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When the political establishment deserts you

15 Oct

http://www.rollingstone.com/politics/features/the-fury-and-failure-of-donald-trump-w444943
This is a brilliant article in Rolling Stone magazine about the anger of the Republican party’s base at the realisation that their leaders have essentially sold them down the river through the decades. It’s also a great reminder of how populations react to the obnoxious and snobbish behaviour of elites, and how they respond – with Trump. 
In a very different sense, the snobbish behaviour of the UPA, and the perception of their nepotism laid the groundwork for the Modi wave, and the consequent emergence of illiberalism as a legitimate thread of democratic discourse. 

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Capital controls against FDI in aviation: An example of bad governance in India

13 Jul

I am cross-posting an old post I had co-written on Prof. Ajay Shah’s blog (LINK). The post highlights some of the persistent failures in Indian administration to follow basic rule of law principles.

Excerpts:

“When the coercive power of the State is wielded by the executive, this should be accompanied by appropriate checks and balances. Good practice in regulatory governance requires that when regulators wish to make changes to regulations, and thus affect the rights of private parties, the regulators must furnish reasons for making those changes. This increases transparency, predictability, and accountability.”

“This multiplicity of regulations also leads to uncertainty of regulatory objectives. Investors have no idea of what criteria is used to assess their investments, and grant them business permissions. It is important to recognize that the justifications used to impose regulatory restrictions for relying on the distinctions between private and public, or domestic and foreign entities, is that these distinctions are reasonable proxies for the other characteristics (national security, systemic risk) that are a valid basis for differential treatment. As in so many areas of regulation, the misapplication of easy proxies for characteristics that are difficult to assess becomes a glaring reminder of regulatory uncertainty. It is important that regulatory objectives be identified clearly in relevant statues and regulations.”

Post on revising the regulatory framework for FDI and capital controls

21 Apr

I have a co-authored post on the reforming the FDI regulatory framework in India on Ajay Shah’s blog here. The post was published on April 21, 2014, and has been co-authored by me, Ajay Shah, and Arjun Rajagopal. The post is being reproduced below. 

 

Capital controls against FDI in aviation: An example of bad governance in India

by Anirudh Burman, Ajay Shah and Arjun Rajagopal.

FDI in aviation was liberalised by the Reserve Bank of India on September 21, 2012 through a change in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 (link). Following that change, private players began putting together a number of complex transactions between Indian and foreign companies such as Jet-Etihad, AirAsia-Tata, and Tata-Singapore Airlines.

On November 20, 2013, the Directorate General of Civil Aviation (DGCA) revised its `Civil Aviation Requirements’ or “CAR” (CAR 4.1.5 to 4.1.16) to state that a domestic airline company cannot enter into an agreement with a foreign investing entity (including foreign airlines) that may give such foreign entity a right to control the management of the domestic operator ( link). This change in regulations has major consequences for some of the transactions which are in progress.
There are two important deficiencies in this action by DGCA:

  1. The CAR makes repeated mention of the requirement of control, without clarifying what the term `control’ means. This creates legal risk for transacting parties.
  2. No rationale has been offered to justify the use of the coercive power of the State via the CAR; no estimates of the costs or benefits of this regulatory action have been provided.

What does `control’ mean?

Rule 4.1.8 of the CAR (link) states:

A Scheduled Air Transport Service/Domestic Scheduled Passenger Airline shall not enter into an agreement with a foreign investing institution or a foreign airline, which may give such foreign investing institution or foreign airlines or others on behalf of them, the right to control the management of the domestic operator.

However, the `right to control the management’ has not been defined. This lack of clarity is compounded by two other regulatory requirements: (a) the directors appointed by the foreign entity cannot exceed more than one-third of the total (CAR 4.1.7), and (b) the substantial ownership and effective control of a domestic operator has to be vested in Indian nationals (CAR 3.1).

The new requirements must mean that `the right to control the management’ involves a form of control over and above these two earlier requirements, but no definition of that form of control is offered. Such lack of precision in drafting of laws results in increased legal risk and should be avoided.

Lack of transparency

When the coercive power of the State is wielded by the executive, this should be accompanied by appropriate checks and balances. Good practice in regulatory governance requires that when regulators wish to make changes to regulations, and thus affect the rights of private parties, the regulators must furnish reasons for making those changes. This increases transparency, predictability, and accountability.

In the case of investments, an investor who commits resources would want an element of control in order to ensure his money is not stolen or wasted. A substantial investment in a company is thus often accompanied by rights regarding management and control of the company. If a regulatory requirement interferes with these rights of investors, the onus is on the regulator to explain why. The changes to the CAR affect the rights of investors and potential investors in the aviation industry, but DGCA has not furnished any reasons for its revisions.

Regulatory actions must not be arbitrary acts of God. They must be steeped in the rule of law. The Draft Indian Financial Code, when enacted, will ensure financial sector regulators make qualitatively better regulations by blocking these kinds of mistakes. All draft regulations will have to be accompanied by reasons for the proposed regulations, as well as a cost-benefit analysis of the proposed regulations. These will be made available for public comment, before the final regulations are adopted. This regulation-making process will result in clearer and better regulations, and will enhance the legitimacy of the regulations and of regulators. The adoption of a similar process by DGCA would have led to a better outcome.

Barriers to international economic engagement: A strategic view

Consider trade barriers. The Indian State has the power to introduce customs duties. A number of government bodies undoubtedly have a major stake in the design of customs duties, and may even have critical expertise in the matter. Nonetheless, the power to introduce and modify customs duties is vested in a single authority — the Ministry of Finance. The Ministry of Textiles, for example, has no power to change the customs duty on imported cloth. This is a healthy arrangement: The Ministry of Finance is responsible for maintaining a unified strategic outlook on the question of trade barriers. The Ministry of Textiles can engage with the Ministry of Finance and suggest changes in tariffs, but responsibility for formulating and promulgating a coherent policy ultimately rests exclusively with Ministry of Finance.

This same strategy is required in the field of capital controls. If multiple regulators or government departments set about writing capital controls, we will have a balkanised mess.

Indeed, the current capital controls based framework is just such a balkanised mess. In the absence of a single governing law for foreign investment, a number of agencies have prescribed foreign investor regulations. The types of capital control restrictions and their rationale can be outlined as:

  1. Entry restrictions by financial regulators such as RBI and Ministry of Finance, usually to promote monetary policy and financial stability (under the Foreign Exchange Management Act, but not restricted to it);
  2. Entry restrictions imposed by DIPP and Ministry of Finance on grounds of national security (may include consideration of factors listed under FEMA as well); and
  3. Regulatory restrictions (including on control and ownership) imposed by sectoral regulators.

This multiplicity of regulations also leads to uncertainty of regulatory objectives. Investors have no idea of what criteria is used to assess their investments, and grant them business permissions. It is important to recognize that the justifications used to impose regulatory restrictions for relying on the distinctions between private and public, or domestic and foreign entities, is that these distinctions are reasonable proxies for the other characteristics (national security, systemic risk) that are a valid basis for differential treatment. As in so many areas of regulation, the misapplication of easy proxies for characteristics that are difficult to assess becomes a glaring reminder of regulatory uncertainty. It is important that regulatory objectives be identified clearly in relevant statues and regulations.

In addition to the legal and regulatory uncertainty created by such a multiplicity of regulators and regulations, the regulations themselves may violate India’s obligations under various multilateral and bilateral investment treaties: Many, if not, most such agreements provide for national treatment of investment once it has been allowed to enter the domestic market. Regulators should not be allowed to impose regulatory restrictions after foreign investment has already entered the domestic market. Under this principle of competitive neutrality, there should be no difference in the conditions imposed on the State Bank of India and those imposed on Etihad, when they invest in Jet Airways.

This requires more than administrative changes. A reform of the legalframework is essential. For example, the restrictions in the CAR appear to be grounded in the expansive powers granted to DGCA under the Aircraft Act, 1934. Section 5 of the Act (link) states:

Power of Central Government to make rules. – (1) Subject to the provisions of section 14, the Central Government may, by notification in the Official Gazette, make rules regulating the manufacture, possession, use, operation, sale, import or export of any aircraft or class of aircraft and for securing the safety of aircraft operation.

Those same powers could ground preferential treatment in other areas of regulation. To the extent that other regulatory bodies with responsibilities for other sectors have similar powers, those sectors too are vulnerable to violations of the principle of competitive neutrality.

The report of the FSLRC proposes a cleaner, clearer regulatory framework for foreign investment, one which is consistent with these obligations. Section 2.5 of the report states:

The Commission envisages a regulatory framework where governance standards for regulated entities will not depend on the form of organisation of the financial firm or its ownership structure. This will yield ‘competitive neutrality’. In this framework, the regulatory treatment of companies, co-operatives and partnerships; public and private financial firms; anddomestic and foreign firms, will be identical.

The draft Indian Financial Code, which encodes the principles articulated in the report, explicitly requires all regulators to maintain competitive neutrality while framing regulations. Section 84 (Principles of consumer protection) and section 141 (Principles of prudential regulation) contain the following identical language:

[C]ompetition in the markets for financial products and financial services is desirable in the interests of consumers and therefore… there should be competitive neutrality in the treatment of financial service providers;

This will ensure that sectoral regulators in the financial sector will not be able to discriminate against foreign and domestic firms/investment.

Pending the introduction of the Code, it would be helpful to incorporate its underlying principles into the existing regulatory framework. For example, the BJP has suggested that they will block FDI in retail but they will remove all capital controls against FDI in other sectors. Any government wishing to carry out such a change would need all capital controls be defined at only one place, where a single policy decision is taken. After this, it should not be possible for any other department of government or a regulatory agency to introduce capital controls.

The required single-window system should have the following characteristics:

  1. A comprehensive definition of foreign investment;
  2. A rule-of-law based mechanism for the government to allow/prohibit entry of foreign investment in specific sectors;
  3. A single regulatory barrier for foreign investment before it can enter the domestic market. Currently FIPB is an example of such a barrier;
  4. Clear documentation of approval of foreign investment that must be binding on all government authorities;
  5. Clear enumeration of reasons for which foreign investment can be restricted, and who can impose these restrictions (without any catch-all provisions like “for any other reason”);
  6. A positive obligation on the government to ensure competitive neutrality, OR a restriction preventing the government from discriminating against foreign investment once the investment has been allowed to enter India; and
  7. A review mechanism where foreign investors whose investment has either (a) been rejected, or (b) been subjected to discriminatory treatment compared to a domestic investor, can seek redressal.

Conclusion

There is great outrage in India today, against a capricious State that is a major source of risk for firms. These failures on capital controls are one important component of that problem. It is the right of politicians to interfere with international economic integration – e.g. to block FDI in retail or not or to have tariffs on import of apples or not. But there should be a single-barrier where this political decision is made.

Constituency-wise Manifestoes, their regulation and consequences

12 Mar

1 Introduction

Today’s Mint carries an article on how political parties have increasingly moved to a system of “localised” manifestoes for the 2014 general election. This is a significant trend that began with Aam Aadmi Party’s Delhi election campaign where it released local manifestoes for each assembly constituency (link). The BJP followed suit in Delhi, and according to news reports, is planning to do the same for the national elections (link). The Congress under Rahul Gandhi is sticking to one manifesto, but its leaders are making the right noises about making manifesto preparation a participatory process.

At the same time, the Election Commission of India has recently started regulating election manifestoes under its Model Code of Conduct pursuant to a Supreme Court judgement. It has stated that election manifestoes should explain the “rationale” for its proposals and how these proposals will be funded. Both these developments, (a) the localization of manifestoes, and (b) the regulation of manifestoes are significant markers for electoral democracy in India.

2 Local Manifestoes

Election manifestoes represent a charter of goals that political parties will strive to achieve if voted into power. The adoption of a system of local manifestoes is both exciting as a tool of political participation, and worrying if one pauses to think of how the aggregation of local manifestoes will work to inform a national government.

On the one hand, this localization process is heartening. Indian political parties seem to be involving the electorate directly in the preparation of manifestoes, and paying greater attention to their voices. This is a marked departure from a process where, as Mint states, “a group of leaders would discuss and determine the content of the manifesto.” AAP has clearly brought in an innovative idea for running political campaigns, and it is being tested by both BJP and the Congress. It makes manifestoes more relevant, and increases (to at least some extent), the level of accountability of elected leaders as voters may have greater recollection of a local manifesto than a national one. If developed properly, this system of local manifestoes could also help make elections more issue-based, albeit at a level where local issues are more relevant. It could also improve the transmission of political messages from voters to politicians by giving the latter a clear charter to try and implement, rather than be a passive responder to powerful local interest groups.

However, while democracy is about representation, but it is also about leadership. The benefit of a centralized process of making a manifesto is that a political party takes an a priori call on what it stands for, and wishes to achieve. This manifesto can then be tempered once voters respond to the manifesto during the campaign. However, here the process of political communication emphasizes leadership and vision. It allows political parties to communicate what they stand for, rather than just try and respond to every constituency’s preference. Incorporating a process where manifesto preparation is completely decentralized creates a risk of parties losing sight of any non-negotiable principles they may stand for.

Obviously, both these arguments assume that it political parties will follow only one of these two approaches, while most political campaigns are likely a blend of both central decision-making and feedback from local constituencies. And given the inordinate amount of power leaders of political parties enjoy, a decentralized process may be the best thing to have occurred in electoral democracy recently. “Garibi hatao” was enormously successful for Indira Gandhi, but it is debatable whether she would have come up with it if the commnication of voter preferences were better. Ditto for NDA’s unsuccessful “India shining” campaign.

Lastly, this argument pre-supposes that political parties and voters take manifestoes seriously! It is in this context that the recent judgement of the Supreme Court (linked above), and the consequent actions of the Election Commission are so significant.

3 Regulation of election manifestoes

The Election Commission has brought election manifestoes under the Model Code of Conduct. In para 3 of “VIII Guidelines on Election Manifestos” of the MCC, the EC states:

(i) The election manifesto shall not contain anything repugnant to the ideals and principles enshrined in the Constitution and further that it shall be consistent with the letter and spirit of other provisions of Model Code of Conduct. (ii) The Directive Principles of State Policy enshrined in the Constitution enjoin upon the State to frame various welfare measures for the citizens and therefore there can be no objection to the promise of such welfare measures in election manifestos. However, political parties should avoid making those promises which are likely to vitiate the purity of the election process or exert undue influence on the voters in exercising their franchise. (iii) In the interest of transparency, level playing field and credibility of promises, it is expected that manifestos also reflect the rationale for the promises and broadly indicate the ways and means to meet the financial requirements for it. Trust of voters should be sought only on those promises which are possible to be fulfilled.

Para (iii) is extremely significant. It requires political parties, for the first time, to (a) explain the reason why the political party is making a particular promise, and (b) explain what resources, including finances it will utilise to fulfill these promises. This is extremely important for the following reasons:

  1. Political parties will have to explain why they want to do something. Ensuring they give proper reasons for wanting to do something will make it more difficult to throw in mindless freebies without any justification. Also, it will reduce room for ideological inconsistencies. Since they have to provide rationales for every promise, it will lead to greater scrutiny of the political party’s overall philosophy, and therefore require parties to think harder about what to put in the manifesto. Lastly, it will reduce incentives to throw in a laundry list of promises without any intention of fulfilling them. Manifestoes have to be readable documents and they have to help the political campaign project an easily communicable message. To ensure this is maintained, the process of picking what to promise will become more selective once the reasons for the promises also have to be included.
  2. Political parties will have to explain what financial resources will be used to achieve its promises. Even if at present they have to only “broadly indicate” how they wil do so, it is a milestone in nudging political parties towards being fiscally responsible. If a political party wants to spend 25% of the country’s budget on defence, it will have to show how it intends to also deliver on its promise of giving everyone free hospitals, food, television sets, electricity, water and the like at the same time. Even if the average voter is not concerned with these issues to start off, it will lead to greater expert and media scrutiny of election promises. We can at least begin to aspire for substantive debates on poll-promises rather than a game of upmanship based on who can promise how much.

 

Foreign direct investment in railways: Does national security matter?

9 Feb

This post has been written by Mr. Pratik Datta.

Background

Present Indian laws ’prohibit’ foreign direct investment (FDI) in railways (other than mass rapid transport system). Of late there has been growing expectation that the Indian Government might allow 100% FDI in construction and maintenance of railway projects (but not in operations). Suddenly the optimism seems to have yielded to apprehensions of ’national security’ concerns (link). These concerns reportedly stem out of potential Chinese investment in Indian railways. India and China have long standing border disputes. The deep penetration of the Indian railways into some remote border areas seem to be bothering the Government. But is this apprehension justified? Do other countries restrict foreign investment based on ’national security’ concerns? Is there no other option but to prohibit foreign investment in railways? These are some of the questions that I will try to answer in this post.

Do other jurisdictions restrict foreign investment on grounds of “national security”?

Yes.

Let’s take the example of US. Since World War II, US has traditionally been an ardent advocate of reduced restrictions on foreign investments. However, at different points of time, specific concerns over national security have shaped US policies on foreign investment. For instance, in 1970s, the US Congress had growing concerns about the increasing foreign investment into US from OPEC countries. This led to the establishment of the Committee on Foreign Investment in the US (CFIUS) in 1975 to oversee the national security implications of foreign investment. In 1988, amidst concerns over acquisition of some US companies by Japanese firms, the Congress approved the Exon-Florio provision that granted the President the power to block cross-border mergers with, or acquisition and takeovers of, certain US companies that might threaten national security.

Subsequently, the 9/11 attacks led to the passage of the Patriot Act, 2001 which declared certain sectors as ’critical infrastructure’ (including transportation) necessary for ’national defense, continuity of government, economic prosperity, and quality of life in the United States ’. The following year, the power to identify ’critical infrastructures’ was transferred to the Department of Homeland Security under the Homeland Security Act, 2002. In 2006, the proposed purchase of the US port operations of British-owned Peninsular and Oriental Steam Navigation Company by Dubai Port World fuelled much discontent among US policymakers. This culminated in the enactment of the Foreign Investment and National Security Act, 2007 that changed the way foreign direct investments are reviewed. First, it included ’critical infrastructures’ and ’homeland security’ as areas of concern comparable with ’national security’ under Exon-Florio provision. Second, it requires CFIUS to investigate all foreign investments involving foreign entities owned or controlled by a foreign government regardless of the nature of business. Therefore, it can safely be concluded that ’national security’ concerns may restrict the free flow of foreign investment into US.

Is US an exception?

No.

An OECD study across 39 jurisdictions found that transportation is the most targeted sector all the jurisdictions have discriminatory foreign investment policy in this sector. The discrimination usually takes three forms: blanket restrictions, sector-specific licensing provisions or contracting, and trans-sectoral measures. The study however concludes that discriminatory investment rules serve as a policy of last resort if all other mechanisms fail, investment policy can be used to prevent investments by foreign entities that may pose risks.

Can it be argued that there is a legitimate national security reason to prevent FDI in Indian railways?

No.

Railways and airways are both modes of transportation. Yet under the present Indian laws, FDI in railways is prohibited while it is allowed in ’air transport service’. In ’scheduled air transport service’ 49% FDI is allowed under automatic route and in ’non-scheduled air transport service’ 74% FDI is allowed – 49% under automatic route and beyond it through approval. Moreover, in ’helicopter services/seaplane services requiring DGCA approval’, 100% FDI is allowed under automatic route. If FDI is not prohibited for air transport on grounds of ’national security’, it is difficult to see why railways should be treated differently.

The prohibition of FDI in railways can be traced back to the Industrial Policy Resolution (IPR), 1948. Railways along with atomic energy, arms and ammunitions were reserved only for state monopolies. The position was reiterated in Schedule A of IPR 1956, which expanded the list of industries (to include air transport also) the ’future development of which would be the exclusive responsibility of the state’. The reason for including ’public utilities services’ within Schedule A was for ’planned and rapid development’ and to provide ’investment on a scale which only the State’ could provide. Evidently, national security never motivated the policy makers to include railways as a state monopoly in the first place. So, it is hard to justify the current blanket ’prohibition’ of FDI in railways on grounds of ’national security’.

If FDI in Indian railways is allowed, would it compromise ’national security’ concerns?

No.

Under the present regime, FDI can come in automatically (automatic route) or through Government approval (approval route). If FDI in railways is allowed under approval route, ’national security’ concerns can be looked into by Foreign Investment Promotion Board (FIPB). If it thinks the concerns are valid, it can reject the FDI proposal. If there is no such valid concern, FDI will be allowed. Subsequent to the FIPB approval, if any genuine ’national security’ concern arises, the foreign investment itself will not be protected under bilateral investment treaties (BITs). For example, Art. 14 of the India-China BIT provides for the ’exception’ clause which excludes from the scope of the treaty any action under domestic laws for protection of ’essential security interests’ by a Contracting Party. The ICSID held in CMS Gas Transmission Company v. Argentine Republic (link) (in paragraph 360) that ’essential security interests’ include ’national security’. Therefore, India can take appropriate actions under domestic law (even expropriate the foreign investment) if there are valid ’national security’ concerns.

To conclude, national security is certainly a crucial issue for foreign investment into any country including India. However, apprehension in itself should not be a ground to prohibit foreign investment. The current legal regime gives enough room to India to address these concerns within the rule of law framework. Imposing a blanket prohibition on foreign investment in Indian railways because of vague national security concerns is neither necessary nor justified.

AAP Governance:The dangerous and regressive fight over Electricity pricing

6 Feb

Introduction

The Aam Aadmi Party led Delhi Government has (link) slashed power tariffs in Delhi, and is in the midst of an ongoing tussle (link) with Reliance owned discom BSES over the supply of electricity in certain parts of Delhi. The AAP, even before taking the reins of the Delhi Government had long accused the Delhi discoms of overcharging consumers, and had demanded an audit into their activities, something they have now initiated (link).

Meanwhile, Delhi’s electricity regulator, the Delhi Electricity Regulatory Commission (DERC) has raised tariffs (link), and also stated that the Delhi Government cannot “cannot interfere in fixing tariff” (link).

What is going on here? On the one hand is the claim by the AAP Government that discoms are over-charging consumers. They seek to resolve this issue by (a) asking discoms to reduce tariffs by 50 percent, and (b) asking the CAG to audit the discoms to see whether they are overcharging. Added to this mix is the DERC which states that the Delhi Government has no power to reduce tariffs. It can only subsidize consumers if it wants. There is a complex legal and regulatory framework with a complex history that needs to be understood here.

 

Electricity regulation in the past

“Electricity” is an entry in List III (Concurrent List) of the Seventh Schedule of the Indian Constitution. This means that electricity can be regulated by both the states and the Central Government. How this works in practice is that purely intra-state generation, production, distribution and consumption of electricity is regulated by the state. Any inter-state aspect of this process is regulated by the Central Government. For example, if a power distribution company in Delhi buys power from a generation company that sells power to 4-5 other states, the terms of the purchase will be regulated by the Central Government.

