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Laying down new law

Outdated and restrictive laws should be scrapped

Business Standard Editorial Comment  |  New Delhi 

As this newspaper reported on Monday, the Planning Commission, in the mid-term review of the 12th Five-Year Plan - to be handed over to the next government - is likely to suggest that certain changes be made to the flagship land acquisition law passed by the United Progressive Alliance. Many would argue that these are necessary; while more compensation to land losers in acquisition is essential, the law also unnecessarily increased the amount of bureaucracy involved. Acquiring land might now take so long that investment in factories will be deterred. Yet the problem is that the land acquisition law was passed with the concurrence of pretty much every party, including the opposition Bharatiya Janata Party. Making changes to it immediately may be politically unfeasible. The problem is that several other such laws may have undesirable consequences. The lengthy new Companies Act, for example, performs the important task of bringing corporate regulation up to date - something that successive governments have failed to do. But there are several clauses in the Act that might create problems down the line. Mandatory corporate social responsibility, which will likely lead to massive boondoggles and corruption, is just one of them. But amending this law, too, will be difficult.

It is perhaps time, therefore, to force the government and Parliament to regularly look at existing laws in order to update them. One possibility is to allow old laws to lapse unless they are renewed by passing again through Parliament. Or they could be amended or superseded, if its lapse is not considered useful. Many of India's laws are inherited from the colonial era, and are not fit for a modern, liberal country. The Foreigners Act of 1946, for example, leads to endless confusion over who is an "immigrant" and who a "refugee", and is open to political manipulation, as is happening at the moment in West Bengal and Assam. Forcing the Indian polity to confront the existence of outdated law may be a useful step. Building a sunset clause into legislation would mean this process has to be repeated regularly - perhaps every seven to 10 years - so that unintended consequences can be readily addressed even without exceptional political will.

Of course, the big constraint on this is state capacity. A government that fails to draft even a few new laws competently will no doubt struggle to update its entire body of law. Still, in certain narrower fields it can, of course, be done. The Financial Sector Legislative Reforms Commission, set up by the current government, sat down to harmonise and update dozens of laws governing Indian finance, and came up with clear and simple recommendations. Similar commissions could be appointed for other fields, bringing in outside experts in order to minimise the strain on government. Whether or not a complete overhaul is possible, it is clear that an attempt must at least be made to remove the deadwood. Many laws on the books are contradictory, and it is a truism that no Indian citizen or business can comply with every single law. This must change.

First Published: Mon, May 05 2014. 21:40 IST
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