India's National Magazine
From the publishers of THE HINDU

Vol. 16 :: No. 02 :: Jan. 16 - 29, 1999

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GOVERNMENT

Legislative quandaries

The BJP-led coalition Government's decision to renew three ordinances by fresh promulgation represents a conspicuous failure of strategy and vision on its part.

SUKUMAR MURALIDHARAN
in New Delhi

AFTER the fiasco of the winter session of Parliament, the Bharatiya Janata Party-led coalition Government at the Centre appears to have embraced the legislative strategy of ordinance promulgation with a new fervour. On January 5, the Union Cabinet decided to send four ordinances to the President for approval. Three of these are already in force, but would lapse in a matter of days for want of ratification by Parliament. These are the Ordinances dealing with the Companies Act (Amendment), Prasar Bharati and the Central Vigilance Commission (CVC). The fourth ordinance - the Indian Patents Act (Amendment) Ordinance - seeks to bring about far-reaching legislative changes in an effort to refurbish the Government's tarnished image in global business circles.

The decision to renew three ordinances by fresh promulgation represents a conspicuous failure of strategy and vision on the part of the Government. But the effort to effect fundamental changes in the statute through an ordinance is perhaps a far more grievous blow to the basic principles of the parliamentary system.

THE Patents Act (Amendment) Ordinance promises the re-enactment of a story of failure from the days of the P.V. Narasimha Rao Government. The intention then - as it is now - was to bring about compliance between India's regime of intellectual property protection and the demands of the World Trade Organisation (WTO). The issue was contentious, but the Narasimha Rao regime sought to ride out the controversy by promulgating an ordinance and seeking its ratification by Parliament later. Passage through the Lok Sabha was secured by impressing upon potential recalcitrants within the ranks of the Congress(I) that full compliance with the WTO agreement was vital in order to sustain the pace of economic reforms launched in 1991. Other political parties proved to be less gullible, both about the objectives of economic reforms and the specific intent of the patents amendment. Rather than risk failure in the Rajya Sabha, where it was short of a majority, the Narasimha Rao Government withdrew the Bill.

Following an adverse ruling by the Dispute Settlement Body of the WTO and the failure of the appellate body to provide any redress, the BJP-led Government embarked upon the mission of assuaging the well-advertised reservations within its own ranks. Resistance was especially sharp from the swadeshi lobby that enjoyed the open patronage of the Rashtriya Swayamsevak Sangh (RSS) and its trade union affiliate, the Bharatiya Mazdoor Sangh (BMS). Instead of being set at rest, these reservations were cast aside in the interests of survival. With the winter session of Parliament following on the heels of a dramatic electoral debacle for the BJP in the northern region, hardliners within the party ranks were persuaded to suspend their judgment in the interests of maintaining a facade of unity.

The passage of the Patents Act (Amendment) Bill in the Rajya Sabha was one of the few legislative achievements of the Central Government in the recent winter session. Identical in all respects to the ill-fated legislation the Narasimha Rao Government had sought to pilot in the teeth of opposition from the BJP, the Bill was sustained in its passage by the support of the Congress. However, the bonhomie was short-lived. The Congress insisted that the amendments that it had proposed should be circulated in advance, prior to the introduction of the Bill in the Lok Sabha. However, the BJP, whose attention was diverted by other components of its contentious legislative agenda, forgot about this basic courtesy. The curtains came down on the winter session with the Patents Act in legislative limbo.

In seeking an alibi for this lapse in the supposed failure to win presidential assent, the Vajpayee Government only compounded the image of ineptitude it had acquired. Parliamentary Affairs Minister Madan Lal Khurana was pilloried for his ignorance of the legislative procedure and was obliged to apologise to the President for dragging him into a matter that did not involve his authority (Frontline, January 15) .

ANU PUSHKARNA
Parliament House. Effecting fundamental changes in the statute through an ordinance is a blow to the basic principles of the parliamentary system.

After the dust had settled, spokespersons for the Government sought reassurance in the fact that the WTO ruling only obliged India to effect the required changes in patents law before April 19. This meant that the Bill could be placed before the Lok Sabha early in the Budget session and be passed well in time to meet the WTO deadline. In nevertheless choosing the ordinance route, the Government has only called attention to its own rather infirm commitments to basic democratic proprieties.

The constitutional provisions on legislation through ordinance are unambiguous. Ordinances are permissible in periods when Parliament is not in session. Once Parliament assembles, all ordinances promulgated in the inter-session period need to be ratified within six weeks, failing which they would lapse. Assuming that the Budget session begins in the last week of February, the Patents ordinance would lapse in the second week of April unless ratified by Parliament in the second week of April - still ahead of the WTO deadline. In other words, the Government would have been in compliance with the WTO norms even if it had avoided this ordinance and merely ensured the passage of the Patents Amendment Bill in the Lok Sabha in the early part of the Budget session. That would, in the circumstances, have been the more proper procedure. In ignoring this option, the Government has succeeded in doing little other than advertise its own state of confusion.

