Model code of conduct won't stop Co Act notifications: EC

A: Yesterday, we announced the dates for 2014 general elections. Normally, when we operate this model code of conduct (MCC), we do not interfere in the routine administrative system or the governance of the country. The model code of conduct will operate only in those areas that create non-level playing field; we don’t intend to interfere into the routine administrative system of our country.

With regards to the Companies Act, I don’t think the EC will have any objection to allow amendments or notification but the fact is that before they amend anything or change anything or announce anything in terms of rules, amendment etc, they should write to us and tell us why the amendments were needed, and the grounds for issuing certain notification. If that is done then I am sure EC will not have any objection.

Otherwise, we think that Election Commissioner should not get into the routine administrative system of the country.

Latha: So, what you are saying is notifying the Companies Act will not be a problem, EC won’t find it a problem, or are you saying that the notification should be first announced to you and only thereafter be notified?

A: Exactly, it should be first notified to the EC and if the Election Commissioner of India finds that the provisions, conditions and issues are meant for the benefit of our country they will not stand in the way.

Sonia: On the other subject of some of the import duty on gold etc what is the EC’s standing on that front? If there is some sort of volatility that we do see in the rupee, can the government go ahead and raise the gold import duty if there is a need for that to be done?

A: If you talk about import duty - certain allowances, certain benefits or benefits to certain categories of industry or certain categories of your clients, definitely EC will strictly go by the law of the land because any announcement, any benefit or any indirect or direct benefit to a category of people or category of industries or category of enterprises – if it is going to create feeling that a particular company or industry has been given the benefit while denying it to others, then  normally election commissioner would want to know why this has been done? Moreover, if it has not been done in last five years, why to do it now? Therefore, it can definitely be deferred till elections are over.

However, we will closely look into these issues. 

Latha: We are living at a time when a lot of emerging market (EM) currencies are under attack, although the Indian rupee has been relatively stable after it saw deep depreciation last July and August. However, no one is to say that some such a run on emerging market currencies including the rupee won’t happen again - at such a time if the government has to take decisions like increasing some duties or doing something to prevent the outflow of dollars, would that require the EC’s permission?

A: Definitely, for any new policy instrument, new guideline to be taken by our government the EC expects those to be referred to them. However, there should be enough justification, enough ground to ensure the steps that are going to be taken are for the interest of our country. Then EC will definitely, not stand in the way.

Sonia: A lot of the government projects at this point are still stuck for some routine approvals like forest clearances, environment clearances etc. Will these clearances be given?

A: Environmental clearance may require close scrutiny. I cannot tell you anything offhand because certain issues have already been discussed five-ten years back and certain direction have been given by the Supreme Court or High Court where the matter has been already adjudicated and so the routine administrative thing has to be done.

However, since some of these clearances, issues that have been announced are approved by the government, so our only request to them is to send the report that these decisions have been taken for the benefit of our country. Then, I don't think the election commission will have any objection to the clearance of such kind of decisions, which safeguard the interests of our country.

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Latha: What is the modus operandi then, all decisions taken by the government should be forwarded to you through the cabinet secretariat or would you tell them that some specific kind of decisions only should be forwarded to you, what exactly is the communication or what is the process that they have to follow?

A: Actually, the stand of EC for last 50 years is that any decision after the announcement of election dates provided they are routine instructions, routine administrative matters it is okay but for example you if they are new guidelines or new benefit to enterprises then those things definitely warrant clearance by the election commission of India because basically, MCC is meant to regulate the functioning of the government in power. Therefore, any action of the government that creates even a bit of non-level playing field in the minds of our people, in the minds of our voters will definitely require prior non-objection certificate (NOC) from EC. It is a sort of preventive measure so that nobody complaints against you. It is not that EC wants to stand in between these kinds of additions.

Latha: When the decisions under the new Companies Act are notified it doesn’t really favour one company over the other or even one group of companies over the other, it is really rules of say how they should do corporate social responsibility for the entire gamut of India Inc, it is those kinds of rules that will get notified - how they should appoint audit committees, how decisions should be taken by the board. They cover the entire India Inc when the decisions get notified, such notifications do they require prior EC clearance?

A: If it is clear that you are only giving a guideline for the whole of the country and it doesn’t affect any particular group or particular enterprise or particular company or anything but it is general instruction to our people of our industry, to our colleagues in various sectors or if it a simple circular on something like an operating manual and applies to everyone in our country, then in such a case they should just inform us because now we have MCC effective from yesterday. So, the best thing would be that they should refer saying that this is what we are going to do for the benefit of our country, for the benefit of our organization and send it to us for record and that is all. We will not stand in the way.

