the anticonvulsant drug phenytoin. In 87% of patients experiencing toxicity, drug levels measured in the blood were well beyond the therapeutic range, putting them at risk of side effects. Many patients had vomiting and other abnormalities and mental function. The good news was that majority of the people turned normal when the doze was reduced. But why were patient stable under any convulsive medication all of a sudden experiencing toxicity. It was because of the excipients. After evaluating the phenytoin capsules investigation discovered that in 1967 one manufacturer had changed its diluents, or bulking agent from calcium disulphate dehydrate to lactose. The lactose formulation allowed the phenytoin to dissolve more readily from the capsule, leading to higher concentrations in the blood. Thus some patients began to experience toxic side effects while others previously getting benefits from the phenytoin had their seizure control for the first time. This incident shows that the excipients are inert and justifies that they are so critical that the brand and generic are pharmaceutically equivalent and bioequivalent. Today all the regulatory body around the globe are really strict. They are not approving generic form of drug without a through scrutiny to the other factors. In addition to be pharmaceutically equivalent and bioequivalent generic drug must have same strength, identity, purity, quality as the branded product.

In 2008, a meta-analysis compared the clinical effectiveness of generic and brand name cardiovascular drugs. The study included 38 RCT’s (Randomised Control Trials) of 9 subclasses of cardiovascular medications, of which 38 (81%) were randomized controlled trials (RCTs). Clinical equivalence was noted in 7 of 7 RCTs (100%) of β-blockers, 10 of 11 RCTs (91%) of diuretics, 5 of 7 RCTs (71%) of calcium channel blockers, 3 of 3 RCTs (100%) of antiplatelet agents, 2 of 2 RCTs (100%) of statins, 1 of 1 RCT (100%) of angiotensin-converting enzyme inhibitors, and 1 of 1 RCT (100%) of α-blockers. Among narrow therapeutic index drugs, clinical equivalence was reported in 1 of 1 RCT (100%) of class 1 antiarrhythmic agents and 5 of 5 RCTs (100%) of warfarin. Aggregate effect size (n = 837) was −0.03 (95% confidence interval, −0.15 to 0.08), indicating no evidence of superiority of brand-name to generic drugs. Among 43 editorials, 23 (53%) expressed a negative view of generic drug substitution.

Lets look deeper, some drugs have a narrow therapeutic index. The drug is only effective within a very small dosage range too little and the drug will have no effect, too much and the drug may cause harm. One such drug is a blood thinner Coumadin also known by its generic name Warfarin. Not everyone response to warfarin in the same way. So those taking it have their blood monitored regularly so that appropriate dose adjustment can be made because of which physicians and pharmacists are hesitant to interchange the brand and generic version of Coumadin and warfarin. Lets see what the data say.

A review article published in 2011 in the journal of pharmaceutical therapy. The review article examined 5 RCT’s and 6 observational studies comparing outcomes when switching patients from Coumadin to generic Warfarin. The observational studies suggest that those switching between brand to generic should be monitored more closely. So perhaps there are more reasons to be cautious about switching between brand and generic like warfarin. In the RCT’s there were no significant differences reported at all. No studies showed that the branded drug was more effective that the generic. Similar results were seen in systematic reviews of antiepileptic drugs. Even though national regulatory bodies require a mountain of data for proving bioequivalence, independent studies have shown the generics are just so effective. As innovator drugs there is still this lingering perception that among some practitioners that generic drugs aren’t as good.