Until about 10 years ago, electricity distribution in most states was run by state-owned companies (one may remember the infamous DESU in Delhi). Electricity distribution in many states is still run by state-owned companies, but many states have privatised this function to a large extent. More importantly, the process of fixing tariffs for electricity has changed. Why?

State governments have an obvious incentive to keep power prices low. It is a sop given to consumers who then vote for the party in government. How this was being done was broadly the following: the state government would direct the state-owned electricity distribution company to keep electricity prices artificially low. The company would consequently be charging consumers a price lower than the cost of providing them electricity. Since the company never recovered the cost of providing electricity, it basically provided poor quality of electricity. They were essentially loss-making entities, being told by the state government to keep operating as loss-making companies to subsidise consumers. The consequences were poor quality of electricity, and lack of expansion of the electricity supply to all segments of the population.

Most importantly, and conveniently for state governments, the loss from under-charging consumers was borne by the distribution company, and not the state government. State governments, rarely transferred the difference between the cost and the price being charged to the distribution company. So even though discoms became more and more financially unviable, state governments never suffered any financial consequences. They could therefore afford to get away while being fiscally irresponsible, and consumers got low quality electricity at low prices.

Parliament’s Standing Committee on Energy noted in 2002(link):

 

“…tariffs not related to costs of operation, the inefficient operational phases and nearly 50% of the energy consumed not metered which go towards agricultural consumption, hut lighting, T&D losses and pilferage. T&D losses reported by many SEBs are fudged figures. There is free or subsidised power supply and absence of commercial outlook. Political intervention in decision-making by SEBs is rampant. Shortage of power and energy is perennial. There was lack of clear cut policies, organisational purpose, control or responsibility and frequent change of leadership. This is coupled with overstaffing and low productivity and revenue earning distribution function totally neglected.”

 

So what changed?

The condition of discoms throughout the country became acute by the mid-1990s. This extract is from a debate in Parliament in 1998 (link):

 

“…we are today in a critical financial situation in the power sector…I have already explained about the poor and fast deteriorating financial health of the SEBs [State Electricity Boards]. With their finances fast getting eroded, the SEBs will find it difficult to realise any improvement in their operational performance and unless their financial condition improves, they may not be able to realise even the limited capacity addition programme that is now envisaged in the State sector during the next four to five years…In short, if the present scenario of the power sector is allowed to continue, the ability of the SEBs to provide adequate electricity in a reliable manner to the consumers will fast get eroded…”

Starting in 1998, efforts were made to create independent regulators in the electricity sector. These regulators were intended to be independent bodies that would set power prices in a technocratic manner, and be independent of political pressures. This would help discoms charge the cost-price of electricity and make the sector financially viable.

At the same time, a slow process of privatisation of electricity generation and distribution was also initiated. By 2006, the National Electricity Policy of the Central Government explicitly stated that there was a need to attract private investments into the power sector (link)

“…It is therefore essential to attract adequate investments in the power sector by providing appropriate return on investment as budgetary resources of the Central and State Governments are incapable of providing the requisite funds…”

Private investors require certainty and clarity. Unlike discoms owned by states and the Central Government, they are unable to absorb losses on an endless basis. They therefore require a proper, technical mechanism of price fixation, and require that the government will stand by the price fixed by it. This was the reason for setting up independent regulators.

 

Electricity Act and Independent Regulators

In 2003, Parliament passed the Electricity Act (Act) (link). The Act set up independent regulators at the Central (The Central Electricity Regulatory Commission or CERCs) and state levels (SERCs). The Act allows the “Appropriate Commission” to determine tariff according to certain principles laid down in the Act.1 These include keeping in mind that the generation, distribution and supply of electricity is done on “commercial principles”, competition, rewarding efficiency in performance, safeguarding consumer interest, etc. It also stated that tariffs cannot be amended more than once during a year.2 Importantly, the Act states that if the State Government requires a discom to provide a direct subsidy to consumers, the state government will compensate the discom in advance.3

The CERC and SERCs are therefore established as independent bodies, and one of their major functions is to regulate the tariff of electricity. The Act also set up an Appellate Tribunal for Electricity (APTEL). APTEL hears appeals from all orders of the CERC and the SERCs, including orders that fix tariff. State governments and discoms can appeal against orders of the CERC and SERCs if they feel the order is inadequate.

There was thus a very conscious move towards creating a legal framework where electricity prices were to be set by an independent body acting in a technocratic manner. It was hoped that this would lead to private investment and competition, and create a more efficient power sector in India.

State of the power sector today

The provisions of the Electricity Act, 2003 have not been implemented in letter and spirit. Electricity tariffs are not revised and set properly, SERCs are not independent enough, and state governments have done a half-hearted job of privatizing the state-owned discoms. The Chairman, CERC told Parliament’s Standing Committee on Energy in 2012 that the state of State Electricity Boards (SEBs or discoms) is almost as bad as it was in 1998.4 The Tamil Nadu State Electricity Board was reported to be bankrupt (in 2011) (link).

The CERC Chairman told Parliament’s Standing Committee on Energy in 2012 that:

“There are State Commissions which have not rationalised tariff for seven to eight years and there, even if they had taken up any kind of rationalisation exercise, it had been more of a formality. All this has contributed to the Electricity Boards coming back to the situation which they were in 2001 and probably getting worse”5

In response to a question raised in Parliament, the Power Minister stated that the situation of state owned power companies was so bad, that,

“A scheme for Financial restructuring of Discoms has been approved recently (October, 2012) with objective to enable the State Governments and the Discoms to carve out a strategy for the financial turnaround of the distribution companies in the State power sector which will be enabled by the lenders agreeing to restructure/reschedule the existing short-term debt…”6

The answer clearly lies in a continued move towards more technocratic tariff setting, and getting state governments to cede control over state-owned discoms/privatise the electricity sector. It is in this context that we must study the conflicts over the prices of electricity in Delhi.

The Delhi electricity price fight

Delhi privatised its electricity distribution some time in 2002 (link) As per a news report, during the last 10 years, “cost of power has increased 300%, mainly because of higher coal prices and a rise in the financing charges due to higher interest rates, while the rate at which it is sold to retail consumers has increased by only 70% during the period…” (link). Whether the increase in prices is correct needs to be determined through a process of audits and reviews. However, some points need to be made:

 

  1. Electricity prices in Delhi are set by the Delhi Electricity Regulatory Commission (DERC), and not by the Discoms or the State Government. The DERC follows an extremely transparent method of determining tariffs. It involves stakeholders in every stage of this tariff determination process (a recent order can be accessed here).
  2. The Delhi Government is legally not permitted to direct discoms or the DERC to reduce tariffs. The reduction or increase in tariffs is dependent on the process followed by the DERC under the Electricity Act, 2003.
  3. If the Delhi Government thinks the DERC has erred in setting the tariff, it is free to go to the APTEL and challenge DERC’s order.
  4. It is free to order an audit of the discoms, and then take a decision on the functioning of these discoms after the results of the audit are published.
  5. If the Delhi Government still thinks that the electricity prices are too high, it is free to subsidise consumers. There is however, one crucial difference between a subsidy the Delhi Government would give now, as opposed to before discoms in Delhi were privatized. Before privatization, the Delhi Government could have forced state-owned discoms to absorb the losses. Today, the burden of funding this subsidy has to be borne by the Delhi Government. According to news reports, this subsidy will force the government to cough up an additional Rs. 201 crore in the lastquarter of 2013-14… (link). This subsidy is apparently being paid for by scrapping infrastructure projects. Notably, there is no rational basis (yet) for claiming that electricity is over-priced by 50 percent. And as pointed out earlier, even after all the tariff hikes in the recent past, the cost of electricity in Delhi is far higher than what consumers pay for it.

As point 5 shows, once the government bears the burden of the subsidy, taxpayers have a very real stake in the game. We may decide that it is fine for the government to subsidise electricity. But at what cost? We are discussing not just a financial cost, but the cost of trying to bulldoze legal institutions such as the DERC into submission on the basis of a simplistic claim of corruption without any actual evidence (yet) of over-priced electricity. We are also discussing the cost of going back to a regressive era where we consumers received poor quality electricity at low prices because elected governments were playing a cynical game of charging less for less. The current fight over electricity pricing goes to the heart of what kind of institutions we build for the future.

 

————

1. Section 61

2. S. 62

3. S. 65

4. Oral evidence of Chairman, CERC to Standing Committee on Energy in its 30th Report on Functioning of Central Electricity Regulatory Commission (CERC), August 2012.

5. Ibid.

6. Unstarred question no.1635 on Provision of electricity at economical rate, by Shri Wakchaure Bhausaheb Rajaram, answered on 07.03.2013, Lok Sabha.

Interesting reads: Media, merit vs. communism, and elections 2013

10 Dec

Some good stuff to read this week:

Vinod K. Jose in Caravan on the lack of a larger philosophical framework for the Indian media to operate within: “Habits of Mind

Nobel Laureate physicist Walter Kohn remembers one-time partner, Indian physicist Chanchal Kumar Majumdar in “A master and his protege“.

Pratap Bhanu Mehta’s engaging piece on the election verdict in the Delhi, Rajasthan, Madhya Pradesh, Chhattisgarh: “Left Behind

Moiz Tundawala’s incisive piece on the rule of law in India: “ON INDIA’S POSTCOLONIAL ENGAGEMENT WITH THE RULE OF LAW

 

 

 

A parliamentary budget office for India

22 Nov

By Kaushiki Sanyal and Sruti Bandyopadhyay
This article was first published in Mint on Nov 20,2013
At a time when India is going through an economic slow down, it seems counter-intuitive to enact legislation such as the National Food Security Law or continue to dole out subsidies that end up benefiting rich farmers. One reason for these economically questionable actions is the political dividend that parties hope to reap. However, there may be other reasons at work—the lack of understanding among parliamentarians of far-reaching economic impact of government policies. This has grave consequences for a parliamentary democracy where financial oversight is one of the key functions of a legislator. It may also explain to some extent the relative lack of debate on fiscal matters in Parliament.
Data released by PRS Legislative Research since 2000 shows that Lok Sabha has not spent more than 45% of its time discussing the budget. In 2013, Parliament did not discuss the budgetary proposals of any ministry (demand for grants). All were “guillotined” i.e., put to vote without any discussion. In case of Bills, the debate hardly ever goes into their fiscal implications. Financial memoranda of Bills only provide the estimated expenditure at the Union level. For example, the Right to Education Bill, 2008, which required the government to reimburse unaided schools for expenditure on every child, did not provide any estimate for this purpose. The Food Safety and Standards Bill, 2005, only budgeted for setting up the Food Safety and Standards Authority of India. It did not specify whether the cost of implementing this law would be different from the existing system, nor did it account for the enforcement costs to be borne by state governments.
What is holding back members of Parliament (MP) from questioning the executive on fiscal matters? The problem may be lack of expertise among MPs and lack of access to objective and high-quality research that is independent of the executive. Unfortunately, MPs in India do not have a staff of high quality researchers (unlike in other developed democracies) to help them gain expertise in budgetary matters. The institutional research support within Parliament such as a library and reference service is limited due to resource constraints, nor are their research products available readily in the public domain.
A remedy for this may be the establishment of a parliamentary budget office (PBO) in India—a common feature across many countries ranging from developed democracies such as the US, the UK, Canada, Australia, Korea, to Hungary, Uganda, Kenya, Thailand and Bangladesh. PBOs provide legislators with high-quality analysis that is independent of the executive. They specialize in objective and policy neutral analysis on the full budget cycle, the broad fiscal challenges facing the government, budgetary trade-offs and the financial implications of legislative proposals. Such research can raise the quality of debate and scrutiny in Parliament as well as enhance fiscal discipline. Most importantly, it strengthens the role of Parliament in financial oversight.
The key challenges faced by any country that establishes a PBO are threefold—guaranteeing independence and viability of the office in the long-run; ability to carry out truly independent analysis; and demonstrating impact. Countries have adopted different models to suit their specific needs.
The degree of independence of the PBOs varies across countries—in the US, Korea, Uganda, Kenya, Canada and Australia, PBOs fall within the jurisdiction of the parliament, while in Sweden and the UK, it is under the executive. India will need to ensure the independence and non-partisanship of such a body for it to have credibility with legislators. This may best be done if it is established as a statutory body reporting directly to Parliament. A clear set of deliverables may be desirable.
The functions of the PBOs may differ too. For example, the US Congressional Budget Office (CBO) provides information on economic outlook, cost estimates of specific legislative proposals, long-term budget outlook etc. The Canadian PBO provides independent budget projections, fiscal sustainability report, and financial analysis of Bills. In Uganda and Kenya, PBOs exclusively cater to requests from committees while Canada carries out service requests from individual MPs but ranks them below committee requests in terms of importance. The US services requests from committees as well as individual legislators. The UK also caters to individual MPs. It may be worth it in terms of strengthening the legislature if the Indian Parliament were to invest in a well-funded, professionally-run PBO that would cater to both individual MPs and committees.
Has there been any discernable improvement in fiscal oversight in countries which have established PBOs? This is a difficult question to answer given the complexity of policy-making. However, there are some encouraging results. The Canadian PBO contested the true cost of the war in Afghanistan and most famously, exposed the real cost of the government’s proposed F-35 fighter jet procurement. In the US, the CBO focuses on costing or scoring legislative proposals relative to the baseline. This has helped discourage Congress from making unaffordable proposals. In Australia, the PBO does a costing of different political parties’ electoral manifestos, which can discourage unaffordable election commitments.
India will surely benefit from an institutional mechanism that strengthens the capacity of the legislature to hold the executive responsible in financial matters.
It is important to understand that a PBO can only provide independent research; it certainly cannot prevent executives from taking bad fiscal decisions.

What entities are public authorities under the RTI Act?

27 Sep

The text below is from my brief titled “Who is a Public Authority under the Right to Information Act, 2005?” as published on the website of Accountability Initiative, published in September 2013. The brief can be accessed here.

 

The definition of ‘public authorities’ under the Right to Information Act, 2005 (“RTI Act”) has been an extremely contentious issue since the RTI came into force. However, in the wake of an order of the Central Information Commission (“CIC”) declaring political parties as public authorities under the RTI Act1, the issue has taken centre stage in public debates. The Central Government sought to undo the CIC decision by proposing to amend the definition of Public Authorities to exclude political parties. This amendment has now been referred to a Parliamentary standing committee. This development affords an important opportunity to examine the definition of public authorities, and controversies arising from its interpretation. The specific focus of this brief is on a sample of cases that were brought to the High Courts.

The RTI Act empowers citizens with the right to access information under the control of ‘public authorities’. Accordingly, RTI Act creates a legal framework to make good this right by defining public authorities, allowing citizens to ask public authorities for information, and imposing penalties on officials of public authorities for failing to disclose ‘information’ defined in Section 2(f). The RTI Act also mandates that “every public authority shall pro-actively disclose information pertaining to it, and maintain its documents and records to facilitate the right to information under the Act”.
Therefore the question of “who is a public authority?” is critical one because it sets the boundaries of the scope of the RTI Act specifically and the transparency regime in the country, more generally. In the last seven years, a wide variety of entities otherwise considered to be private entities (such as schools, colleges and sports associations) have been declared public authorities, and have had to comply with the requirements of the RTI Act. A perusal of judgments of High Courts and the CIC reveals a diverse and at times, conflicting jurisprudence regarding the ambit of ‘public authorities’ under the RTI Act.

 

To read more, click here.

India’s BigLaw: Metamorphosis from deal making to policy activism

24 Sep

This post was first published on http://blogs.law.harvard.edu/legalprofession/, on September 23, 2013. 

As skepticism mounts over India’s economic resilience and economists rush to blame India’s policy framework for the woes of her economy, the role that India’s BigLaw plays in her law and policy making processes assumes greater significance now more than ever before. In the backdrop of an unpredictable, evolving and complex regulatory and legal regime, the quintessential Indian law firm is expected to not only play the flawless draftsman or the aggressive negotiator but also an organization capable of dealing with the regime, its regulators and policymakers. Indian corporate law firms have responded to this demand by claiming policy affairs as a niche area of their legal practice. In this backdrop, this post explores how and why the Indian corporate lawyer has transitioned from a boardroom negotiator and a draftsman to an active participant in India’s law and policy making processes, and highlights potential conflicts associated with this transition.

Today, India’s law and policymaking processes do not only involve the political class, bureaucrats, civil society actors or jurisprudential developments. A proposed policy or law (in particular, one that affects commerce in India) is regularly preceded by well-publicized detailed analyses proactively offered by leading corporate lawyers in the country. As members of expert committees constituted by the government and regulators, providers of feedback on government-released discussion papers, columnists or interviewees in the media, members of business associations interfacing with the government, Indian corporate law firms strive to make conspicuous contribution to proposed laws and policies. The fact that several prominent Indian corporate law firms now project themselves as having an established regulatory and policy practice (which typically includes reform initiatives, legislative drafting work and holding policy-oriented consultations with government actors), underscores their desire to be seen as being active in the policymaking space. A couple of large corporate Indian law firms are now reported to have dedicated, though limited, resources with profiles involving government affairs and policy formulation. These trends are indicative of a progressive tendency to pro-actively contribute towards law and policy making in India.

The growing participation of the corporate legal community in policy and legislative work is directly attributable to an inclusive approach being increasingly adopted by Indian legislators, policy makers and regulators in recent times. Take, for instance, the FDI policymaking space, a most coveted and crowded practice area dominated by India’s BigLaw. In sharp contrast to the pre-2010 era when FDI policymaking processes had no space for involvement of legal professionals, in 2010, the Department of Industrial Policy and Promotion (being the FDI policymaker in India) initiated a discussion paper series inviting comments on proposed FDI policies from all stakeholders [i]. In addition to responses from industry associations, these discussion papers have, in fact, garnered policy-oriented responses from law firms having an established practice in this space [ii]. Similarly, drafts of proposed rules and regulations released by the Ministry of Corporate Affairs and the Securities and Exchange Board of India (the Indian securities regulator) regularly elicits detailed analyses by corporate law firms known for their capital markets practice [iii].

In addition to the policy and regulatory framework, the contribution that Indian corporate law firms have been making to substantive lawmaking cannot be understated. Several substantive corporate laws (such as the Competition Act, 2002, the Companies Act, 2013, etc.) brought into effect in the last decade have been preceded by consultations with law firms known for their expertise in areas governed by such legislations. So much so, the drafting of certain provisions and filings under these legislations was reportedly entrusted to leading legal professionals in the corporate field. Similarly, leading corporate lawyers were engaged as consultants by the government-appointed commission entrusted with the responsibility of overhauling the legal framework applicable to the Indian financial services sector [iv].

Participation of the Indian corporate legal community extends to the implementation and enforcement stages of policies and regulations as well. Owing to the lack of institutional mechanisms that facilitate formal stakeholder participation at the implementation stages, most often, such participation occurs where a law firm identifies an ambiguity or an unaddressed situation in an implemented law or regulation in the course of assisting a client in a transaction, and approaches the regulator or policymaker for clarifications. In the past, queries seeking transaction-specific clarifications have resulted in the regulator or policymaker addressing the problem for the benefit of the general class of stakeholders. A perfect example of this situation are clarifications obtained through the Informal Guidance Scheme implemented by the Indian securities regulator, which is akin to the Interpretive Guidance initiative of the SEC.

In addition to direct contributions of the kind described above, corporate lawyers have made remarkable contributions to the Indian policy framework indirectly through participation in business associations such as the Confederation of Indian Industries, chambers of commerce, etc. Previous evaluations of government-stakeholder consultations in India have indicated that the interests of members of such associations are not always aligned [v]. Conflicting interests amongst members often restrict the ability of business associations to convey their views on proposed and implemented policies to policymakers. Corporate law firms, through their participation in such associations, are able to impart objectivity and clarity to the associations’ collective views on laws and policies that affect the industry. Through presentations made to such associations, participation in specialized committees and consultation processes initiated by the government and regulators with such business associations, corporate lawyers often end up contributing to the policy framework by participating in actual stakeholder and industry-level discussions. For instance, the post-budget announcement days regularly witness tax law firms explaining the implications of the budget on various industries. These views often supply the foundation for opinion-formation by industry-specific business associations on the budget.

Participation by BigLaw in policymaking is mutually beneficial to policymakers, regulators and the participating law firms. While the former are benefitted with the expertise and real-world experience that law firms bring to the table, a capacity to deal with and establish smooth interface with regulators and policymakers can potentially earn a premium for law firms from a client’s perspective. However, the increasing role of corporate law firms in policy formulation and implementation often raises several questions regarding the objectivity underlying their contribution. To what extent are a law firm’s views insulated from client requirements? Do law firms contribute toward policymaking only when warranted by specific transactions? How does one address the inherent conflict of interest while analyzing policy-oriented feedback offered by legal professionals in the corporate field? These questions often reduce the receptivity of lawyers’ views at policy-level discussions. As unregulated as this space currently is, these questions are open-ended and it remains to be seen whether the benefits of professional expertise and legal skills outweigh concerns of objectivity.

Be that as it may, with increasing inclusiveness in the Indian law and policy making space, credit for contributing towards law and policy making in India can no longer be restricted to socially activist lawyers, legal jurists and civil society actors. By volunteering in his own way towards improvisation of proposed and implemented policies, laws and regulations, India’s contemporary corporate lawyer is now making a leap from being a plain dealmaker to a contributor to the law, policy and rule making processes of the country.

Bhargavi Zaveri is a Mumbai-based solicitor with experience in M&A, private equity and corporate practice in India. She is presently an affiliated fellow with the HLS Program on the Legal Profession where she is researching FDI law and policymaking, and the interface between legal professionals and policymakers in India.

India – No country for women?

17 Sep

A fast track sessions court in Delhi awarded the death penalty to the four adult rapists in the December 16 gang-rape case where a young woman was raped and brutalized by six men.  One of the culprits was a juvenile who was sentenced to three years in a remand home (the highest punishment under the Juvenile Justice Act) and the fifth died in custody.  Ironically, according to a newspaper report, of the 23 rape cases Additional Sessions Judge Yogesh Khanna (the presiding judge) heard this year, 20 of them resulted in acquittal, primarily because the evidence against them was not strong.

In another recent incident, a photo-journalist was gang-raped at the Shakti Mills compound in Mumbai giving a blow to its reputation as one of the safest cities in India for women.  It has now come to light that these men were repeat offenders having raped around 10 women including a rag picker and a sex-worker in the last six months.

