Opinion

In 'Digital India', is it time to end Raj-era rules that allow governments to push ordinances?

Governments often misuse the power that enables them to push through legislation without Parliamentary debate.

On the first working day of the new year, a seven-judge bench of the Supreme Court, in a landmark judgement, said that repromulgation of ordinances was impermissible under the Constitution and that the effects of a lapsed ordinance would continue only if they were physically impossible to reverse or if were manifestly in the public interest to let them remain.

While the Supreme Court decision pertains only to the technicalities of ordinance-making powers, given the frequent controversies relating to the use and abuse of this power, there exists a case for abolishing it entirely.

An ordinance is a decree that can be issued by the president in cases where urgent or immediate action needs to be taken but Parliament is not in session. After an ordinance is promulgated, it has the same effect as any other law until the next Parliament session is convened. The ordinance then has to be placed before the legislature, which can pass an identical bill to replace it. If this does not happen within six weeks of Parliament reconvening, the ordinance lapses. Similarly, state governors can also promulgate ordinances when the state assembly is not in session.

Under the Indian Constitution, there is a strict separation of powers between the three arms of the State: the legislature, the executive and the judiciary. The legislature, which consists of elected representatives in Parliament and state assemblies, enacts laws. The executive – the council of ministers at the Centre and in each state – is tasked with implementing these laws while the judiciary adjudicates the enforcement actions under the laws. Neither organ can ordinarily perform the function of the other.

Ordinance making powers conferred upon the president and the state governor are thus unique because they depart from the usual separation of powers. The most important restriction on the use of this power is that circumstances must exist that render it necessary for the government to take immediate action when the legislature is not in session.

Abuse of power

However, over the years, the power to promulgate ordinances has been consistently abused. On many occasions, it has been used for the sake of political convenience even when there is no need for immediate action. For instance, Indira Gandhi in 1969 passed the bank nationalisation ordinance, transferring the ownership of 14 commercial banks to the state, just two days before the Parliament was to convene.

More recently, Prime Minister Narendra Modi’s government refused a discussion on demonetisation in Parliament as it disagreed with the Opposition’s terms on the discussion and failed to introduce any bill to give the move to ban high-value currency notes statutory backing. However, on December 28, a fortnight after the winter session of Parliament ended, an ordinance was promulgated giving legislative backing to the exercise.

There are many more such examples. In 2003, under the Congress-led United Progressive Alliance government, the National Tax Tribunal Ordinance was promulgated. However, that there was no need for immediate action became clear when, despite the ordinance, the tribunal had not been made operational by the time Parliament considered it, a few months later. In 2014,an ordinance was also promulgated for the purportedly urgent matter of ensuring that a newly elected prime minister Modi gets the principal secretary of his choice.

Raj-era Act

The origin of the ordinance-making powers can be traced back the colonial era, and more precisely, to the Government of India Act, 1935. Section 42 of this Act stated that the governor general could issue ordinances while the central legislature was in recess. When independent India’s Constitution was being drafted, some members of the Constituent Assembly such as Hriday Nath Kunzru, HV Kamath and Professor KT Shah objected to the inclusion of ordinance-making powers as being anti-democratic with a high likelihood of abuse. Dr BR Ambedkar, however, saw it as a necessary evil and justified its inclusion by stating:

“My submission to the house is that it is not difficult to imagine cases where the powers conferred by the ordinary law existing at any particular moment may be deficient to deal with a situation which may suddenly and immediately arise. What is the executive to do? The executive has got a new situation arisen, which it must deal with Exhypothesi it has not got the power to deal with that in the existing code of law. The emergency must be dealt with, and it seems to me that the only solution is to confer upon the President the Power to promulgate a law which will enable the executive to deal with that particular situation because it cannot resort to the ordinary process of law because, again ex hypothesi, the legislature is not in session.”

Thus, the idea underlying the ordinance-making power was that when a law needs to be enacted urgently, it should be possible to do so. In the late 1940s, when the Constitution was drafted, it would have been impossible to call an emergency session of Parliament at short notice because in those days, many MPs, especially those from the South and the Northeast, would have needed to undertake long journeys by various means of transport to reach New Delhi for the session.

However, in the 21st century, this is no longer the case. It would be entirely practical to hold an emergency session of Parliament or Legislative Assembly, in which MPs or legislators participate through video conferencing and cast their votes online or on an app-based platform. If need be, a special videoconferencing centre could be set up in each district for such emergency sessions.

Similar provisions already exist in company law. Directors are allowed to participate in board meetings through video conferencing and shareholders can cast their votes online without physically attending the meetings where the issue is taken up for voting.

If such systems are implemented in the legislative process, ordinance-making powers could be repealed, putting to rest all the concerns and controversies surrounding them and replacing them with emergency digital Parliament sessions. If the government truly wants to usher in a Digital India, this would be a good step in that direction.

Sagar Godbole is an associate at Trilegal. Views expressed here are personal.

We welcome your comments at letters@scroll.in.
Sponsored Content  BY 

Want to retire at 45? Make your money work for you

Common sense and some discipline are all you need.

