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LEGAL REGIME OF ECONOMIC ENTERPRISES

TABLE OF CONTENTS

Unit-I

The rationale of Government Regulation

Constitutional Perspectives

The New Economic Policy

The place of Public, small scale, co-operative, corporate, private and joint sectors

in changing context -Emphasis on consumerism

Unit-II

Regulation of sick undertakings

Deregulation of essential commodities

Licensing policy and Legal Process-Growing trends of Liberalization

Unit-III

Special Aspects of Legal Regulation of some public enterprises

Viz. Telecom Regulatory Authority, Insurance Regulatory Authority

and Broadcasting Regulating Authority

Unit-IV

Legal Regulation of Multi-Nationals

Collaboration agreements for technology transfer

Development and regulation of foreign investments

Investments in India: FDIs and Depository Receipts

Investment abroad, GDR, ADRs

UNIT-I

CONSTITUTION OF INDIA

  • COOPERATIVE FEDERALISM
  • CENTRE-STATE RELATIONS
  • FORMULATION AND IMPLEMENTATION OF PLANS
  • SHARE OF STATES IN PUBLIC SECTOR PLAN OUTLAY
  • BASIC MINIMUM SERVICES (BMS) APPROACH
  • INTER-STATE RELATIONS
  • DECENTRALISATION AND PANCHAYATI RAJ
  • INDUSTRIAL POLICY STATEMENT- 1991
  • PUBLIC AND PRIVATE SECTOR, JOINT VENTURE AND SECTORS:
  • CONSUMERISM
  • THE CENTRAL CONSUMER PROTECTION COUNCIL
  • ESTABLISHMENT OF CONSUMER DISPUTES REDRESSAL AGENCIES.

Unit-I

  • The rationale of Government Regulation
  • Constitutional Perspectives
  • The new economic policy
  • The place of Public, small scale, co-operative, corporate, private and joint sectors

in changing context Emphasis on consumerism

In this unit, we will be discussing the some of the provisions of Indian constitution in connection the government regulation. De-Centralization of administration for rendering the economic justice to all sections of the people in state. The various schemes have been taken up by the Planning commission in different five year plans.

Constitution of India

India, also known as Bharat, is a Union of States. It is a Sovereign Socialist Secular Democratic Republic with a parliamentary system of government. The Republic is governed in terms of the Constitution of India which was adopted by the Constituent Assembly on 26thNovember 1949 and came into force on 26thJanuary 1950.

The Constitution provides for a Parliamentary form of government which is federal in structure with certain unitary features. The constitutional head of the Executive of the Union is the President. As per Article 79 of the Constitution of India, the council of the Parliament of the Union consists of the President and two Houses known as the Council of States (Rajya Sabha) and the House of the People (Lok Sabha). Article 74(1) of the Constitution provides that there shall be a Council of Ministers with the Prime Minister as its head to aid and advice the President, who shall exercise his functions in accordance to the advice. The real executive power is thus vested in the Council of Ministers with the Prime Minister as its head.

The Council of Ministers is collectively responsible to the House of the People (Lok Sabha). Every State has a Legislative Assembly. Certain States have an upper House also called State Legislative Council. There is a Governor for each state who is appointed by the President. Governor is the Head of the State and the executive power of the State is vested in him. The Council of Ministers with the Chief Minister as its head advises the Governor in the discharge of the executive functions. The Council of the Ministers of a state is collectively responsible to the Legislative Assembly of the State.

The Constitution distributes legislative powers between Parliament and State legislatures as per the lists of entries in the Seventh Schedule to the Constitution. The residuary powers vest in the Parliament. The centrally administered territories are called Union Territories.

Constitution is a living document, an instrument which makes thegovernment system work. Its flexibility lies in its amendments.

Art. 38. 1[(1)] The State shall strive to promote the welfareof the people by securing and protecting as effectively asit may a social order in which justice, social, economicand political, shall inform all the institutions of thenational life.

2[(2) The State shall, in particular, strive to minimize the inequalities in income, and endeavour to eliminateinequalities in status, facilities and opportunities, notonly amongst individuals but also amongst groups ofpeople residing in different areas or engaged in differentvocations.]

Art.39. The State shall, in particular, direct its policytowards securing—

(a) that the citizens, men and women equally, havethe right to an adequate means of livelihood;

(b) that the ownership and control of the materialresources of the community are so distributed as bestto subserve the common good;

(c) that the operation of the economic system doesnot result in the concentration of wealth and meansof production to the common detriment;

(d) that there is equal pay for equal work for bothmen and women;

(e) that the health and strength of workers, menand women, and the tender age of children are notabused and that citizens are not forced by economicnecessity to enter avocations unsuited to their age orstrength;

[(f) that children are given opportunities andfacilities to develop in a healthy manner and in

conditions of freedom and dignity and that childhoodand youth are protected against exploitation andagainst moral and material abandonment.]

