The core group of secretaries on disinvestment has recently approved the disinvestment of five public sector undertakings (PSUs). This includes the entire shareholding of the government in four PSUs: Bharat Petroleum Corporation (BPCL), Shipping Corporation of India (SCI), North Eastern Electric Power Corporation (NEEPCO) and THDC (operates and maintains the Tehri Hydro Power Complex), and 30% of the shareholding in Container Corporation of India Limited (Concor). The government currently holds 54.8% of Concor, so the sale will reduce its stake below 25%.
Over the last few years, the government has removed legislative barriers towards privatisation of several other PSUs. This raises the question whether the government plans to privatise them.
What was the Supreme Court’s order on privatisation of PSUs?
In 2003, a similar proposal had been raised by the government for the sale of its shareholding in HPCL and BPCL. This proposal was challenged in the Supreme Court on the grounds that it would violate the provisions of the laws that transferred ownership of certain assets to the government (which later formed these PSUs). For example, BPCL was formed by nationalising Burmah Shell in India through an Act of Parliament, and merging their refinery and marketing companies. The Court ruled that the central government cannot proceed with the privatisation of HPCL and BPCL (i.e., reduce its direct or indirect ownership below 51%) without amending the concerned laws. So the government continues to hold majority stake directly in BPCL, and indirectly in HPCL ( through ONGC, another PSU).
The five Companies approved for privatisation include BPCL and SCI (into which two nationalised companies, the Jayanti Shipping Company, and the Mogul Line Limited were merged). The relevant nationalisation Acts have been repealed over the last five years.
How did the government remove the legislative barriers for privatisation?
Between 2014 and 2019, Parliament passed six Repealing and Amending Acts which repealed around 722 laws. These included laws that had transferred the ownership of companies to the central government which later formed BPCL, HPCL, and OIL. These also repealed the laws that had transferred ownership of the companies to the central government which were later merged with the SCI. This implies that now the government can go ahead with the privatisation of these government companies as the conditions imposed by the Supreme Court’s order have been fulfilled. These Repealing and Amending Acts also repealed several other nationalisation laws that were later formed into PSUs. In the Table below, we have listed some of these companies. Note that the Law Commission of India (2014) had suggested the repeal of several of these laws (including the Esso Act, the Burmah Shell Act, the Burn Company Act) on the grounds that these laws do not serve any purpose with respect to the nationalised entity. However, it had suggested that a study of all the nationalisation Acts should be done before repealing these Acts, and if necessary a savings clause should be provided in the repealing Act.
Did Parliament scrutinise these Acts before passing them?
Many of these repeals were made through the Repealing and Amending Act, 2016. These include the Acts relating to BPCL, HPCL, OIL, Coal India Limited, SCI, National Textiles Corporation, Hindustan Copper and Burn Standard Company Limited. The Bill was not referred to a Parliamentary Standing Committee, and was passed after a cursory debate (50 minutes in Lok Sabha and 20 minutes in Rajya Sabha). Similarly, the two Acts passed in 2017, that enable privatisation of SAIL, PowerGrid, and State Trading Corporation were not examined by a Standing Committee.
So what comes next?
The repeal of these Acts have cleared the legislative hurdle for privatisation of these companies. That is, the government does not need prior approval of Parliament to sell its shareholding. Therefore, it is now up to the government to decide whether it wishes to privatise these entities.
A version of this article was published by the Business Standard on October 20, 2019.