THE intents and purposes behind the Companies Act (Amendment) Ordinance are, in comparison, more transparent. With the preparation of the 1998-99 Budget being in its last lap, the picture that confronts the Government is one of grossly miscued calculations. Revenue accruals are far short of targets, and expenditures - especially in routine housekeeping activities - have burgeoned out of control. The target for resource mobilisation through public sector disinvestment is one conspicuous area of failure; against expectations of Rs.5,000 crores accruing under this head, the actual realisation so far is less than Rs.300 crores.

The Companies Act Amendment seeks to bring in the legal provision enabling corporations to buy back their shares. The immediate implication would be that a number of cash-rich public sector undertakings (PSUs) would be compelled to buy back their shares from the government. Estimates of the potential accruals to the government from this rather dubious transaction run to the order of Rs.2,000 crores. A prerequisite, of course, is that the Companies Act Amendment should come into effect.

The multiple sources of moral hazard in this procedure are apparent. An ordinance confers only a transient aura of legality to any transaction. Should the PSUs be compelled to buy back their shares, the Government should equally be obliged to hold the resultant accruals in trust until the ordinance is ratified by Parliament. Failing this, there is a risk that the PSUs would be confronted with an illegitimate fait accompli, should the ordinance fail to win parliamentary approval. The situation would be clearly untenable - one that would seem to invite a potentially embarrassing judicial intervention.

THE CVC ordinance represents the Government's effort to bring the functioning of its principal investigative agencies in line with the norms of autonomous functioning fixed by the Supreme Court in March 1998. It is conceivable that this legislation, which has in some respects been forced upon the Government, does not enjoy its unequivocal backing. But constant judicial supervision on this front makes a retreat virtually impossible. Half-heartedness of political conviction combines with the failure of political decency to make constant renewal of the ordinance - rather than its passage into law - the preferred option. In the bargain, the position of the individual who has been appointed as the Central Vigilance Commissioner remains unsure and the autonomy of the agencies he supervises, less than secure.

LIKE the Patents ordinance, the Prasar Bharati ordinance too was issued after the Bill had been passed by one House of Parliament in the last Budget session. The Government had disregarded the demand that the Bill be placed before the Rajya Sabha for debate and passage, since its intentions were single dimensional, and unpalatable to the Opposition. The ordinance was first promulgated just days after the Budget session had concluded, its sole intention being to disqualify the incumbent chief executive of the broadcasting corporation from being eligible to hold the job, on the grounds that he had crossed the maximum age stipulated.

S.S. Gill, who held the job as an appointee of the United Front Government, was duly removed from office. However, the legal basis of his removal remains unsound. Although Sushma Swaraj, who was the Minister for Information and Broadcasting at that time, had been at pains to disavow any such motives, subsequent events only strengthened the impression of personal animus. The career of the Prasar Bharati ordinance is, in this sense, a testament to the questionable motivations of much of the BJP-led Government's legislative agenda.

THE four ordinances have expectedly drawn sharp criticism from the Opposition. The Left parties were especially severe on this count, calling upon the President to withhold his assent. The Communist Party of India (Marxist) found the intent behind the Patents Ordinance dubious. "The hasty ordinance," said a statement issued by the CPI(M) Polit Bureau, "exposes the BJP-led Government's prior commitment to the WTO without getting the sanction of Parliament." The statement said that the "buy-back scheme" envisaged by the Companies Act ordinance was "preposterous", since it would "harm the major PSUs whose reserves (would) be used for bridging the budget deficit."

The Central Secretariat of the Communist Party of India suggested that the unseemly hurry to introduce the Patents ordinance was connected with the ongoing talks with the United States. It stated that the entire procedure of reserving legislative business for the inter-session period showed that the Vajpayee Government was shy of facing Parliament.

It is well-known that on earlier occasions President K.R. Narayanan has chosen to question the propriety of legislation through ordinance, but has refrained from exercising his power of requesting the Union Cabinet to review its decision. Aware that they were skating on thin ice, Prime Minister A.B. Vajpayee and Home Minister L.K. Advani called on the President on January 6 - the day after the Cabinet decided to despatch the four ordinances to him. If they have succeeded in assuaging the President's reservations, the reprieve is only temporary. When Parliament convenes for its Budget session in February, there is unlikely to be much sympathy for the legislative quandaries the Government has wandered into.