The National Anti-Doping Bill, 2021 is listed for passage in Rajya Sabha today.  It was passed by Lok Sabha last week.  The Bill creates a regulatory framework for anti-doping rule violations in sports.  It was examined by the Parliamentary Standing Committee on Sports, and some of their recommendations have been incorporated in the Bill passed by Lok Sabha.  

Doping is the consumption of certain prohibited substances by athletes to enhance performance.  Across the world, doping is regulated and monitored by the World Anti-Doping Agency (WADA) which is an independent international agency established in 1999.   WADA’s primary role is to develop, harmonise, and coordinate anti-doping regulations across all sports and countries.   It does so by ensuring proper implementation of the World Anti-Doping Code (WADA Code) and its standards.  In this blog post, we discuss the need of the framework proposed by the Bill, and give insights from the discussion on the Bill in Lok Sabha.  

Doping in India

Recently, two Indian athletes failed the doping test and are facing provisional suspension.   In the past also, Indian athletes have been found in violation of anti-doping rules.  In 2019, according to WADA, most of the doping rule violations were committed by athletes from Russia (19%), followed by Italy (18%), and India (17%).  Most of the doping rule violations were committed in bodybuilding (22%), followed by athletics (18%), cycling (14%), and weightlifting (13%).  In order to curb doping in sports, WADA requires all countries to have a framework regulating anti-doping activities managed by their respective National Anti-Doping Organisations.  

Currently, doping in India is regulated by the National Anti-Doping Agency (NADA), which was established in 2009 as an autonomous body under the Societies Registration Act, 1860.  One issue with the existing framework is that the anti-doping rules are not backed by a legislation and are getting challenged in courts.  Further, NADA is imposing sanctions on athletes without a statutory backing.   Taking into account such instances, the Parliamentary Standing Committee on Sports (2021) had recommended that the Department of Sports bring in an anti-doping legislation.   Other countries such as the USA, UK, Germany, and Japan have enacted legislations to regulate anti-doping activities.  

Framework proposed by the National Anti-Doping Bill, 2021

The Bill seeks to constitute NADA as a statutory body headed by a Director General appointed by the central government.  Functions of the Agency include planning, implementing and monitoring anti-doping activities, and investigating anti-doping rule violations.  A National Anti-Doping Disciplinary Panel will be set up for determining consequences of anti-doping rule violations.  This panel will consist of legal experts, medical practitioners, and retired athletes.  Further, the Board will constitute an Appeal Panel to hear appeals against decisions of the Disciplinary Panel.  Athletes found in violation of anti-doping rules may be subject to: (i) disqualification of results including forfeiture of medals, points, and prizes, (ii) ineligibility to participate in a competition or event for a prescribed period, (iii) financial sanctions, and (iv) other consequences as may be prescribed.  Consequences for team sports will be specified by regulations.   

Initially, the Bill did not have provisions for protected athletes but after the Standing Committee’s recommendation, provisions for such athletes have been included in the Bill.  Protected persons will be specified by the central government.  As per the WADA Code, a protected person is someone: (i) below the age of 16, or (ii) below the age of 18 and has not participated in any international competition in an open category, or (iii) lacks legal capacity as per their country’s legal framework

Issues and discussion on the Bill in Lok Sabha

During the discussion on the Bill, members highlighted several issues.  We discuss these below-

Independence of NADA 

One of the issues highlighted was the independence of the Director General of NADA.  WADA requires National Doping Organisations to be independent in their functioning as they may experience external pressure from their governments and national sports bodies which could compromise their decisions.  First, under the Bill, the qualifications of the Director General are not specified and are left to be notified through Rules.  Second, the central government may remove the Director General from the office on grounds of misbehaviour or incapacity or “such other ground”.  Leaving these provisions to the discretion of the central government may affect the independence of NADA. 

Privacy of athletes

NADA will have the power to collect certain personal data of athletes such as: (a) sex or gender, (ii) medical history, and (iii) whereabout information of athletes (for out of competition testing and collection of samples).  MPs expressed concerns about maintaining the privacy of athletes.  The Union Sports Minister in his response, assured the House that all international privacy standards will be followed during collection and sharing of data.  Data will be shared with only relevant authorities.

Under the Bill, NADA will collect and use personal data of athletes in accordance with the International Standard for the Protection of Privacy and Personal Information.   It is one of the eight ‘mandatory’ standards of the World Anti-Doping Code.  One of the amendments moved by the Union Sports Minister removed the provision relating to compliance with the International Standard for the Protection of Privacy and Personal Information.

Establishing more testing laboratories across states

Currently India has one National Dope Testing Laboratory (NDTL).  MPs raised the demand to establish testing laboratories across states to increase testing capacity.  The Minister responded by saying that if required in the future, the government will establish more testing laboratories across states.  Further, in order to increase testing capacity, private labs may also be set up.   The Parliamentary Standing Committee on Sports (2022) also emphasised the need to open more dope testing laboratories, preferably one in each state, to cater to the need of the country and become a leader in the South East Asia region in the areas of anti-doping science and education.