And this brings us to the core of the problem – the impunity with which the men feel they can get away with sexual crimes in India.  A toxic mix of patriarchal and regressive values about women’s honour and purity, inert judiciary and an unresponsive and ill-trained police force combines to ensure that women rarely report sexual crimes.  If they do report, they are often subjected to further trauma by the police force who may refuse to file FIRs, blame the victim, and make her undergo degrading medical tests.  While collection of forensic evidence is crucial for investigating a rape, the police are hardly trained in new and scientific investigating techniques nor are there sufficient laboratories to process forensic evidence in a timely manner (see here and here).  The judiciary is also no less to blame for causing trauma to a rape survivor – whether through delays or allowing the moral character of the woman to be called into question.

In India, women are subjected to milder forms of street sexual harassment such as groping, stalking, flashing, passing lewd remarks almost on a daily basis.  In fact, such harassment is so rampant in public places that it is taken as normal.  Often women themselves are blamed for such actions.  Therefore, few women even bother to complain and treat it as something that is upto them to avoid.

The public outrage triggered by the brutal rape of December 16 in Delhi finally broke the silence and apathy surrounding these issues.  It also forced the government to set up a committee under the chairmanship of Justice J.S. Verma to recommend changes to the rape laws.   It made wide-ranging recommendations on laws related to rape, sexual harassment, trafficking, child sexual abuse, medical examination of victims, police, electoral and educational reforms.  Based on some of these recommendations, the government promulgated the Criminal Laws (Amendment) Ordinance amending the Indian Penal Code.  The Ordinance became an Act of Parliament when it was passed in the Budget Session of 2013.

However, a lot of the public debate is focussed on the type of punishment that should be meted out to rapists – castration, death penalty or life-imprisonment.  High penalty may be a deterrent only if there is certainty of prosecution, which is sorely lacking given the condition of the police and judiciary.  The data from the National Crime Records Bureau show that while registration of cases has been rising, the conviction rate remains at a low 13%-14%.  The high number of pending cases is also a cause for concern.

Table 1 provides a snapshot of the penalty levied for certain sexual crimes against women and the number of cases registered each year since 2008.  It may be noted that the new Criminal Laws (Amendment) Act, 2013 which amended the Indian Penal Code among other Acts have added new offences such as acid attack and stalking and changed the quantum of punishment in existing offences.  The data for these offences would be available from next year.

Table 1: Penalty for sexual crimes and number of cases registered

Sexual Crimes Penalty 2009 2010 2011 2012
Rape (Sec 376 IPC) 7 years to life (lower for marital rape) 21,397 22,172 24,206 24,923
Molestation (Sec 354 IPC) Upto 2 years & fine 38,711 40,613 42,968 45,351
Sexual harassment (Sec 509 IPC) Upto 1 year & fine 11,009 9,961 8,570 9,173
Indecent Prohibition of Women (Prohibition) Act, 1986 Upto 2 years & fine of Rs 2000 (increases on second offence) 845 895 453 141
Immoral Traffic (Prevention) Act, 1956 Varies between 3 months to 14 years 2,474 2,499 2,435 2,563
Total crimes 74,436 76,140 78,632 82,151
Sources: Indian Penal Code; Indecent Representation of Women Act,1986; Immoral Traffic (Prevention) Act, 1956; “Crime in India -2012,” National Crime Records Bureau.

Table 2 provides the data for the cases of crimes against women that were tried, convicted and acquitted since 2009.  Crimes against women include rape, kidnapping & abduction of women and girls, dowry deaths, molestation, sexual harassment, cruelty by husband and relatives, importation of girls, Immoral Traffic (Prevention) Act, 1956, Dowry Prohibition Act, 1961, Indecent Representation of Women Act, 1986, and Sati Act,1987.

Table 2: Cases of crimes against women that were tried, convicted, acquitted and pending

 

Status of Cases

Year Registered Trials completed Conviction Acquittal % of convictions
2009 203,804 100,611 27,977 72,634 13.7%
2010 213,585 108,933 30,270 78,663 14%
2011 228,650 112,368 30,266 82,102 13%
Sources: “Crime in India – 2012”; National Crime Records Bureau.

As the data shows, there has certainly been an increase in registration of rape cases.  On the one hand this is a cause for concern, on the other it may be a sign that more people are coming forward to register rape cases.  Therefore, it is difficult to conclude whether the number of incidents of rape has gone up or the registration of cases has improved.  However, the high pendency in courts and the low rate of conviction point to the dire need for police and judicial reforms.  Various commissions such as the National Police Commission, the Law Commission, the Gore Committee, the Ribeiro Committee, the Padmanabhaiah Committee and the Malimath Committee have made extensive suggestions to reform the police.  However, hardly any far-reaching reforms have been undertaken to overhaul the law enforcement machinery in the country.

In order to ensure that women not only feel safe to venture unaccompanied in public places but also report crimes, the government, judiciary and civil society need to change their approaches drastically.  The government needs to muster the political will to ensure an independent, well-trained and well-equipped police force.  It also needs to legislate judiciously and ensure that the laws are implemented.  The judiciary needs to tackle pendency, fine-tune the process of selection of judges and ensure that there is better quality of judicial infrastructure and manpower.  Last but not the least, civil society is crucial for not only pressurizing the government to act but also to initiate far-reaching changes in the way women are treated in the country.

Can the state handle it?

16 Sep

This post was first published on http://logos.nationalinterest.in on September 15, 2013, and can be accessed here

 

A minimalist theory of state functions explains the main functions of the state as being (a) the function of collecting revenue, (b) the maintenance of law and order, and (c) the protection of a nation’s boundaries. State capacity is a pre-requisite to perform even these essential functions. The roles of states in contemporary times is not limited to these minimal functions. Most states perform these, as well as other roles, sometimes as facilitators, regulators, or direct market participants. In India, there is a broad existing consensus in favour of the state acting in all these capacities. Indeed, there is no clear consensus yet, on whether the state needs to withdraw from certain functions, towards a more liberal construct of the role of a state.

 

In this context, it is essential to connect the legitimacy of the state, to its capacity to deliver. As a social-welfare democracy, our constitutional goals mandate that the state perform roles that very few developed democracies were tasked with at their inception (the eradication of mass poverty, illiteracy and starvation). Therefore, the legitimacy of our state apparatus has never been measured merely against how well it provides the three minimal services of collecting revenue, maintaining law and order, and protecting our borders. These diverse and competing expectations from a fledgeling state apparatus may in fact have compromised its ability to deliver the essential three services in the first place. In short, because we asked our young state to do too much too soon, it may not have been able to deliver basic services expected of every state.

 

Therefore, if the state is to attain legitimacy, it has to perform its functions more efficiently. And since there is an existing consensus on asking it to do a multitude of things, there has to be a comprehensive analysis of the capacity of the state to deliver. In some instances, such as when police-population and judge-population ratios are measured, it is easy to estimate our current numbers, compare it with states who deliver law and order, and justice more efficiently, and estimate how well our current police-population ratio and judge-population ratios measure up against these countries. The police and the judiciary are however relatively homogenous departments that perform a limited number of tasks i.e. the police exists to prevent crimes from occurring, and investigating crimes which have already occurred, and judges exist to interpret the law, examine the facts and deliver justice.

 

But what about the state departments of health? They oversee and regulate private hospitals. They also own and supervise government hospitals. They have to ensure the genuineness of medicines, the operation of emergency health services. They also have to implement  food safety laws and standards. If the central government starts the National Rural Health Mission, they also have to implement the mission. In many cases, the same individuals comprising part of the bureaucracy may be performing these multiple tasks which require very different skills and much more manpower. If this is indeed true (and many commentators feel it is) then contrary to the pop-policy debate on reducing the role of the state, there is an argument for substantial investment in state capacity. In other words, most bureaucracies perform multiple, and heterogenous tasks. However, their internal design, and capacity has not evolved to take on the burden of the ever-expanding regulatory state.

 

One alternative would be to insist on a drastic overhaul of the bureaucracy, as many do. Another would be to insist, or formalize mechanisms for ensuring that any addition to the tasks of a state agency is complemented by an increase in state capacity. The law, rule or regulation that delegates a particular administrative function on a particular agency should do so only if it can justify that the agency is best placed (in terms of skills and resources) to perform this additional task. The latter may in the long run create a virtuous cycle leading to an internalization of the principle of manpower costs before new laws and rules are created.

The Indian Olympic Committee follows the “law of the land”

5 Sep

According to recent news reports the Indian Olympic Commission will continue to be disbarred from the International Olympic Association, due to its refusal to accept a “contentious” clause that prevents “charge-sheeted officials from taking part in administration or contesting elections.” (read here, and here) The reason is not difficult to fathom: “Its secretary-general Lalit Bhanot faces corruption charges in a 2010 Commonwealth Games-related case. India was banned in December 2012 after Mr Bhanot was elected.”

 

The reason the IOA refuses to accept this clause is apparently because the IOA has to comply with the law of the land:

“We can’t go beyond the law of our land. We will make our constitution according to the law of the land. We have clearly told the two-member IOC delegation that we can’t go beyond the law of the land.” (Sourced from here)

Some questions need to be asked:

a. Does incorporating this clause of the IOC violate Indian laws?

b. What prevents the IOA from incorporating standards HIGHER than what Indian laws provide?

c. Is there any special restriction placed on the IOA by the Indian government which prevents it from incorporating such a provision in its rules and regulations?

 

A short answer to all these questions is as follows: No, Nothing, and No.

 

According to the Constitution of the IOA, it is a private society registered under the Societies Registration Act XXI of 1860. Here are two clauses relevant to the current debate:

“3. To enforce all rules and regulations of the International Olympic Committee and the Indian Olympic Association and not to indulge in or associate with any activity which is in contradiction with the Olympic Charter.
To follow, observe and uphold the primacy and domination of the Olympic Charter in case of any contradiction between it and the rules, bye-laws and the constitution framed by the Indian Olympic Association.”

 

The Rules and Regulations of the IOA also list its voting members. There are no government members or nominees with voting rights. There is therefore no governmental pressure on it to resist the changes the IOC is asking it to make. According to its own rules, one of the functions of the General Assembly of the IOA is to enforce the rules and regulations of the IOC.

The IOA is therefore a private, i.e. non-governmental organisation that is not subject to governmental supervision, beyond the state’s supervisory powers to regulate sports associations in India. It is free agree to or sign any clause/contract/agreement that is not prohibited by law.  In fact, as Clause 3 above states, one of the objects of the IOA is to enforce ALL rules and regulations of the IOC, and to not indulge in any activity which contradicts the Olympic Charter. It is then, quite clearly violating its own objects and its rules by not agreeing to the IOC’s new clause requiring charge-sheeted people be barred from the administration of the IOA.

Furthermore, the defense of acting in compliance with Indian laws can at best be described as disingenuous.  The IOA as a private entity is merely an authorised agent of the IOC, who has recognized the IOA as its exclusive agent within India. The clause requiring that charge-sheeted people not be part of the IOA is a contractual term which the IOA has to agree to, in order to continue to be IOC’s recognized agent in India. No law, rule, regulation, authority, apart from the self-interest of some of its members in India prevents the IOA from agreeing to the IOC condition.

 

The question of course is, what is the cost of this self-interest? According to one news report, this is what Abhinav Bindra had to say about the issue:

“It is humiliating for us. When we are travelling abroad to take part in a tournament and representing the country and people ask what sort of system do you have back in India. It is a joke.” (Sourced from here)

 

What is the appropriate public policy response? There are some who would advocate state control over such sports associations. That however has not always yielded great results. Should this issue be left to the IOA, its constituents and sports persons under the IOA banner, with the hope that once things get even worse, someone within will step up and clean the mess? There are no quick-fix answers, and maybe the shame and embarrassment of not being able to participate in the next Olympics, and collective pain of all the athletes who are unable to participate  will create a virtuous push for reform. The best, short-term fix would of course be for our police and judiciary to wake up and once and for all either convict or acquit the charge-sheeted.

RTI Amendment: Legislative supremacy and judicial intervention

13 Aug

Bhargavi wrote a great piece yesterday on the tendency of legislatures to nullify judicial pronouncements by passing laws which overturn judgements/orders. She rightly pointed out this practice as a major issue which needs greater deliberation. There is however, one other issue which needs to be considered while thinking of possible solutions. This is the issue of balancing legislative supremacy with judicial intervention.

 

Legislative supremacy is probably the most important cornerstone of a democracy, and judicial intervention is the most important check on unbridled exercise of such supremacy. Constitutions in different countries balance the two through different mechanisms. Our constitution prohibits unbridled exercise of legislative power on issues affecting fundamental rights, and gives the judiciary the power to check the legislature from doing so. In essence however, the legislatures are democratically elected bodies, while the judiciary is unelected. While the legislature gains its legitimacy from the democratic process, the judiciary gets its legitimacy through the perceived correctness of its judgements. At any given point of time therefore, it is difficult to ascribe greater legitimacy to one institution over another, as there is no formulaic mechanism to judge the popular legitimacy of the judiciary and compare it with that of legislatures.

 

Legislatures retrospectively invalidate many rulings. Bhargavi points out some such laws which have nullified historically and constitutionally significant rulings. Some of these invalidations have apparently been made to protect the powers and privileges of politicians. However, many such laws (including the Vodafone incident, and numerous other retrospective laws on tax cases, especially in Punjab&Haryana) can also be said to reflect democratic preferences. In essence, in all such cases, the legislature seems to be saying that it feels that the judiciary has made an improper call in ruling the way it did. This may be easier to disprove objectively in some cases (where politicians clearly invalidate a correct judicial interpretation) than others (I for example, completely disagree with the assertion that political parties fall within the ambit of the RTI Act, read more here).

The important point is this: We should try and focus on mechanisms to make the legislative process more accountable and responsible. As long as we depend on the judiciary to intervene and correct “wrong” steps taken by legislatures, we are not putting sufficient pressure on the legislature to correct itself. I would argue that in the long run, incentivising legislatures to behave more responsibly is better than forcing them to make laws which make them more accountable. Doing so would in turn make the democratic process more virtuous and participatory. If lawmakers fail to consult citizens before passing laws, there should be sufficient public outrage which forces lawmakers to consult citizens.

 

The forum for reforming the democratic process should be direct engagement with the legislature. Using the judiciary as an instrument to dictate popular public policy goals does nothing to further the cause of popular democracy in the long run. It prevents popular engagement with substantive issues since the judiciary does not need to deliberate with, and convince the masses of the correctness of its decision.

Fighting it out with legislatures and politicians may be a tougher alternative, but it is definitely a more virtuous one.

Let the public participate

5 Aug

This post was first published in Takshashila’s Pragati – The Indian National Interest Review on May 3, 2013.  The article can be accessed here.

Given the failure of many government legislations in achieving the objectives for which they were formulated, a case for institutionalising deeper public consultations in the legislative process has been made in the recent past. Currently, there are four entry points where citizens can participate in the legislative process: first, the identifying stage; second, the drafting stage; third, the legislative stage; and fourth, the post-legislative stage.

Civil society organisations can alert the government to the need for a particular legislation or changes in an existing law. The Mazdoor Kisan Shakti Sangathan, a farmers and workers group, ran a successful campaign for a Right to Information law, which was finally enacted in 2005. The recent anti-corruption agitation led to the introduction of a Lokpal Bill currently pending in the Rajya Sabha. The long-running Right to Food campaign by a network of NGOs has been instrumental in raising awareness about chronic hunger and the eventual introduction of the National Food Security Bill in 2011.

The government can also suo moto decide that a law is required in a particular sector. It may get inputs from specialised bodies such as the National Human Rights Commission and the Law Commission or appoint a group to study a sector and draft a law. These groups or bodies may hold consultations with independent experts and stakeholders. Furthermore, an individual Member of Parliament (MP) can also introduce a Bill in either House. This is known as a Private Member’s Bill (for example, Lok Sabha MP, Kalikesh Singh Deo introduced the Disclosure of Lobbying Activities Bill in 2013 to regulate lobbying activities). Although these are generally never passed, they act as signalling devices to the government, which may introduce its own legislation on the subject. It is possible for the public to approach their constituency representatives to advocate for a particular law.

Government Bills are drafted by the concerned ministry, which is then vetted by other ministries. There are also times when the government approaches an independent expert to draft a law. Recently, it appointed the Financial Sector Legislative Reforms Commission, under the chairmanship of Justice BN Srikrishna to reform the financial sector laws.

The government may publish the draft legislation in the public domain for feedback. Drafts of the Electronic Service Delivery Bill, the National Sports Bill and the Land Acquisition and Resettlement Bill were published for a specified time period (generally 20-30 days). It may also circulate the draft among a select set of stakeholders for comments.  An individual MP may solicit public feedback on his Private Member Legislation. For example, Biju Janata Dal, MP Baijayant Panda uses his personal website and social media tools such as Facebook to publicise the draft of his private member bills.

There are few avenues of public engagement once the Bill is introduced in the Parliament. Since 1993, 24 Department-related Standing Committees (DRSCs) were formed to scrutinise Bills and other policies of the Government (before 1993 Bills were sometimes referred to ad-hoc committees for scrutiny). Generally most Bills are referred to these DRSCs, however, the presiding officer of the House has the discretion not to do so. For instance, key Bills such as the Special Economic Zones Bill, 2005 and the National Investigation Agency Bill, 2008 were not referred to a DRSC. In contrast, the Lokpal Bill passed by the Lok Sabha was sent to a Select Committee by the Rajya Sabha although it had been examined by the DRSC.

These DRSCs may solicit feedback from the public by issuing notices in key newspapers and the Gazette of India. The public comments are also tabled in the form of a report. However, the level of public engagement varies with different Bills. For instance, the DRSC scrutinising the Companies Bill, 2009 received 101 comments while only 10 submissions were received for the Armed Forces Tribunal (Amendment) Bill, 2012.

The government is not bound to accept the recommendations of the DRSC but individual MPs may introduce amendments to the Bill when it is being considered by the House. The MP may suggest amendments based on the DRSC’s suggestions or any public feedback.

Once Bills are enacted, ministries draft and notify Rules (also known as subordinate legislation) to enable their implementation. These Rules may be scrutinised by the Subordinate Legislation Committee, which is empowered to seek public feedback.

Post legislative scrutiny of laws is not mandatory in India. It may however be undertaken by bodies such as the Law Commission of India, the DRSCs or a specific commission appointed for the purpose who may hold public consultations. Recently, rape laws were reviewed by the Justice Verma Committee before an Ordinance was promulgated on the matter.

Many other democracies have devised meaningful ways to encourage public participation in the legislative process. In countries such as the UK, Australia and South Africa, it is mandatory to hold public consultations or publish draft Bills for comments. In fact, in South Africa it is a constitutionally mandated provision. In the UK, the Government publishes Green Paper and White Paper, which sets out its central ideas on the Bill. After introduction, it is compulsory to refer a Bill to a committee in the UK and the US. However, there is no such requirement in Australia, Canada and South Africa. Unlike in India and South Africa, it is mandatory for the Government in countries such as the UK, Australia and Canada to respond to the recommendations of the committee. While post legislative scrutiny in India is largely a matter of discretion of the Government, in the UK it is compulsory to do so within three to five years. In the US, legislative oversight committees review laws on a continuous basis. In Australia, most laws have to be reviewed within three years.  Public comments are also solicited during the post-legislative scrutiny.

India can learn from the experience of these countries and tailor them to suit our requirements. There are many ways in which the government can deepen public engagement in the legislative process.

First, ministries can be mandatorily required to publish the draft Bill for a reasonable time and publicise it through different media. Along with the draft Bill, the ministry may be required to include available background information on the subject and facilitate access to legal and legislative record on the matter.

Second, it should be compulsory to refer a Bill to a DRSC or select committee for scrutiny. This could be at both the pre-legislative stage and the legislative stage.  These committees should be required to hold wide consultations with a variety of stakeholders (NGOs, state and local governments, special interest groups, academics and legal experts). Public participation may be facilitated by increasing access to constituency offices, using a variety of media outlets to publicise the Bill and creating public participation offices that can interface with the public.

Third, in order to increase transparency in the feedback process, the government could be required to publish a report demonstrating how the inputs from stakeholders have been considered while formulating the law.

Fourth, most Acts should be subject to a post legislative scrutiny through public engagement every three to five years.  This could be carried out if each Bill includes an Explanatory Note giving the criteria or outcomes by which the Bill could be judged for effectiveness.  This responsibility could be given to a specialised committee.

Such measures will result in robust legislations, which shall need lesser amendments and will be successful in achieving the objective with which that legislation was enacted.

Is the Food Security Ordinance a game-changer for India’s poor?

23 Jul

Citing the disruptions in Parliament, the UPA government decided to promulgate the National Food Security Ordinance on July 5. Under Article 123 of the Constitution, the President can promulgate an Ordinance when Parliament is not in session and there is need for ‘immediate action’. It is possible that the government has crossed a line of Constitutional propriety by promulgating this Ordinance since Parliament is about to convene in a few weeks and there is a similar Bill already pending in Parliament. This issue will be explored more fully in my next blog post. In this post, I propose to examine the key highlights of the Food Security Ordinance and whether it would deliver food security to the citizens of this country.

Highlights of the National Food Security Ordinance

  • It entitles upto 75% of the rural population and 50% of the urban population to 5 kg food grains per month at a subsidized rate.
  • Rice, wheat and coarse grains will be sold at Rs 3, Rs 2 and Rs 1 per kg respectively.
  • Central government shall decide the proportion of the population to be covered in each state.
  • State governments shall identify the eligible households in the states.
  • Food grains shall be distributed to the eligible persons through the network of fair price shops under the PDS.
  • In case the central government is unable to supply food grains to the state, it shall compensate the state governments who have to give a food security allowance to each entitled person.

Key milestones in India’s food security policy

The notion that access to food should be a right has its origin within the UN’s 1966 International Covenant on Economic, Social and Cultural Rights. Food security exists when all people at all times have access to sufficient, safe, nutritious food to maintain a healthy and active life.

India’s tryst with food security can be traced back to 1996 when the Supreme Court declared that the “right to live guaranteed in any civilized society implies the right to food”. This was followed by a writ petition filed in the Supreme Court by the People’s Union for Civil Liberties (PUCL) Rajasthan in April 2001 against the central government, Food Corporation of India (FCI), and six state governments. The petition contended that the right to food was a fundamental right under “the right to life” provided by Article 21 of the Constitution of India.

Although no final judgment has been given, the Supreme Court has issued several interim orders in the case. On May 8, 2002, the Supreme Court appointed two Commissioners for the purpose of monitoring the implementation of the interim orders (see reports).

Both UPA I and II made food security an electoral promise and entrusted the task of drafting a legislation to the Sonia Gandhi led National Advisory Council (NAC). On October 23, 2010, the NAC made certain recommendations about the basic framework of the Food Security Bill. In response, the Prime Minister set up an Expert Committee under Dr C. Rangarajan to examine the Bill, which submitted its report in January 2011. It stated that it would not be possible to implement the NAC recommendations because of lack of availability of food grains and huge subsidy implications. The NAC however disagreed with it and prepared a draft Bill in June 2011.