A survey of 506 physicians in the US revealed that as many as 23% had negative opinions on the efficacy of generic drugs and those over the age of 55 years are 3 times likely to believe that. After a survey while 8-11% of doctors believe that generic drugs were less effective than the brand product and only 2.3% of pharmacists shared this opinion. Why is it so? Pharmacists spend a lot of time in school learning about the chemical nature in drugs and how excipients work in drug products perhaps resulting in a higher degree of confidence in well formulated generic drugs. Conversely, physicians are more likely to hear the firsthand account of the patients being unhappy with the generic making them less likely to prescribe in the future. Here are the consequences- a study compared adherence to statin therapies in patients that were started on either the brand or generic drug. A significantly higher number of patients started on the generic drugs, and those taking generics had an 8% reduction in hospitalization for acute coronary syndrome or stroke. Why, because generic cost less and people are more likely to stick to the stuff and is not as expensive for them. A chemical compound is a chemical compound and as long as bioequivalence is assured brand and generic drug should give the same result. There may be good reasons to be cautious to be switching back and forth between different formulations of certain narrow therapeutic index drugs but from vast majority of small molecular drugs there is no difference. We should not get hung upon the labels. The generic drug may appear different in terms of colour, flavor but the active ingredients is similar to that found in the branded drug. It is the active ingredient which will determine the effectiveness of the drug. The inactive ingredients will not affect the overall performance, safety & effectiveness of the generic drug. A generic drug is identical in strength, dosage form and mode of administration as of the branded drug. If the branded drug is a capsule the generic drug will also be in the form of a capsule. If the branded drug is taken orally then the generic drug will also be taken orally. A generic drug will have the same use indication as that of a branded drug. The generic drug is manufactured under the same strict standards and processes as that of a branded drug.

Branded drugs are more pricier because drug companies who have manufactured them have obtained drug patent which means no else in the market can produce or manufacture the drug until the patent expire which usually last between 17 to 20 years. Once the patent expires other companies can start selling the generic version of it at a lower price. Since generic need not need to manufacture from the start the cost of manufacturing of the drugs become significantly cheaper as they don’t need to pay for costly advertisement, marketing and promotion. Put into report generic drugs save consumers at an estimated $8 to $ 10 billion a year at rental pharmacies on average cost of the generic drugs is 80-85% lower than the branded drug. Generic drugs are safe effective and low cost. It is safe to transfer from branded drug to generic drug. Generic drug are allowed to have different filler materials and the active ingredient. That’s why generic drugs come in different shapes and sizes and colours compared to their brand name drug. So the problem is using different filler material and how the tablets gets dissolves and get absorbed in your body. So to overcome this problem the generic drug should be proven to have similar rate and extent of absorption as the branded drug before it gets approved.

For eg when we take a tablet it gets absorbed gradually and the concentration in the blood increases until it reaches a peak. Then it starts decreasing as the body starts metabolizing and getting rid of the drug. In clinical practice, the TI is the range of doses at which a medication appeared to be effective in clinical trials for a median of participants without unacceptable adverse effects. For most drugs, this range is wide enough, and the maximum plasma concentration of the drug (Cmax) and the area under the plasma concentration–time curve (AUC) achieved when the recommended doses of a drug are prescribed lie sufficiently above the minimum therapeutic concentration and sufficiently below the toxic concentration. So the generic drug company hire a group of people and gives them the drug being tested, then the blood samples are obtained from them to measure the concentration of the drug in the blood at various times. From these numbers an average Cmax an area under the curve are calculated and to ensure the precision of these numbers a 90% confidence interval is calculated. So the 90% confidence interval gives us a range which you were to repeat the same experiment there is a 90% chance that the average Cmax an AUC will lie within the range. The medical experts in the FDA specify that the 90% confidence interval of the Cmax and that of the AUC of the generic drug must be entirely within 80% to 125% of the average Cmax and AUC of the brand. If the confidence interval lies outside these ranges the generic drug will not be approved. Since the FDA allows little bit of room for variation. Concentration between brand name drug of the generic drug, does that mean they are different and we should switch between them. Well not quite, it depends on the therapeutic index of the drug in question.

TI = TD50/ED50

TD50à Dose that causes toxicity in half of the population

ED50 à dose that causes a desired response in half of the population

Therapeutic index is the ration between dose that causes toxicity and half of the population over the dose that causes a desired response in half of the population. A large therapeutic index implies that there is a wide range of concentration of drug and blood that would achieve the desired therapeutic effect and the small therapeutic index implies that there is a small range of concentration that achieve the desired therapeutic effect. So switching a drug with a small therapeutic index between brand and generic drugs is kind of risky because the new concentration might be outside the narrow range of desirable concentration. On the other hand switching the drug with a large therapeutic index is safe because even if the generic drug achieve a different concentration compared to the brand that concentration would still be within the desirable therapeutic range. The vast majority if drug have a large therapeutic index.

So switching between brands and generics is entirely safe and effective in those drugs. Switching is an issue in drugs with small therapeutic index. Brand name which is more expensive does not mean it is better.

