A RUSH OF BILLS

Print edition : December 11, 1999

The NDA Government rushes through with a slew of legislative measures.

WITH the preliminaries over in the previous session, the winter session of the 13th Lok Sabha began on November 29 intent on doing serious legislative business. Emboldened by the greater security of numbers it enjoys in the Lok Sabha, the National Democ ratic Alliance (NDA) Government was in a tearing hurry to push through laws that are likely to change the course of the country's economy as well as polity.

Eager to prove its reformist credentials to the international community in order to win its approval, the Government has speeded up the process of economic reforms, a sector which the Congress(I) has trodden with caution.

In the truncated first session, the Government had set the ambitious legislative agenda rolling with the introduction of three bills with major ramifications - the Insurance Regulatory and Development Authority (IRDA) Bill, the Prevention of Money Launde ring Bill (PMLB) and the Securities Contracts (Regulation) Amendment Bill. The session ended without a debate on the legislative proposals. On the first day of the winter session, four more bills, all of economic importance, were tabled. They are: the IR DA Bill, the Foreign Exchange Management (FEMA) Bill, the Mines and Minerals (Regulation and Development) Amendment Bill and an amendment to the Securities Contracts Bill. The strategy of burdening the House within a short span with a slew of legislation , which require expert inputs for the conduct of any meaningful debate, appears to have paid off. The House passed four of the bills in the first week itself without any meaningful debate. In fact, the controversial FEMA Bill and the ineffectual PMLB we re taken up and adopted on December 3, at the fag end of the week when several MPs were leaving for their respective constituencies. In fact, the House barely had a quorum. What better moment to put the bills to vote and get them passed?

With more bills on the anvil, the floodgates would be opened for the introduction of a clutch of World Trade Organisation (WTO)-ordained bills, which are under various stages of preparation. The current Lok Sabha will perhaps be remembered as the fastest law-maker in Indian legislative history.

The Congress(I), the main Opposition party with a majority in the Upper House, had initially made a song and dance about the IRDA Bill and kept the Government on tenterhooks over whether the legislation would get its support. In fact, it hardly had any i deological differences with the Government on this issue, having authored the initial phase of the reforms in the first place. Not unexpectedly, it finally decided to play ball, but only after proving a point. It premised its support to the bills on cert ain changes that it wanted incorporated in the IRDA Bill. The Bill, which throws open the insurance sector to private and foreign investors, was passed after incorporating the amendments prescribed by the Congress(I), despite stiff opposition from the Le ft parties and the insurance employees. A smirking Congress(I) now sees itself as the patron critic of the reforms process.

The IRDA Bill was rushed through hastily even as Roopchand Pal of the Communist Party of India (Marxist), who is a member of the Parliamentary Standing Committee on Finance, demanded the setting up of a Petitions Committee to discuss a petition signed by 1.5 crore persons against the passage of the Bill in its current form. This merely indicated the Government's cavalier attitude to popular sentiment. Deputy Speaker P.M. Sayeed did not consider it necessary to wait for the setting up of the Petitions Co mmittee before the Bill was taken up for discussion and adoption. Vayalar Ravi of the Congress(I) urged Sonia Gandhi not to allow the passage of the Bill, but the Congress(I) had other plans.

The amendments make it mandatory for all insurance companies to invest a portion of their funds in the social and infrastructural sectors. The Congress(I) had originally sought a commitment on 75 per cent of the insurers' investible funds in these sector s. But the Government has left it to the Regulatory Authority to specify the quantum. A clause suggested by the Congress(I) that failure to comply with specified provisions be made punishable with penalties of up to Rs.25 lakh and even cancellation of li cence granted to the insurer in case of persistent failures, has been included in the Bill. Another amendment provides for preferential registration of those companies which seek to provide health insurance cover to individuals and groups of individuals as part of their life and general insurance policies. The Government also conceded the Congress(I)'s demand that the private companies offer insurance cover to backward, rural and the unorganised sectors. This would include crop insurance policies.

Prime Minister A.B. Vajpayee with Parliamentary Affairs Minister Pramod Mahajan outside Parliament House on the opening day of the winter session.-SHANKER CHAKRAVARTY

EMPLOYEES of the insurance sector staged a protest outside Parliament House. The All-India Insurance Employees' Association condemned "the haste with which the Government is proceeding towards the enactment of the IRDA Bill, 1999, despite allround opposi tion." Class II, III and IV employees of the Life Insurance Corporation of India and the General Insurance Corporation went on a day's strike on December 1 to protest against the adoption of the Bill. The Left parties, which believe that the passage of t he Bill amounts to the betrayal of the working class, will oppose its passage in the Rajya Sabha.

