MCQs and Answers

Regulation by government through its own Departments or Agencies directly under its control has always existed. The last century has seen the emergence of a special category of regulatory systems – the Independent Statutory Regulating Agencies.

These agencies differ from the conventional regulating system as they are separated from the executive wing of the government and enjoy a certain degree of autonomy.

The concept of independent regulations took birth in the USA. A large number of Federal Agencies were set up by Acts of Congress, the basic premise of the establishment of these agencies being that a market based economy needs to be regulated in order to ensure a level playing field to all and also to safeguard the larger public and national interest.

Other factors, which favoured the creation of independent regulations, were – increasing complexities and the advancement of technologies required handling of issues by experts; public interest is best served by insulating decision making in certain issues, from political interference.

In India, with the initiation of the process of economic liberalization in the early 90s, government withdrew from many activities which, hitherto were monopolized by it. The entry of the corporate sector necessitated certain measures to boost the investor competence and to safeguard public interest. One such measure was setting up of independent regulators.

In addition, the traditional departmental structure of government was not best suited to play the dual role of a policy making as well as regulating the sector concerned, more so, because in several sectors there were public sector units competing with corporate bodies.

The aforesaid circumstances led to the setting up of several independent statutory regulating agencies in sectors such as Power, Telecom, Financial services, Insurance etc.

There is one more category of regulators – Self Regulatory Authorities. These Authorities are created under different laws but they are self regulatory in nature. The functions of Self-Regulatory Bodies may include: (i) issues of professional education: development of curriculum, setting up of teaching standards, institutional infrastructure, recognition of degrees etc. and (ii) matters connected with licensing, and ethical conduct of the practitioners.

There are organizations like the Institute of Engineers which was formed purely by voluntary action by the respective members of the profession. They do not have any statutory background.

Immediately after independence Jawaharlal Nehru assumed the office of Prime Minister and PMO that point of time was a small organisation attached to the PM.

It was headed by H.M. Patel, distinguished member of ICS who was also a joint secretary of the Viceroy executive council, functioned as a de facto Cabinet Secretariat. He was also appointed as the principal private secretary to Nehru.

In parliamentary democracy, Cabinet is the apex body and Cabinet Secretariat is the ape administrative unit. In terms of working there is no rivalry between Cabinet Secretarial and PMO. Jawaharlal Nehru was a democrat and had a great regard for constitutional authorities.

Cabinet secretary was given primary importance and PMO was a small personal office of the PM performing mostly administrative functions and the importance of cabinet secretary was in no way affected because ol PMO. Nehru also downgraded the post of his principal private secretary to the level of joint secretary, thereby ensuring clear authority and precedence to the cabinet secretary.

Lai Bahadur Shastri succeeded Nehru and strengthened the PMO and made it a powerful organ of the government. The same trend was continued by Indira Gandhi also. L.K.Jha was the principal secretary to the PM during the tenure of Lai Bahadur Shastri was also the head of PMO.

In 1967 P.N. Haskar was appointed to PMO from 1967-1977. PMO became the most powerful organ replacing Cabinet Secretariat. It fell to the temptation of bypassing the formal channels of hierarchy and created a rival power centre to Cabinet Secretariat. Apart from administrative functions, it also performed political functions of the PM, in the process politicizing administrative organs.

Janata Party came to power in 1977 and initially it restored the balance of power in favour ol Cabinet Secretariat but faced with political instability PM Morarji Desai took the help of PMO in performing political functions.

Indira Gandhi returned to power in 1980 and P. C. Alexander was made the head of PMO. During this period cabinet secretary regained its confidence and PMO acted as an institution to aid and advice the PM.

During the tenure of Rajiv Gandhi, PMO again became powerful as it was filled with technocrats and specialists in administration but cabinet secretary retained its own identity and there was coordination between the two during this period.

PMO again became powerful during the tenure of P. V. Narasimha Rao as it extended its scope of authority to all departments within the government. During the tenure of Vajpayee PMO was powerful though the powerful cabinet secretariat also retained its identity.

At present PMO has more than 350 people working for it. It has a large establishment and every ministry/ department of Central Government is represented in PMO. Because of the authority yielded by the PMO it has been criticised as ‘Super cabinet’, ‘Super Ministry’, the ‘Government of the Government of India, etc.