North East Institute of Advanced Studies [NE-IAS]


Reference–Clinical Equivalence of Generic and Brand-Name Drugs Used in Cardiovascular Disease-A Systematic Review and Meta-analysis-


Do we need a Parliament?


Contemporary events in the country has given rise to the question “Do we need a Parliament ?” Let’s see which events have propelled this question and then we will decide on ” Do we need a Parliament “.

First event happened May 2014 elections when India voted for NDA in such a manner that no opposition party was there as such to claim big as opposition. Opposition party didn’t have required number to have Opposition leader which is required to maintain the balance for healthy discussion required for democracy.

Second event which happened over the period of time was absence of PM Modi from Parliamentary discussions majorly due to his foreign visits and engagements often accruing to frustration of opposition parties who wanted PM to answer there questions in debate hours. Also the silence of PM on many issues being discussed in Parliament created unpleasant feelings in the opposition minds.

Third event which has triggered the final blow is Demonetisation. 86 % of the currency of the country is no more a legal tender anymore. Such a big decision was taken through executive order without holding any discussions with opposition. It was kept so confidential that even ministers associated with Government in power were not aware of this decision.

Let’s see the other side of these events one by one:

The majority of NDA in Lok Sabha was balanced by lack of majority in Rajya Sabha. For example GST bill has taken sufficient discussions in the Parliament in evolving the  draft of it.

Absence of PM in Parliament or his silence may sound counterproductive to discussions but the fact that PM is on official tour and is trying to work towards foreign engagements is also a requirement in the contemporary scheme of World Politics. World is acknowledging India’s presence more than before.

Third is the Demonetisation. The goals to be achieved through demonetisation were such that it had to be kept confidential and spontaneous. Black money, Money laundering, Human trafficking and Terror Funding etc had to be addressed. So people involved in these unlawful activities had to be caught unaware. It does create inconvenience to lawful citizens. But it has to be understood that this fight can not be won without their participation.

So whether we need a Parliament or not ? Answer is that We do need a Parliament. Few things we need to work on is: a)our understanding regarding the assumptions, implications of the steps taken by the government in power and should give time to assess the after effects before coming to any conclusion. B) we should stop politicising every issue without grasping the goals and objectives of that step. C) Responsible media is the need of the hour as media is considered 4th organ of the contemporary administration along with legislative, executive and judiciary. Media should not play in the hands of Political parties and their interests. If these three steps are implemented, the parliamentary system will seem working fine otherwise we will keep fixing the problems without fixing the origin of the problem and it will become chained reaction never culminating to anything fruitful.

Sunil K Awasthi

Faculty, North East Institute of Advanced Studies [NE-IAS]


Biodiversity integration with Development


Are we responsible and accountable to flora and fauna of the world? We may say yes superficially but truth is we are not sensitive to Biodiversity. We need to understand that very basis of our life is life around us whether animate or inanimate, biotic or abiotic. The alarming rate at which the biodiversity is being affected worldwide because of various industrialised developments taking place reveals that we humans are quite insensitive to other life forms.


Biodiversity means the variability among living organisms from all sources including terrestrial, marine and other aquatic ecosystems. The diversity includes variability within species (genetic diversity) as well as between species (species diversity) and ecosystems (ecosystem diversity). It provides services such as water purification and supply, waste assimilation and the cleaning of air and water, regulation of pests and diseases, and soil nutrient cycling and fertility. Biodiversity helps mitigate unpredictable global changes and natural disasters. A rich biodiversity is the basis for good health, food security, economic growth, livelihood security and moderation of climatic conditions. The annual contribution of biodiversity to the world is put at $33 trillion.


What can be done

No doubt, Development is necessary. But we need to change the definition of development. In contemporary world, USA and Europe stand as an example of what development is and emerging economies are trying to follow the same footsteps which is actually a folly. It is estimated that if every human being on earth utilises the resources in same way as an average American then we may not leave anything for future generations. It may result in end of the civilisation.

So, what can be the changed definition of development in synch with contemporary scenario.

