The results of General Election 2019 were declared last week concluding the process for electing the 17th Lok Sabha. Immediately after the results, the previous Lok Sabha was dissolved. The next couple of days will witness several key events such as swearing-in ceremony of the Prime Minister and Cabinet, and the first session of the 17th Lok Sabha. In the first session, the newly elected MPs will take their oaths, the Speaker of the 17th Lok Sabha will be elected, and the President will address a joint sitting of Parliament. In this blog, we explain the process and significance of the events that will follow in the days to come.
Key Events in the First Session of the 17th Lok Sabha
The Bharatiya Janta Party has emerged as the single largest party and the leader of the party will be sworn-in as the Prime Minister. As per Article 75(1) of the Constitution, the other ministers are appointed by the President on the advice of the Prime Minister. The 91st Amendment to the Constitution limits the total size of the Council of Ministers to 15% of the total strength of the House (i.e., 81 Ministers). As per media reports, swearing-in of the Council of Ministers is scheduled for May 30, 2019.
How is the schedule for first session decided?
The 17th Lok Sabha will commence its first session in the first week of June. The exact date of commencement of the first session and the schedule of key events in the session, including the date of President’s address, is decided by the Cabinet Committee on Parliamentary Affairs. This Committee will be set up after the swearing in of the Council of Ministers. The previous Lok Sabha had commenced on June 4, 2014 and its first session had six sitting days (June 4, 2014 to June 11, 2014).
Who presides over the first session?
Every proceeding of the House is presided by a Speaker. The Office of the Speaker becomes vacant immediately before the first meeting of a new Lok Sabha. Therefore, a temporary speaker, known as the pro-tem Speaker, is chosen from among the newly elected MPs. The pro-tem Speaker administers oath/affirmation to the newly elected members, and also presides over the sitting in which the new Speaker is elected. The office of the pro-tem Speaker ceases to exist when the new Speaker is elected.
How is the pro-tem speaker chosen?
Once the new government is elected, a list containing the names of the senior-most members of the House is prepared. The seniority is decided by total tenure as a member of either Lok Sabha or Rajya Sabha. The Prime Minister then identifies a Member from the list who acts as the Speaker pro-tem. Three other members are also identified before whom other members may take oath/affirmation.
How is the new Speaker chosen?
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Any member may give notice of a motion that another Member be chosen as the Speaker of the House. The motions are then moved and voted upon. After the results are announced, the Speaker-elect is felicitated by leaders of all political parties, including the Prime Minister and Leader of the Opposition. From then, the new Speaker takes over the proceedings of the House. |
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An understanding of the Constitution, the Rules of Procedure, and conventions of Parliament is considered a major asset for the Speaker. While this might indicate that a Speaker be one of the senior-most members of the House, this has not always been the norm. There have been occasions in the past where the Speaker of the House was a first-time MP. For instance, Mr. K.S. Hegde, the Speaker of the sixth Lok Sabha and Mr. Bal Ram Jakhar, the Speaker of the seventh Lok Sabha were both first time MPs |
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What is the role of the Speaker in the House?
The Speaker is central to the functioning of the legislature. The proceedings of the House are guided by the Rules of Procedure and the final authority for the interpretation and implementation of these rules rests with the Speaker. The Speaker is responsible for regulating the discussion in the House and maintaining order in the House. For instance, it is the Speaker’s discretion on whether to allow a member to raise a matter of public importance in the House. The Speaker can suspend a sitting member for obstructing the business of the House, or adjourn the House in case of major disorder.
The Speaker is also the chair of the Business Advisory Committee, which is responsible for deciding the business of the House and allocating time for the same. The Speaker also chairs the General Purposes Committee and the Rules Committee of the Lok Sabha and appoints the chairpersons of other committees amongst the members. In the past, Speakers have also been instrumental in strengthening the Committee system. Mr. Shivraj Patil, the Speaker of the 10th Lok Sabha, played a key role in the initiation of 17 Departmental Standing Committees, therefore strengthening Parliament’s control over the functioning of different ministries of the government.
Since the Speaker represents the entire House, the office of the Speaker is vested with impartiality and independence. The Constitution and the Rules of Procedure have prescribed guidelines for the Speaker’s office to ensure such impartiality and independence. Dr. N. Sanjiva Reddy, the Speaker of the fourth Lok Sabha, formally resigned from his political party as he was of the opinion that the Speaker belongs to the whole House and should therefore remain impartial. As per Article 100 of the Constitution, the Speaker does not exercise vote on any matter being voted upon, in the first instance. However, in case there’s a tie during the voting, the Speaker exercises her vote.
What does the President’s Address entail?
The election of the Speaker is followed by the President’s Address. Article 87 of the Constitution requires the President to address both Houses at the beginning of the first session after each general election. The President also addresses both the Houses at the beginning of the first session of each year. The President’s address highlights the initiatives of the government from the previous year, and mentions the policy priorities for the upcoming year. After the address, the ruling party moves a Motion of Thanks to the President’s address in both Houses of Parliament. In the Motion of Thanks, MPs may move amendments to the motion, which are then put to vote.
The President of India, Mr. Ram Nath Kovind will address Parliament in this first session of the 17th Lok Sabha. During the 16th Lok Sabha, the first President’s address was held on June 9, 2014 and the last time he addressed Parliament was on January 31, 2019 (highlights of this address can be read here).
