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 The relevant nationalisation Acts have been repealed over the last five years.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Between 2014 and 2019, Parliament passed six Repealing and Amending Acts which repealed around 722 laws.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 These also repealed the laws that had transferred ownership of the companies to the central government which were later merged with the SCI.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.
The Arms (Amendment) Bill, 2019 was introduced in Lok Sabha recently and is scheduled to be passed in this Winter Session. The Bill amends the Arms Act, 1959 which deals with the regulation of arms in India. The Act defines arms to include firearms, swords, and anti-aircraft missiles. The Statement of Objects and Reasons of the Bill noted that law enforcement agencies have indicated a growing connection between the possession of illegal firearms and criminal activities. In this context, the Bill seeks to reduce the number of firearms allowed per person, and increases punishments for certain offences under the Act. The Bill also introduces new categories of offences. In this post, we explain key provisions of the Bill.
How many firearms are allowed per person?
The Arms Act, 1959 allows a person to have three licenced firearms. The Bill proposes to reduce this to one firearm per person. This would also include any firearms that may have been given as inheritance or as an heirloom. Excess firearms must be deposited at the nearest police station or licensed arms dealer within one year of the passing of the Bill. The Bill also extends the duration of a licence from three years to five years.
Note that in 2017, 63,219 firearms were seized from across India under the Arms Act, 1959. Out of these, only 3,525 (5.5%) were licenced firearms. Further, 36,292 cases involving firearms were registered under the Act in 2017, of which only 419 (1.1%) cases involved licenced firearms. [1] This trend persisted even at the level of specific crimes, where only 8.5% of the murders committed using firearms involved licenced firearms. [2]
What changes are being made to existing offences?
Presently, the Act bans manufacture, sale, use, transfer, conversion, testing or proofing of firearms without license. The Bill additionally prohibits obtaining or procuring un-licensed firearms, and the conversion of one category of firearms to another without a license. The latter includes any modifications done to enhance the performance of a firearm.
The Bill also proposes increased punishments for several existing offences. For example, the Act specifies the punishment for: (i) dealing in un-licensed firearms, including their manufacture, procurement, sale, transfer, conversion, (ii) the shortening or conversion of a firearm without a licence, and (iii) import or export of banned firearms. The punishment for these offences currently is between three years and seven years, along with a fine. The Bill increases the minimum punishment to seven years and the maximum to life imprisonment.
The Act also punishes dealing in prohibited firearms (such as automatic and semi-automatic assault rifles) without a license, with imprisonment between seven years and life imprisonment, along with fine. The Bill increases the minimum punishment from seven years to 10 years. Additionally, the punishment for cases in which the usage of prohibited arms results in the death of a person has been revised. The punishment has been updated from the existing punishment of death penalty to allow for death penalty or life imprisonment, along with a fine.
Are there any new offences being introduced?
The Bill adds certain news offences. For example, forcefully taking a firearm from police or armed forces has been made a crime under the Bill. The punishment for doing so is imprisonment between 10 years and life imprisonment, along with a fine. Additionally, the Bill punishes the negligent use of firearms, such as celebratory gunfire during weddings or religious ceremonies which endanger human life or personal safety of others. The proposed punishment in this case is imprisonment of up to two years, or a fine of up to one lakh rupees, or both.
The Bill also adds a definition of ‘illicit trafficking’. It is defined to include the trade, acquisition, sale of firearms or ammunitions into or out of India where the firearms are either not marked as per the Act or violate the provisions of the Act. The Bill makes illicit trafficking punishable with imprisonment between 10 years and life, along with a fine.
Does the Bill address issues of organised crime?
The Bill also introduces a definition of ‘organised crime’. ‘Organised crime’ has been defined as continued unlawful activity by a person, either as a member of a syndicate or on its behalf, by using unlawful means, such as violence or coercion, to gain economic or other benefits. An organised crime syndicate refers to two or more persons committing organised crime.
The Bill introduces harsher punishments for members of an organised crime syndicate. For example, for the possession of an unlicensed firearm, the minimum term for an individual would be seven years, extendable to life imprisonment and liable to a fine. However, the possession of unlicensed firearms by a member of a syndicate will be punishable with imprisonment between 10 years and life, along with a fine. This increased punishment also applies to non-members contravening provisions of the Act on behalf of a syndicate.
[1] Crime in India 2017, National Crime Records Bureau, October 21, 2019, http://ncrb.gov.in/StatPublications/CII/CII2017/pdfs/CII2017-Full.pdf.
[2] Crime in India 2016, National Crime Records Bureau, October 10, 2017, http://ncrb.gov.in/StatPublications/CII/CII2016/pdfs/NEWPDFs/Crime%20in%20India%20-%202016%20Complete%20PDF%20291117.pdf.