A skyscraper should be done away as a symbol of development. Instead a village where organic farming for food, solar panels or renewable sources for electricity, hybrid fuels for public transport etc. are used, should become exemplary to showcase development to world. Research and development results on renewable sources should be shared with emerging and least developed countries. Technology and equipment transfer of green technology should be done from Developed countries towards rest of world. This should be done thinking that we live in one Global village and contribution towards other countries’ green fund is actually a contribution towards contemporary global village we all are part of. Another way to bring the integration of development with biodiversity is to spread awareness to masses that what sustainable development is. Ozone layer depletion, endangered species, extinct species, carbon credits are actually alien terms to majority of masses.

It is clear that to achieve many national and international biodiversity goals such as the National Biodiversity Strategies and Action Plans and the Aichi Biodiversity Targets, as well as meet CBD objectives, biodiversity integration into developmental sectors is a pre- requisite. For this to happen active participation from Central and State governments is needed. Private sectors need to come forward for this cause and do funding for the research. Public Private partnerships is another efficient way to make this happen.

In the end, it is We the People who are responsible and accountable to our surroundings. We may not be capable of taking actions but very much capable of responding. Actions will follow once we start responding as a common man to our flora and fauna and also the initiatives being taken in the society. It is not only Government and Private institutions’ prerogative but also common man’s prerogative to bring in Green technology in simple housekeeping.

Sunil K Awasthi

Faculty, North East Institute of Advanced Studies [NE-IAS]



An insight into Sutlej – Yamuna link (SYL) canal issue between Punjab and Haryana


 Jeopardising the construction of Sutlej – Yamuna Link (SYL) in Punjab by the order of five-judge constitution bench of the Supreme Court- status quo on land marked for the construction for the SYL, has exposed the weakness of entire edifice of constitutional governance in our country – elected governments, constitutional authorities, political parties, autonomous bodies and even the judiciary 

From the Indus water treaty

In 1960, the Indus Water Treaty was signed between India and Pakistan. This treaty provided that three eastern rivers are allocated to India for exclusive use before they enter Pakistan; while the three western rivers are allocated for exclusive use by Pakistan. The Indus river system comprises of three western rivers viz. Jhelum, Chenab and Indus; and three eastern rivers viz. Ravi, Beas and Sutlej. After signing of the Indus Water Treaty, the water of these three rivers viz. Ravi, Beas and Sutlej was shared between Punjab, Delhi and Jammu & Kashmir.

About the Crisis

In 1966, Haryana was carved out from Punjab on linguistic basis. As a successor state, Haryana was eligible to receive a share of Punjab’s river waters. But at the same time, Yamuna River, which used to flow in undivided Punjab before 1966, flowed only in Haryana. The water of Yamuna River was never considered a part of the arrangements made at the time of bifurcation of Punjab. In 1976, the then Prime Minister Indira Gandhi brokered a deal to divide the water, such that each state received 3.5 million acre feet (MAF) of water. Also, Rajasthan was to get 8 MAF and Delhi 0.20 MAF.

In both the states, the sharing of water became an emotive and political issue. Punjab maintained that it had already shared water with Rajasthan via Indira Gandhi Canal, it does not have additional water to share with Haryana.

To enable Haryana to use its share of the waters of the Sutlej and its tributary Beas, a canal linking the Sutlej with the Yamuna, cutting across the state, was planned. In April, 1982, Prime Minister Indira Gandhi ceremonially dug the ground at Kapoori village in Patiala district for the construction of the 214km SutlejYamuna Link (or SYL) canal, 122 km of which was to be in Punjab, and 92 km in Haryana. A tripartite agreement was also negotiated between Punjab, Haryana, and Rajasthan in this regard. However, in 1990, Punjab stopped work when the canal was 90% complete. In 1995, Punjab issued a white paper which said that it would not proceed with the construction of canal and suggested that Haryana be given water from Bhakhra Canal system. When the matter reached to Supreme Court, the court directed Punjab in 2002 to complete construction work by January 2002; and also, rejected the review petition. In 2003, another review petition was filed by Punjab in Supreme Court to relieve it from canal project. In 2004, Supreme Court asked the central government to constitute a high-powered committee to supervise the canal construction process. However, in the same year, the Punjab Government passed Punjab Termination of Agreements Act, 2004 to revert the land of the people acquired for the purpose of construction of Canal.

