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Parliament sessions are usually held thrice a year: once in February for the Budget Session, once around July or August for the Monsoon Session, and once in November for the Winter Session. This year, the government is yet to announce the dates for the Winter Session. While there has been uncertainty around whether Parliament will meet, ministers in the government have indicated that the Session will be held soon.[1]
The practice of allowing the government to convene Parliament differs from those followed in other countries. Some of these countries have a limited role for the government in summoning the legislature, because in a parliamentary democracy the executive is accountable to Parliament. Allowing the government to call the Parliament to meet could be in conflict with this principle. While we wait for the government to announce the dates for the Winter Session, this post looks at the relationship between Parliament and the government, recommendations made over the years on improving some parliamentary customs, and discusses certain practices followed by other countries.
What is the role of Parliament in a democracy?
The Constitution provides for the legislature to make laws, the government to implement laws, and the courts to interpret and enforce these laws. While the judiciary is independent from the other two branches, the government is formed with the support of a majority of members in the legislature. Therefore, the government is collectively responsible to Parliament for its actions. This implies that Parliament (i.e. Lok Sabha and Rajya Sabha) can hold the government accountable for its decisions, and scrutinise its functioning. This may be done using various methods including, during debates on Bills or issues on the floor of Parliament, by posing questions to ministers during Question Hour, and in parliamentary committees.
Who convenes Parliament?
Parliament must be convened by the President at least once in every six months. Since the President acts on the advice of the central government, the duration of the session is decided by the government.
Given the legislature’s role in keeping the executive accountable for its actions, one argument is that the government should not have the power to convene Parliament. Instead, Parliament should convene itself, if a certain number of MPs agree, so that it can effectively exercise its oversight functions and address issues without delay. Some countries such as the United Kingdom and Australia release an annual calendar with the sitting dates at the beginning of the year.
How regularly has Parliament been meeting over the years?
Over the years, there has been a decline in the sitting days of Parliament. While Lok Sabha met for an average of 130 days in a year during the 1950s, these sittings came down to 70 days in the 2000s. Lesser number of sittings indicates that Parliament was able to transact less business compared to previous years. To address this, the National Commission to Review the Working of the Constitution has recommended that Lok Sabha should have at least 120 sittings in a year, while Rajya Sabha should have 100 sittings.[2] 
The Constituent Assembly, while drafting the Constitution had debated the power that should be given to Parliament with regard to convening itself. Mr. K. T. Shah, a member of the Assembly, had suggested that in case the President or the Prime Minister are unable or unwilling to call for a Parliament session, the power to convene the Houses should be given to the presiding officers of those Houses (i.e., the Chairman of Rajya Sabha and the Speaker of Lok Sabha). In addition, he had also suggested that Parliament should itself regulate its procedure, sittings and timings.[3]
How does Parliament hold the government accountable?
One of the forums of holding the government accountable for its actions is the Question Hour. During Question Hour, MPs may pose questions to ministers related to the implementation of laws and policies by the government.
In the 16th Lok Sabha, question hour has functioned in Lok Sabha for 77% of the scheduled time, while in Rajya Sabha it has functioned for 47%. A lower rate of functioning reflects time lost due to disruptions which reduces the number of questions that may be answered orally. While Parliament may sit for extra hours to transact other business, time lost during Question Hour is not made up. Consequently, this time lost indicates a lost opportunity to hold the government accountable for its actions.
Further, there is no mechanism currently for answering questions which require inter-ministerial expertise or relate to broader government policy. Since the Prime Minister does not answer questions other than the ones pertaining to his ministries, such questions may either not get adequately addressed or remain unanswered. In countries such as the UK, the Prime Minister’s Question Time is conducted on a weekly basis. During the 30 minutes the Prime Minister answers questions posed by various MPs. These questions relate to broader government policies, engagements, and issues affecting the country.[4]
How is public opinion reflected in Parliament?
MPs may raise issues of public importance in Parliament, and examine the government’s response to problems being faced by citizens through: (i) a debate, which entails a reply by the concerned minister, or (ii) a motion which entails a vote. The time allocated for discussing some of these debates or Bills is determined by the Business Advisory Committee of the House, consisting of members from both the ruling and opposition parties.