The government finally introduced the National Food Security Bill, 2011 in the Lok Sabha on December 22, 2011. It was referred to the Standing Committee on Food, Consumer Affairs and Public Distribution, which submitted its report in January 2013. The discussion on the Bill had been initiated during the Budget session of 2013. The government also introduced a set of official amendments to the Bill, which have been incorporated in the Ordinance that was promulgated recently.

Ordinance: A hit or miss?

Opinion is divided about the need and desirability of the Food Security Ordinance. Some experts such as Jean Dreze and Amartya Sen are staunch supporters of the Bill given India’s malnutrition rates. Others such as Arvind Panagariya, Surjit Bhalla and Abhijit Banerjee have raised certain key issues regarding the need and impact of such a legislation. In fact, the debate on food security has dove-tailed with a larger debate about India’s governance priorities between two renowned economists – Amartya Sen and Jagdish Bhagwati (see here and here for the Sen-Bhagwati debate on re-distribution vs growth).

The criticism of the Ordinance mainly falls into the following categories: (a) purpose of the Ordinance; (b) identification of beneficiaries; (c) mechanism for delivering food security; and (d) the impact on the food subsidy burden.

Purpose of the Ordinance: The basic premise of the Ordinance is that India has a problem of persistent hunger which has led to high rate of malnutrition. Therefore, the government needs to provide the population with subsidized food grains. These premises have been challenged by various experts. Prof Arvind Panagariya, an economist at Columbia University, has recently attacked the notion that India’s child malnutrition rates are higher than that of Sub-Saharan Africa. Blaming the flawed measurement methodology of WHO, he makes a persuasive case that it is improbable that India is ahead of Sub-Saharan Africa in all other health indicators except malnutrition.

Other experts such as Arvind Virmani point out that persistent hunger is a much lesser problem than malnutrition. According to NSSO, in 2004-05, about 2% of households suffered from hunger at some point during the year. This Ordinance only addresses hunger while the focus needs to be on malnutrition which is a problem of a higher magnitude. Given the data on hunger, it is clear that malnutrition exists not so much because of lack of access to food but because of faulty diet. However, the Ordinance only focuses on providing cereals rather than nutrition rich food like vegetable, pulses and fruits. In fact, it may even have the unintended consequence of forcing farmers to grow cereals rather than fruits, pulses and vegetables.

Some experts have also pointed out that one of the major causes of malnutrition is the lack of sanitation. Unless policies focus on addressing this, malnutrition will remain a severe problem (see here, here and here). Others such as Prof Kaushik Basu have suggested that there is need to redesign how the government acquires and releases food on the market.

Identification of beneficiaries: While the Bill had divided the population into three groups (priority, general and excluded), the Ordinance only has two categories (those entitled to subsidized food grains and those who are not). However, this does not do away with the need to identify beneficiaries and thus can lead to inclusion and exclusion errors. According to some estimates, 61% of the eligible population is excluded from the BPL list while 25% of non-poor households are included in the list. The only way to completely eliminate inclusion-exclusion errors is by universalizing the scheme or by having a clear-cut exclusion criteria (see here). However, given the issue of financial burden, the problem of identification may be tackled through the biometric-linked Aadhaar number (see here and here). Basically, Aadhaar will enable the government to authenticate the identity of a person. It may reduce duplicate and ghost beneficiaries (non-existent beneficiaries). However, the success of Aadhaar in weeding out ghost beneficiaries depends on mandatory enrolment. If enrolment is not mandatory, both authentication systems can co-exist. In such a scenario, people will be able to opt out of the Aadhaar system (see here).

Mechanism for delivering food security: The Ordinance legalizes the PDS even though there is a large body of evidence about the inefficiency of the system (see Wadhwa Committee reports, Planning Commission report). These committees have pointed out issues such as targeting errors, low off-take of foodgrains by households, leakages and diversions of food grains to the open market, adulteration of food grains and lack of viability of Fair Price Shops.

Many experts have suggested other alternatives to the PDS such as cash transfer (see here, here and here) and food coupons. There is evidence that these methods have worked in countries such as Brazil (see here and here). Some advantages of these are: reduced administrative costs, expanded choices for beneficiaries, and more competitive pricing among shops. Also, allowing alternate methods could give more flexibility to the states to adopt the mechanism that suits their needs (see here).

Impact on food subsidy burden: According to the government’s calculations, the Ordinance will take the total food subsidy bill to Rs 124, 747 crore in 2013-14. However, there are other costs related to the implementation of the scheme that may not have been factored in such as cost of procurement, storage and transport of food grains. The Bill had given an annual estimate of Rs 95,000 crore as the cost to the exchequer. However, various experts refuted this figure. Their estimations vary from Rs 2 lakh crore to Rs 3.5 lakh crore (see here and here). The basic problem of having a high food subsidy bill is the effect on the fiscal deficit and inflation. Also, given the limited resources available, if the government prioritises one policy, it adversely impacts resource allocation for other policy goals. Therefore, policy choices need to be made based on what would give the most bang for the buck (see here) rather than on populist rhetoric.

It is imperative that the government considers these critiques while framing its food security policy; otherwise the Ordinance would be another lost opportunity to address a key problem faced by the poor.

Electoral Reforms, Vol. I: Recent developments and issues

15 Jul

Crime and Punishment Parliament

This post is the first installment in a series on electoral reforms.

Last week was a blockbuster one for election law, bringing us not one, but two Supreme Court decisions with implications for convicted criminals, political candidates, legislators, and combinations thereof. On Thursday, the Supreme Court ruled that individuals lodged in jails or in police custody cannot contest elections. Earlier in the week, the same bench struck down a provision in the Representation of the People Act that protects legislators convicted of crimes from disqualification for three months from the date of conviction.

These decisions are timely. Upon taking office this past January, Law Commission Chairman Justice DK Jain stated that electoral reforms were going to be a top priority. Last month, the Commission appeared to make good on that promise releasing a [very brief] Consultation Paper on Electoral Reforms, and a notice soliciting feedback.

While any collective soul-searching into the deficiencies of election statutes is a positive development, it’s worth noting that this process has repeated itself many times in the recent past.  Here’s a (possibly non-exhaustive) list of efforts since 1990: [i]

  • Goswami Committee on Electoral Reforms (1990)
  • Vohra Committee Report (1993)
  • Indrajit Gupta Committee on State Funding of Elections (1998)
  • Law Commission Report on Reform of the Electoral Laws (1999)
  • National Commission to Review the Working of the Constitution (2001)
  • Election Commission of India – Proposed Electoral Reforms (2004)
  • The Second Administrative Reforms Commission (2008)
  • Core Committee on Electoral Reforms (2010)

Taking note of issues from election financing to media regulations, the newest Law Commission paper declares the “criminalization of politics” to be its primary concern. Indeed, there is nothing new about the pervasive feeling that Indian Parliamentarians are a particularly compromised lot. In its 1993 report – part of which was deemed so explosive that it was never published – the Vohra Committee observed that “The nexus between the criminal gangs, police, bureaucracy and politicians has come out clearly in various parts of the country” and that “some political leaders become the leaders of these gangs/armed senas and over the years get themselves elected to local bodies, State assemblies, and national parliament.”[ii]

As this week’s Supreme Court decisions have highlighted, it is this last phenomenon – membership in Parliament – that many consider the most vexing manifestation of the mixing of criminal and political activity. Importantly, this week’s Supreme Court rulings do not resolve the issue. That’s because, while the Representation of People Act and this week’s decisions bar certain convicted criminals from holding office,  the more intractable problem is what to do about the many MPs with criminal charges pending, who have not yet been convicted of any crime and are free on bail.  According to a 2009 report of the Association for Democratic Reforms, 1158, or 15%, of all candidates contesting in the general election, had criminal charges pending against them. This included almost a third of all candidates in Bihar, as well as 27% of Congress candidates, 27% of BJP candidates, and 43% of ADMK candidates nationwide. During the election 162 MPs with criminal charges pending were elected (up from 128 in 2004), including 76 involved in “heinous offences such as rape, dacoity, and murder” (up from 58 in 2004).[iii]

The BJP and Congress each sent 42 MPs with criminal charges pending to the Lok Sabha. Of those MPs with serious (defined more broadly than heinous) IPC counts against them, there were 52 BJP, 31 Congress, 31 SP, 18 BSP, and 23 JD(U) MPs, as well as 9 MPs each from the ADMK, NCP and RJD.[iv]

The Law Commission’s recent Consultation Paper highlights two ways in which this could be addressed. Under the status quo contained in section 8 of the Representation of the People Act, MPs convicted of certain crimes will be disqualified for a period of time, based on the severity of the offence. The first alternative presented by the paper is that an MP or candidate could be disqualified much before conviction, when charges are framed by a court.  The second alternative is the creation of a quasi-judicial tribunal that would “travel beyond the domain of criminality” and “evaluate the fitness of a candidate on the touchstone of certain enumerated standards.” In other words, not only criminal charges, but also complaints alleging a much broader spectrum of misconduct could lead to disqualification. Such a tribunal would issue orders disqualifying candidates based on the “preponderance of probability” rather than proof beyond a reasonable doubt.

Similar proposals have been made in the past as well.[v] The Election Commission and the Second Administrative Reforms Commission proposed a similar solution to the first alternative offered by the Law Commission. That proposal also contained provisions to prevent abuse. Only candidates/MPs accused of crimes punishable by 5 years or more of imprisonment could be disqualified upon having charges framed against them. Further, charges filed within six months of an election would not lead to disqualification.

There are a few striking features shared by these proposals. The first is the significant confidence they place in the capabilities of both judges and quasi-judicial tribunals to fairly adjudicate highly politicized questions quickly and without the format of a trial. The second is the tension between holding accused politicians accountable and the enormous potential for abuse. While it may be a popular idea, barring candidates only accused (and not chargesheeted or convicted) of crimes seems to be recognised as a bridge too far.  Yet even the Law Commission proposals would go much further than Thursday’s ruling, which itself leaves plenty of room for abuse. In an editorial on Friday, The Hindu called that decision “a remedy worse than the disease,” noting that, “All that politicians in power now need to do to prevent rivals from contesting an election is to ask the police to file a case and effect arrest.”[vi]

One proposal that might avoid such pitfalls was proposed by The National Commission to Review the Working of the Constitution, in 2001. The Commission proposed the establishment of Special Courts to decide cases against candidates within six months. Candidates against whom charges are pending would be entitled to have their cases heard in the special courts, which would determine if a plausible prima facie case had been made against them or if the case was frivolous. BJD MP Jay Panda recently introduced a Private Members’ Bill in the Lok Sabha that would set up a fast track court within 90 days of charges being registered against an elected official.

The third striking feature of these proposals (and the whole discussion) is that within them lies a certain distrust of the electorate. Any such rule, by its very nature, assumes that, by choosing to elect MPs in criminal trouble, the electorate is either (1) unwise or (2) powerless to prevent those results. One problem with this (aside from its paternalism) is that it is empirically shaky. The ADR report states that in 2009, “Of the 608 candidates with the most serious criminal cases against them, only 76 won. The remaining 532 were rejected by the voters.”[vii] That is a win rate of only 12.5%. In ADR’s list of the top 20 candidates with criminal cases pending against them, all but two lost.[viii]

Finally, it is hard not to come away from the discussion wondering why there is such little acknowledgment of the much larger and more urgent problem at work here. That is, of course, the backlog of cases in the courts and the routine denial of speedy justice that plagues the entire judicial system. After all, if criminal cases were adjudicated more quickly, the existing provisions of the Representation of the People Act might well be enough. In 2009, Chief Justice A.P. Shah of the Delhi High Court said in a report that “it would take the court approximately 466 years” to clear the 2,300 criminal appeals cases pending in that Court alone.[ix] In 2011, there were over 72 lakh cases pending in the entire country.[x] The tainted state of the Lok Sabha is the most visible and most embarrassing consequence of this state of affairs, one that arguably affects each individual citizen far more profoundly than the election of criminal MPs.

Transparency and Political Parties – Finding the Right Instrument

12 Jul

In a recent post, I had written on why I think bringing political parties under the Right to Information Act is a bad idea. Economic and Political Weekly recently published my article on the same topic, where I critique the judgement of the Central Information Commission in detail, and argue that transparency in incomes and expenditures of political parties should be enforced by the Election Commission, rather than under the RTI Act.

While the CIC judgment follows developing judicial precedent under the RTI Act, bringing political parties under the purview of this Act opens a Pandora’s box that the CIC itself probably has not thought through. International practice demonstrates that the onus of creating more transparency within the political system is the task of independent election commissions.

 

The EPW article can be found here

Dams and disasters in the Himalayas

10 Jul

This post was first published as an op-ed by Mint on July 9, 2013. The original article can be accessed here

 

Relief operations in disaster-ravaged Uttarakhand have ended and the time seems ripe to take account of the institutional frailties that have contributed to the ongoing human disaster in the state. Chief minister Vijay Bahuguna has been blamed for inaction when the disaster first struck and has also admitted that the state did not meet the norms for national disaster management. The Union government is also mulling changes to the Disaster Management Act, 2005, to make national disaster response more effective.

Dig a little deeper, and the story, however, indicates multiple institutional failures. In short, the story is not of one or two agencies failing to act. Various factors point to a disturbing lack of clear prioritization, capacity, coordination across multiple government agencies.
In 2012, a paper published by Maharaj Pandit and Edward Grumbine in the journal Conservation Biology highlighted that there were 292 dams proposed and under construction all over the Himalayas. If all of them were to be completed, the dam density in the region would be the highest in the world (an average of 1 dam for every 32km of river channel). Figuring out the impact of such large-scale construction on human settlements in ecologically sensitive areas is going to be difficult even if it is not exactly rocket science. This becomes disturbing when one considers the functioning of the expert appraisal committees (EAC) of the Union ministry of environment and forests that clears river valley projects. In one report (http://bit.ly/18agNGy ), the South Asia Network on Dams, Rivers, and People (SANDRP) noted that:

“The Union ministry of environment and forests’ (MoEF) expert appraisal committee (EAC) on river valley and hydroelectric projects (RVP) has considered a total of 262 hydropower and irrigation projects in close to six years since April 2007 when the new committee was set up to its latest, 63rd meeting in December 2012. It has not rejected any project in this period.” (Page 3 of the report).

If you are not sufficiently bothered yet, consider this. According to SANDRP the Central Water Commission (CWC), which publishes the National Register of Large Dams (NRLD) apparently, does not contain an exhaustive record of large dams. In response to applications under the Right to Information (RTI) Act, 2005, filed by SANDRP, CWC replied that it only relies on information given to it by state governments. Consequently, according to SANDRP, for 2,687 out of 5,187 large dams listed in NRLD, there is no mention of the name of the river on which these projects stand.
SANDRP’s analysis is not an isolated instance. This year, the Comptroller and Auditor General (CAG) of India issued a report on disaster preparedness in India (http://bit.ly/12aPXZt ). The report is scathing with respect to the preparedness and functioning of both the National Disaster Management Authority (NDMA) and the Uttarakhand disaster management authority. The report, for example, highlights that 653 lives have been lost in the past five years to landslides, hailstorms, excessive rain, earthquakes, cloud bursts, avalanches and fire accidents. Yet, the chief minister stated there is no way the state could have been prepared for cloud bursts. Additionally, the state disaster management plan was not prepared, the state disaster management authority never met since it was created and there was no state plan for early warnings. However, and perhaps revealing the skewed sense of priorities, 71,474 government and non-government personnel had been trained through 546 workshops.
CAG also notes that NDMA and the governments at the Union and state levels have performed abysmally with respect to communications systems, capacity building and planning for specific disasters. For example, to address the problem of communications systems being disrupted during national disasters, NDMA was to set up the National Disaster Communication Network. The concept paper for this purpose was developed in October 2007, but the Union ministry of home affairs had not finalized the project by December 2012.
These examples serve to highlight the vast inefficiencies in existing government design and their cumulative potential to exacerbate natural calamities into man-made disasters. While accountability for lapses at various levels should be fixed, it is also important to get right the design, capacity and incentives of public agencies and officials. We may be able to create a more balanced system of ecological preservation and development by a nuts-and-bolts analysis of what goes wrong within existing government agencies, rather than raise the promise of newer, stronger and better legislation to cure all administrative failures. Focusing on issues of capacity, coordination and creating clear, transparent objectives for different agencies may help government in general be more pro-active rather than reactive in matters such as disaster management. Plugging leaks in this case, may therefore be better than building dams.
Anirudh Burman works on law and governance issues with the Centre for Policy Research, Delhi.
He can be reached at aburman@llm12.law.harvard.edu.

Key Principles of Right To Public Service Delivery Legislations

3 Jul

In my last post titled  “Time-bound delivery of Public Services now a reality?!“, I lamented on the need and the importance of the right to public service delivery legislation. In this post I shall be discussing some of the main principles of the acts. While, all the acts differ, the essence of their rules remain the same – providing the public with time bound delivery of specific services of particular departments as mentioned in the rules and notifications which are made after the bill has been passed. This bill penalizes the service provider for failing in his duty according to the rules made with the aim of achieving efficient and effective delivery of the public service to the citizens at large.

Key Principle of the Legislations:

1.      Departments and Services Covered

The number of departments to be covered under this act along with services provided by them is released through notifications. These notifications are revised from time to time and the list is updated accordingly. The list includes some of the services including issuing ration cards, water connections, death certificates, driving licences, electricity connections, mark sheets, attestations and so on. The departments covered include Human Resource Development, Revenue Department, Department of Police, Transport Department, Labour Department and General Administration Department. The services offered are dependent on a number of factors including the demand from the citizens, willingness of the departments or even their current efficiency.

2.      Time Period

The time period is stipulated according to each service offered and differs from state to state. This depends on varied reasons like the simplicity of the service provided, the volume of the applications etc. The time period is measured from the time that an application is submitted to the officer-in-charge (designated officer) or an official responsible/authorized on the officer’s behalf and acknowledged through a receipt. In case the application is rejected, written reasons are to be recorded by the officer and the citizen is to be intimated. For instance, in Jammu and Kashmir, the inclusion of a new born child’s name is to take a maximum of 7 days after the submission of the birth certification. In Rajasthan, the health department is to issue the amount due to the woman under the Janani Shishu Suraksha Yojana (JSSY) immediately after delivery. In Punjab, the Housing and Urban Development Department is stipulated to sanction Building Plans/Revised Building Plans of a residential place within 30 days and of a commercial space within 60 days.

3.      Nodal Departments

The nodal departments are those which are assigned by each government to be incharge of implementing the Right to Public Service Legislation. The nodal departments differ in each state. Some of them include General Administration Department, Administrative Reforms Department, Department of Home, Department of Information Technology or even the Department of Revenue.

4.      Appeals

Every state legislation on public service delivery has its own rules on the number of appeals available to its citizens under the right to services legislation. For instance, in Madhya Pradesh if the application is rejected by the officer-in-charge, the applicant can file an appeal with the First Appellant Officer (FAO) within 30 days of the date of rejection or on expiry of the prescribed time limit. If the FAO rejects the application again, the applicant can appeal for the second time to the Second Appellant Authority (SAT) within 60 days of rejection by the FAO. Similarly, Bihar, UP and Rajasthan also give the applicants an option of two sets of appeal.  On the other hand, the legislation also gives an option to an aggrieved designated officer as well as the FAO to file for a revision before the nominated officer. While, J&K also has an option of two sets of appeal although an aggrieved officer may file a revision before a special tribunal to be set up. Punjab and Uttarakhand provide for three rounds of appeal with the third and final round of appeal to be addressed to the special commission set up under this act.

5.      Penalty

Every government officer who fails to provide the service within the stipulated time period is liable to a certain amount of penalty.  In most of the states (MP, UK, Delhi, J&K, Bihar, Rajasthan, Punjab, Jharkhand, Kerala and Orissa) the penalty is of Rs. 250 per day with the total amount not exceeding Rs. 5000. In Delhi, the penalty is of Rs. 10 per day not exceeding Rs. 200 while in Karnataka it is Rs. 20 per day not exceeding Rs. 500. In Himachal, the penalty can range anywhere between Rs. 1000 to Rs. 5000.

State

Number of Services

Number of departments covered

Penalty for not providing service

Nodal Department

Madhya Pradesh

52

16

Rs. 250 per day, max Rs. 5000

Department of Public Service Management

Uttar Pradesh

13

4

Rs. 250 per day, max Rs. 5000

Department of Revenue

Delhi

96

22

Rs 10 per day, max Rs. 200

Department of Information Technology

Jammu and Kashmir

45

6

Rs. 250 per day, max Rs. 5000

General Administration Department

Bihar

50

10

Rs. 250 per day, max Rs. 5000

General Administration Department

Rajasthan

108

15

Rs. 250 per day, max Rs. 5000

Administrative Reforms Department

Uttarakhand

63

10

Rs. 250 per day, max Rs. 5000

General Administration Department

Himachal Pradesh

 

12

Min Rs. 1000, max Rs. 5000

Department of Home

Punjab

69

11

Rs. 250 per day, max Rs. 5000

Department of Governance Reforms

Jharkhand

54

20

Rs. 250 per day, max Rs. 5000

 

Chattisgarh

139

20

Rs. 100 per day, max Rs. 1000

 

Assam

55

14

Rs. 50 per day, max Rs. 2000

Administrative Reforms and Training Department

Karnataka

334

45

Rs. 20 per day, max Rs. 500

Department of Personal and Administrative Reforms

Kerala

   

Rs. 250 per day, max Rs. 5000

Personal and Administrative Reforms Department

Orissa

56

10

Rs. 250 per day, max Rs. 5000

General Administrations Department

Gujarat

       

Goa

   

Rs 50 per day or Rs. 2500 whichever is less

 

* Information on the services and departments to come under the act is published as notifications. The gaps in the table above are due to lack of sufficient information. They will be updated as and when the information can be accessed. As for Goa and Gujarat both the bills are new and hence the implementation is still in the planning stage.

In my final blog post I will be analysing the working of some of these acts. Some of the questions that arise and that I will be looking into will be relating –

  1. Is penalizing officers the best way of achieving efficiency in delivering public services?
  2. Do these acts simplify the procedures for an applicant? Is there still scope for corruption within these acts?
  3. The success, if any, of the acts in providing better services to the public.

 

Where angels fear to tread

1 Jul

This article was published in the Crest edition of the Times of India on June 29, 2013.

It’s rather strange that while the debate over allowing foreign universities to set up campuses in India remains as yet unresolved, the University Grants Commission (UGC), our apex education regulator, is about to notify rules regarding their entry in the country. The government, it seems, is in a bit of a hurry. Presently, Indian institutions can grant degrees and diplomas in collaboration with foreign institutions; but, foreign universities cannot set up branch campuses here without an Indian partner.