Because of the enlarging scope of functions performed by PM, PMO has become a necessity. The power and prestige enjoyed by PMO since independence reflected the power and prestige enjoyed by the prime minister respectively. In Prime Ministerial form of Government, PMO enjoyed unquestioned power and relegated CS to the secondary position.

Under the present circumstances PMO should be a highly professional body and should function through the system and not try to bypass it. Increasing complexity of governance, while the PM deals with the contenders for power and deals with socio, economic and political complexities at home and abroad, cannot deal with himself without a score of specilised advisors on the patterns of US president.

Prime Minister should keep a crucial watch over the performance of his ministers to ensure a proper image of his government and should also display equal vigilance to ensure that the officials in the PMO do not misuse their position and power. Both CS and PMO perform the role of coordination but of different types. PMO has to coordinate with the PM’s team of ministers to enable the PM to discharge his responsibilities as the Chief Executive. It is the job of the CS to coordinate the work of Council of Ministers.

Qualifications for Membership:

Article 83 lays down the qualifications for membership of the two Houses of Parliament. In order to be eligible to be chosen as a member, a person must be a citizen of India and not less than 30 years of age in case of Rajya Sabha and not less than 25 years of age in case of Lok Sabha. Additional qualifications may be prescribed by law.

Disqualifications for Membership:

Under Article 102, a person shall be disqualified for being chosen as and for being a member of either House (i) if he is not a citizen of India or otherwise owes allegiance to a foreign State, (ii) if he is an undercharged insolvent or one declared by a competent court to be of unsound mind, (iii) if he holds any office of profit under the Union or a State government other than the office of Minister or any office exempted by Parliament by law, and (iv) if he is otherwise disqualified under any law made by Parliament.

Also a person may be disqualified on grounds of defection under the 10th Schedule which was added to the Constitution by the 52nd Amendment.

Vacation of Seats:

Article 101 lies down that a member shall be required to vacate his seat in a House if he is elected to both Houses of Parliament or to a House of State Legislature. In the latter case, if the member does not resign his seat in the State Legislature, his seat in House of Parliament may be declared vacant. A seat may also stand vacated if a member becomes subject to any disquali­fication or voluntarily resigns his seat.

Oath by Members:

The first sitting of the first session of the Lok Sabha after a general election is devoted to members making and subscribing the prescribed oath or affirmation to “bear true faith and allegiance to the Constitution of India” and to “uphold the sovereignty and integrity of India” and to faithfully discharge the duty of a Member of Parliament.

Salary and Allowances:

Members of both the Houses are entitled to salaries and allowances as may be determined by Parliament by law from time to time (Article 106).

The Parliamentary System of government is based upon the principle of the leadership of the Prime Minister. India has adopted the British model of Parliamentary democracy. The British system is a result of continuous evolution in the course of which the real centre or power has passed from the hands of the monarch to the House of Lords, from House of Lords to House of Commons and from House of Commons to the Cabinet and finally from the Cabinet to the all powerful Prime Minister.

The system that exists presently is described as the Prime Ministerial form of Government and in case of India also the same system was followed with little modifications. In the Indian political system, the office of the Prime Minister has become very powerful, although the constitution of the country gave him very limited powers. Article 74 only says that the Prime Minister shall be the head of the Council of Ministers.

Article 75(1) is related to the appointment of the Prime Minister and the Council of Ministers and Article 78 defines not the powers but the duties of the Prime Minister and in the discharge of those duties he acts as a link between the President and the Cabinet.

This was all the Constitution provided about the office of the Prime Minister, but this office has become so important that is considered that India has neither a Parliamentary nor a Cabinet but a Prime Minister system of Government.

The Prime Minister is the heart of the cabinet, focal point of the political system. He has emerged as the undisputed chief of the Executive. The constitutional provision giving him a free hand in choosing members of his Council, provide him with an opportunity to

Select those persons from his party who are acceptable to him. It is he who selects the other minister’s and distributes portfolio among them. He presides over meetings of the Cabinet and determines what business shall be transacted in these meetings. He can change the personnel of the Cabinet at any time by demanding a minister’s resignation or having him dismissed by the President. In Ivory Jennings’s phrase ‘he is a sun around which other ministers revolve like planets.

