HT explains: What are ordinances?

  • B Sundaresan, Hindustan Times, New Delhi
  • Updated: Jan 28, 2015 08:36 IST

The government has chosen the Ordinance route to put into force several legislative Bills over the past months. Many of these are expected to be tabled in Parliament in the upcoming budget session. HT explains four of them.

What is an ordinance?

As per Article 123 of the Constitution, when Parliament is not in session, the President has the power to promulgate an Ordinance — which has the same force and effect as an Act. But, the article states that this route should be adopted only when the President is convinced of the necessity for him to take immediate action. Also, an Ordinance has to be laid before both Houses of Parliament, and it ceases to be functional after six weeks from Parliament’s re-assembly. The President can withdraw Ordinances at any time. The NDA government has approved 11 Ordinances so far out of which 10 have received presidential approval.

Coal Mines (Special Provisions) Ordinance, 2014

This provides for the auction of 204 coal blocks that were cancelled by the Supreme Court (SC) in September 2014. It amends the Coal Mines Act, 1973, and the Mines and Minerals (Development and Regulation) Act, 1957. An auction policy has been drafted as coal directly affects energy security and the functioning of industries such as steel and cement that have across-the-board impact.

The Ordinance states that all specified mines will be auctioned with the government having the discretion to allot mines to government companies that are not in joint ventures (JV) with private firms to set up power projects based on competitive bidding.

Prior allottees, whose blocks have been cancelled, can participate in the auction if they pay an additional levy. The mines will be allocated for specific end-use.

The Insurance Laws (Amendment) Ordinance

The Bill seeks to amend three Acts — Insurance Act, 1938, the General Insurance Business (Nationalisation) Act, 1972 and the Insurance Regulatory and Development Authority Act, 1999. The amendments include, among other things, room to raise the cap on foreign direct investment (FDI) in insurance companies from 26% to 49%. However, the increase will be subject to approval by the Foreign Investment Promotion Board.

Other proposed amendments include changes in IRDA’s regulatory powers, provision for penalties on insurers, and allowing of foreign re-insurers to operate in India through branches. The Bill also recognises health insurance as a separate segment, with a minimum capital requirement of Rs 50 crore for companies.

The Land Acquisition, Rehabilitation and Resettlement (Amendment) Ordinance, 2014

This seeks to amend the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR Act) passed by the UPA government. The government said the LARR Act had exempted 13 other laws such as the Atomic Energy Act, Railways Act, National Highways Act etc from the ambit of higher compensations. The Ordinance includes all these acts.

However, to speed up land acquisitions, the social impact assessment clause of LARR Act has been removed for projects related to defence, defence production, rural infrastructure, industrial corridors and infrastructure projects involving public private partnerships where the land is owned by the government. These sectors will no longer require prior consent of the landowners. The LARR Act mandated the approval of 80% of those who will be affected by the private project, before an acquisition. This figure is 70% in case of PPP projects. The Ordinance has also removed restrictions on acquisition of multi-cropped land.

Mines and Minerals (Development and Regulation) Ordinance, 2015

This seeks to amend the Mines and Minerals Development Act, 1957, to address problems such as illegal mining, renewal of licences, decreasing output, the powers of states in allocation of mines and exploitation of mining areas.

The Ordinance does away with the policy of discretionary allocation of mines, and replaces it with an auction system. It also scraps the need to renew licences as the allottees will be given a fixed tenure of 50 years.

The Ordinance also vouches for the setting up of a ‘National Mineral Development Trust,’ which would be funded by the mine holders themselves, to promote mineral exploration in the country. District-level mineral foundations also will be set up for the development of areas where mines are located. Penal provisions against illegal mining have been made more stringent, and special courts will be set up to monitor this.

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