[39A. The State shall secure that the operation of thelegal system promotes justice, on a basis of equalopportunity, and shall, in particular, provide free legalaid, by suitable legislation or schemes or in any otherway, to ensure that opportunities for securing justice arenot denied to any citizen by reason of economic or otherdisabilities.]

73rdConstitutional Amendment

Panchayats : 3 – Tier System:

PART- IX of the Constitution envisages a three-tier system of Panchayats, namely, (a) The village level; (b) The District Panchayat at the district level; (c) The Intermediate Panchayat which stands between the village and district Panchayats in the States where the population is above 20 lakhs.

Composition:

All the seats in a Panchayat shall be filled by persons chosen by direct election from territorial constituencies in the Panchayat area. The electorate has been named Grama Sabha consisting of persons registered in the electoral rolls relating to a village comprised within the area of a Panchayat. In this way representative democracy will be introduced at the grass roots.

The Chairperson of each Panchayat shall be elected according to the law passed by a State and such State Law shall also provide for the representation of Chairpersons of Village and Intermediate Panchayats in the District Panchayat, as well as members of the Union and State Legislature in the Panchayats above the village level.

Reservation of seats for Schedule Castes and Scheduled Tribes:

Article 243D provides that seats are to be reserved for (a) Scheduled Castes, and (b) Scheduled Tribes. The reservation shall be in proportion to their population. If, for example, the Scheduled Castes constitute 30% of the population and the Scheduled Tribes 21%, then 30% and 21% seats shall be reserved for them respectively.

Out of the seats so reserved not less than 1/3rd of the seats shall be reserved for women belonging to Scheduled Castes and Scheduled Tribes, respectively.

Reservation for women:

Not less than 1/3rd of the total number of seats to be filled by direct elections in every Panchayat shall be reserved for women.

Reservation of offices of Chairpersons:

A State may by law make provision for similar reservation of the offices of Chairpersons in the Panchayats at the village and other levels.

These reservations favouring the Scheduled Castes and Scheduled Tribes shall cease to be operative when the period specified in Article 334 (at present 60 years i.e., upto 21-1-2010).

A State may by law also reserve seats or offices of Chairpersons in the Panchayat at any level in favour of backward classes of citizens.

Duration of Panchayat:

Every Panchayat shall continue for five years from the date of its first meeting. But it can be dissolved earlier in accordance with the procedure prescribed by State Law. Elections must take place before the expiry of the above period. In case it is dissolved earlier, then the elections must take place within six months of its dissolution. A Panchayat reconstituted after premature dissolution (i.e., before the expiry of the full period of five years) shall continue only for the remainder of the period. But if the remainder of the period is less than six months it shall not be necessary to hold elections.

Qualification for membership:

Article 243F provides that all persons who are qualified to be chosen to the State Legislature shall be qualified to be chosen as a member of a Panchayat. The only difference is that a person who has attained the age of 21 years will be eligible to be a member (in case of State Legislature the prescribed age is 25 years-Article 173). If a question arises as to whether a member has become subject to any disqualification, the question shall be referred to such authority as the State Legislature may provide by law.

Powers, authority and responsibilities of Panchayats:

State Legislatures have power, to confer on the Panchayats such powers and authority as may be necessary to enable them to function as institutions of self-government [Arts. 243G-243H]. They may be entrusted with the responsibility of (a) preparing plans for economic development and social justice, (b) implementation of schemes for economic development and social justice, and (c) in regard to matters listed in the Eleventh Schedule (inserted by the 73rd Amendment). The list contains 29 items, e.g., land improvement, minor irrigation, animal husbandry, fisheries, education, women and child development etc. The 11th Schedule thus distributes powers between the State Legislature and the Panchayat just as the 7th Schedule distributes powers between the Union and the State Legislature.

Powers to impose taxes and financial resources:

A State may by law authorise a Panchayat to levy, collect and appropriate taxes, duties, tolls etc. The law may lay down the procedure to be followed as well as the limits of these exactions. It can also assign to a Panchayat various taxes, duties etc. collected by the State Government. Grants-in-aids may be given to the Panchayts from the Consolidated Fund of the State.

Panchayats Finance Commissions:

Within one year from 25th April 1993, i.e., the date on which the Constitution 73rd Amendment came into force and afterwards every five years the State Government shall appoint a Finance Commission to review the financial position of the Panchayats and to make recommendations as to---

the distribution between the State and the Panchayats of the net proceeds of taxes, duties, tolls and fees leviable by the State which may be divided between them and how allocation would be made among various levels of Panchayats;

water taxes, duties, tolls and fees may be assigned to the Panchayats;

grant-in-aid to the Panchayats.

The report of the Commission, together with a memorandum of action taken on it, shall be laid before the State Legislature. These provisions are modelled on Article 280 which contains provisions regarding appointment of a Finance Commission for distribution of finances between the Union and the States.