However, it is possible that the IRDA Bill will have to return to the Lok Sabha for consideration of certain embarrassing clauses that have crept into the document. The Bill allows insurance companies to invest 25 per cent of their funds in securities of the Government of the United Kingdom or those guaranteed by that Government. This fact came to light when the Bill was taken up for discussion in the Rajya Sabha.

THE PMLB and FEMA constitute a composite piece of legislation. If FEMA is passed by the Rajya Sabha, for the first time in independent India, violations relating to foreign exchange will be treated as civil offences. Despite Finance Minister Yashwant Sin ha's assurances that capital account convertibility will not be allowed, experts feel that the loopholes in the Bill will result in large-scale flight of capital. One glaring loophole in the Bill is the arithmetical definition of a resident Indian. Anyon e who has resided for more than 182 days in the course of the previous financial year alone will be reckoned as a resident Indian for purposes of liability under FEMA. Under its predecessor, the Foreign Exchange Regulation Act (FERA), no arithmetical for mula was applied to determine a person's resident status; FERA was more concerned with the nature of activities he or she was engaged in while abroad, and his or her intention determined liability. While FEMA may remove any discretion that the agency inv estigating the violations may have had in determining a person's culpability, it also makes it possible for anyone intending to violate FEMA to remain abroad for over 182 days during the course of a financial year in order to escape the provision of the law.

Sections 6(4) and 9(d) of FEMA, which define the circumstances under which a resident Indian can hold, own, transfer or invest in foreign currency, foreign security or immovable property abroad appear to have been designed specifically to shield certain persons currently being investigated for FERA violations. Section 15, which allows compounding offences, further weakens an already weak law. But the most controversial provision in the Bill is Section 40 which gives the Government the power to suspend o r relax the operation of any or all provisions of the Act. This is a blatant authorisation of governmental intervention in investigations and is unprecedented. Finally, Section 49 (3) sets a time-frame of two years from the commencement of the Act for th e completion of all ongoing investigations under FERA. Is this time-limit realistic for investigating transnational crimes involving protracted procedures, not to mention banking secrecy laws in many parts of the world?

THE Mines and Minerals (Regulation & Development) Amendment Bill, 1999, seeks to effect three changes. First, it proposes to delegate to the States certain powers hitherto exercised by the Centre. Based on the recommendations made by the B.B.Tandon Commi ttee in December 1996, the Bill proposes to authorise State governments to grant and renew prospecting licences and mining leases for those minerals listed in schedules A and B. The Bill seeks to confer full powers to the State governments for grant of m ineral concessions in respect of limestone. It seeks to review existing laws and procedures governing the regulation and development of minerals in order to make them more compatible with changed policies. It also seeks to check illegal mining. The Bill contains the new concept of "reconnaissance operations". Reconnaissance as a stage distinct from prospecting operations has been included in the Bill and a person or company can apply for a reconnaissance permit for a total area of 10,000 square kilometr es. The statement of objectives and reasons appended to the Bill states that this will facilitate investments through the deployment of state-of-the-art exploration technologies and accelerate exploration of mineral resources. The moot question is whethe r this is consistent with national security. The Bill generated some debate with Left party MPs opposing some of the provisions. It is yet to be passed.

Employees of the insurance sector protesting against the Insurance Regulatory and Development Authority Bill in New Delhi.-

The Lok Sabha also passed the amendment to the Securities Bill seeking to allow derivatives trading. Two more amendments to the Securities Laws Bill were also tabled. The amendments seek to regulate the business of dealing in securities, to promote the d evelopment of the securities market and to provide for regulation of depositories in securities.

IN an important development, a BJP MP has introduced a private member's Bill to amend the Constitution to bar persons of foreign origin from holding the offices of President, Vice-president and Prime Minister. Introduced by Kirit Somiaya, after prolonged wrangles, it is widely seen as an attempt to target Congress(I) president Sonia Gandhi. It drew protests from Congress(I) members, who argued that Parliament did not have the legislative competence to consider a Bill that amounts to altering the basic s tructure of the Constitution. They argued that the Bill sought to make a distinction between "natural born" citizens and those who acquired citizenship and therefore sought to tinker with the structure of the Constitution.

The Congress(I) members objected to the Bill also on the ground that it had not been cleared by the committee on private members' bills. Prime Minister A.B. Vajpayee, for his part, said that the issue of "foreign origin" formed part of the NDA's manifest o and that every member had a right to introduce any legislation on any issue.

The NDA Government is not likely to be take up the Small States Bill, which would have enabled the formation of Vananchal, Uttarakand and Chattisgarh States. The introduction of this Bill is being resisted by the Telugu Desam Party (TDP). The rumblings w ithin Andhra Pradesh for a separate Telengana State is behind the TDP's stand.

This article is closed for comments.
Please Email the Editor