Presidential reference

Earlier in 2004, the Punjab government enacted Punjab Termination of Agreements act (2004) to scrap all water sharing agreements with neighbouring states. Presidential reference was made in the Supreme Court regarding this act.

What is the stand of Punjab?

Punjab has categorically rejected to execute the project saying that it does not have even a drop of water to share with Haryana. So, it has passed Satluj-Yamuna Link Canal Land (Transfer of Property Rights) Bill, 2016 to return all of the land acquired for Satluj-Yamuna Link Canal project. Without waiting for the bill to get governor’s assent, the local politicians have encouraged farmers to begin filling up the canal with mud. Punjab defends its act, stating that under Article 143, the Supreme Court has only advisory functions, and hence cannot pass an assumptive interim order. Subsequently, the canal was filled up in many areas before the Supreme Court directed to maintain status quo.

What is the stand of Haryana?

In 2004, the Supreme Court directed the central government to undertake the construction of canal under the supervision of a high-powered committee. So, the Haryana government claims Satluj-Yamuna Link Canal Land (Transfer of Property Rights) Bill, 2016 of Punjab is in violation to the Supreme Court’s ruling. Haryana claims to have suffered a loss of Rs 35,020 crore. Haryana finished constructing the canal on its side in 1980. 3.5 MAF of water from Ravi and Beas was allotted to Haryana. Haryana claims it would have grown an additional 8 lakh tone of food grains earning 1000 crore per year had the Punjab government completed the canal. Also, it claims it has spent nearly 20 crores to fight the cases related to the canal project in court.

What is the stand of farmers?

With escalating land prices, the farmers in the three districts (Ropar, Fatehgarh Sahib and Patiala) through which the 214  km long canal passes through in Punjab have begun to claim back their lands by filling it up with mud and by clearing structures such as canal walls, pillars etc. The support of the local politicians have encouraged the farmers to initiate such actions.

Similarly, the farmers of Haryana who had lost their lands for the project have started demanding that their government should also return back their lands.


Punjab’s stand on this issue has become a severe test for inter-state relations and is escalating bad precedent to other states that have similar disputes with their neighbours. By acting on its own way without any regard to the rights of other states, the actions of states like Punjab may have evil consequences to the federal structure and to the unity and integrity of the nation. However, with consensus governance and respecting the phenomenon of “Live and let live” will truly prevent many water wars.

Sankar Ray

North East Institute of Advanced Studies [NE-IAS]




Surgical strike on black money will be half marathon if expenditure and funding of elections are not accountable


The absence of ceiling on expenditure has created condition of financial recklessness. To propagate their political motive, all political parties spent thousands of crores of rupees in election campaign. Where does the money come from?

State Funding: Meaning

State funding essentially means, state/government should provide funds to political parties for contesting election and there should be regulations for accepting fund from any other source.

Why this issue has cached eyes?

Recently, PM Modi urged to start debate on “State funding of election”. Former Chief Election Commission S Y Quraishi has estimated that, it costs the exchequers around INR 10000 Cr for a cycle of parliament and state elections, roughly equal to what political parties themselves rise. The dominant role played by money power in election is vitiating the country’s democracy. The sources could be: corporate funds, small donations, sale of coupons and membership fee besides interest on deposits, rental and revenue income. There is no transparency in the source of donations. As much as 75 per cent of all funds are shown as donations without disclosing the source. This is a serious matter. It may be foreign money or from crime mafia. In any case, most of it is unaccounted for and could, therefore, be ‘black’ money.

Direct and Indirect state funding

Direct state funding means providing fund directly to political parties. Indirect state funding means funding may take place in the form of subsidised, free media, tax benefits, free access to public space for campaign and display, transport, travel expenses, security etc.

What is the current status in India?

Currently there is no provision of direct funding but available in the form of free campaign in public broadcasters for National parties in general election. Besides this political parties are also provided with utility space, security. Another is registered political parties do not have to pay income tax as per Section 13A of Income Tax Act.

Understanding the State funding of election

It is, no doubt, true that democracy cannot function without money to contest elections. However, money cannot be allowed to dominate the process so much that only the rich can contest and hijack the political system. The law, therefore, prescribes a ceiling on expenditure of the candidates — though not on the expenditure of political parties. The ECI (Election Commission of India) has been demanding for over two decades that there should be full transparency. It wants a law prescribing an annual audit of parties by an independent auditor from a panel given by the ECI — instead of an in-house auditor. The move to place political parties under Right to Information Act had drawn up sharp protests from all major parties which could have reduced the necessity of state funding of election. The issue is still under debate and political parties still don’t come under RTI.