Dreaming of writing that book or taking that cruise when you hit your 40s? Well, this dream need not be unrealistic.

All it takes is simple math and the foresight to do some smart financial planning when you are still young. If you start early and get into the discipline of cutting down on unnecessary expenditure, using that money to invest systematically, you can build wealth that sets you free to tick those items off your bucket list sooner than later.

A quick look at how much you spend on indulgences will give you an idea of how much you can save and invest. For example, if you spend, say Rs. 1,000 on movie watching per week, this amount compounded over 10 years means you would have spent around Rs 7,52,000 on just movies! You can try this calculation for yourself. Think of any weekly or monthly expense you regularly make. Now use this calculator to understand how much these expenses will pile up overtime with the current rate of inflation.

Now imagine how this money could have grown at the end of 10 years and overcome the inflation effect if you had instead invested a part of it somewhere!

It is no rocket science

The fact is that financial planning is simpler than we imagine it to be. Some simple common sense and a clear prioritization of life’s goals is all you need:

  1. Set goals and work backwards: Everything starts with what you want. So, what are your goals? Are they short-term (like buying a car), medium-term (buying a house) or long-term (comfortable living post-retirement). Most of us have goals that come under all the three categories. So, our financial plans should reflect that. Buying a house, for example, would mean saving up enough money for up-front payment and ensuring you have a regular source of income for EMI payment for a period of at least 15-20 years. Buying a car on the other hand might just involve having a steady stream of income to pay off the car loan.
  2. Save first, spend later: Many of us make the mistake of putting what is left, after all our expenses have been met, in the savings kitty. But the reverse will have more benefits in the long run. This means, putting aside a little savings, right at the beginning of the month in the investment option that works best for you. You can then use the balance to spend on your expenditures. This discipline ensures that come what may, you remain on track with your saving goals.
  3. Don’t flaunt money, but use it to create more: When you are young and get your first jobit is tempting to spend on a great lifestyle. But as we’ve discussed, even the small indulgences add up to a serious amount of cash over time. Instead, by regulating indulgences now and investing the rest of your money, you can actually become wealthy instead of just seeming to be so.
  4. Set aside emergency funds: When an emergency arises, like sudden hospitalisation or an accident, quick access to money is needed. This means keeping aside some of your money in liquid assets (accessible whenever you want it). It thus makes sense to regularly save a little towards creating this emergency fund in an investment that can be easily liquidated.
  5. Don’t put all your eggs in one basket: This is something any investment adviser will tell you, simply because different investment options come with different benefits and risks and suit different investment horizons. By investing in a variety of instruments or options, you can hedge against possible risks and also meet different goals.

How and Why Mutual Funds work

A mutual fund is a professionally managed investment scheme that pools money collected from investors like you and invests this into a diversified portfolio (an optimal mix) of stocks, bonds and other securities.

As an investor, you buy ‘units’, under a mutual fund scheme. The value of these units (Net Asset Value) fluctuates depending on the market value of the mutual fund’s investments. So, the units can be bought or redeemed as per your needs and based on the value.

As mentioned, the fund is managed by professionals who follow the market closely to make calls on where to invest money. This makes these funds a great option for someone who isn’t financially very savvy but is interested in saving up for the future.

So how is a mutual fund going to help to meet your savings goals? Here’s a quick Q&A helps you understand just that:

  1. How do mutual funds meet my investment needs? Mutual Funds come with a variety of schemes that suit different goals depending on whether they are short-term, medium-term or long-term.
  2. Can I withdraw money whenever I want to? There are several mutual funds that offer liquidity – quick and easy access to your money when you want it. For example, there are liquid mutual funds which do not have any lock in period and you can invest your surplus money even for one day. Based on your goals, you can divide your money between funds with longer term or shorter term benefits.
  3. Does it help save on taxes? Investing in certain types of mutual funds also offers you tax benefits. More specifically, investing in Equity Linked Saving Schemes, which are funds that invest in a diverse portfolio of equities, offers you tax deductions up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act.
  4. Don’t I need a lot of money to invest in MFs? No, you can start small. The returns in terms of percentage is the same irrespective of the amount you invest in. Additionally, the Systematic Investment Plan (SIP) allows you to invest a small amount weekly, monthly or quarterly in a mutual fund. So, you get to control the size and frequency of your investment and make sure you save before you spend.
  5. But aren’t MFs risky? Well many things in life are risky! Mutual funds try to mitigate your risk by investing your money across a variety of securities. You can further hedge risk by investing in 2 to 3 mutual offers that offer different growth stories i.e. a blue-chip fund and a mid-cap fund. Also remember in a mutual fund, your money is being managed by professionals who are constantly following the market.
  6. Don’t I have to wait too long to get back my returns? No! Mutual Funds, because of the variety of options they offer, can give you gains in the short or medium term too.

The essence of mutual funds is that your money is not lying idle, but is dynamically invested and working for you. To know more about how investing in mutual funds really works for you, see here.

Disclaimer: Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

This article was produced by the Scroll marketing team on behalf of Mutual Funds Sahi Hai and not by the Scroll editorial team.