In August, 2019 a six-month suspension was imposed on NDTL for not complying with International Standard for Laboratories (ISL) by WADA.  The suspension was extended for another six months in July, 2020 due to non-conformity with ISL.  The second suspension was to remain in effect until the Laboratory complies with ISL.  However, the suspension was extended for another six months in January, 2021 as COVID-19 impacted WADA’s ability to conduct an on-site assessment of the Laboratory.  In December, 2021 WADA reinstated the accreditation of NDTL.

Raising awareness 

Several athletes in India are not aware about the anti-doping rules and the prohibited substances.  Due to lack of awareness, they end up consuming prohibited substances through supplements.  MPs highlighted the need to conduct more awareness campaigns around anti-doping.  The Minister informed the House that in the past one year, NADA has conducted about 100 hybrid workshops relating to awareness on anti-doping.   The Bill will enable NADA to conduct more awareness campaigns and research in anti-doping.  Further, the central government is working with the Food Safety and Standards Authority of India (FSSAI) to test dietary supplements consumed by athletes.  

While examining the Bill, the Parliamentary Standing Committee on Sports (2022) recommended several measures to improve and strengthen the antidoping ecosystem in the country.  These measures include: (i) enforcing regulatory action towards labelling and use of ‘dope-free’ certified supplements, and (ii) mandating ‘dope-free’ certification by independent bodies for supplements consumed by athletes.

Later this week, the GST Council will meet to discuss the issue of GST compensation to states.  The central government is required to compensate states for any loss of revenue they incur due to GST.  The Centre must pay this compensation on a bi-monthly basis, but over the past one year these payments have been delayed by several months due to lack of funds.  The COVID-19 pandemic and the consequent lockdown have amplified the issue manifold, with both centre and states facing a revenue shortfall, limiting the ability of the Centre to meet states’ compensation needs.

Why is the Centre required to compensate states for GST?

With GST implementation in 2017, the principle of indirect taxation for many goods and services changed from origin-based to destination-based.  This means that the ability to tax goods and services and raise revenue shifted from origin states (where the good or service is produced) to destination states (where it is consumed).  This change posed a risk of revenue uncertainty for some states.  This concern of states was addressed through constitutional amendments, requiring Parliament to make a law to provide for compensation to states for five years to avoid any revenue loss due to GST.

For this purpose, the GST (Compensation to States) Act was enacted in 2017 on the recommendation of the GST Council.  The Act guarantees all states an annual growth rate of 14% in their GST revenue during the period July 2017-June 2022.   If a state’s GST revenue grows slower than 14%, such ‘loss of revenue’ will be taken care of by the Centre by providing GST compensation grants to the state.  To provide these grants, the Centre levies a GST compensation cess on certain luxury and sin goods such as cigarettes and tobacco products, pan masala, caffeinated beverages, coal, and certain passenger vehicles.  The Act requires the Centre to credit this cess revenue into a separate Compensation Fund and all compensation grants to states are required to be paid out of the money available in this Fund.

How much compensation is provided to states?

For 2018-19, Centre gave Rs 81,141 crore to states as GST compensation.  However, for the year 2019-20, the compensation requirement of states nearly doubled to Rs 1.65 lakh crore.  A huge increase in requirement implies that states’ GST revenue grew at a slower rate during 2019-20.   This can be attributed to the economic slowdown seen last year, which resulted in a nominal GDP growth of 7.2%.   This was significantly lower than the 12% GDP growth forecast in the 2019-20 union budget (Figure 1).

Figure 1:  GDP growth rate (2017-21)

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Sources:  Union Budget Documents; MOSPI; PRS.

In 2019-20, the gross GST revenue (Centre+states) increased by just 4% over the previous year.  Despite this, due to the compensation guarantee, all states could achieve the growth rate of 14% in their GST revenue – much higher than the overall growth in GST revenue.  However, there was a delay in payment of compensation from Centre.   More than Rs 64,000 crore of the compensation requirement of states for 2019-20 was met in the financial year 2020-21.

What led to a delay in payment of compensation to states?

In 2019-20, the delay in payment was observed due to insufficient funds with Centre for providing compensation to states.  These funds are raised by levying a compensation cess on the sale of certain goods, some of which were affected by the economic slowdown.  For instance, in 2019-20, sales of passenger vehicles declined by almost 18% and coal offtake from domestic coal companies reduced by nearly 5%, over the previous year.  As a result, cess collections registered a growth of just 0.4% in 2019-20 (Figure 2), against the 104% increase seen in the compensation requirement of states.  This resulted in a shortfall of funds of nearly Rs 70,000 crore.

Figure 2:  Cess collections insufficient for providing compensation

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Note:  In 2017-18, GST was implemented for only nine months.  Compensation amount shown may not match with the amount released in that financial year because of delay in releases.

Sources:  Union Budget Documents; Ministry of Finance; GST Council; Lok Sabha Questions; PRS.

How can compensation be paid to states if cess collections are insufficient?