Table 1: Some Nationalisation Acts repealed since 2014 (list not exhaustive)
|
Company |
Act being repealed |
Repealing Act |
|---|---|---|
|
Shipping Corporation Of India (SCI) |
The Jayanti Shipping Company (Acquisition of Shares) Act, 1971 |
Repealing and Amending Act, 2016 |
|
The Mogul Line Limited (Acquisition of Shares) Act, 1984 |
||
|
Bharat Petroleum Corporation Limited (BPCL) |
The Burmah Shell (Acquisition of Undertakings in India) Act, 1976 |
Repealing and Amending Act, 2016 |
|
Hindustan Petroleum Corporation Limited (HPCL) |
The Esso (Acquisition of Undertakings in India) Act, 1974 |
Repealing and Amending Act, 2016 |
|
The Caltex [Acquisition of Shares of Caltex Oil Refining (India) Limited and of the Undertakings in India of Caltex (India) Limited] Act, 1977 |
||
|
The Kosangas Company (Acquisition of Undertaking) Act, 1979 |
||
|
Coal India Limited (CIL) |
The Coking Coal Mines (Emergency Provisions) Act, 1971 |
Repealing and Amending Act, 2016 |
|
The Coal Mines (Taking Over of Management) Act, 1973 |
||
|
The Coking Coal Mines (Nationalisation) Act, 1972. |
Repealing and Amending (Second) Act, 2017 |
|
|
The Coal Mines (Nationalisation) Act, 1973. |
||
|
Steel Authority of India Limited (SAIL) |
The Bolani Ores Limited (Acquisition of Shares) and Miscellaneous Provisions Act, 1978 |
Repealing and Amending (Second) Act, 2017 |
|
The Indian Iron and Steel Company (Acquisition of Shares) Act, 1976 |
||
|
Power Grid Corporation of India Limited |
The National Thermal Power Corporation Limited, the National Hydroelectric Power Corporation Limited and the North-Eastern Electric Power Corporation Limited (Acquisition and Transfer of Power Transmission Systems) Act, 1993. |
Repealing and Amending (Second) Act, 2017 |
|
The Neyveli Lignite Corporation Limited (Acquisition and Transfer of Power Transmission System) Act, 1994. |
||
|
Oil India Limited (OIL) |
The Burmah Oil Company [Acquisition of Shares of Oil India Limited and of the Undertakings in India of Assam Oil Company Limited and the Burmah Oil Company (India Trading) Limited] Act, 1981 |
Repealing and Amending Act, 2016 |
|
State Trading Corporation of India Ltd. (STC) |
The Tea Companies (Acquisition and Transfer of Sick Tea Units) Act, 1985 |
Repealing and Amending Act, 2017 |
|
National Textile Corporation Limited (NTC) |
The Sick Textile Undertakings (Taking Over of Management) Act, 1972 |
Repealing and Amending Act, 2016 |
|
The Textile Undertakings (Taking Over of Management) Act, 1983 |
||
|
The Laxmirattan and Atherton West Cotton Mills (Taking Over of Management) Act, 1976 |
||
|
Hindustan Copper Limited |
The Indian Copper Corporation (Acquisition of Undertaking) Act, 1972 |
Repealing and Amending Act, 2016 |
|
Burn Standard Co Ltd |
The Burn Company and Indian Standard Wagon Company (Nationalisation) Act, 1976 |
Repealing and Amending Act, 2016 |
|
Indian Railways |
The Futwah-Islampur Light Railway Line (Nationalisation) Act, 1985 |
Repealing and Amending Act, 2016 |
|
Braithwaite & Co Limited, Ministry of Railways |
The Braithwaite and Company (India) Limited (Acquisition and Transfer of Undertakings) Act, 1976. |
Repealing and Amending (Second) Act, 2017 |
|
The Gresham and Craven of India (Private) Limited (Acquisition and Transfer of Undertakings) Act, 1977 |
||
|
Andrew Yule & Co. Ltd. |
The Brentford Electric (India) Limited (Acquisition and Transfer of Undertakings) Act, 1987 |
Repealing and Amending (Second) Act, 2017 |
|
The Transformers and Switchgear Limited (Acquisition and Transfer of Undertakings) Act, 1983 |
Repealing and Amending Act, 2019 |
|
|
Alcock Ashdown (Guj) Limited, Government of Gujarat Undertaking |
The Alcock Ashdown Company Limited (Acquisition of Undertakings) Act, 1973. |
Repealing and Amending Act, 2019 |
|
Bengal Chemicals & Pharmaceuticals Ltd. (BCPL) |
The Bengal Chemical and Pharmaceutical Works Limited (Acquisition and Transfer of Undertakings) Act, 1980 |
Repealing and Amending (Second) Act, 2017 |
|
Organisations under Department of Pharmaceuticals |
The Smith, Stainstreet and Company Limited (Acquisition and Transfer of Undertakings) Act, 1977 |
Repealing and Amending (Second) Act, 2017 |
|
The Bengal Immunity Company Limited (Acquisition and Transfer of Undertakings) Act, 1984. |
Sources: Repealing and Amending Act, 2015; Repealing and Amending (Second) Act, 2015; Repealing and Amending Act, 2016; Repealing and Amending Act, 2017; Repealing and Amending (Second) Act, 2017; Repealing and Amending Act, 2019.
Recently, the Personal Data Protection Bill, 2019 was introduced in Parliament. The Bill has been referred to a Joint Parliamentary Committee for detailed examination, and the report is expected by the Budget Session, 2020. The Bill seeks to provide for protection of personal data of individuals, create a framework for processing such personal data, and establishes a Data Protection Authority for the purpose. In this blog, we provide a background to the 2019 Bill, and explain some of its key provisions.
What is personal data and data protection?
Data can be broadly classified into two types: personal and non-personal data. Personal data pertains to characteristics, traits or attributes of identity, which can be used to identify an individual. Non-personal data includes aggregated data through which individuals cannot be identified. For example, while an individual’s own location would constitute personal data; information derived from multiple drivers’ location, which is often used to analyse traffic flow, is non-personal data. Data protection refers to policies and procedures seeking to minimise intrusion into the privacy of an individual caused by collection and usage of their personal data.