Reports and committees

Various committees and reports have expressed their views.

  1. Indrajit Gupta Committee on State Funding of Elections (1998)


  1. Law Commission Report on Reform of the Electoral Laws (1999)
  2. National Commission to review the working of the constitution (2001)
  3. Second Administrative reform commission (2008)

 Let’s walk through their views

  1. Indrajit Gupta Committee on State Funding of Elections (1998)

It endorsed state funding of elections, seeing “full justification constitutional, legal as well as on ground of public interest” in order to establish a fair playing field for parties with less money. The Committee recommended two limitations to state funding.

Firstly, that state funds should be given only to national and state parties allotted a symbol and not to independent candidates. Secondly, that in the short-term state funding should only be given in kind, in the form of certain facilities to the recognised political parties and their candidates. The Committee noted that at the time of the report the economic situation of the country only suited partial and not full state funding of elections.

  1. Law Commission Report on Reform of the Electoral Laws (1999)

 Commission concluded that total state funding of elections is “desirable” so long as political parties are prohibited from taking funds from other sources. The Commission concurred with the Indrajit Gupta Committee that only partial state funding was possible given the economic conditions of the country at that time. Additionally, it strongly recommended that the appropriate regulatory framework be put in place with regard to political parties (provisions ensuring internal democracy, internal structures and maintenance of accounts, their auditing and submission to Election Commission) before state funding of elections is attempted.

  1. National Commission to review the working of the constitution (2001)

Commission did not endorse state funding of elections but concurred with the 1999 Law Commission report that the appropriate framework for regulation of political parties would need to be implemented before state funding is considered.

  1. Second Administrative reform commission (2008)

Ethics in Governance”, a report of the Second Administrative Reforms Commission (2008) also recommended partial state funding of elections for the purpose of reducing “illegitimate and unnecessary funding” of elections expenses.

Including Law Commission Report 2015, none of them have unequivocally supported introduction of state funding.

Valid conceptual and economic arguments against introducing state funding in our country

 Some experts are in the view that, why should a taxpayer be forced to contribute to political parties he does not support? Now he/she has NOTA option.

Is it legitimate and ethically sound to give scarce and hard earning to those who practice politics and no other profession?

It has been viewed that this is antidemocratic and protects the status quo of big political parties, make small and independent parties in disadvantage.

The economic arguments against state funding are stronger. The main objection is ‘in a resource-starved’ country where 300 million live below the poverty line and where the average per capita income is $1 a day, is it equitable to give such humongous sums of money to an elite class? Limited resources should be utilised for the welfare of the largest number.

It has been experienced in other developed countries with more effective regulations that state funding neither prevents parties from raising funds from corporates, nor does it reduces election expenditure. It actually makes elections more expensive because parties pocket government funds and continue to raise private funding, could possible end up with rise in more “Black Money”

Justification for and the appropriateness of state funding

 Experts in the view that introduction of state funding will make political parties accountable. Massive undisclosed money and its sources can be curbed by this encouragement. It will also help in reducing crony-capitalism. Some economists are also in view that it will boost India’s GDP and may help it streamlining our economy.

As per the view of Former Chief Election Commission S Y Quraishi, the best way out is the state funding of parties (as different from funding of candidates). The parties have been showing a fund collection of an average a thousand crore rupees per annum. This can be given by the state. For every vote secured, INR 100 can be given. In the General Election to the Lok Sabha in 2014, nearly 55 crore votes were cast. At the rate of INR 100 per

vote, this will add up to INR 5,500 crore. This roughly corresponds to the collection of all parties put together. Private and corporate donations will then be totally banned. State funding will free the parties from dependence on and clutches of the corporate houses who feel tempted to run the government by proxy. The amount proposed is so small that it can easily be accommodated in the national budget. But, if necessary, an Election Trust Fund could be created, to which corporates may be asked to make donations. The fund could be administered by an independent Trust or Election Commission. The allocation of funds will be based on the actual performance of parties, whose accounts will be audited by an independent auditor on the ECI approved panel or by CAG.