Prime Minister and the Parliament

The Prime Minister is the leader of the Parliament. He determines the dates of its meetings, as also its programmes. He is the leader of the House and the chief spokesman of the government in the House and it is he who usually keeps it informed about the government’s intentions. He makes announcement of principal government policies and answer questions on super-departments lines.

Prime Minister and the Party

The Prime Ministers in India have also tried to dominate the party by conscious manipulation and maneuver. Nehru forced Tendon to resign as Congress President and took over command of the Party. After the death of Patel (in December 1950) Nehru became Supreme in the party and in the Government.

He combined the two posts of Party President and Prime Minster for three years (1951-1954). From December 1950 to October 1962 (prior to the Chinese aggression on India), there were few fetters on his powers of appointing and dismissing ministers and conducting the working of the council of Ministers.

After the Congress split (1969), the Party office worked on behalf of the Prime Minister (Mrs. Indira Gandhi) and there was centralization of power. Almost all the party presidents were said to be virtually her nominee.

After the formation of the Congress (I), the Prime Minister virtually became the High Command of the Party. Mrs. Gandhi remained the Prime Minister as well as the Party’s President from 1980 – 1984. Rajiv Gandhi and PV. Narasimha Rao was also the Prime Minister as well as the President of the Congress (I) Party.

Prime Minister and Foreign Affairs

In international relations, the Prime Minister is regarded as chief spokesman of the country. In international or regional conferences, it is he who speaks for the nation. Our first Prime Minister was a co-founder of a policy of Non-alignment in the third world.

The complete list of Prime Ministers of India includes the persons sworn into the office as Prime Minister of India following the proclamation of the independence of India in 1947.

Article 53(1) of the Constitution states:

‘The executive power of the Union shall be vested in the Pr dent and shall be exercised by him either directly or through officer subordinate to him in accord with this Constitution’.

The President is the head of the State and the formal executive. The Minister and the Council of Ministers constitute the real and effective executive, according to Dr. Ambedkar.

Under the constitution the President occupies the same position as the King under the Eng constitution. He is the head of the state but not of the executive. He represents the nation but does rule the nation. He is the symbol of the nation. His place in the administration is that of ceremony device on a seal by which the nation’s decisions are made known.’

Although the Constituent Assembly rejected the presidential form of government, it was emotion opposed to leaving the President as a mere figure head. The status of the President of the Republic France, for instance, projected a gloomy picture. Nehru echoed the sentiment of the assembly when declared that the position of the President of India should be ‘of great authority and dignity.

Thus, in our constitutional system, the President occupies a very special place. Every import authority mentioned in the constitution is directly or indirectly attached to him. The list of powers, the constitution confers upon the President, is long and impressive.

These may be broadly classified under the following categories:

Legislative Powers:

The President of India, like the British and Irish counterparts and unlike President of the USA is an integral part of the national Legislature.

The President has the power to nominate to the Rajya Sabha 12 members who have distinguish: themselves in the field of arts, literature, science, and social service etc. and may nominate 2 An Indians to the House of the People (Lok Sabha) if he thinks the Anglo-Indian community is not prop- represented in that House. He also decides about the disqualification of any member of either on the advice of the Election Commission.

The President, from time to time, summons each House of Parliament to meet at such time place as he thinks fit. But there should not be a gap of more than six months between its last sitting one session and the date fixed for its first sitting in the next session.

The President is empowered prorogue the Houses or either House and to dissolve the Lok Sabha. He can call joint sittings of the Houses to resolve their differences over a non-Money Bill [A. 108 (1)]. He can address both the of Parliament assembled together and either House of the Parliament in regard to any pending bill any other matter.

He addresses both Houses of Parliament assembled together at the first session a’ each general election and at the commencement of the first session of each year and inform Parliament of the cause of its summons (A.87).

As regards legislation, the prior recommendation or previous sanction of President is required introducing a Money Bill [A.117 (1)] and Bills affecting taxation in which States are interested (A.27 Prior recommendation of the Head of the State is also necessary when a bill is to be introduced un A.3 for the formation of new States or alteration of boundaries etc.

All bills after having been passed by both the Houses of Parliament must be presented to President for his assent. Bills become Acts only after receiving the assent of the President (A.111). President may withhold his assent or may return the bill to the Parliament for reconsideration. But if returned bill is passed for a second time by the Parliament with or without amendment, he must give assent.

