Ministry of Consumer Affairs launches National Transparency Portal on PDS

Sakshi - November 2, 2012

A recent news report has discussed the methods by which states such as Chattisgarh have attempted to reform the Public Distribution System (PDS). Chattisgarh has computerised its PDS supply chain and introduced smart cards as part of a slew of measures to plug pilferage and weed out corruption in the system. In an effort to create a national computerised database for PDS, the Ministry of Consumer Affairs has launched an online National Transparency Portal for the Public Distribution System. The portal aims to provide end-to-end computerisation of PDS; it is a single platform in the public domain for all PDS related information. The PDS is a centrally sponsored scheme that entitles beneficiaries to subsidised foodgrains every month. Currently, beneficiaries are divided into the following groups: Below Poverty Line (BPL), Above Poverty Line and Antodaya Anna Yojana. As such, several challenges have been identified in the implementation of PDS. Some of them are as follows:

Targeting errors: Separating beneficiaries of the PDS into three categories requires their classification and identification. Targeting mechanisms, however, have been prone to large inclusion and exclusion errors. In 2009, an expert group estimated that about 61% of the eligible population was excluded from the BPL list while 25% of non-poor households were included in the BPL list.
Large leakages and diversion of subsidized foodgrain: Foodgrain is procured by the centre and transported from the central to state godowns. Last mile delivery from state godowns to the Fair Price Shop (FPS) where beneficiaries can purchase grain with ration cards, is the responsibility of the state government. Large quantities of foodgrain are leaked and diverted into the open market during this supply chain.

The creation of the e-portal could help track these issues more effectively and increase transparency in the system. The portal contains information relating to FPS and ration cards attached to the FPS. It is likely that this will help weed out bogus ration cards and improve targeting of subsidies. The portal also has information on capacity utilization of Food Corporation of India, state storage godowns, and data on central pool stocks. This helps track storage supplies of grains at each level and aims to prevent leakage of grain. With respect to data on PDS in states, the portal hosts information such as the central orders on monthly allocation of foodgrain to states, state-specific commodity sale prices, lifting position of states, etc. for public view. All states and union territories will be required to maintain and update the data on the portal. The reforms come at a time when the National Food Security Bill, 2011 is pending in Parliament. The Bill aims to deliver foodgrain entitlements through Targeted PDS to 75% of the rural and 50% of the urban population. The Bill is currently under examination by the Standing Committee of Food, Consumer Affairs and Public Distribution. It proposes reforms to the TPDS, which include the application of information and communication technology, including end-to-end computerisation. These reforms seek to ensure full transparency of records in the PDS and prevent diversion of foodgrains. The creation of the e-portal might be a step towards reforming the PDS. For an analysis of the National Food Security Bill, see here.

Legislation

Examining the Model Tenancy Act, 2021 and regulation of rental property in India

Shruti Gupta - June 10, 2021

The Union Cabinet approved the Model Tenancy Act, 2021 on June 2, 2021, for adoption by state and union territory governments. The Model Act has three primary objectives. First, it aims to regulate renting of residential and commercial premises by establishing conditions for tenancy, eviction, and management of the property. Second, in regulating tenancy, it proposes mechanisms to balance and protect the rights of landlords and tenants. Last, it proposes a three-tier adjudicatory mechanism consisting of Rent Authorities, Rent Courts, and Rent Tribunals for speedy adjudication of tenancy related disputes.

However, note that rental housing is regulated by states as land, land improvement, and control of rents falls under the State List of the Indian Constitution. This Model Act is only a proposed framework that states and union territories may alter when passing their own tenancy laws.

In this blog, we provide a background on the rental housing market and explain some issues with the 2021 Model Act.

Need for the Act

In India, 95% of households in rural areas live in self-owned housing, and rental housing is a predominantly urban phenomenon. Between 1951 and 2011, the urban population in India grew by six times and as of 2011, comprises 31% of the total population. This is projected to grow to 40% by 2036. However, the share of persons living in urban rental accommodation has decreased from 58% to 27% between 1961 and 2011. The 2015 draft National Urban Rental Housing Policy noted that urban areas face a significant housing shortage and stated that this cannot be addressed by home ownership. In 2012, a Technical Group studying urban housing shortage estimated the urban housing shortage to be at 1.9 crore units. The 2011 Census noted that between 6.5 crore to 10 crore people (17% to 24% of the urban population) live in unauthorised housing in urban areas. The Economic Survey (2017-18) noted that rental housing is a key way to address informality and shortage. It stated that rental housing enables mobility and affordability for low-income segments, who may not be able to purchase housing. It also observed that a significant portion of urban rental housing stock is vacant, attributing it to unclear property laws, poor contract enforcement, and rent control laws.