There are broadly three perspectives in the debate over the entry of foreign institutions. One, the opponents of the move argue that it would lead to commercialisation of higher education, and restrict access to quality education only to the rich. In response, the move’s proponents argue that it would increase choices for students, enhance competition in the sector – with potential for qualitative improvement in the Indian institutions – and provide technical skills for the job market. They suggest that the government can provide easy loans and scholarships to economically disadvantaged students to ensure that they do not lose out. Three, some experts have taken a middle view. They favour allowing foreign institutions so long as there are appropriate regulations in place to ensure that only good quality institutions are allowed entry.

The proposed UGC regulations have also taken the middle path, it appears, by restricting entry to only institutions that are placed in the top 400 as per ‘world university rankings’ put out by groups such as the Times Higher Education or Quacquarelli Symonds. In addition, only institutions which are accredited and have a track record of a minimum of 20 years in the parent country would be considered. While the purpose for such high entry barriers is to ensure that only quality institutions are allowed to enter, it is an open question whether top institutions would choose to come to India. Till date, hardly any high quality institution has entered India although the regulations notified by the All India Council of Technical Education (AICTE) allow foreign technical institutions to offer degree or diploma courses either directly or through collaboration with an Indian partner.

It is noteworthy that countries such as South Korea, Singapore, and UAE offer incentives that reduce the costs and the risks associated with establishing a campus in a different country. However, the proposed regulations take it for granted that institutions are willing to come to India and appear to focus on increasing the constraints to entry. These include requiring the foreign institution to operate as a non-profit legal entity; insisting that they maintain a corpus of at least Rs 25 crore for each campus they propose to establish and disallowing any repatriation of surplus income. In fact, it allows foreign institutions to utilise only up to 75 per cent of the surplus income for developing the campus.

Foreign educational institutions would also have to mandatorily publish a prospectus with details of course, fees and other charges and money to be refunded. The institutions would be penalised with a minimum fine of Rs 50 lakh which may be extended to Rs 1 crore if they do not conform to the norms of UGC. However, it is not clear what procedure would be followed to penalise such institutions or whether UGC would have the power to close down these institutions.

According to the National Knowledge Commission and the Yash Pal Committee, the regulations should focus on ‘incentivising quality institutions’ to enter India while disincentivising sub-standard institutions from entering the country. But why would quality institutions be interested in entering the Indian market if they have to operate under such constraints? It is also not clear if these institutions would have the autonomy to setup their own courses and charge their own fees. Sadly, this is not the government’s first misguided attempt to facilitate entry of foreign universities. In May 2010, it introduced the Foreign Educational Institutions (Regulation of Entry and Operations) Bill, which is still pending in the Lok Sabha. This Bill had been examined by the Parliamentary Standing Committee on HRD, which recommended that there be adequate safeguards for stakeholders. It suggested that an independent regulator should monitor fee, curriculum and salary;approvals should be given on a short-term basis first before being extended and the government should devise incentives for foreign institutions to utilise their surplus funds in India.

These current UGC notifications, which do not need legislative approval, are an attempt to bypass the legislative logjam. Besides, there is also a basic lack of clarity in purpose. Does the government want to woo good quality foreign universities or does it only seek to regulate the ones who are interested in coming to India? We can’t assume that the two go together. And these regulations fail to serve either purpose fully since they do not provide incentives for quality institutions to enter India but create high entry barriers for other institutions.

Foreign universities are certainly not the panacea for all the ills of the higher education system in India. They would at best bring in some much needed competition into the sector filled with mediocre institutions. Before framing any policy for foreign institutions, our policy-makers need to have a clear understanding on the fundamental question of whether foreign universities need us or do we need them more.

Death at Kedarnath: Mule owners and their right to strike

26 Jun

Little noticed news reports in a couple of papers (here and here) indicate that the death of many pilgrims in Kedarnath may have been exacerbated by the actions of local mule owners and contractors for car parking lots in the days leading up to the heavy rains and clash floods. The local mule owners and and contractors apparently went on a strike, and prevented private chopper services from operating on June 14, 15, and 16.

Ten private helicopter services ferry pilgrims from Phata and Guptkashi to Kedarnath and back. The car park owners are located in Gaurikund, from where pilgrims walk, or ride on mules to reach Kedarnath. The helicopters were not allowed to land in Kedarnath for two days. Additionally, the mule owners also went on a strike. As a result, there was an unusually large concentration of pilgrims in Kedarnath who could not travel back. This may have contributed to the increase in loss of human life, as so many pilgrims were left stranded when the flash floods struck the region.

 

Why were the mule operators and car parking contractors striking?

As per the news report, local officials said the strike was ostensibly on grounds of “environment protection”. The actual dispute was however that the helicopter services were seen hurting the economic interests of the mule owners and contractors. Their business was suffering due to the decrease in demand for their services owing to the helicopter ferry service. The state government was able to convince these protesting groups to allow helicopter services to land only on June 16. June 16 was also when the rains and flash floods struck the region.

 

How could this have been prevented?

At one level this incident is just a story of short-sighted self interest causing the unnecessary loss of human lives. However, as vague as it sounds, developing a culture that emphasizes the protection of fundamental rights could in the long run, prevent such occurrences.

Let us for one moment keep the humanitarian tragedy to one side. On June 14 and 15, there was little indication (apart from forecasts of heavy rainfall) that a natural calamity of such magnitude would befall the region. At that point of time, the “dispute” between the mule owners and contractors on the one hand, and the helicopter service providers on the other hand was a conflict between two sets of individuals trying to protect their fundamental rights. Article 19(1)(g) of the Constitution allows all citizens the right to “practise any profession, or to carry on any occupation, trade or business”. What this means is that the state cannot take away this right from any individual.

The Supreme Court has clearly held, that since all citizens possess this right, the right of one citizen cannot be curtailed for facilitating the exercise of the Fundamental right of another person (Railway Board v. Niranjan AIR 1971 SC 966). In short, the right of the helicopter service provider cannot be curtailed to facilitate the fundamental right of the mule owner or the car park contractor. One may argue that in this case, the fundamental right of the helicopter service providers was not curtailed by the state, but by other private citizens. However, the state, by failing to protect the rights of the helicopter service providers, and by allowing the local protesters to prevent the helicopters from landing, did in fact prioritze one right over the other. The state may not have violated fundamental rights, and it may not suffer any liability for the same. However, fundamental rights were curtailed in the present case, and the state could have done more to prevent the same.

It must also be stated that while the Constitution allows people the freedom to protest, it does not allow protesters to infringe on the fundamental rights of other citizens while protesting. The mule owners and car park contractors are well within their rights to protest, but in doing so, they cannot prevent the helicopter services from operating, as that infringes on someone else’s freedom to conduct business. The Supreme Court has held that violation of the fundamental right of one individual by another individual (without the support of the state) is not considered a violation of Article 19 (Samdasani v. Central Bank of India AIR 1952 SC 59). On the face of it then, fundamental rights cannot be said to have violated as the mule owners were private operators. However, the district administration was in charge of regulating the mule service. The district administration therefore had an obligation to resolve issues faced by mule owners and also not allowed the rights of the helicopter service providers to be infringed.

Moreover, even if the state has no positive obligation to protect fundamental rights under Article 19, it does have the power to create reasonable restrictions. Sometimes, the creation of such restrictions enable the better enforcement of these fundamental rights. For example, the Supreme Court has held the following to be reasonable restrictions on fundamental rights: (a) protection of slum-dwellers against excessive rent, (b) protection of slum dwellers against eviction, and, (c) protection of debtors from excessive interest. There was thus, nothing preventing the district or state administration from interfering in the protest by the locals to impose a reasonable restriction in the interests of the general public. The state may not have violated a fundamental right by failing to do so. But it does have certain powers given to it under the Constitution, which it could have utilised to ensure the general public was not affected.

 

To be clear, I am not making the case that the state violated fundamental rights in this case. However, the state could, and should have taken a rights-based approach and made sure that helicopter ferry services were not interrupted due to the ongoing protests. If the helicopter service providers had the required permissions and clearances to ferry passengers to and fro from Kedarnath, the government should in no case have allowed local protesters to prevent such a service. It affected the rights of the service providers, and it in effect was restricting the rights of the pilgrims to enter into a contract with a service provider of their choice. While the pilgrims were held to ransom and for all practical purposes denied any means of transport, the state administration merely sent two officials to negotiate with the striking individuals. In short, the government was trying to negotiate the extraction of stranded pilgrims by locals who were acting completely illegally!

This is by no means an isolated incident. While the state routinely subverts many legitimate protests for the enforcement of fundamental rights, it also bends over backwards routinely to negotiate with misbehaving, but important constituencies. Protection of rights in such cases often takes a backseat, and every once in a while, this leads to a completely unnecessary, and tragic loss of human lives. Pilgrims, literally, be damned.

Disaster management: How prepared are we?

25 Jun

The flash floods and landslides caused by sudden heavy rains in Uttarakhand and Himachal Pradesh on June 15 have resulted in heavy casualty and loss of property.  The death toll is likely to be about 1000 while over 20,000 people still need to be evacuated.  Currently, rescue operations are being carried out by several agencies such as the Army, Indo-Tibetan Border Police (ITBP), Border Security Forces (BSF), and the National Disaster Response Force (NDRF) (see here for latest updates).

However, various news reports (see here, here and here) have highlighted the lack of disaster preparedness of the authorities in the state and the centre.  In fact, news reports suggest that the Indian Meteorological Department had warned Uttarakhand government of the likelyhood of heavy rainfall within 48 hours.  However, the local authorities failed to issue any warning or analyse the likely effect of such rainfall.  Given the size of its population and the high risk it faces from natural disasters, it would be absolutely criminal for India to be lackadaisical about its disaster preparedness.

In this blog post, I provide a quick analysis of where India stands in disaster management preparedness.

A blue-print for disaster management

India first woke up to the need for a holistic approach to disaster management (and not relief centric) after the devastation caused by the Indian Ocean tsunami, the super cyclone in Orissa and the earthquake in Gujarat.  Disaster management was recognized as a development issue for the first time during the 10th Five Year Plan (2002-2007).  In 2005, the government passed the Disaster Management Act, to provide for effective management of disasters.  It defined disaster as a catastrophe, calamity or grave occurrence in any area due to man-made or natural causes or by accident where there has been substantial loss of life and property.  The Disaster Management Policy was framed in 2009.

The Ministry of Home Affairs is the nodal ministry for disaster management.  The National Disaster Management Authority (NDMA) is mandated to deal with all types of disasters, natural or manmade with certain exceptions (such as terrorism, counter-insurgency, serial bomb blasts, and hijacking, mine disasters and forest fires).  The National Crisis Management Committee (NCMC), headed by the Cabinet Secretary handles these issues.  NCMC gives directions to the Crisis Management Group, which actually deals with all the matters related to relief activities in the case of any major disasters.

National level authorities under 2005 Act

  • The Act established the NDMA and provided for setting up advisory committees and a National Executive Committee to aid the NDMA in performing its functions.
  • NDMA’s functions include (a) laying down the policies, plans and guidelines for disaster management; (b) approving the National Plan and the plans of various ministries; and (c) laying guidelines for state authorities.  It shall also recommend guidelines for the minimum standard of relief to be provided to persons affected by the disaster (relief camps, ex-gratia assistance).
  • The National Executive Committee would prepare a National Plan for disaster management of the country.
  • The National Disaster Response Force (NDRF) would be under the general superintendence of NDMA but the command of the force shall be with the Director General of NDRF to be appointed by the central government.

State and district level authorities under 2005 Act

  • Every state government has to set up a State Disaster Management Authority, which would be assisted by advisory committees and State Executive Committee.  In addition, it has to set up District Disaster Management Authorities in every district of the state.  The State Executive Committee is responsible for implementing the national and state plans and act as the coordinating and monitoring body for management of disaster in the state.

Penalties

  • The Act also lays down penalties ranging from one to two years imprisonment and fine for offences related to obstruction of any officer in the performance of his duties, false claims, misappropriation of money or material and for making false warning (relevant government officials have been given blanket immunity from this provision).

On-ground status on implementation

By the end of the 10th Plan, a skeletal structure for disaster management had been put in place.  A central law on disaster management was enacted in 2005 and the National Disaster Management Authority was set up.  However, the Act itself had certain shortcomings which contributed to its poor implementation record.

Shortcomings in the Act

The Standing Committee on Home Affairs had examined the Disaster Management Bill and made certain recommendations, most of which were not incorporated in the 2005 Act.  It suggested that at each level, the respective authority should include elected representatives from the Parliament, State Legislatures and local government bodies.  At the district level, there should be a Relief Commissioner (other than the District Collector/Magistrate) to ensure that affected population in disaster hit areas get relief.  Although the Act included penalties for giving false warning and causing obstruction, it is not clear who would be the complainant in such cases.

Other experts (see here and here) also pointed out loopholes in the Act, which might make it less effective.  They include (a) lack of clear guidelines on who shall be entitled to relief and compensation under the Act; (b) lack of clarity on who shall be monitoring the performance of the various agencies set up under the Act; (c) lack of clarity about coordination between the different agencies; (d) no guideline on how to differentiate between a disaster and a disaster of severe magnitude; and (e) no provision for declaring a disaster prone zone or classifying disasters in various categories.

Poor implementation record

The level of preparedness for disaster management at the centre and the states is very uneven.  According to a 2012 report by the Institute of Defence Studies and Analyses, even after six years of the enactment of the Disaster Management Act, many states have not yet established the state-level authorities.  The report concludes that the present capability of civil administration for combating disasters remains inadequate and they rely on the armed forces for major emergency responses.

In 2013, the Comptroller and Auditor General (CAG) released a performance report on India’s disaster preparedness.  It found critical gaps in the preparedness level for various disasters.  It found NDMA to be ineffective in most of the core areas since it neither had information and control over the progress of the work at the state level nor could it successfully implement various projects.  The report stated that the National Executive Committee had not met after May 2008; the National Plan for Disaster Management has not yet been formulated and there were delays and mismanagement in respect of State Disaster Response Fund.

Response to a specific disaster is the best test of the level of disaster preparedness.  However, the response to the Uttarakhand floods has exposed the lack of preparedness of administrative machinery.  While natural disasters may be unpredictable, India cannot afford to wait for the next disaster to strike before getting its act together.

Time-bound delivery of Public Services now a reality?!

21 Jun

Tired of paying repeated bribes for common public services?  Tired of running around in circles to collect government documents? Tired of waiting forever for your file to move? The Right to Public Services Legislation could be the one stop solution for all your woes!

My experiences with government services haven’t been the most pleasant ones. There have been many instances where I’ve heard people complaining about public service delivery mechanisms but I never understood the extent of their misery till I had to face it myself. For instance, the number of bribes I had to pay to get a simple passport made in addition to the extra bucks for tatkal for a speedy delivery was not only taxing financially but also mentally tiring.

1. Bribe number one was to the police to verify my identity,

2. Bribe number two was for the scribe who pushed me ahead in line so that I get my turn faster (I did not belong to the city where the closest passport office was located) and

3. Bribe number three for a special agent as my first application had been denied as they did not believe in the authenticity of my birth certificate because my name was written on the top corner with a pen (was marked during school admission to keep it safe).

This is just one such example. This got me thinking about how it has become a part of our life now. As long as we can pay and get the work done, we go ahead with it. There are people who are harassed because they do not have the means to pay a bribe. Filing a complaint with the courts or the lokayukta for every little bribe that has been asked for or paid till date is not only arduous but also time consuming.

Trying to emphasize on the nature of the issue at hand, Janaagraha, a not for profit institution based in Bangalore came up with a website called IPAIDABRIBE.COM. The website has reports from regular people relating to bribes they have paid, accounts of their tryst with honest policemen and stories from people who fought against it. According to data collected by the website, 23110 reports has been filed from 548 cities in India where people have paid a cumulative bribe of around 186 crores as of 19 June 2013. These are people who 1.) have access to internet, 2.) know about the website and 3.) have taken time out to file a report. Imagine the extent of the unaccounted bribes paid across the country just to get the public services sector to do its job.

India has witnessed an encouraging momentum of people who united against the cause of corruption led by Anna Hazare. While this moment emphasized on an overarching regulating body like the Lokpal in the centre and Lokayuktas in the states, there are other legislations which bring about change which is felt closer home. The crusade on improving public service delivery mechanisms was started in 1997, where in a conference of Chief Ministers of various states and union territories presided by the then Prime Minister, it was decided that both the central and state governments would formulate a citizen’s charter. In 2002, the Government of India under the aegis of Department of Administrative Reforms and Public Grievances set up a comprehensive website. While, this move was good in principle its implementation faced setbacks in terms of lack of will from the lethargic bureaucracy, lack of awareness, constant transfers of concerned officers as well as wrongful understanding of standards or norms relating to the service provided. In 2005, the momentous Right to Information act was passed with the aim to make Indian governance more transparent.

Indian states have come a long way from the non-binding citizen charter to introducing legally binding legislations that guarantee its citizens time bound delivery of select public services. Madhya Pradesh in 2010 under chief minister Shivraj Singh Chouhan was the first state to enact the Madhya Pradesh Lok Sewaon Ke Pradan Ki Guarantee Adhiniyam. The Right to Public services legislation has since been adopted by 16 other states. The bill texts can be found in the table below.

Public Services Legislations in India

 

Title of the Bill Date of passing
The Madhya Pradesh Lok Sewaon Ke Pradan Ki Guarantee  Adhiniyam, 2010 August 18, 2010
The Uttar Pradesh Janhit Guarantee Adhyadesh, 2011 January 13, 2011
The Delhi (Right of Citizen to Time Bound Delivery of Services) Act, 2011 April 28, 2011
The Jammu and Kashmir Public Services Guarantee Act, 2011 April 13, 2011
The Bihar Right to Public Services Act, 2011 August 15, 2011
The Rajasthan Guaranteed Delivery of Public Services Act, 2011 September 21, 2011
The Uttarakhand Right to Service Act, 2011 October 4, 2011
The Himachal Pradesh Public Services Guarantee Act, 2011 October 17, 2011
The Punjab Right to Service Act, 2011 October 20, 2011
The Jharkhand Right to Service Act, 2011 November 15, 2011
The Chattisgarh Lok Seva Guarantee Act, 2011 December 12, 2011
The Assam Right to Public Services Act, 2012 March 29, 2012
The Karnataka (Right Of Citizens to Time Bound Delivery Of Services) Bill, 2011 April 2, 2012
The Kerala Right to Service Bill, 2012 July 27, 2012
The Odisha Right to Public Services Act, 2012 September 6, 2012
The Gujarat (Right of Citizens to Public Services) Bill, 2013* April 1, 2013
The Goa (Right of Citizens to Time-Bound. Delivery of Public Services) Bill, 2013 May 2, 2013

* bill text is not available

The Government of India has also come up with the Right of Citizens for Time Bound Delivery of Goods and Services and Redressal of their Grievances Bill, 2011. The bill was introduced in the Lok Sabha on December 20, 2011 and was sent to the Standing Committee which submitted its report on August 28, 2011.

While, the implementation of these acts as well as its impact is yet to be analysed thoroughly, it’s a step in the right direction. Awareness relating to these acts is low among the local populace. Steps need to be taken to promote the use of these acts just as it was done for the Right to Information Act. In my next blog post, I will be discussing the main principles of these acts and examine its implementation in select states.

Aside

Who watches Big Brother?

20 Jun

Recent news reports provide a sneak peek into the blueprint for the National Cyber Coordination Centre in India.  According to a 2012 Report of the Institute for Defence Studies and Analysis, India’s intelligence agencies and their policy development wings are extremely fragmented.  Thus, the decision to prefer a central authority that would coordinate between different intelligence departments is good, and should be heralded.  However, surveillance strategies typically raise concerns over the right to privacy.  Surveillance agencies are empowered to monitor, record, and intercept communications that may even be private, and access stored private information.  While intelligence collection is required for ensuring security, procedural safeguards are required to ensure that the right to privacy is not violated.  In this article I discuss privacy concerns in the context of their accountability to the electorate and hope to provide a solution that treads the fine balance between right to safe and secure environment and the right to privacy.

The devil lies in the details

Not all intelligence and information collection agencies in India are established under a statute.  For instance, National Intelligence Grid (NATGRID), Unique Identity Authority of India (UIDAI now proposed to be replaced by the National Identity Authority of India), Intelligence Bureau (IB), do not have statutory backing.  Other agencies, such as the Computer Emergency Response Team-India (CERT-In) and National Infrastructure Information Protection Centre (NIIPC), have been envisioned under the Information Technology Act, but its structure and procedures have not been dealt with. Right to private communications was held to be a fundamental right by the Supreme Court of India under Article 19 and 21.  However, communications can be intercepted in case of “public emergency” or “in the interest of public safety”.

Checks against agencies that conduct surveillance and collect information are often not borne out of the enactments under which they are constituted.  For instance, the Telegraph Act did not require surveillance agencies to adhere to procedures that protected the right to privacy.  It was only after the Supreme Court delivered its decision in PUCL vs. UOI (1997), Rules were notified to provide safeguards to privacy in case of interception of telephone calls.  The Rules require permission to intercept from the Home Secretary, which are reviewed by a Review Committee. Similarly, the Information Technology Act, 2000 does not provide guidelines to Computer Emergency Response Team-India or the National Infrastructure Information Protection Centre on how they may use surveillance powers.  Under various provisions of the enactment (Sections 69: interception or monitoring or decryption of any information; and Section 69B: monitor and collect traffic data or information) the government is empowered to monitor online communications.  The enactment however delegates the power to specify procedural safeguards to surveillance.  Admittedly, the safeguards provided under the Telegraph Act have been notified under the IT Act as well.  But the question remains, should the manner in which a fundamental right can be impinged, even on the ground of public interest, be left to the discretion of the executive?

While delegated legislation has developed to provide procedural safeguards to surveillance activities, there is merit in statutory provisions to this effect.  Delegated legislation, such as Rules and Regulations, do not require prior approval of the democratically elected representatives.  They are neither proposed by a member, or subject to in-depth scrutiny by a parliamentary committee that has expertise on the subject.  Rules are deemed to be passed by the parliament once they have been tabled for a period of time, unless they are specifically objected to by a member.  Past experience is telling in this respect.  The Information Technology Rules, 2011 relating to the rights of citizens to express themselves on the internet are in force despite an assurance to review the Rules by the Minister for Information Technology.  On the other hand, statutes undergo rigorous scrutiny by the parliament and allow for citizen engagement at various stages of development. A number of information collecting, sharing and monitoring agencies have been set up without concomitant legislations.  The UIDAI, which is established under the Planning Commission, is not a statutory body.

Similarly, the Crime and Criminal Tracking Network and System, launched by the Home Ministry, is not sanctioned by Parliament.  The NATGRID, which links various databases between intelligence and investigative agencies on the one hand and service providers, such as telecom companies, banks, etc, to enhance our counter terrorism capabilities is also not established through an enactment.  Functions performed by these entities and the powers they wield are likely to impinge the rights of citizens to privacy.  These bodies are not guided by statutory principles for protecting the fundamental right to privacy.  Therefore, the need for accountability in relation to these agencies is higher.