However, the President cannot withhold his assent from a money bill. Under A. 86(2), the Pr dent has the power to issue ordinances, if Parliament is not in session. However all such ordinances are laid before both Houses of Parliament when they meet in session and will have validity at the expiration of six weeks from the date on which parliament reassembles, unless withdrawn earlier.

Executive Power

The Constitution vests the executive power of the Union in the President. The execution power ‘prim means the execution of the laws enacted by the legislature’ and ‘the power of carrying on the business of government’ or ‘the administration of the affairs of the state.

The President is the chief executive had of the Indian Union. He is the formal head of administration and he shall exercise all the executive powers either directly or through the officers subordinate to him [A. 53(1)] in accordance with the constitution.

This Article further provides that the supreme command of the defence forces shall be vested in the President and the exercise of this power shall be regulated by law. A. 74(1) provides that ‘there shall be a Council of Ministers with the Prime Minister at the head to aid and advice the President who shall, in the exercise of his functions act in accordance with such advice.’ Thus the President cannot ever rule the country unaided by a Council of Ministers.

The President as the executive head enjoys vast powers of appointment. He appoints the Prime Minister and according to the latter’s advice, he appoints the other Ministers [A. 75(1)]. If no party has a clear majority in the Parliament (as it happened in 1979,1989,1991,1996 and 1998) and if the leadership is disputed, the President may have the scope for an independent choice of the leader and influencing the inclusion of members in the cabinet. Under such circumstances, the influence of the President will depend upon his personality and his ability to man oeuvre things.

All other appointments, including those of Judges of the Supreme Court are made by the President. As a President he can also remove the various dignitaries from office.

Under Article 78, the President has a right to be kept informed by the Prime Minister of all decisions taken by the Council of Ministers and seeks such other information about the affairs of the Government of India as he may consider necessary.

The Article further provides that the Head of the State may also ask the Prime Minister to submit for the consideration of the Council of Ministers any matter on which a decision had been taken by a Minister but which has not been considered by the Council.

Financial Powers

The President has vast financial powers. Before the beginning of a financial year, he causes to be laid before Parliament the annual budget and the supplementary budget, if any. No money bill, particularly no bill proposing imposition of new taxes or changes in the existing taxes, in which the States are interested, can be introduced in the Lok Sabha without the prior recommendation of the President.

He distributes the share of all income tax receipts between the Centre and States and allocates to the State of Assam, West Bengal, and Bihar and Orissa grants-in-aid in lieu of their shares in export duty on jute. He appoints Finance Commission to make recommendations regarding financial relations between the Union and the States.

Judicial Powers

Under Art. 72 the Head of the State is vested with power to grant pardon, reprieve, respite or remission of punishment. He can also suspend, remit or commute a sentence of any person convicted of an offence – (a) in all cases of punishment by a Court of Martial; (b) in all cases where the punishment is for an offence against any law relating to a matter to which the executive power of the Union extends; or (c) in all cases of sentence of death. In December 1988, the President dismissed the petition of Kehar Singh convicted in Indira Gandhi murder case.

The President can refer any matter of constitutional law to the Supreme Court for advice (A. 143). The advice of the Supreme Court, however, is not binding upon him.

Emergency Powers

The Constitution confers vast emergency powers upon the President unparalleled in the history of world constitutions. The Constitution envisages three kinds of emergencies, namely,

(1) Emergency arising out of war, external aggression or armed rebellion (Article 352)

(2) Emergency arising out of the failure of constitutional machinery in the states (Article 356)

(3) Financial emergency (Article 360)

During the last few years, there has been a demand for greater autonomy to the public enterprises. It has been argued that Article 12 of the Constitution, where the public sector units are treated as ‘authorities’ under ‘State’, has put a lot of constraint on them.

The demand of/for autonomy has also become somewhat irrelevant if we take cognizance of the recent development regarding providing autonomy to a large number of PSUs.

Ministries told to keep their PSUs at arm’s length

The government has barred its officers and staff from using the infrastructure or facilities of the state-owned companies and asked administrative ministries to repatriate PSU staff working with them.

The measures are aimed at providing greater autonomy to the state-owned companies by keeping administrative ministries at a professional distance..

Several PSU officials are currently working in key ministries such as power, oil, steel, chemicals and heavy industry. The government has also received complaints that governance norms have been violated in cases where PSU employees are working with the administrative ‘ministries in advisory roles.