State governments regulate rental housing through various legislative tools including rent control laws. To prevent landlords from charging exorbitant rent and ensure affordable housing, these laws specify a ceiling on rent and put conditions on eviction of tenants. The 2015 draft Policy noted that rent control laws discourage private investment in rental properties. It observed that rent control laws also skew arrangements towards tenants and lead to more litigation. This has eroded the trust of landlords in the regulatory system. A significant share of the rental demand is addressed through alternate arrangements such as leave and license agreements and informal leases.

A model law to regulate tenancy was first proposed in 1992. The first draft Model Tenancy Act was released in 2015, which was adopted by Tamil Nadu. However, as of 2021, 20 states including Karnataka, Maharashtra, and West Bengal continue to have rent control laws. A few states including Madhya Pradesh, Jharkhand, and Chhattisgarh have repealed their rent control laws.

Besides its key objectives, the Model Act also seeks to ensure affordability, formalisation and increase private investment in the rental housing market. The framework proposed under the Model Act may address some of these concerns. However, experts have recommended supplementing this with other policy initiatives to meet these objectives. For instance, a 2012 Technical Group observed that about 96% of the urban housing shortage pertains to the Economically Weaker Sections (EWS) and Lower Income Group (LIG) categories. The 2015 draft Urban Rental Housing Policy noted that a repeal of rent control laws may increase private investment and availability of rental housing. However, it has recommended several other measures to ensure affordability of rental housing. These include: (i) provision of incentives such as tax exemptions and subsidies to tenants and home owners, (ii) encouraging public-private partnerships and residential rental management companies, and (iii) enhancing access to finance within the EWS and LIG sectors.

Concerns for right to privacy

The Model Act requires all landlord and tenants to intimate the Rent Authority about a rental agreement with a prescribed form. The form requires both the tenant and the landlord to submit their Aadhaar numbers and attach self-attested copies of the card with the form. This may violate a 2018 Supreme Court judgement, which states that requiring Aadhaar card or number can be made mandatory only for expenditure on a subsidy, benefit or service incurred from the Consolidated Fund of India. Registering a tenancy agreement does not entail these, therefore making Aadhaar number mandatory for registering a tenancy may violate the judgement.

The Model Act also states that tenants and landlords will be provided with a unique identification number after registering a rental agreement. Details of the agreement along with other documents will be uploaded on the Rent Authority’s website. It is unclear if personal details of the parties such as PAN and Aadhaar number, which must be submitted along with the agreement, will also be made available publicly. If these are shared on the website, this may violate the right to privacy of the involved parties. The Supreme Court has included the right to privacy as a fundamental right. This right may be infringed only if three conditions are met: (i) there is a law, (ii) the law achieves a public purpose, and (iii) the public purpose is proportionate to the violation of privacy. Sharing personal information of individuals may not serve a public purpose, and hence may violate the right to privacy of such individuals.

Dispute redressal

The preamble of the 2021 Model Act and the background note accompanying the 2020 draft Model Act state that it seeks to establish a speedy adjudication mechanism for disputes linked to tenancy agreements. The Model Act specifies the timelines for resolution of cases linked with eviction and payment of rent. However, timelines have not been specified for certain cases. For instance, no timeline has been specified within which the Rent Authority must resolve a dispute on withholding of essential services or revision of rent.

Specification of minute details

The Model Act seeks to balance the tenant-landlord relationship by specifying rights and duties of both parties. However, it also caps the maximum possible security deposit amount that a tenant must pay to the landlord. Further, a suggestive framework for the rental agreement also includes minute details on responsibility for repair and maintenance. If codified, these specifications may hinder flexibility in framing tenancy agreements.

For a PRS analysis of the Model Tenancy Act 2021, please see here.

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Ministry of Consumer Affairs launches National Transparency Portal on PDS

Examining the Model Tenancy Act, 2021 and regulation of rental property in India

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