Parliamentary scrutiny of surveillance agencies

Indian law enforcement, surveillance and security agencies have preferred to stay in shadows, protected from demands of accountability.  While these agencies are responsible to the parliament through the Ministers, their accountability has been limited as: (a) there is no requirement for ministries to provide detailed reports about the functioning of these agencies to parliament; (b) annual reports that discuss their working are very skeletal (see here at page 24 – MHA’s annual report that discusses NATGRID). These agencies are also exempt from scrutiny of citizens under the Right to Information Act.  The RTI provides a blanket exemption to intelligence agencies such as IB and RAW and to other agencies when the information dealt with is sensitive in nature.

While such protections are warranted, given the nature of the information that they deal with, adequate mechanisms for accountability need to be developed to ensure that these agencies function within the fold of the policies envisioned by the legislature and the rights it seeks to protect.  The parliament, as the representative of the people, has the onus to ensure that agencies established by the government function according to the demands of national interest.  This may be done through means of direct accountability of officers from these agencies to the parliament, frequent detailed reports of their working, and institution of a parliamentary committee that oversees intelligence agencies across ministries. In developed democracies, intelligence agencies are responsible to the legislature and have to frequently justify their actions to the elected representatives.

For instance, the Government Communications Headquarters (GCHQ) that conducts surveillance in the UK, is responsible to the Intelligence and Security Committee, which comprises parliamentarians though it is not a parliamentary committee.  Government officials are statutorily required to share information with the Committee.  The Committee is answerable to the PM and through him to the parliament.  The Committee Reports are debated in parliament.  In response to the recent allegations arising from the Snowden leak, that the GCHQ relied upon the US surveillance systems to monitor British citizens, the agency is due to submit its report to the Committee.  On the basis of the Report, the Committee will decide its future action.  Such scrutiny ensures that agencies maintain the balance between national security and individual liberties.  It also helps the legislature innovate solutions in real-time to circumstances such as those in the UK today.

Need for Safeguards against “Big Brother”

The fractured politics of today have made the Opposition voices stronger.  The decision to roll-out National Counter Terrorism Centre was shelved when it was rejected by various regional party led governments.  Any move to increase surveillance, needs to be balanced with safeguards of parliamentary oversight and statutory protection of the right to privacy.  In the absence of these rudimentary good governance checks and an overarching law on privacy, the surveillance program would fail to secure the people’s buy-in and only increase the trust deficit between the elected and the electorate.

The Report of the Group of Experts on Privacy too had noted the importance of accountability to ensuring privacy.  It stated that “accountability provides directions for enterprise wide implementation of privacy. For the commitment to accountability, organisations are expected to undertake a trust building exercise in respect of its responsibility towards privacy.”  How the government will undertake trust building exercise remains to be seen.

The Naxal, the Tribal, and the Doctor

19 Jun

Recent news reports state that the Chhattisgarh government has asked International Committee of the Red Cross (ICRC) to suspend its operations in the Bijapur district where it had operated for the past two and a half years. ICRC had been providing medical help to violence hit people in the tribal dominated area. This order of suspension raises important questions about (a) the duty and ability of the state to provide medical services to the tribal population in that area, and (b) the willingness of the state to allow medical services to affected people in an area affected by Maoist violence.

 

Bastar district is a predominantly tribal area, with more than two-thirds of the population belonging to the Scheduled Tribes category. Ninety percent of the population is rural, more than 87% of the population is employed only seasonally, and literacy levels are among the lowest in Chhattisgarh. Two thirds of the Village Reports, or Jan Rapats prepared by the villagers themselves (Jan Rapats are prepared by all villages in Chhattisgarh, and reflect the needs and views of the villagers) state that health facilities in these areas are very poor.

“Most villages emphasise that the availability of medicines, appointment of health personnel, improvement in the quality of health care, Government aid, and the availability of clean drinking water are areas that require attention.”

 

Though 6.25% of Chhattisgarh’s population is based in the Bastar district, the area had 3 hospitals, no dispensaries, and 57 Primary Health Care centres as of 2001. Forty percent of the population had no access to toilet facilities, safe drinking water, and electricity as of 2001.

(Human Development Report Chhattisgarh, 2005. Available here.)

 

Bastar has also been in the news recently owing to the naxal attack on Congress’ Parivartan Yatra convoy on May 25, 2013, during which senior Chhattisgarh Congress functionaries and security personnel were killed.

ICRC first expressed its willingness to enter Naxal affected areas in Chhattisgarh in 2008, and was welcomed by Chief Minister Raman Singh (Sourced from here):

“Certainly, ICRC plays a vital role in mitigating the sufferings of people in conflict zones across the globe. With the kind of resources and expertise ICRC has at its command, its presence will benefit the poor tribals of the region where a huge population is suffering and hundreds of children have been orphaned in the conflict…”

Interestingly, he went on to say,

“We have no problem even if such organisations provide medical assistance to Naxalites injured in encounters with security forces…We also do the same thing. Whenever Naxalites are injured, they are hospitalised so that they can be punished by a court of law for their crimes.”

 

Since 2010, ICRC has run a Primary Health Care centre, mobile clinics, and a hand-pump rehabilitation programme to ensure safe drinking water for the tribal population. According to another Times of India story, international agencies have helped play a crucial role in providing essential health care facilities in the region:

“Last year, when a diarrhoea epidemic broke out in South Bastar, killing nearly 100 people, Bijapur administration had enlisted the support of MSF and UNICEF, apart from calling doctors from other districts. But in Dantewada, in the absence of such an intervention, and in the face of an acute shortage of doctors, a large unknown number of people died without medical support.”

Then why the order of suspension?

The order of suspension has ostensibly been given by the district administration because “…ICRC is yet to enter into a Memorandum of Understanding with the state government” regarding its work in the region. State government sources have said that since ICRC is an international organization, it needs “certain clearances from the centre” for carrying out its operations.

If ICRC has operated in Bastar since 2010, how was it able to function without obtaining clearances from the central and state governments for almost three years? How was it able to bring in medical equipment, and (presumably) foreign personnel into a security sensitive area, and operate without the required permissions for all this time? Does the state and district administration seriously expect people to believe that they allowed ICRC to work in a Naxal dominated area for close to three years without the proper paperwork?

 

News reports indicate that other reasons may also be at play here. In 2011, the police in south Bastar and Dantewada had alleged that ICRC, along with MSF (Doctors Without Borders) which had been operating there since before ICRC started working there, was facilitating the treatment of Maoist rebels. Two Maoist rebels who had been arrested claimed that they were being treated by ICRC and MSF.

“These two organisations are deliberately going to Maoist camps and spending weeks. The foreign doctors should know what they are doing. I am from an enforcement agency and can’t welcome them having extra love for Maoists, but not for people injured in Maoist brutalities.” – Senior Superintendent of Police, Dantewada (Sourced from here)

 

According to him, people from the two organisations could be prosecuted under the Chhattisgarh Special Public Security Act that prohibits direct or indirect contact with Maoists.

 

The recent order of suspension, coming soon after the Maoist attack on May 25 can then also be seen through the lens of an overzealous state and district administration irked by the fact that ICRC is treating Maoist rebels. If in fact this is the case, several questions beg to be asked: What prevents doctors from treating Maoist rebels injured in conflict, especially after the Chief Minister himself expressly stated that he would be fine with such treatment? Does the duty of a doctor to treat injured people depend on whether a person is suspected of being an insurgent or terrorist? Does such treatment in itself make a doctor an accomplice in the crimes the injured is suspected of having committed? If yes, should lawyers representing suspected terrorists also be made accomplices to crimes committed by their clients?

 

The central government has repeatedly touted its plan of combining development with improving law and order as a solution to Naxalism in these regions. ICRC is one of the most reputed health care agencies operating in Bastar, an area with a clearly documented lack of health care facilities. The administration at all levels clearly needs to reconcile its twin goals of development and security enforcement in a transparent, and rational way. Essential health care for tribals in a conflict-ridden area, and the work of doctors cannot be left to the alternating prioritization of security enforcement and development. This is especially so when the Jan Rapats reveal how miserably the state has failed in meeting the expectations of the local population.

 

Should cheque-bouncing be a crime? Issues and consequences

18 Jun

It has been estimated that about 30% of criminal cases in Indian courts are either cheque bouncing or traffic offences. The government has now proposed to amend the Negotiable Instruments Act (N.I. Act) to decriminalise the offence of bouncing cheques (called `138 N.I.’ in legal circles) (See here). This move is aimed a decongesting the judicial system.

The criminalisation of writing cheques without a sufficient balance was introduced in India in 1988. It was an addition to a much older British law called the Negotiable Instruments Act, made in 1881. The reason for the amendment was the endemic problem of cheques being dishonoured. This had made it difficult to do transactions where payment and delivery don’t happen instantaneously. Mistrust of cheques was encouraging cash transactions, with consequent problems of counterfeiting, costs of storing and moving cash, and the law enforcement problems of an underground economy.

In 1988, when the amendment was brought in, no estimation was done of the additional burden on the criminal court system because of the law. This episode has taught all of us that every time legislation is enacted, careful calculations need to be made about the costs of enforcing the law and these costs should find their way into budgets.

The de-criminalisation of cheque bouncing is a good move. It will reduce the burden on criminal courts. However, the cheque bouncing cases are symptomatic of a deeper malaise: poor contract enforcement. While we may cheer the demise of a poorly thought out and draconian measure in 1988, there is a dark side to this as well.

Consequences for contract law

One of the best achievements of the World Bank is their `Doing business’ database. India ranks poorly on many counts in the Doing Business 2013 report. Of the 10 indicators tracked by the report, India’s rank is worst in Enforcing Contracts, where it is ranked 184th out of 185 countries:

  1. It takes 1,420 days to resolve a contract dispute.
  2. 39.6 percent of the contract value is lost, of which 30% is paid out as fees to lawyers.
  3. Even after getting a judgment in your favour, it takes 305 days to enforce the judgment.

Given the absence of good contract enforcement, after 1988, cheques were often used by the recipient of funds to create a deterrent against reneging. A common method of ensuring regular payment of rent is to use post-dated cheques. The landlord takes the entire year’s rent in post-dated cheques. This allows the landlord to bypass the entire rent-controller and court system for evictions when rent is not paid on time. With the voucher from the bank (recording the dishonouring of the cheque), the landlord can file a criminal complaint against the tenant.

This is a bad system of contract enforcement! It is biased towards the party which expects payments and has no remedy to the party which is getting a service or good. As an example, if the tenant sets off some rent because of mandatory repairs which the landlord failed to carry out, the tenant is perfectly allowed to take a defence of `set-off’ in a contractual relationship. However, underlying the NI act is a presumption of debt, which will let the criminal case continue till the tenant is able to establish that there had been a valid set-off.

On a similar note, while the existing Section 138 of the NI Act is a draconian idea and bad in many ways, it has interesting positive effects when placed in an environment of bad contract enforcement. Consider the penalties for bouncing a cheque:

  1. Imprisonment for up to 2 years, or,
  2. Fine up to twice the amount involved, or,
  3. Both of the above.

This is draconian, but there is considerable legal certainty. In contrast, when a contract is violated, there is no statutory method for calculating the amount of damages that the violator has to pay. Given the delays in contract resolution, and the legal and administrative costs, which are usually not awarded, the net receipt is generally much lower than the amount owed. Indian courts are not bound by a strict statutory requirement of calculating litigation costs and interest accrued is rarely granted from the date of dispute. For this reason, there was some method in the madness of S.138 of the N.I. Act.

Consequences for courts

The proposed withdrawal of 138 N.I. has not adequately been thought through, in terms of the implications for the judiciary and the legal system. It is being argued that for many cases, arbitration will be done. However:

  1. What about the increased civil court burden? As argued above, post-dated cheques were used as a substitute for contract enforcement services of civil courts. When this mechanism is no longer available, there will be a surge in contract disputes. This flow of cases will atleast partially counteract the de-bottlenecking of courts that will come from removing cases associated with S.138.
  2. Where will we get the increased number of arbitrators? There are very few arbitrators in India, and there is no institutional system of providing arbitration services outside the larger cities.
  3. Who will bear the costs? The costs of arbitration are very high in India. While it may be appropriate for large businesses to internalise their dispute resolution mechanisms, smaller businesses should have access to a court system.
  4. Will arbitration be faster? There is no standardised procedure in the arbitration system in India for cheque bouncing cases. Evidentiary and procedural variety will lead to more challenges in appeal and increase the burden of the judiciary where every appeal will have to be checked for procedural propriety.
  5. Does the judiciary have the bandwidth to cope with the case load that will appear for review? Orders of arbitrators will be appealed to the higher judiciary. In many cases the courts will have to intervene to appoint arbitrators.
  6. Will people write more bad cheques? The authority of the arbitration system is based on the efficiency of the court system. The rational violator knows that the arbitral award will go to the same over-burdened judiciary where penal costs are rarely imposed, so there will be little incentive to honour arbitration awards.

Conclusion

S. 138 of the N. I. Act is a reminder to us of the complexity of public administration reforms. When liberal democracy works well, it is a Rube Goldberg machine with immense complexity of many moving parts. Simplistic reasoning will almost always lead us astray with unintended consequences. Hurried changes of law (such as those produced through weekend drafting projects) will almost always go wrong. Well done law will almost always require enormous effort, will require sophisticated thinking about incentives in envisioning legal effects, and will involve a certain element of complexity.

Faced with a problem like S.138 of the N. I. Act, what is a thinker of government to do? There is a real opportunity in thinking outside the box. The solution to making payments lies not in making cheques work better but in fundamental change in technology: by moving to electronic payments. All these problems go away if you pay me on an electronic system, and within one second, I know whether I have received the money or not. Our job is to dematerialise money, just as we have dematerialised shares. This will also require consequent changes in the Payments and Settlement Systems Act, which has mistakenly copied S.138 of the N. I. Act. This requires new thinking in financial policy so that India can get to a sensible payments system.

Electronic payments is of course no substitute for the public goods of contract enforcement. India desperately needs a good legal system, which comprises laws, lawyers and courts. But in this specific case, the storm of complexity associated with cheques is actually something that can be completely side-stepped. Amidst the debate around S.138 of the N. I. Act is a failure of imagination on policies about the payments system.

What ails India’s public health delivery system

17 Jun

Recently, the Cabinet approved the Ministry of Health and Family Welfare’s new programme, the National Urban Health Mission (NUHM), which seeks to focus on the public health needs of the urban poor. NUHM is the new scheme under the government’s overarching National Health Mission (NHM) programme.

The existing National Rural Health Mission (NRHM) is the other scheme under the NHM. NRHM was launched in April 2005 to provide comprehensive healthcare in rural areas. The programme focuses on 18 states. Each village with a population of 1,000 in these states are to have an Accredited Social Health Activist. NRHM proposes to (a) strengthen existing infrastructure; (b) prepare district health plans; (c) guide sanitation and hygiene projects; (d) strengthen disease control programmes; (e) foster public-private partnerships in healthcare; and (f) implement new finance mechanisms.

Although providing the urban poor with a well-functioning public health system is a dire necessity, it is unclear whether NUHM would succeed in doing so given the government’s poor track record in establishing a public health system in the country. Having said that, it is also true that India has come a long way from the time of independence in terms of providing health facilities to its citizens.

This post focusses on India’s present status in terms of health indicators and public health infrastructure based on the performance of NRHM. Since the NUHM would follow a similar model as NRHM, its chances of success may depend on addressing the bottlenecks in the NRHM.

India’s track-record so far…

Health indicators

India’s dysfunctional public health system has taken a toll on its citizens, especially the poor. Table 1 comparing India’s status with other countries on key health indicators shows that it lags behind many countries. However, public spending on health in India is among the lowest in the world at about 1.4% of the Gross Domestic Product (GDP). Also, households in India spend about 5-6% of their consumption expenditure on health.

Table 1: Health indicators of some countries

Country IMR MMR Life expectancy at birth Total Health Exp (as % of GDP)

M

F

India

44

212

62.6

64.2

4.6

Pakistan

71

320

66.9

67.5

2.6

Ghana

50

350

61.8

63.6

6.9

Bangladesh

49

570

65.8

68.1

3.4

China

22

45

71.8

75.3

4.6

Sri Lanka

12

58

70.8

78.2

4

Malaysia

8

62

72.5

77.2

4.8

USA

7

24

75.4

80.5

16.2

UK

5

12

77.4

81.7

9.3

Sweden

3

5

78.8

82.9

9.9

Sources:All India Progress under NRHM as on 31 Dec, 2012,” NRHM website; “World Population Prospects: the 2010 Revision,” UN, Dept of Economic and Social Affairs, 2011; “MDG Indicators,” UN; Databank of World Bank; 11th Five Year Plan, Planning Commission.

*Note: Infant Mortality Rate (IMR): Deaths per 1000 live births; Maternal Mortality Rate (MMR): Deaths per 100,000 live birth; Total Health Expenditure: Includes public and private expenditure.

Infrastructure

India has an elaborate public health infrastructure but it is mostly dysfunctional with neither proper infrastructure nor trained man-power. According to government norms, urban areas are supposed to have a two-tier system with Urban Health Centres for every 100,000 population, followed by general hospital. There are similar norms for rural areas. Table 2 gives an overview of the multi-tier network through which government health services are supposed to be delivered in rural areas.

Table 2: Norms for public health institutions in rural areas and the shortfall

Tiers Population and staff norms Services Status as of 2012
Sub-Health Centre Level(Gram Panchayat level) 1 Sub-Centre for a population of 5,000 in the plains and 3,000 in hilly areas.Staffed with Auxiliary Nurse Midwife and a male health worker. Perform tasks related to maternal and child health, nutrition, immunisation, diarrhoea control etc. Provided with basic drugs for minor ailments. 1,48,124 (shortfall of 35,762 Sub Centres)
Primary Health Centres (PHCs)(Cluster of Gram Panchayats) 1 PHC for a population of 30,000 in the plains and 20,000 in the hilly areas.Staffed with one Medical Officer and 14 other workers. Acts as a referral unit for 6 sub-centres and has 4-6 beds for patients. Provides a package of essential public health programmes. 23,887 (shortfall of 7,048 PHCs)
Community Health Centres (CHCs)(Block level) 1 CHC for a population of 1,20,000 in the plains and 80,000 in hilly areas.Staffed with 4 Medical Specialists and 21 paramedical and other staff. Has 30 in-door beds and serves as a referral centre for 4 PHCs. Provides facilities for emergency obstetrics care and specialist consultations. 4,809 (shortfall of 2766 CHCs)
District and Sub-District Hospitals(District level) 1 hospital for each district, which is linked to sub-district hospitals, CHCs, PHCs and Sub-Centres.Staff norms vary based on the size of the hospitals i.e. the number of beds. District hospitals generally have 75 to 500 beds. Sub-District hospitals have 31 to 50 beds. Services include OPD, indoor and emergency services. Provides consultation services with specialists. District hospitals provide secondary level referral services for institutions below district level. 627 district hospitals and 305 health facilities

Sources: Annual Report 2010-2011, Ministry of Health and Family Welfare; “Indian Public Health Standards for 201-300 Bedded District Hospitals: Guidelines,” January 2007, MoHFW; “All India Progress under NRHM as on 31 Dec, 2012,” NRHM website; NRHM MIS.

Availability of doctors

Even in places where the infrastructure is in place, there is a shortfall in trained doctors and support staff. Qualified doctors do not want to be posted to rural areas because of lack of educational facilities, irregular electricity supply, lack of potable water, safety issues and lack of well-equipped laboratories. Table 3 shows the percentage of vacancies of doctors at both the PHC and CHC level.

Table 3: Vacancies of doctors in PHCs and CHCs

State

% of vacancy in PHCs

% of vacancy in CHCs

ChhattisgarhWest BengalMaharashtraUttar PradeshMizoram

Madhya Pradesh

Gujarat

Andaman & Nicobar Islands

Odisha

Tamil Nadu

Himachal Pradesh

Uttarakhand

Manipur

Haryana

Sikkim

Meghalaya

Delhi

Goa

Karnataka

Kerala

Andhra Pradesh

Rajasthan

Arunachal Pradesh

Assam

Bihar

Chandigarh

Dadra & Nagar Haveli

Daman & Diu

Jammu & Kashmir

Jharkhand

Lakshadweep

Nagaland

Puducherry

Punjab

Tripura

India

71

44

37

36

35

34

31

30

28

27

22

22

20

19

19

18

14

11

10

7

3

0.4

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

24

90

0

34

NA

NA

88

0

100

62

0

NA

74

94

94

NA

0

0

67

NA

NA

27

49

NA

NA

60

50

0

0

53

81

0

NA

0

40

NA

59

Sources: National Rural Health Mission (available at http://nrhm-mis.nic.in/UI/RHS/RHS%202011/RHS%20-March%202011-%20Tables-%20Final%209.4.2012.pdf). The data for all states is as of March 2011 except Bihar, UP, Mizoram and Delhi where data is as of 2010

Food for thought for policy-makers…

The existing system does not approach the task of providing healthcare in a comprehensive manner. It takes a fragmented disease specific approach with limited scope for innovations. In addition to dysfunctional health infrastructure, there is lack of accountability and discipline in the whole system. Over the years various committees such as the Bhore Committee 1946, Jungalwalla Committee 1967, Bajaj Committee 1996, Mashelkar Committee 2003 and the National Commission on Macroeconomics and Health 2005 have suggested ways to strengthen the health sector. Based on the recommendations of these committees and other experts, below are some policy options the government can consider.

  • Given that out of pocket expenditure on health is very high for Indians, the government needs to focus on reducing household expenditure of the poor by financing comprehensive healthcare package. The Planning Commission’s report on Universal Health Coverage can be a starting point for framing a suitable package that has the most impact on the poor.
  • One of key reasons why the public healthcare system is dysfunctional is the lack of accountability and discipline among the stakeholders. Since government functionaries have security of tenure, there is very little incentive to perform on the job. Therefore, it is essential to establish institutional mechanisms for oversight functions as well as incentivize health personnel to perform well. Some experts have suggested that the community and locally elected bodies through Village Health Committees and empowered management committees be involved in overseeing the functioning of PHCs and CHCs. Similarly, a District Health Authority may be constituted with public representatives. Also, there needs to be performance based monitoring of health personnel.
  • The role of the private sector in providing health care is already well-established. The private sector includes a range of providers addressing different market segments (voluntary, not-for-profit, corporate, for-profit, trusts, and stand-alone specialist services). While there are a number of super-specialty hospitals such as Medinova, Max, Escorts, and Apollo, most providers are sole practitioners or small nursing homes with 1-20 beds. They serve urban or semi-urban clientele. According to some experts, there is need to enforce sufficient regulations on the private sector to ensure that the unqualified health providers or quacks are not able to harm the patients.
  • The focus of any health policy should be the quality of care provided to a patient. A recent study by experts at the World Bank has comprehensively shown that the problem lies not so much in access to public health care but of the quality of care being provided. According to these experts, so far, government policy has focussed primarily on increasing access to public health rather than devising ways to ensure that everyone gets access to quality care. The study suggests some solutions: (a) fundamentally reforming the way medical degrees are awarded and requiring doctors to go for re-certification periodically; (b) doctors may perform better if there is some performance based pay, better monitoring and a denser peer network; and (c) educating people about issues such as over-medication, sanitation, hygiene and waste management.