Using these methods, MPs may discuss important matters, policies, and topical issues. The concerned minister while replying to the debate may make assurances to the House regarding steps that will be taken to address the situation. As of August 2017, 50% of the assurances made in the 16th Lok Sabha have been implemented.[5] 
Alternatively, MPs may move a motion for: (i) discussing important issues (such as inflation, drought, and corruption), (ii) adjournment of business in a House in order to express displeasure over a government policy, or (iii) expressing no confidence in the government leading to its resignation. The 16thLok Sabha has only discussed one adjournment motion so far.
To improve government accountability in Parliament, the opposition in some countries such as the UK, Canada, and Australia forms a shadow cabinet.[6],[7] Under such a system, opposition MPs track a certain portfolio, scrutinise its performance and suggest alternate programs. This allows for detailed tracking and scrutiny of ministries, and assists MPs in making constructive suggestions. Some of these countries also provide for days when the opposition parties decide the agenda for Parliament.
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[1] Sonia Gandhi accuses of Modi govt ‘sabotaging’ Parliament Winter session, Arun Jaitley rejects charge’, The Indian Express, November 20, 2017, http://indianexpress.com/article/india/jaitley-refutes-sonia-gandhis-charge-of-sabotaging-parliament-session-says-congress-too-had-delayed-sitting-4946482/; ‘Congress also rescheduled Parliament sessions: Arun Jaitley hits back at Sonia Gandhi’, The Times of India, November 20, 2017, https://timesofindia.indiatimes.com/india/congress-also-rescheduled-parliament-sessions-arun-jaitley-hits-back-at-sonia-gandhi/articleshow/61726787.cms.
[2] Parliament and State Legislatures, Chapter 5, National Commission to Review the Working of the Constitution, March 31, 2002, http://lawmin.nic.in/ncrwc/finalreport/v1ch5.htm.
[3] Constituent Assembly Debates, May 18, 1949.
[4] Prime Minister’s Question Time, Parliament of the United Kingdom, http://www.parliament.uk/about/how/business/questions/.
[5] Lok Sabha and Session Wise Report of Assurances in Lok Sabha, Ministry of Parliamentary Affairs, http://www.mpa.gov.in/mpa/print_summary_lses_ls.aspx.
[6] Her Majesty’s Official Opposition, Parliament of the United Kingdom, http://www.parliament.uk/mps-lords-and-offices/government-and-opposition1/opposition-holding/.
[7] Current Shadow Ministry List, Parliament of Australia, http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/Parliam
The issue of Non-Performing Assets (NPAs) in the Indian banking sector has become the subject of much discussion and scrutiny. The Standing Committee on Finance recently released a report on the banking sector in India, where it observed that banks’ capacity to lend has been severely affected because of mounting NPAs. The Estimates Committee of Lok Sabha is also currently examining the performance of public sector banks with respect to their burgeoning problem of NPAs, and loan recovery mechanisms available.
Additionally, guidelines for banks released by the Reserve Bank of India (RBI) in February 2018 regarding timely resolution of stressed assets have come under scrutiny, with multiple cases being filed in courts against the same. In this context, we examine the recent rise of NPAs in the country, some of their underlying causes, and steps taken so far to address the issue.
What is the extent and effect of the NPA problem in India?
Banks give loans and advances to borrowers. Based on the performance of the loan, it may be categorized as: (i) a standard asset (a loan where the borrower is making regular repayments), or (ii) a non-performing asset. NPAs are loans and advances where the borrower has stopped making interest or principal repayments for over 90 days.
As of March 31, 2018, provisional estimates suggest that the total volume of gross NPAs in the economy stands at Rs 10.35 lakh crore. About 85% of these NPAs are from loans and advances of public sector banks. For instance, NPAs in the State Bank of India are worth Rs 2.23 lakh crore.
In the last few years, gross NPAs of banks (as a percentage of total loans) have increased from 2.3% of total loans in 2008 to 9.3% in 2017 (Figure 1). This indicates that an increasing proportion of a bank’s assets have ceased to generate income for the bank, lowering the bank’s profitability and its ability to grant further credit.