74thConstitutional Amendment

Municipalities And Planning Committees

PART IXA which has come into force on 1-6-1993 gives a constitutional foundation to the local self-government units in urban areas. In fact such institutions are in existence all over the country.Some of the provisions are similar to those contained in Part IX, e.g., Reservation of Seats, Finance Commission, Election Commission etc.

This part gives birth to two types of bodies:

[i] Institutions of self-government [Art. 243Q], and

[ii] Institutions for planning [Arts. 243ZX and 243 ZE].

Institutions of self-government, called by a general name "municipalities" are of three types:

Nagar Panchayat, for a transitional area, i.e., an area which is being transformed from a rural area to an urban area.

Municipal Council for a smaller urban area.

Municipal Corporation for a larger urban area.

Article 243Q makes it obligatory for every State to constitute such units. But if there is an urban area or part of it where municipal services are being provided or proposed to be provided by an industrial establishment in that area then considering also the size of the area and other factors the Governor may specify it to be an industrial township. For such an area it is not mandatory to constitute a Municipality.

Panchayat Finance Commission:

The Finance Commission appointed under Art. 243-I (see Chapter 18 under Panchayat Finance Commission) shall also review the financial position of the Municipalities and make recommendations as to-

the distribution between the State and the Municipalities of the net proceeds of taxes, duties, tolls and fees leviable by the State which may be divided between them and how allocation of shares amongst various levels of Municipalities.

the taxes, duties, tolls and fees may be assigned to the Municipalities.

grant-in-aid to the Municipalities.

the measures needed to improve the financial position of the Municipalities.

any other matter that may be referred to it by the Governor.

Cooperative Federalism

Introduction

In a vast country like ours, the spirit of co-operative federalism should guide the relations between the Centre and the States on the one hand, among different States and between the States and the Panchayati Raj Institutions (PRIs) and the Urban Local Bodies (ULBs) on the other. The essence of co-operative federalism is that the Centre and the State Governments should be guided by the broader national concerns of using the available resources for the benefit of the people. Co-operative federalism encourages the Government at different levels to take advantage of a large national market, diverse and rich natural resources and the potential of human capabilities in all parts of the country and from all sections of the society for building a prosperous nation. Co-operative federalism makes it possible to raise all the available resources by the Government at different levels in a co-ordinated way and channel them for use for the common good of the people. This requires a harmonious relationship and co-operative spirit between the Centre and the States and among the States themselves. While a healthy competition among the States for evolving efficient and socially desirable policies and programmes is welcome, any competition which nullifies each other's advantages in development and erodes the resource base of the States should be avoided. Co-operative federalism is intended to ensure a minimum bundle of basic services and a nationally acceptable level of living for all the people of the country.

Centre-State Relations

The relations between the Centre and the States in political, economic, financial and administrative spheres have been periodically reviewed. The Administrative Reforms Commission and the Sarkaria Commission were appointed to review the whole gamut of relations between the Centre and the States and to recommend measures, including changes in the Constitutional provisions, to harmonise the relationship between the Centre and the States. While the Government has accepted and implemented several recommendations of the Administrative Reforms Commission, the recommendations of the Sarkaria Commission are under consideration in the Inter-State Council (ISC) which is trying to reach a consensus on various issues. Out of the 247 recommendations of the Sarkaria Commission, the Inter-State Council has taken a decision on 91 recommendations. These recommendations pertain to All India Services, Administrative Relations, Deployment of Union Armed Forces, Agriculture, Forest, Food, Civil Supplies, Mines & Minerals, Trade, Commerce, Mass Media etc. The re-activisation of ISC has opened a new chapter in the Centre-State relations and provided a useful forum for building a common national approach on various issues.

Formulation and Implementation of Plans

In the sphere of planning, the balance of decision making process tilted more towards the Centre during the early years of planning. This was probably inevitable as there was lack of adequate experience in the formulation and the implementation of Plan programmes at the State level. No doubt, planning from the grass-roots level has been emphasised from the very beginning, but its implementation has been sporadic and tardy. Even so, the Planning Commission encouraged District Planning Committees (DPCs) and taluk level planning process from the Fourth Plan. Subsequently, a significant step was taken through the enactment of the 73rd and the 74th Amendments to the Constitution in 1993, which conferred a Constitutional status not only on the PRIs and the ULBs but also on the DPCs. It is now fully realised that the spirit of co-operative federalism should get reflected in the strong encouragement given to participative planning processes. In other words, the Central Government, the State Governments, the PRIs, the ULBs, and the non-Governmental organisations, the voluntary action groups and most of all, the people at the grass-roots have to be involved in the process of formulation and implementation of the Plans. It is realised that the process of democratic decentralisation can have true meaning only when sufficient autonomy and freedom is available to the States as well as to the PRIs and the ULBs in the formulation and the implementation of the Plans. At the same time, autonomy pre-supposes maturity in decision making and responsibility in the use of national resources. Decentralisation of the process of formulation and implementation should, therefore, ensure accountability.