The extinction of the Telegram

14 Jun

Firstpost reports that the Telegraph service in India will be discontinued from July 15, 2013, 160 years after the service was started in India. While telegrams have really become a relic, a service that people hardly use anymore, the growth and advent of telegraphs in India parallels the growth and spread of the British empire in India.

 

As per a fantastic article in the Telegraph, telegraphs “expedited the East India Company’s total commercial dominance of the country”. The telegraph’s use in India was “pioneered by William O’Shaughnessy, a surgeon and inventor”. Lord Dalhousie, the then Governor General of India recognized its potential, and asked for the first telegraph line in India to be built near Calcutta. In 1857, telegrams proved decisive in the British victory over the Indians in the Revolt of 1857.

“…with one captured Indian soldier, on his way to the gallows, reportedly pointing at the telegram device and stating: “There is the accursed string that strangles us.”…” (Telegraph, linked above)

 

In 1947, Nehru sent a telegram to British Prime Minister Clement Atlee of an important development about Kashmir:

“A 230-word message sent in October 1947 by India’s first Prime Minister Jawaharlal Nehru informed his counterpart in London, Clement Attlee, that the disputed state of Kashmir had been invaded by Pakistani forces. “We have received urgent appeal for assistance from Kashmir government,” he wrote. “We would be disposed to give favourable consideration to such request from any friendly state.” (Sourced from The Independent, here)

 

Today, the BSNL sends only about 5,000 telegrams a day, down from several lakhs decades earlier. This is obviously because of the rise and spread of landline telephony, and now mobile telephony and internet. India is however, one of the few countries in the world to keep up and use telegrams on a large-scale in this day and age. The maintenance of this infrastructure, has according to Firstpost (linked above), become too expensive.

“Faced with declining revenues, the government had in May 2011, revised the telegram charges after a gap of 60 years. The telegram charges for inland services was hiked to Rs. 27/50 from Rs. 3/50, 4/50 earlier.””

 

Telegrams however, still have a role to play: apparently, for soldiers requesting leave, or a court requesting certified information, a stamped telegram is still the only document accepted (The Independent, cited above). As a lawyer, I find the latter assertion a little suspicious, but would not be surprised if it were true, given the archaic nature of some of our laws and judicial infrastructure!

P.s. Yes, this post has nothing to do with new and important policy developments in this country everyday. But extinction is at least as interesting as evolution. Thanks to Shubho Roy for giving me this idea.

 

John F. Kennedy used to joke during his 1960 presidential campaign that he had just received a telegram from his father. “Dear Jack: Don’t buy one more vote than necessary. I’ll be damned if I pay for a landslide.”

(The Telegraph, sourced from here)

 

Legalizing Betting in Sports: Some Reflections on Law Making (Part II)

13 Jun

In my previous post, I looked at the recent proposal to legalize betting in sports in India and reflected upon the question of the moral authority of the state to ban conduct such as betting. In this post, I examine some of the justifications offered for the non-implementation of betting laws and the impact of legalization of betting on fixing.

Even as the recent IPL scandal has exposed intricate links between fixing and betting, a solution to betting is being proposed as a solution to fixing. There is a difference between fixing and betting. I don’t think anyone would support legalized or regulated fixing. Fixing is deplorable; it turns a match to a scripted episode, denies honest players a chance to win (or lose) a game on their effort (or the lack of it), and undermines the faith the fans repose in the game and the players. However, legalization of betting in sports is being seen as one of the solutions to mitigate the practice of fixing.

There are mixed reactions to this proposal. On one hand, it seems that betting causes fixing, because bookies are willing to pay players and fix the game to make substantial profits by changing the odds in their favour and winning bets. On the other hand, it is argued that legalization will help monitor the conduct of bookies, take betting away from criminals to financed bookies who have incentive to report corruption, and provide regulatory authorities with a data source to rely on when investigating cases of suspicious bets and fixing. It is also argued that the law should allow regulated betting rather than waste resources imposing a blanket ban which, in any case, is impossible to implement fully. Whether legalization of betting will actually help check fixing or not is debatable. It is argued by some that such experiments in the past have not worked, for example, fixing exists in football even in countries where betting is legal, and spot fixing occurred in cricket in England in 2010 involving Pakistani players, although betting is legal in England.

Here, I do not want to pronounce upon whether a betting ban is in fact impossible to implement and whether legalization will actually help control instances of spot fixing and match fixing. What I do want to reflect upon is whether obedience to a law (i.e. whether a law is generally followed by people) should be a valid ground to repeal or change the law? Assuming these justifications are in fact correct, should that be a good reason to legalize betting? There are two aspects of this argument involved here: one, betting laws themselves are incapable of being fully enforced; and two, legalization of betting will make another law (anti-fixing law) more efficacious.

Enforcing Laws on betting

Let us begin with the first aspect. I believe that the argument in favour of changing betting laws due to their non-enforceability has been received quite comfortably and without much challenge. Similar arguments to legalize conduct because of the perceived difficulty in  implementing them have been made in other areas like prostitution and illegal migration. In India, many laws remain unenforced and many crimes happen despite strict criminal laws. I don’t believe anyone would argue that we should, for instance, legalize rape just because rapes will anyway continue to occur. What about anti-piracy measures under copyright laws?

Of course, no one is so naïve as to argue for legalization on the sole ground that implementation is not possible. However, we need to examine if this should be a ground at all. I feel there is some laziness involved in making the argument to change laws just because they are not being implemented. Questions on legalization of prostitution vis-a-vis rape has got nothing to do with implementation, but about substantive questions about what we consider legal and illegal. I am not saying that the consideration of actual enforcement of a law is irrelevant to law making. However, by itself, inefficacy and non-implementation are not the grounds to change a law.

Other considerations

So what are these other considerations? At first, we need to examine if a law is actually ‘impossible’ to enforce. Many laws may be easy to make but difficult to implement. Is the question really about the difficulty of enforcement or the inadequacy of our enforcement mechanisms? Road traffic laws may be ‘impossible’ to fully implement, but when they are strictly and correctly enforced by concerned authorities through fines and other penalties, these laws may become more efficacious.

Legal philosopher Hans Kelsen has a fascinating point of view on this. He states that the validity of a law is not conditional on the law being efficacious. In fact, according to him, if a norm is anyway followed by all, then the enactment of the very law is meaningless. This indicates that some discord between the law and reality is bound to exist. We may think of ways to make existing enforcement mechanisms better or consider adopting different enforcement mechanisms, without changing the substantive law.

Non-efficacy may help us question some more substantive aspects as well. We may look at the ‘mischief’ that the law seeks to remedy and reconsider if we really do want to regulate that ‘mischief’. For example, in my previous post I considered whether the state should criminalize victimless conducts like betting. If yes, what is the best way to address the mischief—stricter criminal laws as was done in recent amendments on rape laws, or decriminalization coupled with regulation as is being argued in the case of betting? If majority of people are disobeying a law, it might be a good ground to examine our motives and strategies, but not by itself to change the law.

We also need to consider some of the ‘side-effects’ of existing laws. Arguments for relaxation in betting (and prostitution and migration) laws involve not only the continuation of the banned conduct, but also that these laws drive illegal conduct underground, furthering the mischief. Drawing from Justice O.W. Holmes’ Bad Man theory, instead of eradicating the evil, the law may instead drive the bad man to engage in it more clandestinely, causing greater harm.

This brings us to the second aspect that legalization of betting will help address the bigger problem of fixing. The argument is to decriminalize one conduct to check another crime, probably a higher evil (like relaxed migration laws may help reduce vulnerability of migrants to exploitation and forced prostitution). Again, rather than treating this as a ground for legalization itself, there is a need to examine the motives and regulation strategies of the conduct sought to be legalized. There is also a need to examine the strategies being used to counter the higher evil, in this case, fixing. What other possible strategy may prevent a ‘bad man’ from engaging in a wrongful conduct? If the motives behind criminalizing the lesser evil are justified, the improved efficacy of the other law cannot by itself be a ground for decriminalization.

Thus, while concerns around efficacy and non-implementation are valid, we need to use these concerns to question and address the more significant issues. If the real problem lies elsewhere, we must not lazily use these as excuses to change the law.

Welcome to the surveillance state

12 Jun

Last week brought us explosive revelations from the The Guardian that the US National Security Agency (NSA) is conducting extensive surveillance on internet traffic patterns, email, and telecommunications. While perhaps not surprising, the news was shocking on at least three levels – (1) the program’s extensive reach, (2) its corporate participation from the likes of Google, Facebook, Microsoft and Apple, and (3) the fact that it was entirely secret from the public.

In an editorial today entitled “Do not emulate the US on surveillance.”[1] The Economic Times reminds us that in India, “[t]he actual situation might already be alarming: remember, a leading service provider not too long ago revealed it had intercepted around 1.5 lakh phone calls over a five-year period. And that’s just one service provider.” The editorial goes on to declare, “[w]anton use of such capability isn’t just illegal, it vitiates the notions of transparency and accountability central to democracy.”[2]

So what is the actual situation? What is the reach of the Indian cyber surveillance state?

Yesterday, The Hindu reported on an upcoming government initiative that looks eerily similar to the US program, dubbed the National Cyber Coordination Centre (NCCC).[3] According to the newspaper, it obtained details of the program from a “secret government note.” The goal of the NCCC will be to  provide a “real-time assessment of cyber security threats and generate actionable reports/alerts for proactive actions by law enforcement agencies.” In order to accomplish this, the NCCC will “collect, integrate and scan [Internet] traffic data from different gateway routers of major ISPs at a centralised location for analysis,”[4] which also happens to be the backbone activity of the US program.[5] In addition, the NCCC will have several members of the national security apparatus as active participants, including: the IB, RAW, the National Technical Research Organisation (NTRO), DRDO, and all three branches of the military, among others. The NCCC will be under the Department of Electronics and Information Technology and is expected to cost around Rs. 1000 crore.[6]

The NCCC may not be in place just yet, but extensive government surveillance capabilities, both physical and legal, are already in place. The Information Technology Rules, 2011, provide for the release of sensitive personal information (including passwords, bank accounts, credit and debit card details,  physical, physiological and mental health conditions, sexual orientation, medical records, and biometric information) to government officials on written request for the purpose of investigation and prosecution.[7] The free speech implications of provisions in the Rules prohibiting certain types of internet content are already well known, with numerous cases of individuals facing legal action and jail over social media posts.[8]

Just last month, the government began to roll out the Central Monitoring System, which will give government organizations like the Intelligence Bureau, National Investigation Agency, and tax authorities access to the entire spectrum of personal communications, including online activities, phone calls, SMS messages, and social media.[9] Last week, Human Rights Watch issued a statement calling the CMS “chilling.”[10]

This post presents a very cursory sketch of the cyber surveillance apparatus, and nothing in it is intended to say that the government has no legitimate interest in protecting the country from cyber threats. In the modern security landscape, coordinated cyber attacks (especially from China) present a significant national security threat and alarming incidents have already been documented.[11] Assuming the story in The Hindu is accurate, however, the formation of the NCCC and roll out of the CMS, will have huge implications for the privacy of internet and telecom users.

Coupled with  the IT rules and recent developments in the erosion of free speech,[12] such provisions have the potential to further dampen political dissent on internet forums and social media. Unlike the American spying program, however, the basic framework of India’s cyber surveillance state is still in its nascent stages, and public debate may yet impact its scope. A quick search of  parliamentary questions and debates from the Fifteenth Lok Sabha yields many logistical questions about cyber security, but few concerns about cyber privacy. One can only hope that, as programs such as the NCCC are developed further, some measure of parliamentary accountability takes hold and an even more robust public debate ensues.

 


[2] Id.

[3] Sandeep Joshi, India gets ready to roll out cyber snooping agency, The Hindu (Jun. 10, 2013), http://www.thehindu.com/news/national/india-gets-ready-to-roll-out-cyber-snooping-agency/article4798049.ece?homepage=true

[4] Id.

[5]Barton Gellman & Laura Poitras, U.S., British intelligence mining data from nine U.S. Internet companies in broad secret program, The Washington Post (Jun. 7, 2013), http://www.washingtonpost.com/investigations/us-intelligence-mining-data-from-nine-us-internet-companies-in-broad-secret-program/2013/06/06/3a0c0da8-cebf-11e2-8845-d970ccb04497_story.html

[6] Joshi, supra note 2.

[7]Chakshu Roy & Harsimran Kalra, Rules and Regulations Review: The Information Technology Rules, 2011, PRS Legislative Research (Aug. 12, 2011), http://www.prsindia.org/uploads/media/IT%20Rules/IT%20Rules%20and%20Regulations%20Brief%202011.pdf

[8] India’s centralised monitoring system comes under scanner, reckless and irresponsible usage is chilling, DNA (Jun. 8, 2013), http://www.dnaindia.com/india/1845205/report-india-s-centralised-monitoring-system-comes-under-scanner-reckless-and-irresponsible-usage-is-chilling

[9] Indu Nandakumar & J. Srikant, Central Monitoring System to make government privy to phone calls, text messages and social media conversations, Economic Times (May 7, 2013), http://articles.economictimes.indiatimes.com/2013-05-07/news/39091148_1_single-window-pranesh-prakash-internet

[10] India: New Monitoring System Threatens Rights, Human Rights Watch (Jun. 7, 2013), http://www.hrw.org/news/2013/06/07/india-new-monitoring-system-threatens-rights

[11] Manu Kaushik & Pierre Mario Fitter, Beware of the bugs, Business Today (Feb. 17, 2013),  http://businesstoday.intoday.in/story/india-cyber-security-at-risk/1/191786.html

Link

The new Bill on Lobbying: Silver lining to the Walmart episode or lip service to the Indian populace?

11 Jun

In the upcoming issue of the Economic and Political Weekly, I critically analyse the draft Disclosure of Lobbying Activities Bill, 2013 recently introduced in the Parliament.

The article recognizes that the Bill is perhaps the first official recognition of the fact that lobbying practices are omnipresent. However, it questions the seriousness of political leaders in seeing the Bill through fruition. The full article can be found on:

http://www.epw.in/commentary/disclosure-lobbying-activities-bill-2013.html

Should political parties be subject to the Right to Information Act?

10 Jun

The Central Information Commission (CIC), on June 3, 2013, stated that political parties are “public authorities” under the Right to Information Act, 2005 (RTI Act). Public authorities under the RTI Act are required to make pro active disclosures regarding their organization and its functioning. In addition, they have to appoint Public Information Officers (PIOs). Members of the public can write to PIOs as per the procedure under the RTI Act, and get any information about that public authority which is not an official secret. The CIC’s decision has been uploaded here: CIC_order.

While I am an ardent supporter of greater transparency into the working of political parties, I do have reservations about the CIC’s decision. In this post, I intend to address one such reservation: information asymmetry. The RTI Act gives individuals the right to receive information from public authorities. However, it does not mandate that such information received should then also be further shared with a wider public. Therefore, if I receive some information from a political party under the RTI Act, I have the right to not share such information with anyone else. Therefore, there is an asymmetry in information between me, and every other member of the public, who would also be interested in this information. How I choose to use such information is then up to me.

I am of the opinion that this asymmetry in information is not an issue when citizens seek information from government departments about ration cards and electricity bills. Those pieces of information pertain to individuals, and there is nothing to be gained by making such information public to all. However, the chief concern about political parties are these: (a) their sources of funding, (b) their manner of expenditure, and (c) how they use any public money/subsidies given to them. This information should be provided to everyone freely. It should not be left to an individual applicant to file an RTI application to get this information. Therefore, it would be much better if the Election Commission frames rules requiring disclosure by political parties of all their sources of income and their utilisation of public funds.

Given below are excerpts from a book titled “Funding of Political Parties and Election Campaigns” which show how parties are funded, and what reporting requirements exist in some other countries around the world (The information given below is copied directly from the linked document). In light of these, I would be very interested in hearing your thoughts on the same. Please feel free to comment and respond.

Africa

Sources: Donations are the modal source of political financing in Africa. The major sources of funding remain big business leaders or corporate elites.

 

Indirect funding: Free air time on radio and television or free advertising space in the publicly-owned print media. Inmany African countries the opposition parties have been too weak and divided to succeed in extracting from the government even the most basic aid the state can give to political parties, namely, free and equal access to the government-owned and -controlled mass media. In Kenya it took the threat of a lawsuit and the personal intervention of the visiting SecretaryGeneral of the Commonwealth to secure equal access for the opposition parties – 90 seconds per day “paid up” advertising on Kenya Broadcasting Corporation’s radio and television, and live coverage “where possible” of their rallies.

 

UK

Disclosure requirements: Parties must publish both the names of donors and the exact amounts of their donations when they amount to GBP 5.000 (Int’l $ 6.900) or more annually, or GBP 1.000 (Int’l $ 1.400) at the constituency level. Under the new law, audited annual accounts of parties’ income and expenditures will have to be delivered to the Electoral Commission within six months of each year’s end.

 

Indirect funding: In the UK free broadcasting time is conventionally allocated to parties both during election campaigns and between elections by the BBC, and on a voluntary basis by commercial channels, which consider it a public duty.

 

Australia

Disclosure requirements: At present each party’s agent is required to give detailed information in their annual report of transactions of an aggregate of AUD 500 (Int’l $ 330) or more with persons or organizations.For those over AUD 1.500 (Int’l $ 1.000), names and addresses must be supplied. Non-monetary donations (subsidies in kind by private donors), such as loans of company cars or business jets, must also be included, with a market price equivalent.

The parties must disclose totals of their receipts, payments and debts. The annual reports, covering the period from 1 July to 30 June, must be lodged with the AEC by 20 October. Although they are not published they become available for public inspection at the AEC offices from 1 February of each year.

 

Indirect funding: In Australia free media time has traditionally been provided by state-owned radio and television services for policy speeches (which correspond to a party election manifesto) and advertisements, and by commercial radio and television stations for policy speeches. In Australia donations up to AUD 100 (Int’l $ 67) by individuals are tax-exempt.

 

Canada

Disclosure requirements: In Canada the source and amount of contributions over CAD 200 (Int’l $ 160) have to be disclosed. Individuals will be mentioned by name and the amount donated stated. Privacy concerns, however, mean that the address, employer and occupation of the donor and even the date of the donation are not included in the information disclosed on contributions.

The chief agent of a registered party has to transmit to the Chief Electoral Officer (CEO) an annual return of the party’s receipts and expenses (other than election expenses) within six month of the end of the fiscal (i.e., calendar) year. In addition, within six months from the date of a general election the chief agent must file a return of the election expenses incurred by the party.

 

Indirect Funding: In Canada radio and television stations have to make up to 6,5 hours of prime time available for paid advertising or political broadcasts by the parties during the last four weeks of the election campaign. In Canada federal and provincial tax credits for political donations and legal provisions for issuing tax receipts have supported efforts to solicit small donations from individual citizens and small businesses

 

USA

Sources: In the USA stipulations of the FECA and decisions of the Supreme Court have distinguished between “hard money” – money directly given to a party, an issue or a candidate’s committees – and funds which are raised beyond the limits set by the FECA – “soft money”. The domain of “soft money” was extended considerably when the Supreme Court, on various occasions, lifted the ban on certain contributions. Contributions by individuals are the most important source of income for US federal parties. Legally these contributions belong to the category of hard money, i.e., they go directly to a candidate’s campaign committee for use at its discretion.

 

Disclosures: Disclosure is at the heart of public supervision of political finance in the USA. The FECA requires candidate committees, party committees and other PACs to file periodic reports disclosing the sources of their funds. Candidates must identify, for example, all PACs and party committees which gave them a contribution. All committees must identify individuals who gave to them more than USD 200 in one year. With respect to independent expenditures the FECA requires persons (and parties since 1991) making such independent expenditures (soft money) to disclose the sources of the funds they used, although there are no limits on independent expenditures.

 

All candidate committees, party committees and other PACs are obliged by the FECA to file periodic reports on the money they raise and spend. In addition, candidates or candidate committees must report all expenditures exceeding USD 200 per year to any individual or vendor. Persons and parties undertaking independent expenditure (soft money) have to report the amounts of their expenses, even though there are no limits on independent expenditures. All reports filed are open for public scrutiny at the FEC, a public agency.

 


Are we water-secure or water-starved? – National Water Policy

5 Jun

By Esha Singh Alagh

 

Recent news reports suggest that Cherrapunji, once the wettest place on earth is now water starved in the summer season. While the population of India constitutes around 17% of the entire world’s population, its water resources comprise of only 4% of world’s renewable water resources.

Accepting the importance of protecting our water resources as well as regulating it, Ministry of Water Resources came up with a draft National Water Policy (NWP) in January 2012 and after many external deliberations and consultations published a revised draft in June 2012. Under the Indian Constitution, water comes under the State List (Item 17 in List II of the Seventh Schedule or the State List). There has been an increasing debate about studying water in a holistic manner with a national perspective in mind. The Ministry has stressed that the water policy consists of overarching principles of water which will be framed in close collaborations with its state counterparts.

Current Status

As of December 2012, the revised draft of the National Water Policy has been adopted by the National Water Resource Council which is governed under the chairmanship of Prime Minister Manmohan Singh. Union Water Minister, Harish Rawat has assured the states that the water framework law[i] will be drafted only after close discussions with the stakeholders to ensure that the powers of the state are not curtailed.

Outline of the NWP

The Draft National Water Policy suggests that water be treated as a common community resource held by the state under public trust doctrine. Another basic principle it stresses on is that water be treated as economic good after certain pre-emptive needs for safe drinking water, sanitation and high priority allocations for domestic needs such as agriculture, ecology and needs of animals are met. Other than these the NWP lists down various aspects relating to Integrated Water Management, steps for Clime Change Adaptation, Water Pricing, Demand Management, Water Infrastructure, Institutional Mechanisms and Groundwater Management.

Merits and de-merits

(a)   Does it account for climate change: The NWP has incorporated many forward thinking principles relating to climate change.

(b)  It moves from supply-based management to demand based management: It has also concentrated on demand management more than the commonly discussed supply management.

(c)   Dam safety: With the construction of large dams across the country, NWP recommends a legally empowered dam safety service.