Impact of Demonetisation on State funding issue

In wake of demonetisation, PM Modi urged for constructive discussion on state-funding of election. The demonetisation move has hit hard on their finance.


Whether to introduce state funding of election is a matter of debate. But before introducing it, there are some questions which needs be answered.

  1. How will finance be distributed among the parties and its candidates?
  2. How will political parties be accountable for using the money judiciously for the right candidate through right means for right purpose?

More analysis and debate with proper policy formulation with implementation strategy would definitely solve the purpose.

Sankar Ray

Faculty, North East Institute of Advanced Studies







The era of digital India and way forward for cashless economy-

Ever since the decision of government to withdraw the legal tender of INR 500 and INR 1000 currency, there is a mix reaction among all section. Scholars like Noble laureate Amarty Sen terms,” Demonetisation is a despotic move”.  But the historic action should be analysed cautiously in the light of socio-political and economic perspective of India.

Is this a new move?

Although November 08 2016 move is the first since 1991 economic reforms, nevertheless India had witnessed another two moves in January 1946, January 1978.

This historic movement will make the way forward for cashless economy. Not only this it will also curb black money, death blow to terror funding and would certainly stop counterfeit currency and many more.  Before we go in-depth analysis, there is a need to understand what is demonetisation? What is cash economy, how does cash flow in the market? What is cashless economy?

    Demonetisation is the act of stripping of currency from its status as legal tender. It is necessary whenever there is a change of national currency. The old units of currency must be retired and replace with new currency.


The crude difference between cash economy and cashless is that, the earlier in which most transactions are made by physical currency and later where transactions are made through online i.e. digitally or in other words there is a minimal use of physical currency.

What is the move?

INR 500 and INR 1000 currency ceased to be legal tender and are replaced with new INR 500 and INR 2000 currency.

Understanding demonetisation from Economic and socio-political perspective

Black money and impact on it

Black money is money which is earned by illegal means or has not been disclosed before legal tax authorities. Government of India had given many chance to its citizen to disclose the undisclosed money under Income Disclosure Scheme where immunities also have been given under IT Act 1961, Wealth Tax Act 1957, Benami Transactions(Prohibition) Act 1988. Starting from constituting SIT(special investigation team) headed by M.B. Shah, later formulating the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, NDA government has taken many measures. Other measures include the passage of Multi-Agency Group(MAG) on Panama paper leaks and passage of Benaim transaction Bill, 2015 etc. But many have not disclosed so far as a token of ignorance.

So, banning the legal tender of old INR 500 and INR 1000 currency, person holding huge cash will certainly face difficulties. Because the value of money is zero now and can’t be used in any transaction. And going to bank for depositing the money will certainly made them under    the purview of legal scrutiny. In other words, there is no way other than disclosing it as black money and paying tax for same as per guidelines, if one wishes to get at least some value out of it rather than getting nothing by not disclosing.

So, here after every transaction made digitally will not only improvise the habit of people but also will put a check on the transactions made digitally, as amount of money present in Bank account has to be explained with source of income before the legal authorities.

In India, major portion of transactions are made in cash. But demonetisation has certainly forced the market to go for cashless economy. It will also reduce the expenses made upon printing and handling of physical currency. However, we should not ignore the negative impact of demonetisation.

Impact on market: who suffers and up to what extend

At least this move has brought rich and poor in same platforms in terms of value of money. But there has been a huge impact on general traders, poor, farmers, small vendors especially unorganised sector who are far away from digital era. They have been facing shortage of demand due to volatility of market. But in a long run many unorganised sectors will be streamlined with main economy.

How does it curb terrorism and its funding, insurgency, counterfeit currency and impact on our Red Corridor!

    In the era of global problem like terrorism, stopping terrorists funding is one of major way to curb the menace of terrorism. Many terrorists funding are done with cash, there is a view that Pakistan sponsored terrorist will meet blow because of demonetisation move, as they will certainly get difficult to get the new currency for their transactions.

Not only this, it is also in view that it will curb the counterfeit currency which are traded within India and outside also, especially from Pakistan, this is a serious death to their action, because many security measures have been adopted in the new currency and almost impossible to copy it.

