How long can the central government take to frame Rules?

Saket Surya - Oct 21, 2022

On October 18, it was reporte d in the news that the central government has been given more time for framing rules under the Citizenship (Amendment) Act, 2019. The President had given assent to this Act in December 2019 and the Act came into force in January 2020. Similarly, about two years have passed since the new labour codes were passed by Parliament, and the final Rules are yet to be published. This raises the question how long the government can take to frame Rules and what is the procedure guiding this. In this blog, we discuss the same.

Under the Constitution, the Legislature has the power to make laws and the Executive is responsible for implementing them. Often, the Legislature enacts a law covering the general principles and policies, and delegates the power to the Executive for specifying certain details for the implementation of a law. For example, the Citizenship Amendment Act provides who will be eligible for citizenship. The certificate of registration or naturalization to a person will be issued, subject to conditions, restrictions, and manner as may be prescribed by the central government through Rules. Delay in framing Rules results in delay in implementing the law, since the necessary details are not available. For example, new labour codes provide a social security scheme for gig economy workers such as Swiggy and Zomato delivery persons and Uber and Ola drivers. These benefits as per these Codes are yet to be rolled out as the Rules are yet to be notified.

Timelines and checks and balances for adherence

Each House of Parliament has a Committee of Members to examine Rules, Regulations, and government orders in detail called the Committee on Subordinate Legislation. Over the years, the recommendations of these Committees have shaped the evolution of the procedure and timelines for framing subordinate legislation. These are reflected in the Manual of Parliamentary Procedures issued by the Ministry of Parliamentary Affairs, which provides detailed guidelines.

Ordinarily, Rules, Regulations, and bye-laws are to be framed within six months from the date on which the concerned Act came into force. Post that, the concerned Ministry is required to seek an extension from the Parliamentary Committees on Subordinate Legislation. The reason for the extension needs to be stated. Such extensions may be granted for a maximum period of three months at a time. For example, in case of Rules under the Citizenship Amendment Act, 2019, at an earlier instance, an extension was granted on account of the onset of the COVID-19 pandemic.

Activity	Timeline
Publication of Rules, Regulations, and Bye-Laws, where public consultation is required under the Act	A minimum of 30 days for public feedback Consequently, for publication, Three months, if the number of suggestions is small Six months, if the number of suggestions is large
Publication of Rules, Regulations, and Bye-Laws, not requiring public consultation	Six months from the date on which the concerned Act came into force
Any extension for publication	A maximum of three months at a time

To ensure monitoring, every Ministry is required to prepare a quarterly report on the status of subordinate legislation not framed and share it with the Ministry of Law and Justice. These reports are not available in the public domain.

Recommendations to address delays

Over the years, the Subordinate Legislation Committees in both Houses have observed multiple instances of non-adherence to the above timelines by various Ministries. To address this, they have made the following key recommendations:

Statement on reasons for the delay: In 2011, Rajya Sabha Committee recommended that while laying Rules/Regulations before Parliament, the Ministry should also lay a statement explaining the reasons for the delay, if any.
Scrutiny of delays by the Cabinet Secretary: In 2016, the Rajya Sabha Committee recommended that the Cabinet Secretary should continue the practice of calling the Secretaries of concerned Ministries/Departments, to explain the reasons for the delay in framing the subordinate legislation. Each Ministry should send a quarterly status report to the Cabinet Secretariat.
Revisiting guidelines: In 2011, Lok Sabha Committee recommended that the 1986 guidelines should be revisited and all major recommendations of the Committee should be incorporated. However, as per the Action Taken Report, the government observed that the ministries consider the extant guidelines adequate and these guidelines were re-iterated in 2012.

Are all Rules under an Act required to be framed?

Usually, the expressions used in an Act are “The Central Government may, by notification, make rules for carrying out the provisions of this Act.”, or “as may be prescribed”. Hence, it may appear that the laws aim to enable rule-making instead of mandate rule-making. However, certain provisions of an Act cannot be brought into force if the required details have not been prescribed under the Rules. This makes the implementation of the Act consequent to the publication of respective Rules. For example, the Criminal Procedure (Identification) Act, 2022 enables the police and certain other persons to collect identity-related information about certain persons. It provides that the manner of collection of such information may be specified by the central government. Unless the manner is prescribed, such collection cannot take place.

That said, some other rule-making powers may be enabling in nature and subject to discretion by the concerned Ministry. In 2016, Rajya Sabha Committee on Subordinate Legislation examined the status of Rules and Regulations to be framed under the Energy Conservation Act, 2001. It observed that the Ministry of Power had held that two Rules and three Regulations under this Act were not necessary. The Ministry of Law and Justice had opined that those deemed not necessary were enabling provisions meant for unforeseen circumstances. The Rajya Sabha Committee (2016) had recommended that where the Ministry does not feel the need for framing subordinate legislation, the Minister should table a statement in Parliament, stating reasons for such a conclusion.

