The government is considering a number of measures to tackle corruption such as the formation of the office of the Lokpal or Ombudsman to investigate corruption cases, the Judicial Standards and Accountability Bill, 2010 that requires judges to declare their assets, lays down enforceable standards of conduct for judges, and establishes a process for removal of the Supreme Court and High Court judges (see PRS Analysis) and the Public Interest Disclosure and Protection of Persons Making the Disclosure Bill, 2010. In 2004, following the death of whistleblower Satyendra Dubey, the government issued a notification laying down certain guidelines for whistleblowing and protecting whistleblowers.  It introduced the Public Interest Disclosure and Protection of Persons Making the Disclosure Bill, 2010 in August 2010 to give statutory backing to the 2004 government resolution.  Commonly known as the Whistleblower’s Bill, it seeks to protect whistleblowers i.e. persons making a public interest disclosure related to an act of corruption, misuse of power or criminal offence by a public servant.  It designates the Central and State Vigilance Commissions to receive disclosures from whistleblowers and lays down safeguards for protection of whistleblowers (see PRS Analysis). The Bill was referred to the Departmentally related Standing Committee on Personnel, Public Grievances, Law and Justice.  The Committee presented its report on June 9, 2011. Key recommendations of the Standing Committee

  • § The Bill seeks to establish a mechanism to register complaints on any allegation of corruption or wilful misuse of power by a public servant.  The Committee broadly agreed with the provisions of the Bill but hoped that the government would consider the recommendations and adopt them wherever found appropriate.
  • § The Bill covers any complaint under the Prevention of Corruption Act, 1988; wilful misuse of power, and a criminal offence by a public servant.  The Committee suggested that the scope of the Bill may be widened to include offences such as maladministration and human rights violations.  Specifically, the Bill should cover accrual of wrongful gain to a third party.  Also, the definition of “public servant” in the Indian Penal Code and the Prevention of Corruption Act, 1988 could be adopted for this Bill.
  • § The Committee proposed that the defence forces and intelligence organisations should be included within the ambit of the Bill.  There could be reasonable exceptions based on operational needs of the forces.  Alternately, a separate authority could be set up for these exempted agencies.  It added that the Bill should cover members of the Council of Ministers, the judiciary (including higher judiciary) and regulatory authorities.
  • § The Bill states that a public interest disclosure can be made only to the Central or State Vigilance Commissions (VCs).  The Committee is of the opinion that this may restrict access especially to population in remote areas.  It recommended that the Rules should provide for a smooth and convenient system.  The Committee added that if there are multiple points at which complaints can be made, the identity of the complainant should be strictly protected.
  • § The Bill does not allow anonymous complaints.  The Committee however suggested that if the anonymous complaints have supporting documents that substantiates the claims, the VCs can investigate it.  It also advised that an alternative mechanism could be set up within or outside the Bill for inquiring into anonymous complaints.
  • § The Committee recommended that there should be a foolproof mechanism to ensure that the identity of the complainant is not compromised with at any cost.  This is especially important because without such a mechanism it would deter prospective complainants due to fear of harassment and victimisation.
  • § The Bill allows the VCs to reveal the identity of the complainant to the head of the organisation if it is necessary to do so.  The Committee recommended that the identity of the complainant should not be revealed to the head of the organisation without the written consent of the complainant.
  • § The Committee felt that undue burden should not be placed on the complainant to provide proof to substantiate his case.  As long as he is able to make out a prima facie case, the VCs should follow up on the case.
  • § The Committee is of the view that the VCs should inform the complainant about the outcome of the complaint.  Also, the VCs should give reasons if it decides to dismiss a complaint and the complainant should be given a reasonable hearing if he is not satisfied with the dismissal.
  • § The Committee proposed that there should be a time limit for conducting discreet inquiry by the VCs, for inquiry by the head of the organisation and for taking action on the recommendations of the VCs.  The authority would have to give reasons in writing if it wants the time limit to be extended.  There should also be some mechanism to ensure that the directions of the VC are not avoided to protect the wrongdoer.
  • § The Bill states that the VCs shall not entertain any complaints made five years after the action.  However, the Committee is not convinced that this restriction should be prescribed.  If at all there has to be a time limit, exceptions should be made in case of complaints which prima facie reveal offences of a grave nature.
  • § The Committee recommended that the term “victimisation” should be defined and the whistleblower should be provided with sufficient protection to protect him from violence.  Also, witnesses and other persons who support the whistleblower should be accorded the same protection.
  • § The Committee strongly recommended that there should be a mechanism to ensure that the orders of the VCs are complied with. Stringent action should be taken against any person who does not comply with the order.
  • § The Committee felt that the penalty for frivolous or malafide complaints was too high and should be substantially reduced.  Also, while deciding whether a disclosure is frivolous, the intention of the complainant should be examined rather than the outcome of the inquiry.  The complainant should also have the right to appeal to the High Court.