Sonia: The key issue of the gas price hike or the diesel price hike, I wanted to get your view on that, currently many of these oil companies have been asked by the government to raise prices by 50 paise per month every month. Now if this is discontinued then will that tantamount to a breach of code of conduct?

A: If the oil companies have taken a commercial decision to increase the price every month or decrease the price every month, it is their decision. But there should be an instruction from government or instruction from the state enterprises that they plan to reduce the price or increase the price.

But definitely any benefit by reduction or giving subsidy, then we will not allow it.

Latha: This becomes a little bit of a grey area because oil companies so far have not been taking commercial decisions on diesel price, diesel prices are subsidised by the government. So it is a political decision but sometime last year the government found that subsidy unsustainable so they allowed the oil companies to raise the diesel price by 50 paise every month till they come to the level of the market price where the subsidy is wiped out, so every month we have been getting 50 paise more for diesel prices. Our question is what if it is discontinued? If the hike comes in then it is routine, if that hike is discontinued, will you all frown?

A: If the oil companies have taken a policy decision with a very clear objective that if they increase price every month by 50 paise or more than that, we have no objection to that but if it is suddenly discontinued without any reasonable ground or reasonable argument then it is definitely a big question mark.

So, definitely election commissioner will look into the matter on why they have discontinued suddenly. Election commission will definitely look into the matter very closely and scrutinize why increasing was done earlier and why they have stopped raising now because it will be a question mark in the minds of our people.

Sonia: On this subject of bank licences, just wanted a clarification from you, will the code of conduct now that it has kicked in impact the issuances of bank licences?

A: Bank licences are being issued by Reserve Bank of India (RBI) in a very routine and standard manner. If RBI has taken a decision for the benefit of our country, for the benefit of people of unbanked areas because banks don’t serve any particular category of people, it serves to every countryman then I don’t think EC will have any objection. Bank is a very important financial infrastructure required for our country and definitely we will welcome opening of banks in unbanked areas where people of our country require loan etc. If they have done it in a very diligent and honest manner, why should EC object issuing of bank licenses.

Whatever we do, whatever action we initiate, whatever objectives we have should be for the benefit of our country. It should serve the benefit of every one of our countrymen. So why should EC stand in their way? I don’t think EC will have any ground or any objection to allow banking license to our banking branches in the area where the banks are non-existent or their services are non-existent. So, we definitely welcome this whether there is election or no election.

However, the only thing is that RBI should inform the EC of India saying that this decision was taken a year or a half year back by the competent authorities, by the concerned board of directors or by the concerned competent agencies and that it is being done for the benefit of our country. Then, I don’t think EC will have any objection to that. Personally, I don’t see any ground or visualise any objection to issuances of licences by RBI to our banking infrastructure.

Latha: The RBI is technically an independent institution, takes its own decisions, for the most part does not toe the government’s line but you would still want them to – so therefore whatever decisions they take including the issue of bank license, would you want them to clear it with you?

A: Not necessarily because RBI is also an autonomous organisation, it is a part of our system and is an institution which all of us respect. I don’t think anywhere, anytime RBI has faulted in doing their job. We don’t expect RBI management will do something which is not warranted or where people can have a doubt.

And if RBI thinks that they require any no objection certificate (NOC) or clearance from election commission, they are welcome and I don’t think election commission will ever have a doubt or even have a point of objection for their opening of new banking institutions which is required for our country, which is definitely a welcome step.

Only thing would be that they should not take a decision now, they should have taken a decision maybe few months back or half year back or a year back because opening banking branches are not a spur of a moment decision. I don’t think bank will do anything in a spur of the moment because opening a branch, opening an institution definitely takes around 100-200 days in which competent persons study and make a proposals etc.

Latha: The process of issuing new licenses started about four years ago when it was announced as a policy decision in the Budget but it is not for the government to give the licenses, it is RBIs domain and thereafter a lot of work has been done, there were discussion papers floated and then a special high level committee appointed under a previous RBI governor has made its recommendations. The logical step for RBI is therefore to issue, you would assume that will therefore not meet with the EC’s disapproval?

A: No, because as you rightly mentioned that if four years back the decision was taken because there is a procedure, there is a way to go around and so if those issues are taken care of, which I am sure they have been taken care of then why should election commission come in the way of granting. Whatever decision RBI has taken, they must have taken it years ahead. So, when RBI has done their job properly then why should election commission stand on the way? They should do their job, that’s all.

Election commission will not stand in the way of anything which will obstruct our growth.