The government is of view that it is important to separate the functions of the ministry and its public undertakings, given the government’s disinvestment programme. No PSU official should be involved in such decision making process barring the chairman and his appointed staff.

The department of public enterprises, the nodal agency for all state-owned companies, has also come out with guidelines restricting officials of the administrative ministry from participating in retail issues. The same is applicable to PSU employees who are involved in the decision making process.

Some administrative ministries, however, feel that this exercise may lead to delays in decision making on key matters.

The government is further looking to curtail the role of administrative ministries both in functional and financial matters. Four PSUs – NTPC, SAIL, ONGC and IOC – have been approved for the new maharatna category. As of now, only NTPC enjoys this status, the rest of the PSUs have to appoint non-official directors to get maharatna powers.

Port trusts to become public sector companies

Years after the government set up its first corporatised port at Ennore, the ministry of shipping is planning to initiate the conversion of major port trusts into public sector undertakings (PSUs) in a bid to make them independent and more profitable. The plan is to begin the process with Jawaharlal Nehru Port Trust (JNPT) and then move on to other major port trusts.

A consensus has been reached within JNPT over corporatisation among various stake holders including employees’. Usually, corporatisation of ports has been a thorny issue for the government due to opposition from labour unions.

The move is expected to give more autonomy to boards of major ports especially at a time when there is immense pressure on the government to expedite the National Maritime Development Programme for modernisation and expansion of ports through public private partnership (PPP).

India gives greater autonomy to jewels’ among state-run firms

India created a new category for its highly-efficient state-run firms, called maharatnas or mega- jewels, to extend much greater autonomy to its managements and flexibility in areas like mergers, acquisitions and recruitment.

The main objective of the maharatna scheme is to empower the mega central public sector enter­prises to expand their operations and emerge as global giants.

The proposed higher category will act as an incentive for other navratnas (jewels) firms, provide brand value and facilitate the delegation of enhanced powers to central public sector enterprises.

Currently, there are 18 navratnas among state-run firms.

For a company to be accorded maharatna status, it would first have to be a navratna, besides being listed on stock exchanges with public shareholding as prescribed by the Securities and Exchange Board of India (SEBI).

The firm should also have clocked an average annual turnover of Rs. 25,000 crore ($5 billion) with an average annual net worth of Rs. 15,000 crore ($3 billion) during the past three years.

It should also have posted annual net profit of more than Rs. 5,000 crore ($1 billion) during the past three years and enjoy a significant global presence or international operations.

The procedure for grant of maharatna status as well as their review is proposed to be similar to that in vogue for the grant of navratna status.

Some of the special powers to maharatna companies include:

1. Make equity investment to establish joint ventures and subsidiaries in India or abroad
2. Execute mergers in India or abroad subject to a ceiling of 15 percent of its net worth up to an absolute ceiling of Rs. 5,000 crore ($1 billion)
3. Powers to the board on recruitment

The government had introduced the navratna scheme in 1997 to identify state-run firms that had comparative advantages over others and needed autonomy and support to become global giants.

The boards of these navratna companies have been delegated powers in areas such as capital expenditure, investment in joint ventures or subsidiaries, mergers and human resources management. “The current criteria for the grant of navratna status are size-neutral.

Over the years some navratna companies have grown very big and have considerably larger operation than their peers. ‘The proposed higher category (of maharatna) will act as an incentive for other navratna companies, provide brand value and facilitate delegation of enhanced powers to central public sector undertakings. Conclusion

To conclude, it is clear that during the last 62 years, public sector units have registered a growth in jurisdiction, volume of investment and activities.

The performance of public enterprises, which at times was dismal, has improved to some extent. Large number of contributions has been made by the public enterprises in the past. Even after liberalisation, the public sector will play an important role in the economic development of our country.

What is required is to have a supporting role from the private enterprises. Instead of privatisation of the public sector units, one can argue that there is a need to bring in private culture of management in the PSUs. Efficiency is not the function of ownership, but of management.

In case, we are able to provide the real operational autonomy, reduce the bureaucratic way of functioning, bring about modern techniques of management, reduce considerably the size of manpower and bring about effective accountability, the public sector would still occupy commanding heights and play a significant role in the economic development with social justice in India.