(d)  Inter-state water disputes: It takes a step further to propose setting up of permanent water disputes tribunal at the Centre and make implementation of projects including clearances time bound.

Is water a community-resource for everyone, or an economic good which everyone should pay equally for?

The earlier draft of the NWP had proposed that various dimensions of water use are to be considered as an economic good including “basic livelihood support to the poor and ensuring national food security” and suggested a water-pricing module for “maximizing value from water”.

This would affect the poor the most especially farmers who might be forced to pay for water similar to say commercial projects like withdrawing water for a cricket field. It could also lead to preferential treatment as commercial projects are more profitable than cultivation. It has since been revised to adopting differential pricing for high priority uses “to achieve food security and to support livelihoods of the poor” reiterating the significant nature of these usages.

This revised approach to the NWP has placed emphasis on water as a community resource and has simultaneously stressed on treating it as an economic good. This dichotomy will have to be addressed very carefully and in detail in the draft Framework Law to ensure that there are no biases in terms of access economically and otherwise.

Depleting groundwater resources

The NWP also lists out the importance of groundwater. Groundwater is generally treated as private/individual property and there are no rules regulating the amount of water which can be withdrawn ignoring the question of sustainable use. The revised NWP suggests “groundwater levels in over exploited areas need to be arrested by introducing improved technologies of water use, incentivizing efficient water use and encouraging community based management of aquifers”. While it does not mandate community based management of groundwater but rather ‘encourages’ it, this might lead to questions over ownership in the future which will have to be addressed. It might also affect agricultural usage of groundwater which is extremely high in India.

Conclusion

The revised National Water Policy has accepted many recommendations from stakeholders and accepted them in its draft but as expressed above there are a couple of issues which might need more deliberation and clarification. While the policy is a forward thinking document, the apprehensions of the state could potentially delay its implementation.

Sources:

  1. “Draft National Water Policy (2012) as recommended by the National Water Board in its 14th meeting held on June 7, 2012.” Ministry of Water Resources, Government of India. http://www.mowr.gov.in/writereaddata/linkimages/DraftNWP2012_English9353289094.pdf
  2. Balani, Sakshi. “Report Summary: Draft National Water Policy”. PRS Legislative Research. 24 August 2012. http://www.prsindia.org/parliamenttrack/report-summaries/summary-on-draft-national-water-policy-2012-2431/
  3. Ramesh, S. “Revising the Draft National Policy.” Infochange Water Resources. September 2012. http://www.infochangeindia.org/water-resources/analysis/revising-the-draft-national-water-policy.html
  4. “Not The Farmers, Not The Environment: Draft National Policy 2012 Seems to Help Only Vested Interests.” Press release by SANDRP. http://www.indiawaterportal.org/post/23168
  5. “National Water Resources Council Adopts National Water Policy (2012).” Press Release, Ministry of Water Resources, India. 28 December 2012. http://pib.nic.in/newsite/erelease.aspx?relid=91240
  6. Dharmadhikary, Shripad. “Better, but needs more work.” India Together. 25 July 2012. http://www.indiatogether.org/2012/jul/env-nwp.htm

[i] “Framework law is an umbrella statement of general principles governing the exercise of legislative and/or executive (or devolved) powers by the Centre, the States and the local governing bodies.

Can’t bank on it

4 Jun

This article was co-authored by me, and appeared in the Indian Express on June 4, 2013. The original may be found here.

According to a recent press release by the Reserve Bank of India, its board met in early May. This was the first board meeting after the Cobrapost exposé, revealing widespread failure by banks in adhering to the RBI’s Know Your Customer (KYC) regulations. What did the RBI board discuss and what decisions did it take?

The first set of Cobrapost exposés happened on March 14, implicating three banks. On April 6, a second set of news stories exposed more banks. The exposés revealed widespread failure by banks in enforcing KYC regulations.

When the RBI central board met in Srinagar on May 9, one would have expected the board to take some decisions to look into the issue of KYC regulations. At the very least, the board might have asked for a report on the enforcement of KYC regulations, or a review of the audits carried out on banks by the regulator. Alternatively, the management of RBI would have informed the board of the steps to be taken to review the working of the KYC regulations. The board might have highlighted the need for better regulatory oversight.

The press release says that the board, however, took “four major decisions”: one, banks are to enhance the Credit Deposit Ratio (CDR) in the state from 36 per cent to 40 per cent by March 31, 2014. Two, the state government should legislate the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Securities) Act in the state. Three, the state government and banks are to take up electronic benefit transfer on a pilot basis. Four, banks are to have an active role in skill development for horticulture and other social activities in the state.

There are two important things to note. First, the RBI board did not express a view on the KYC regulations. Second, none of its decisions were about banking regulations or what the regulator may do. All its decisions were about about what the state government and banks will do.

The first decision related to commercial banks is not about risk, safety, or regulatory compliance. Giving more credit to increase the CDR is a commercial decision of a bank. The second decision is an instruction/ suggestion to elected legislatures of the state. While the RBI may assist the legislature on making the laws, it is not within the powers of the RBI board to decide that “The state government [has] to legislate the SARFAESI Act in the state”. Similarly, the decision of the RBI board that the J&K government take up a pilot project or that banks engage in skill development in horticulture are not decisions that the board of a financial regulatory authority should be taking.

None of the four major decisions of the RBI board had anything to do with its regulatory failure. There was no attempt at reviewing why the failure took place. There was no attempt to say what the RBI would do to prevent such failure.

The key function of the board of a regulator is to make regulations, to review the effects of the regulations, enforcement, performance review and cost benefit analysis. The board of any corporate body is created to maintain oversight of the functioning of the corporate body. For example, a company’s board reviews the functioning of the company, orders investigation into serious issues and gives direction to the company. The decisions of the board are actionable orders to the management of the company. For regulators, the main functioning is making regulations. The board of the regulator must exercise control, oversight and review the functioning of the regulator. Many regulatory boards develop modern corporate governance systems like risk committees and audit committees to discharge their duties.

In addition, boards of regulators have a responsibility to the public at large. Companies use funds of shareholders, and therefore, the board’s responsibility is limited to shareholders. For regulators, the entire public is the shareholder of the regulator. The board must also publicly demonstrate that it is discharging its statutory duties. Only issues that are decided to be sensitive may be closed to the public. To complete the cycle of accountability, it is important for the public to be aware of the outcomes of the decision of the board. A review of whether a regulation the board approved was enforced properly, and whether it achieved the purpose for which it was written, must be made public.

The Indian Financial Code, drafted by the Financial Sector Legislative Reforms Commission, addresses some of these issues. It incorporates modern-day developments in governance and oversight mechanisms for public institutions. The code requires every regulation to be approved by the board of the regulator through a resolution. Unlike the present system, the only regulatory instruments the regulator is allowed to issue are regulations. Today, the RBI issues regulations, circulars and master circulars that are not required to be approved by the board.

In contrast, at the RBI board meeting in Srinagar, the issue of the Cobrapost exposé and KYC was not even discussed. No review of the KYC regulations was done. No decision was taken about KYC. The board’s major decisions were ones that the RBI cannot implement. It is not even clear that the RBI board has the constitutional authority to decide what the J&K legislature will legislate, or even whether it can decide if banks should have a role in social activities in the state.

Though the IFC lays down in detail the role and functioning of the board of regulators, it is not necessary for the RBI to wait for adopting these good practices. The current RBI Act, Section 7 (2), says: “Subject to any such directions, the general superintendence and direction of the affairs and business of the bank shall be entrusted to a central board of directors which may exercise all powers and do all acts and things which may be exercised or done by the bank.” Under these powers, the RBI can transform its board from taking decisions advising banks to develop horticulture skills to writing better regulations that prevent money-laundering in India.

The writer, professor at the National Institute of Public Finance and Policy, Delhi, is a consulting editor for ‘The Indian Express’. This article has been co-authored by Shubho Roy.

Legalizing Betting in Sports: Some Reflections on Law Making (Part I)

4 Jun

The recent IPL betting and fixing scandal has brought shame on the country and the sport. It has also got the law makers thinking about their laws and policies to check such practices. One of the solutions being offered is to legalize betting in sports in India. A complete ban on betting is often thought to be difficult to implement, and that legalization may help regulate betting instead of driving it underground. Legalization will also allow regulated betting to act as a potential source of funds, and will help reduce instances of match fixing and spot fixing.

This proposal has received mixed reactions and has both pros and cons. But there are two broader questions these recent debates evoke about our law and policy making and the way we respond to scandals such as these. Firstly, what moral authority does the state have to ban conduct such as betting? And secondly, should inefficacy of law be a valid ground to repeal or change the law? I will devote this post to the first question, and my next post on the second one shall (hopefully) follow soon.

The debate on legalization of betting raises interesting questions around the moral authority of the state to ban betting in the first place. There is no doubt that the state has legal authority to pass laws on betting. Entry 34 of the State List in the Indian Constitution allows states to make laws on betting and gambling and Entry 62 allows imposition of taxes on such luxuries. Further, Entry 40 of the Union List allows the centre to regulate lotteries. But should a state interfere in activities such as betting by criminalizing such conduct?

What could be the justifications behind criminalization of betting? Criminal law is usually invoked in cases involving a public wrong, causing a harm or threat of harm to another person. However, in case of betting, it is possible that two parties consensually enter into a betting arrangement, where one loses and the other wins, and there is no harm caused to anyone else. Some acts are criminalized based on the threat to the unity and integrity of the nation, like the offence of sedition. It is unlikely that betting poses such a risk. The state also sometimes criminalizes conduct that it perceives as immoral or which are likely to offend society’s collective morality. The law criminalizing homosexual conduct was one such law. It is debatable if betting is considered ‘immoral’ in this sense, and whether the state can or should make conduct which is immoral illegal, even if such actions are not harmful or violative of any person’s right. If betting is a ‘victimless crime’, the debate over its legalization raises interesting questions around the liberty of citizens, the government’s role in modern India and the legitimacy of the state to take decisions on behalf of the people to prohibit acts it considers undesirable.

Interestingly, the Constituent Assembly debates reveal that the insertion of the entry on betting and gambling was opposed on the ground that such insertion might lead to legalization of such activities. One of the members, Shri Lakshminarayan Sahu, argued that mention of such activities should have no place in a constitution built on the ideals of truth and non-violence practiced by Mahatama Gandhi. It was when Chairman Ambedkar clarified that insertion of the entry will in fact empower the state to prohibit such activities, that the motion to insert the entry was passed. [Constituent Assembly Debates, Volume IX, 2 September 1949].

The negative stance towards betting and some of the justifications behind its criminalization are visible in Supreme Court judgments. The court has referred to the Vedas, Mahabharat and other ancient texts to conclude that Indian law makers have always viewed gambling as a “sinful and pernicious vice”. Such practices leave people indebted and homeless, disrupt families, destroy wealth, disavow values like honesty and truth and lower the standard of living. Interestingly, there were also references to texts like that of Kautilya who would have allowed regulated gambling and enabled the state to earn revenue from it. The court has developed a distinction between games of chance and games of skill and allowed games such as horse racing and rummy to legally exist as falling in the category of games of skill. [Dr. K.R. Lakshmanan v. State Of Tamil Nadu, AIR 1996 SC 1153; State of Andhra Pradesh v. K. Satyanarayana (1968) 2 SCR 387; State of Bombay v. RMD Chamarbaugwala, AIR 1957 SC 699].

Irrespective of whether betting in cricket is a game of chance or skill, should a state prohibit even games of chance? Should it be the state’s business to criminalize activities to make sure that people spend their time and money in productive activities instead of getting addicted to wasteful acts which might have some negative effects in society? What about activities like drinking and smoking, which are perhaps more ‘harmful’ than betting, in terms of harming the person doing the act, disrupting families, increasing risk of other crimes, and are engaged in by a larger number of people. Even if it may not involve any skill, betting might be a form of private entertainment for some people.

This also raises the question whether criminal law is the proper law to regulate betting. Undesirable conduct in society can be regulated through other means such as civil law, tort law and tax law. Criminal law involves a higher level of social sanction, as opposed to others. Should betting be subject to that?

There is an implicit assumption about the illegality of betting in the Constituent Assembly Debates and the Supreme Court judgments. The recent debates on legalization of betting have also largely failed to engage with the wider questions about the state’s moral authority to ban betting. The debates have largely focused on the practicalities of implementation and the economics of regulation. The exercise of the power of the state to ban or regulate the conduct has remained unquestioned. While there is no doubt such practical concerns are significant, I find questions around the role of the state and liberty of the people more interesting. As a state, India needs to consider if it should deal with certain private acts which may have some negative offshoots for society through the medium of law, and, if yes, what will be the best legal strategy to regulate such conduct. Perhaps we should use moments of legal uncertainty and possible change such as these to engage with these larger questions on the ethics of law making in India.

My next post will deal with the second question raised above on inefficacy of laws. It is often stated that full implementation of a blanket ban on betting is impossible. It is also argued that legalization of betting will help reduce instances of the crime of fixing. My next post will examine, assuming that the state has a legitimate ground to ban betting, if these arguments would justify legalization of betting.

How good is the data for monitoring government schemes?

3 Jun

Recently, a news item brought to attention a crucial but not often discussed matter on the quality of data collected at various levels of the government. It quoted a report from the Planning Commission’s think tank, Institute of Applied Manpower Research (IAMR) which found that the data on the government’s many flagship schemes was either incomplete or inconsistent.

Here’s a quick summary of the report.

The report examined the Management Information System (MIS) of 13 flagship central government schemes. MIS is a tool to collect data for a particular scheme or organization to help evidence-based programme management. The 13 schemes this report focused on are:

Total budgetary allocation for all these schemes is Rs 1,71, 582 crores.

Findings

  • The study ranked PMGSY and MNREGA in the top bracket in the design of MIS. NRHM, NRDWP, RGVY and TSC were ranked in the next category because they have recently started designing a more effective MIS. However, key schemes such as SSA, MDM, JNNURM and ICDS had poorly designed MIS and needed to take steps to strengthen the process.
  • A very important criteria is the reliability of data. Therefore, reliability and validity checks of data should be done at the district level. However, RGGVY, JNNURM, rural telephony and irrigation checked the data at the state level. Also, many of the data was not up to date.
  • The connection between implementation and outcome was weak for most schemes except MNREGS and PMGSY. There was also inconsistency in data. For example, ICDS and the National Family Health Survey are inconsistent with respect to data on level of malnutrition for each state. Since there was no effort to conduct an independent external verification or authentication of the data, there were discrepancies with the outcome/output data in the MIS and the sample survey data carried out by independent organizations.
  • Lack of use of data was a key weakness of the MIS of flagship programmes. Each scheme used the MIS data to get approval for next year’s budget and action plans but not for course correction.

New initiatives

Under the 12th Five Year Plan, the government has proposed new initiatives for effective management of centrally sponsored schemes. It proposed use of real-time technologies to monitor schemes. Furthermore, it planned to provide each beneficiary with a Unique Identity Number (Aadhaar) linked to his biometric data. This would make it easier to monitor whether the targeted beneficiaries actually receive the benefits. By 2014, about 600 million citizens are likely to have Aadhaar. Currently, there is no information on whether MIS data has been used to achieve the desired outcomes or if the implementation strategy has been modified with the help of MIS data. The 12th Plan intends to change this by focusing on outcome sustainability.

Implications for India

While statistics may not tell the whole story, it is well established that governments need timely and reliable facts to design effective policies. If the database is weak, resource allocation may get distorted and policies may not respond to the real needs of the community. Therefore, India’s lack of robustly designed data collection systems may be one of the reasons why innumerable government schemes fail to actually achieve the stated objectives.

Some experts have raised alarm bells about the lack of reliable data (see here, here and here) in various sectors and how it has hampered policy making. However, the government has not displayed major signs of urgency about tackling this problem. If concerned stakeholders are able to convince the government that designing a robust data collection system is going to give the government more bang for their buck it may actually take steps to address the problem.

Defamation: who should you fear more- Big Govt. or Big Corporate

31 May

Unlike many other countries, India has both civil defamation (if you defame someone, you have to pay compensation), and criminal defamation (you defame someone, you go to jail). Most other countries have removed criminal defamation as a crime from their law books. The result is that in India, not only does a publisher face the threat of having to pay stiff monetary penalties in case he/she defames, someone, there is the bigger threat of being imprisoned for defamation.

These two provisions put together, are increasingly being used by corporate houses to threaten journalists and bloggers from publishing uncomfortable facts. Aparajita Lath, a student of  NUJS, Kolkata, was recently threatened with both civil and criminal action by Times Publishing House Ltd., and their lawyers K. Dutta and Associates for “an excellent summary of the 19 year old litigation between Financial Times Ltd. and Times of India Group over the trademark “Financial Times” & “FT” on the blog SpicyIPIndia. According to Prof. Shamnad Basheer, owner of the Spicyip blog,

“According to the legal notice, served on Aparajita, the publication of her post, “caused an irreparable injury and loss of reputation” to Times Publishing House Ltd. The following paragraph is even better: “Pursuant to the publication of the impugned article our Client has been contacted by several persons, inquiring about the same. Our client has been questioned and subjected to contempt and ridicule and has suffered immense prejudice and loss of goodwill, reputation, standing and goodwill in the industry”. Oh my! And I guess the sky is going to fall on our heads next because of one post on this blog.
The allegedly defamatory post by Aparajita can be accessed here. In the post, she carried an excellent summary of the 19 year old litigation between Financial Times Ltd. and Times of India Group over the trademark “Financial Times” & “FT”. Aparajita’s post had very carefully referenced and summarized a number of articles which appeared in the Mint about the dispute and from the information we have, theMint has not been sued as yet.”
Prof. Shamnad Basheer has also posted here, stating that the magazine, Caravan, was recently served with a legal notice,

“from Agarwal Law Associates (ALA) on 18 April concerning the pending publication of a ‘defamatory’ story on the Attorney General (AG), Goolam Vahanvati. ALA’s clients, the Anil Dhirubhai Ambani Group (ADAG), were understandably flustered as a result of the article’s keen recording of Anil Ambani (head of ADAG) and the AG’s somewhat cosy relationship.The implication of course, was that Ambani’s ties with Vahanvati had a hand in forestalling investigation into the ownership history of Swan Telecom – Ambani’s ‘front’ company at the centre of the notorious 2G scandal…”

Earlier this year, Caravan was also sued by Arindam Chaudhuri, director of the Indian Institute of Planning and Management (IIPM), for defamation, and Mr. Chaudhuri claimed Rs. 50 crore in damages.

“The suit was filed, not in Delhi, where both the IIPM and the magazine’s publisher, Delhi Press, are based, but 2,200 km away in Silchar, Assam, 300 km from Guwahati, Assam’s capital. The IIPM filed the case at the Court of Civil Judge in Silchar district, through one Kishorendu Gupta, who operates Gupta Electrical Engineers in a Silchar suburb, and is the first plaintiff. IIPM is the second plaintiff.

In addition to The Caravan and its proprietors, the suit charges Siddhartha Deb, Penguin (the publisher of the upcoming book by Deb in which the article is a chapter), and Google India (which, the suit alleges, has been “publishing, distributing, giving coverage, circulating, blogging the defamatory, libelous and slanderous articles”).

The civil court in Silchar granted the IIPM a preliminary injunction, enjoining Delhi Press to remove the article in question from their website, ex-parte, without any pre-hearing notice.”

(Sourced from here)

Before this,

“In 2005, the IIPM filed a case against Rashmi Bansal, a blogger and editor of Just Another Magazine (JAM), who published an article in print and online questioning many of the claims made by the IIPM in its brochures and advertisements, which highlighted that the IIPM had not been accredited by any Indian agency such as AICTE, UGC or under other state acts. The IIPM filed a case against Bansal from Silchar, Assam, even though she runs a small independent outfit based in Mumbai. The IIPM managed to get an ex-parte order from the court, forcing Bansal to remove the article from the website. The IIPM also filed for damages.”

 

(Sourced from here)

 

Citizens usually have good reason to believe that the threat of criminal defamation will be used by the government to muzzle the freedom of speech and expression. However, increasingly, there is reason to worry that journalists and bloggers (especially those without the resources to fight back) will face harassment from powerful corporates and business houses. This is even more worrying for a country at our stage of development, where we are welcoming private investment into numerous sectors, allotting and selling off scarce resources to attain higher growth. A free media is important to ensure such transactions and investments are fair and not marked by crony capitalism. Well considered defamation laws are essential to ensure this journalistic freedom and integrity.

 

For more on defamation laws in India, read this.

Law to regulate lobbying in India

29 May

Recent news reports suggest that the committee investigating the case of Walmart lobbying the Indian government to allow FDI in the retail sector is going to submit its report shortly.  It is reported that the committee could not find evidence of Walmart bribing any government official or indulging in any unlawful activity.  However, the committee may recommend that the government frame rules to regulate lobbying in India.

In this context, Harsimran Kalra and I published an article in the Oxford India Policy Blog that made a case for regulating lobbying in India.  It also flagged some issues that needs to be debated widely before a law on lobbying is drafted.

The full article can be accessed here.

An excerpt from the article is given below

At present, a few countries have laws to regulate lobbying.  These include Australia, Canada, US, Germany, Hungary, Poland, Lithuania, Slovenia, Israel and Taiwan.  Other countries such as France, Spain, Portugal, India and Japan do not have any such law while UK and Ireland regulate the lobbied.

Although India currently does not regulate lobbying, it is likely to move toward that direction.  Before the government drafts a law, it is essential to get clarity on the activities sought to be regulated and sanctioned.  In this article, we explore how other countries have defined lobbying, the mechanism they adopted to regulate these activities and the lessons India could learn from their experience.

New uses of UID/Aadhaar operationalised

26 May

According to a NY Times blog post today, 3 different uses of UID numbers, or Aadhaar were operationalised recently:

Those in the Aadhaar system will now be able to identify themselves by using an eye scanner, which checks the unique patterns in their irises, and providing their ID number. Those with mobile phones can also request a one-time numerical password to be sent by text message, which would be used in conjunction with the user’s ID number. The third service, dubbed e-KYC (“know your customer”), allows users to authorize businesses like banks to receive electronic proof of the users’ identify and home address.

“This is a major step in the direction of enabling Aadhaar holders to avail various services by using the Aadhaar identity platform,” Nandan Nilekeni, chairman of the Unique Identification Authority of India, which oversees Aadhaar, said in a statement.

“It also makes sense for various user agencies — public or private — as they can identify a beneficiary or customer using a secure, economical and paperless format,” he said. “The direct benefit transfer is the biggest benefit, but we will find so many applications in future in banking, telecommunication, insurance, health sectors, including carrying an individual’s health data…
…Residents can update their details at permanent Aadhaar centers set up around the country. At present 500 centers are operational, and another 500 will be opened in the next three months.”

Read more here: http://india.blogs.nytimes.com/2013/05/24/aadhar-program-introduces-instant-verification-services/#more-64350

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