The shortfall in collections for 2019-20 was met through: (i) surplus cess collections from previous years, (ii) partial cess collections of 2020-21, and (iii) a transfer of Rs 33,412 crore of unsettled GST funds from the Centre to the Compensation Fund.   These unsettled funds are GST collections, generated in 2017-18 from inter-state and foreign trade, that have not yet been settled between centre and states.

In the 2020-21 budget, the Centre has estimated a 10% growth in nominal GDP.  However, due to the impact of COVID-19 and the lockdown, the actual growth in 2020-21 is likely to be much lower.  In such a scenario, states’ GST revenue would also be much lower than expected, thus leading to a higher compensation requirement.  However, the ability of Centre to pay compensation depends on the cess collections, which are also getting impacted this year.  For instance, cess collections during the period Apr-Jun 2020 have been 41% lower in comparison to the same period last year.  Moreover, of the Rs 14,482 crore collections made during this period, Rs 8,680 crore has been likely used up for paying compensation for 2019-20.

Note that under the GST (Compensation to States) Act, 2017, Centre can provide compensation to states only through the money available in the Compensation Fund.   The Union Finance Minister, in her budget speech in February 2020, clarified that transfers to the Fund would be limited only to collections of the GST compensation cess.  Despite a shortfall of money in the Compensation Fund, the Centre is constitutionally obligated to meet states’ compensation requirement for a period of five years.

Various measures have been suggested to address the issue of shortfall in the Fund, either by reducing the compensation payable to states (which would require Parliament to amend the Act following GST Council’s recommendation) or by supplementing the funds available with Centre for providing compensation to states.   The Act allows the GST Council to recommend other funding mechanisms/ amounts for credit into the Compensation Fund.  For example, one of the measures proposed for meeting the shortfall involves Centre using market borrowings to pay compensation to states, with the idea that these borrowings will be repaid with the help of future cess collections.  To enable this, the GST Council may recommend to Centre that the compensation cess be levied for a period beyond five years, i.e. post June 2022.

Impact on states post 2022

In 2019-20, except for a few north-eastern states, most states saw their compensation requirements increase multifold by 2-3 times, over the previous year’s figures.  Table 1 shows the compensation requirement of states for the years 2018-19 and 2019-20.  Six states (Delhi, Gujarat, Karnataka, Maharashtra, Punjab, and Tamil Nadu) accounted for 52% of the total requirement of compensation for 2019-20.  Further, in some states such as Punjab and Delhi, compensation grants form a significant share of the overall revenue receipts (20% and 16% resepctively).  

Note that states have been guaranteed compensation only for a period of five years.  After June 2022, states dependent on compensation will observe a revenue gap due to a cut in these grants coming from Centre.  States have roughly two years to bridge this gap with other tax and non-tax sources to avoid a potential loss of revenue, and a consequent fall in the size of their state budget, which could adversely affect the economy.  To what extent will such concerns be alleviated remains to be seen based on the course of action decided by the GST Council.

Table 1:  GST compensation requirement of states for 2018-19 and 2019-20 (in Rs crore)

State

2018-19

2019-20

% increase in compensation requirement

Amount

As a % of revenue

Amount

As a % of revenue*

Andhra Pradesh

0

-

3,028

3%

-

Assam

455

1%

1,284

1%

182%

Bihar

2,798

2%

5,464

4%

95%

Chhattisgarh

2,592

4%

4,521

7%

74%

Delhi

5,185

12%

8,424

16%

62%

Goa

502

5%

1,093

9%

118%

Gujarat

7,227

5%

14,801

10%

105%

Haryana

3,916

6%

6,617

10%

69%

Himachal Pradesh

1,935

6%

2,477

8%

28%

Jammu and Kashmir

1,667

3%

3,281

5%

97%

Jharkhand

1,098

2%

2,219

4%

102%

Karnataka

12,465

8%

18,628

11%

49%

Kerala

3,532

4%

8,111

9%

130%

Madhya Pradesh

3,302

3%

6,538

4%

98%

Maharashtra

9,363

3%

19,233

7%

105%

Meghalaya

66

1%

157

2%

138%

Odisha

3,785

4%

5,122

5%

35%

Punjab

8,239

13%

12,187

20%

48%

Rajasthan

2,280

2%

6,710

5%

194%

Tamil Nadu

4,824

3%

12,305

7%

155%

Telangana

0

-

3,054

3%

-

Tripura

172

1%

293

3%

70%

Uttar Pradesh

0

-

9,123

3%

-

Uttarakhand

2,442

8%

3,375

11%

38%

West Bengal

2,615

2%

6,200

4%

137%

Note:   Arunachal Pradesh, Manipur, Mizoram, Nagaland, and Sikkim did not require any compensation in 2018-19 and 2019-20.

*Revenue for the year 2019-20 does not takes into account those GST compensation grants which were payable to states in 2019-20 but were released by Centre in the year 2020-21. The percentage figures would be slightly lower if such grants are included in 2019-20 revenue.

Sources:  State Budget Documents; Ministry of Finance; Lok Sabha Questions; CAG; PRS.