Escalating NPAs require a bank to make higher provisions for losses in their books. The banks set aside more funds to pay for anticipated future losses; and this, along with several structural issues, leads to low profitability. Profitability of a bank is measured by its Return on Assets (RoA), which is the ratio of the bank’s net profits to its net assets. Banks have witnessed a decline in their profitability in the last few years (Figure 2), making them vulnerable to adverse economic shocks and consequently putting consumer deposits at risk.
What led to the rise in NPAs?
Some of the factors leading to the increased occurrence of NPAs are external, such as decreases in global commodity prices leading to slower exports. Some are more intrinsic to the Indian banking sector.
A lot of the loans currently classified as NPAs originated in the mid-2000s, at a time when the economy was booming and business outlook was very positive. Large corporations were granted loans for projects based on extrapolation of their recent growth and performance. With loans being available more easily than before, corporations grew highly leveraged, implying that most financing was through external borrowings rather than internal promoter equity. But as economic growth stagnated following the global financial crisis of 2008, the repayment capability of these corporations decreased. This contributed to what is now known as India’s Twin Balance Sheet problem, where both the banking sector (that gives loans) and the corporate sector (that takes and has to repay these loans) have come under financial stress.
When the project for which the loan was taken started underperforming, borrowers lost their capability of paying back the bank. The banks at this time took to the practice of ‘evergreening’, where fresh loans were given to some promoters to enable them to pay off their interest. This effectively pushed the recognition of these loans as non-performing to a later date, but did not address the root causes of their unprofitability.
Further, recently there have also been frauds of high magnitude that have contributed to rising NPAs. Although the size of frauds relative to the total volume of NPAs is relatively small, these frauds have been increasing, and there have been no instances of high profile fraudsters being penalised.
What is being done to address the problem of growing NPAs?
The measures taken to resolve and prevent NPAs can broadly be classified into two kinds – first, regulatory means of resolving NPAs per various laws (like the Insolvency and Bankruptcy Code), and second, remedial measures for banks prescribed and regulated by the RBI for internal restructuring of stressed assets.
The Insolvency and Bankruptcy Code (IBC) was enacted in May 2016 to provide a time-bound 180-day recovery process for insolvent accounts (where the borrowers are unable to pay their dues). Under the IBC, the creditors of these insolvent accounts, presided over by an insolvency professional, decide whether to restructure the loan, or to sell the defaulter’s assets to recover the outstanding amount. If a timely decision is not arrived at, the defaulter’s assets are liquidated. Proceedings under the IBC are adjudicated by the Debt Recovery Tribunal for personal insolvencies, and the National Company Law Tribunal (NCLT) for corporate insolvencies. 701 cases have been registered and 176 cases have been resolved as of March 2018 under the IBC.
What changed recently in the RBI’s guidelines to banks?
Over the years, the RBI has issued various guidelines aimed at the resolution of stressed assets of banks. These included introduction of certain schemes such as: (i) Strategic Debt Restructuring (which allowed banks to change the management of the defaulting company), and (ii) Joint Lenders’ Forum (where lenders evolved a resolution plan and voted on its implementation). In line with the enactment of the IBC, the RBI, through a circular in February 2018, substituted all the specific pre-existing guidelines with a simplified, generic, time-bound framework for the resolution of stressed assets.
In the revised framework which replaced the earlier schemes, the RBI put in place a strict deadline of 180 days during which a resolution plan must be implemented, failing which stressed assets must be referred to the NCLT under IBC within 15 days. The framework also introduced a provision for monitoring of one-day defaults, where incipient stress is identified and flagged immediately when repayments are overdue by a day.
Borrowers whose loans were tagged as NPAs before the release of the circular recently crossed the 180-day deadline for internal resolution by banks. Some of these borrowers, including various power producers and sugar mills, had appealed against the RBI guidelines in various High Courts. A two-judge bench of the Allahabad High Court had recently ruled in favour of the RBI’s powers to issue these guidelines, and refused to grant interim relief to power producers from being taken to the NCLT for bankruptcy. All lawsuits against the circular have currently been transferred to the Supreme Court, which has now issued an order to maintain status quo on the same. This means that these cases cannot be referred to the NCLT until the Supreme Court’s decision on the circular, although the RBI’s 180-day deadline has passed. This effectively provides interim relief to the errant borrowers who had moved to court till the next hearing of the apex court on this matter, which is scheduled for November 2018.