Some key issues related to subordinate legislation

The Legislature delegates the power to specify details for the implementation of a law to the Executive through powers for framing subordinate legislation. Hence, it is important to ensure these are well-scrutinised so that they are within the limits envisaged in the law.

Capacity of Committees on Subordinate Legislation: Parliamentary Committees on Subordinate Legislation have the responsibility to examine Rules in detail. In past, they have examined some key rules, regulations, and notifications regarding e-commerce, liability of internet-based services, and demonetisation. However, usually, they are able to examine only a fraction of subordinate legislation in detail. For more details, please see the PRS discussion paper here.
Uniformity of standards: Countries such as UK, USA, Australia, and Canada have overarching legislation for regulating the framing of subordinate legislation. These laws provide for the manner of public consultation, timelines, drafting standards, and a common register. India does not have any similar law. In India, the detail whether public consultation for subordinate legislation is required or not, is specified in respective Acts. The General Clauses Act, 1897 also governs certain aspects of the framing of subordinate legislation. In addition, the Pre-Legislative Consultation Policy, 2014 guides the pre-legislative consultation on subordinate legislation.

See here for our recently published analysis of the Criminal Procedure (Identification) Rules, 2022, notified in September 2022. Also, check out PRS analysis of:

Parliament

Union Budget 2020-21: Are the fiscal targets realistic?

Gayatri Mann , Suyash Tiwari - February 6, 2020

Today, a general discussion on the Union Budget 2020-21 is being held in both Houses of Parliament. In the budget, the government presented the estimates of the money it expects to spend on various ministries, and how much money will be raised from different sources such as levy of taxes and dividends from public enterprises in 2020-21. In addition, the budget presented the revised estimates made by the government for the year 2019-20 in comparison to the estimates it had given to Parliament in the previous year’s budget. The budget also gave an account of how much money the government actually raised and spent in 2018-19.

What are revised estimates?

Some of the estimates made by the government might change during the course of the year. For instance, once the year gets underway, some ministries may need more funds than what was actually allocated to them in the budget, or the receipts expected from certain sources might change. Such deviations from the budget estimates get reflected in the figures released by the government at later stages as part of the subsequent budgets. Once the year ends, the actual numbers are audited by the Comptroller and Auditor General of India (CAG), post which they are presented to Parliament with the upcoming budget, i.e. two years after the estimates are made.

For instance, estimates for the year 2019-20 were presented as part of the 2019-20 budget in July 2019. In the 2020-21 budget (February 2020), the government presented 2019-20’s revised estimates based on the actual receipts and expenditure accounted so far during the year and estimations made for the remaining 2-3 months.

Is there a way to find out the government’s actual receipts or expenditure mid-year?

The actual receipts and expenditure accounts of the central government are maintained by the Controller General of Accounts (CGA), Ministry of Finance on a monthly basis. On January 31, 2020, the CGA updated the accounts figures for the period April to December 2019. Thus, we have unaudited actuals for the first nine months of the financial year.

How do the actual figures for the year 2019-20 so far compare with the revised estimates?

Table 1 gives the revised estimates presented by the central government for the year 2019-20 and the monthly account figures maintained by the CGA for the nine-month period April to December 2019. The difference between these two figures gives us the three-month target that the government will have to meet by March 2020 to reach its revised estimates.

Till December 2019, the government has spent Rs 21.1 lakh crore, which is 78% of the revised estimates for 2019-20. While the expenditure has reached 78% of the target, so far, the government has been able to generate only Rs 11.8 lakh crore or 61% of the receipts (excluding borrowings) for the year 2019-20. This implies that the receipts will have to grow at a rate of 41% in the three-month period January-March 2020 to meet the revised estimates of Rs 19.3 lakh crore. So far, receipts have grown at a rate of 4%.

Table 1: Budget at a Glance – Comparison of 2019-20 revised estimates with Apr-Dec 2019 figures (Rs crore)

Budget at a Glance	Actuals	Revised	Nine-month period	Three-month target	Growth rate so far	Growth target
Budget at a Glance	2018-19	2019-20	Apr-Dec 2019	Jan-Mar 2020	% change (Apr-Dec 2018 to Apr-Dec 2019)	% change (Jan-Mar 2019 to Jan-Mar 2020)
Revenue Expenditure	20,07,399	23,49,645	18,54,125	4,95,520	14%	28%
Capital Expenditure	3,07,714	3,48,907	2,55,522	93,385	21%	-3%
Total Expenditure	23,15,113	26,98,552	21,09,647	5,88,905	15%	22%
Revenue Receipts	15,52,916	18,50,101	11,46,897	7,03,204	6%	50%
Capital Receipts	1,12,779	81,605	31,025	50,580	-33%	-24%
of which Disinvestment	94,727	65,000	18,100	46,900	-47%	-22%
Total Receipts (without borrowings)	16,65,695	19,31,706	11,77,922	7,53,784	4%	41%
Revenue Deficit	4,54,483	4,99,544	7,07,228	-2,07,684
Fiscal Deficit	6,49,418	7,66,846	9,31,725	-1,64,879
Primary Deficit	66,770	1,41,741	5,07,411	-3,65,670

Sources: Union Budget 2020-21; Controller General of Accounts, Ministry of Finance; PRS.