Nevertheless, it will also make difficult to the operations of many extremist groups that are active along Red corridor of India, because their transactions are done only in cash.

From Constitutional and legal perspective: Does it infringes our Fundamental Rights? What does Directive principle and Fundamental Duties say?

The move was based on Section 26(2) of RBI Act, 1934, which allows only withdraw of a series of particular currency but not whole of it as done in this case. Right to withdraw can be drawn under Article 21-Right to live with dignity and Article 19 –Rights regarding certain freedom, though some legal expertise are in view that sudden demonetisation and a certain cap on withdraw of money from bank account infringes our fundamental right to withdraw. DPSP (Directive Principles of state policy)- Article 39 states that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment. It is a good step towards achieving this goal. Article 51A -Fundamental Duties talks about developing scientific temper, humanism and spirit of enquiry and reform. Indeed, this reform is going to cause a positive impact in near future. Other expertise view the government’s move in a positive way as there is nothing called absolute right and government may impose certain restrictions as per constitution for welfare measurements and necessities.


As our Prime Minister Hon’ble Shri Narendra Modi quoted “One last queue to end all queues”, although people are facing temporary discomfort, recent demonetisation indeed will leave a positive foot print in the long run, which would not only help in  uplifting India’s GDP but also would help in achieving the Digital India mission. Also, JAM (Jandhan, Adhar, Mobile) will be the game changer to quote “one person, one account”. This type of financial inclusion will truly meet the globalisation era with other countries. It is soon we can believe that each and every person would come into the main stream economy and would able to contribute in India’s inclusive growth.

Sankar Ray


North East Institute of Advanced Studies


Historic Verdict of Supreme Court on the National Anthem: Should Indians develop a culture of patriotism?


A PIL was filed by one Shayam Narayan Chaoskey in SC after a wheelchair bound man who could not stand and sing the national anthem in Cinema was assaulted by a couple in Panaji, Goa, considering it an insult to the National Anthem. It was sought in the PIL what amounts to an insult to National Anthem?

SC gave the ruling on November 30, 2016 that National Anthem should be played in cinema halls before screening of the movie. This means everyone should stand up to respect the National Anthem which is also stated under article 51A. While giving such a verdict, SC also prohibits any dramatisation of the National Anthem.

The Supreme Court order directing cinema halls to play the national anthem before screening to “instill committed patriotism and nationalism” has received mixed reactions from legal experts with a few terming it as “judiciary’s over-enthusiasm” and others saying playing it and respecting it won’t cause any harm.

Several other questions do also arise with this ruling of SC. Why are Cinema Halls being targeted only while there are other public places like temples, community halls, parties, functions etc. where mass gathering take place without the national anthem.  Why is the need to show patriotism and nationalism in cinema halls or for that matter anywhere at large? Why is judiciary intervening and dictating the nationalistic virtues to be followed unlike before? Is the government responsible for this intervention as Attorney General of India who is appointed by government in power, has welcomed the verdict? Why is it needed by the person who is in no mood to imbibe nationalistic feelings and only wants some relaxation & rejuvenation in the Cinema Halls? These questions still remain unanswered.

However, those who are in favour ask the same questions but with different Intent. Why is 3 mins of respect in cinema halls becoming such an uncomfortable reckoning? Why nationalistic and patriotic feelings should not be promoted when India is doing the surgical strikes across the borders and losing soldiers frequently?  Why shouldn’t it be Cinema hall because it is a place of unity in diversity where everybody comes leaving his identities at home? Is it not the Ideals of National Anthem which are followed in the country and makes it a beautiful and peaceful place to sit and enjoy the movie unlike Middle East turmoil, so why shouldn’t it be played in Cinema halls.

There have been varied reactions from layman as well as prominent people in Indian society over this verdict. It is disheartening to know that some media articles are also misinterpreting the judgement by writing extensively on “why should we sing National Anthem”? The judgement is not about singing or performing on National Anthem, it is just the symbol of showing respect and bringing patriotism at a time when India is growing fastest economically and facing the heat from neighbours for infiltration and terrorism. Standing for 3 minutes won’t do any harm mentally or physically.

Sunil Awasthi

Faculty, NE-IAS

North East Institute of Advanced Studies