 

There have been some recent developments in the sugar sector, which pertain to the pricing of sugarcane and deregulation of the sector.  On January 31, the Cabinet approved the fair and remunerative price (FRP) of sugarcane for the 2013-14 season at Rs 210 per quintal, a 23.5% increase from last year’s FRP of Rs 170 per quintal.  The FRP of sugarcane is the minimum price set by the centre and is payable by mills to sugarcane farmers throughout the country.  However, states can also set a State Advised Price (SAP) that mills would have to pay farmers instead of the FRP. In addition, a recent news report mentioned that the food ministry has decided to seek Cabinet approval to lift controls on sugar, particularly relating to levy sugar and the regulated release of non-levy sugar. The Rangarajan Committee report, published in October 2012, highlighted challenges in the pricing policy for sugarcane.  The Committee recommended deregulating the sugar sector with respect to pricing and levy sugar. In this blog, we discuss the current regulations related to the sugar sector and key recommendations for deregulation suggested by the Rangarajan Committee. Current regulations in the sugar sector A major step to liberate the sugar sector from controls was taken in 1998 when the licensing requirement for new sugar mills was abolished.  Delicensing caused the sugar sector to grow at almost 7% annually during 1998-99 and 2011-12 compared to 3.3% annually during 1990-91 and 1997-98. Although delicensing removed some regulations in the sector, others still persist.  For instance, every designated mill is obligated to purchase sugarcane from farmers within a specified cane reservation area, and conversely, farmers are bound to sell to the mill.  Also, the central government has prescribed a minimum radial distance of 15 km between any two sugar mills. However, the Committee found that existing regulations were stunting the growth of the industry and recommended that the sector be deregulated.  It was of the opinion that deregulation would enable the industry to leverage the expanding opportunities created by the rising demand of sugar and sugarcane as a source of renewable energy. Rangarajan Committee’s recommendations on deregulation of the sugar sector Price of sugarcane: The central government fixes a minimum price, the FRP that is paid by mills to farmers.  States can also intervene in sugarcane pricing with an SAP to strengthen farmer’s interests.  States such as Uttar Pradesh and Tamil Nadu have set SAPs for the past few years, which have been higher than FRPs. The Committee recommended that states should not declare an SAP because it imposes an additional cost on mills.  Farmers should be paid a uniform FRP.  It suggested determining cane prices according to scientifically sound and economically fair principles.  The Committee also felt that high SAPs, combined with other controls in the sector, would deter private investment in the sugar industry. Levy sugar: Every sugar mill mandatorily surrenders 10% of its production to the central government at a price lower than the market price – this is known as levy sugar.  This enables the central government to get access to low cost sugar stocks for distribution through the Public Distribution System (PDS).  At present prices, the centre saves about Rs 3,000 crore on account of this policy, the burden of which is borne by the sugar sector. The Committee recommended doing away with levy sugar.  States wanting to provide sugar under PDS would have to procure it directly from the market. Regulated release of non-levy sugar: The central government allows the release of non-levy sugar into the market on a periodic basis.  Currently, release orders are given on a quarterly basis.  Thus, sugar produced over the four-to-six month sugar season is sold throughout the year by distributing the release of stock evenly across the year.  The regulated release of sugar imposes costs directly on mills (and hence indirectly on farmers).  Mills can neither take advantage of high prices to sell the maximum possible stock, nor dispose of their stock to raise cash for meeting various obligations.  This adversely impacts the ability of mills to pay sugarcane farmers in time. The Committee recommended removing the regulations on release of non-levy sugar to address these problems. Trade policy: The government has set controls on both export and import of sugar that fluctuate depending on the domestic availability, demand and price of sugarcane.  As a result, India’s trade in the world trade of sugar is small.  Even though India contributes 17% to global sugar production (second largest producer in the world), its share in exports is only 4%.  This has been at the cost of considerable instability for the sugar cane industry and its production. The committee recommended removing existing restrictions on trade in sugar and converting them into tariffs. For more details on the committee’s recommendations on deregulating the sugar sector, see here.