Sources: The Constitution of India; Rules and Procedure and Conduct of Business in Lok Sabha; Handbook on the Working of Ministry of Parliamentary Affairs; The website of Parliament of India, Lok Sabha; The website of Office of the Speaker, Lok Sabha.
These are challenging times for chit fund operators. A scam involving the Saradha group allegedly conning customers under the guise of a chit fund, has raised serious questions for the industry. With a reported 10,000 chit funds in the country handling over Rs 30,000 crore annually, chit fund proponents maintain that these funds are an important financial tool. The scam has also sparked responses from both the centre and states: the Finance Ministry, Ministry of Corporate Affairs and SEBI have all promised to act and the West Bengal Assembly has passed The West Bengal Protection of Interest of Depositors in Financial Establishments Bill, 2013, with Odisha and Haryana considering similar legislation. What is a chit fund? A chit fund is a type of saving scheme where a specified number of subscribers contribute payments in instalment over a defined period. Each subscriber is entitled to a prize amount determined by lot, auction or tender depending on the nature of the chit fund. Typically the prize amount is the entire pool of contribution minus a discount which is redistributed to subscribers as a dividend. For example, consider an auction-type chit fund with 50 subscribers contributing Rs 100 every month. The monthly pool is Rs 5,000 and this is auctioned out every month. The winning bid, say Rs 1000, would be the discount and be distributed among the subscribers. The winning bidder would then receive Rs 4,000 (Rs 5,000 – 1,000) while the rest of subscribers would receive Rs 20 (1000/50). Winners cannot enter the auction again and will be liable for the monthly subscription as the process is repeated for the duration of the scheme. The company managing the chit fund (foreman) would retain a commission from the prize amount every month. Collectively, the subscribers to a chit fund are referred to as a chit group and a chit fund company may run many such groups. What are the laws governing chit funds? Classifying them as contracts, the Supreme Court has read chit funds as being part of the Concurrent List of the Indian Constitution; hence both the centre and state can frame legislation regarding chit funds. States like Tamil Nadu, Andhra Pradesh and Kerala had enacted legislation (e.g The Kerala Chitties Act, 1975 and The Tamil Nadu Chit Funds Act, 1961) for regulating chit funds. Chit Funds Act, 1982 In 1982, the Ministry of Finance enacted the Chit Funds Act to regulate the sector. Under the Act, the central government can choose to notify the Act in different states on different dates; if the Act is notified in a state, then the state act would be repealed[i]. States are responsible for notifying rules and have the power to exempt certain chit funds from the provisions of the Act. Last year the central government, notified the Act in Arunachal Pradesh, Gujarat, Haryana, Kerala and Nagaland. Under the Act, all chit funds require previous sanction from the state government. The capital requirement for establishing chit funds is Rs 1 lakh and at least 10% of profits should be transferred to a reserve fund. The amount of discount (i.e. the bid) is capped at 40% of the total chit fund value. States may appoint a Registrar who would be responsible for regulation, inspection and dispute settlement in the sector. Any grievances over decisions made by the Registrar can be subject to appeals directed to the state government. Chit fund managers are required to deposit the entire value of the chit fund (can be done in 50% cash and 50% bank guarantee) with the Registrar for the duration of the chit cycle. Prize Chits and Money Circulation Schemes (Banning) Act, 1978 The Prize Chits and Money Circulation Schemes (Banning) Act, 1978 defines and prohibits any illegal chit fund schemes (e.g. schemes where auction winners are not liable to future payments). Again, the responsibility for enforcing the provisions of this Act lies with the state government. Reports suggest that the government is discussing amendments to this Bill in the wake of the chit fund scam. West Bengal Protection of Interest of Depositors in Financial Establishments Bill, 2013 Last month the West Bengal Assembly passed the West Bengal Protection of Interest of Depositors in Financial Establishments Bill, 2013. This was a direct response to the chit fund scam in West Bengal. While not regulating chit funds directly, the Act regulates and restricts financial establishments to curb any unscrupulous activity with regards to deposits. Chit funds are specifically included under the definition of deposits. The state government will appoint a competent authority to conduct investigations. What is the role of RBI and SEBI? The Reserve Bank of India (RBI) is the regulator for banks and other non banking financial companies (NBFCs) but does not regulate the chit fund business. While chit funds accept deposits, the term ‘deposit’ as defined under the Reserve Bank of India Act, 1934 does not include subscriptions to chits. However the RBI can provide guidance to state governments on regulatory aspects like creating rules or exempting certain chit funds. As the regulator of the securities market, SEBI regulates collective investment schemes. But the SEBI Act, 1992 specifically excludes chit funds from their definition of collective investment schemes. In the recent case with Sarada Group, the SEBI investigation discovered that Sarada were, in effect, operating a collective investment scheme without SEBI’s approval.
[i] The central act repeals the Andhra Pradesh Chit Funds Act, 1971; the Kerala Chitties Act, 1975, the Maharashtra Chit Funds Act, 1974’, the Tamil Nadu Chit Funds Act, 1961 (applicable in Chandiragh and Delhi), the Uttar Pradesh Chit Funds Act, 1975, Goa, Daman and Diu Chit Funds Act, 1973 and Pondicheery Funds Act, 1966.