Why was a Bill brought for personal data protection?
In August 2017, the Supreme Court held that privacy is a fundamental right, flowing from the right to life and personal liberty under Article 21 of the Constitution. The Court also observed that privacy of personal data and facts is an essential aspect of the right to privacy. In July 2017, a Committee of Experts, chaired by Justice B. N. Srikrishna, was set up to examine various issues related to data protection in India. The Committee submitted its report, along with a Draft Personal Data Protection Bill, 2018 to the Ministry of Electronics and Information Technology in July 2018. The Statement of Objects and Reasons of the Personal Data Protection Bill, 2019 states that the Bill is based on the recommendations of the report of the Expert Committee and the suggestions received from various stakeholders.
How is personal data regulated currently?
Currently, the usage and transfer of personal data of citizens is regulated by the Information Technology (IT) Rules, 2011, under the IT Act, 2000. The rules hold the companies using the data liable for compensating the individual, in case of any negligence in maintaining security standards while dealing with the data. The Expert Committee in its report, held that while the IT rules were a novel attempt at data protection at the time they were introduced, the pace of development of digital economy has shown its shortcomings.3 For instance, (i) the definition of sensitive personal data under the rules is narrow, and (ii) some of the provisions can be overridden by a contract. Further, the IT Act applies only to companies, not to the government.
What does the Personal Data Protection Bill provide?
The Bill regulates personal data related to individuals, and the processing, collection and storage of such data. Under the Bill, a data principal is an individual whose personal data is being processed. The entity or individual who decides the means and purposes of data processing is known as data fiduciary. The Bill governs the processing of personal data by both government and companies incorporated in India. It also governs foreign companies, if they deal with personal data of individuals in India.
Will individuals have rights over their data?
The Bill provides the data principal with certain rights with respect to their personal data. These include seeking confirmation on whether their personal data has been processed, seeking correction, completion or erasure of their data, seeking transfer of data to other fiduciaries, and restricting continuing disclosure of their personal data, if it is no longer necessary or if consent is withdrawn. Any processing of personal data can be done only on the basis of consent given by data principal.
Are there any restrictions on processing of an individual’s data?
The Bill also provides for certain obligations of data fiduciaries with respect to processing of personal data. Such processing should be subject to certain purpose, collection and storage limitations. For instance, personal data can be processed only for specific, clear and lawful purpose. Additionally, all data fiduciaries must undertake certain transparency and accountability measures such as implementing security safeguards and instituting grievance redressal mechanisms to address complaints of individuals. Certain fiduciaries would be notified as significant data fiduciaries (based on certain criteria such as volume of data processed and turnover of fiduciary). These fiduciaries must undertake additional accountability measures such as conducting a data protection impact assessment before conducting any processing of large scale sensitive personal data (includes financial data, biometric data, caste, religious or political beliefs).
What is the grievance redressal mechanism if the above restrictions are not followed?
To ensure compliance with the provisions of the Bill, and provide for further regulations with respect to processing of personal data of individuals, the Bill sets up a Data Protection Authority. The Authority will be comprised of members with expertise in fields such as data protection and information technology. Any individual, who is not satisfied with the grievance redressal by the data fiduciary can file a complaint to the Authority. Orders of the Authority can be appealed to an Appellate Tribunal. Appeals from the Tribunal will go to the Supreme Court.
Are there any exemptions to these safeguards for processing of personal data?
Processing of personal data is exempt from the provisions of the Bill in some cases. For example, the central government can exempt any of its agencies in the interest of security of state, public order, sovereignty and integrity of India, and friendly relations with foreign states. Processing of personal data is also exempted from provisions of the Bill for certain other purposes such as prevention, investigation, or prosecution of any offence, or research and journalistic purposes. Further, personal data of individuals can be processed without their consent in certain circumstances such as: (i) if required by the State for providing benefits to the individual, (ii) legal proceedings, (iii) to respond to a medical emergency.
Is the Bill different from the draft Bill suggested by the Expert Committee?
The Bill has made several changes from the draft Bill. For instance, the Bill has added a new class of significant data fiduciaries, as social media intermediaries. These will include intermediaries (with users above a notified threshold) which enable online interaction between users. Further, the Bill has expanded the scope of exemptions for the government, and additionally provided that the government may direct data fiduciaries to provide it with any non-personal or anonymised data for better targeting of services.
In a follow-up blog, we will provide a detailed comparison of the key provisions of this Bill with the Draft Personal Data Protection Bill 2018, released by the Justice B. N. Srikrishna Committee.