How do the actual tax receipts fare in comparison to the revised estimates of 2019-20?

A lower than estimated growth in nominal GDP has also affected the tax receipts of the government during the year. The 2019-20 budget estimated the nominal GDP to grow at 12% over the previous year, whereas the latest estimates suggest this growth rate to be 7.5% in 2019-20. The revised estimates for 2019-20 show gross tax receipts of Rs 21.6 lakh crore (includes states’ share). Till December 2019, tax receipts of Rs 13.8 lakh crore has been collected, which is 64% of the target. The tax receipts will have to grow at 19% in the three-month period January-March 2020 to meet the target. Table 2 shows similar comparison for the various taxes and also for the tax receipts devolved to states. While the budget estimated a growth in receipts from all major taxes, receipts from taxes such as corporation tax (-14%), union excise duties (-2%), and customs (-12%) have declined during the period Apr-Dec 2019.

Table 2: Tax receipts – Comparison of 2019-20 revised estimates with Apr-Dec 2019 figures (Rs crore)

Revenue Receipts	Actuals	Revised	Nine-month period	Three-month target	Growth rate so far	Growth target
Revenue Receipts	2018-19	2019-20	Apr-Dec 2019	Jan-Mar 2020	% change (Apr-Dec 2018 to Apr-Dec 2019)	% change (Jan-Mar 2019 to Jan-Mar 2020)
Gross Tax Revenue	20,80,465	21,63,423	13,83,035	7,80,388	-3%	19%
Devolution to States	7,61,454	6,56,046	4,76,113	1,79,933	-2%	-34%
Net Tax Revenue	13,17,211	15,04,587	9,04,944	5,99,643	-3%	57%
Dividend and Profits	1,13,420	1,99,893	1,61,979	37,914	175%	-30%
Other Non-tax Revenue	1,22,284	1,45,620	79,974	65,646	-10%	96%
Revenue Receipts	15,52,916	18,50,101	11,46,897	7,03,204	6%	50%

Note: Figures for income tax exclude receipts from the Securities Transaction Tax.

Sources: Receipts Budget, Union Budget 2019-20; Controller General of Accounts, Ministry of Finance; PRS.

If we look at sources of receipts other than taxes, non-tax revenue during Apr-Dec 2019 is Rs 2.4 lakh crore, i.e. 69% of the estimated Rs 3.5 lakh crore. Disinvestment receipts till date amounted to Rs 18,100 crore, i.e. 17% of the budget target of Rs 1.05 lakh crore. Though the investment target has been revised down to Rs 65,000 crore, it implies that Rs 47,000 crore would need to be raised in the next two months.

How does this impact the borrowings of the government?

When the expenditure planned by the government is more than its receipts, the government finances this gap through borrowings. This gap is known as fiscal deficit and equals the borrowings required to be made for that year. Given lower than expected receipts, the government has had to borrow more money than it had planned for. Borrowings or fiscal deficit of the government, till December 2019, stands at Rs 9.3 lakh crore, which is 22% higher than the revised estimate of Rs 7.7 lakh crore. Note that with three months still remaining in the financial year, fiscal deficit may further increase, in case receipts are less than expenditure.

When we look at fiscal deficit as a percentage of GDP, the 2019-20 budget estimated the fiscal deficit to be at 3.3% of GDP. This has been revised upward to 3.8% of GDP. However, till December 2019, fiscal deficit for the year 2019-20 stands at 4.6% of GDP (taking the latest available GDP figures into account, i.e. the First Advance Estimates for 2019-20 released in January 2020). This increase in fiscal deficit as a percentage of GDP is because of two reasons: (i) an increase in borrowings as compared to the budget estimates, and (ii) a decrease in GDP as compared to the estimate made in the budget. The latter is due to a lower than estimated growth in nominal GDP for the year 2019-20. The 2019-20 budget estimated the nominal GDP to grow at 12% over the previous year, whereas the latest estimates suggest this growth rate to be 7.5% in 2019-20.

Note that, in addition to the expenditure shown in the budget, the government also spends through extra budgetary resources. These resources are raised by issuing bonds and through loans from the National Small Savings Fund (NSSF). The revised estimates for 2019-20 show an expenditure of Rs 1,72,699 crore through such extra-budgetary resources. This includes an expenditure of Rs 1,10,000 crore by the Food Corporation of India financed through loans from NSSF. Since funds borrowed for such expenditure remain outside the budget, they do not get factored in the deficit and debt figures. If borrowings made in the form of extra-budgetary resources are also taken into account, the fiscal deficit estimated for the year 2019-20 would increase from 3.8% of GDP to 4.6% of GDP due to extra-budgetary borrowings of Rs 1,72,699 crore. This does not account for further slippage if the targeted revenue does not materialise.

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How long can the central government take to frame Rules?

Union Budget 2020-21: Are the fiscal targets realistic?

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