New Delhi: Union minister for corporate affairs Prem Chand Gupta believes wide-ranging talks within and outside the government are necessary to push reforms. While he expects the Competition Commission of India (CCI)—the statutory body that will look at competitive (and anti-competitive) practices—to be functional by the end of the year, he hopes the Valuation Professionals Bill, aimed at regulating the business of corporate valuations, will be introduced in Parliament before the government completes its term early next year. Gupta, a Rashtriya Janata Dal leader, speaks about policy changes, including the introduction of a new companies Bill—Companies Bill 2008—to replace a 56-year-old legislation. Edited excerpts:
If the ruling coalition is defeated in the general election next year, do you think the new government will relook at the Companies Bill 2008?
First, since it (Companies Bill 2008) was introduced in the Lok Sabha (lower House), once the term of the House gets over, the Bill is likely to lapse. But our country is such (that) on certain issues we are all one, be it foreign policy or a major finance policy. The present Companies Act was enacted in 1956 and it was amended 25 times. Three attempts were made to go for its revision—in 1993, 1997 and 2003—but somehow nothing happened.
Inclusive outlook: Gupta believes a consultative approach works. Ramesh Pathania / Mint
Now this Bill has been prepared through a lot of consultations, not only with different ministries, but (consultative process) also with all possible stakeholders, including the corporate sector. It was put on the website of the ministry of corporate affairs (MCA) for inviting suggestions from the public at large.
Then Irani committee was constituted under J.J. Irani. Irani (director, Tata Sons) represents a corporate house. Besides, there were others on board such as the representatives of the Institute of Chartered Accountants of India (Icai), the Institute of Cost and Works Accountants of India (Icwai), the Institute of Company Secretaries of India (ICSI), Confederation of Indian Industry (CII), the Associated Chambers of Commerce and Industry of India (Assocham), Federation of Indian Chambers of Commerce and Industry (Ficci) and several legal experts. The government was hardly represented in the (Irani) committee, except that the MCA provided secretarial services. Thereafter, various ministries were consulted. So, no matter which government comes, whether we (the Congress-led United Progressive Alliance) come or somebody else comes, it does not make much difference. This Bill has been introduced in Parliament. I am sure after due diligence, whichever government is there...the Bill will be re-introduced which is the general practice. But the ball has been set rolling.
Wouldn’t it have been better to introduce the Bill in the Rajya Sabha (upper House)?
It doesn’t really make much difference. Because the Bill, in a way, is a finance Bill—as revenue is collected—it had to be introduced in the Lok Sabha. Because of the wide consultative process involved, I don’t think there will be a problem in adopting the document by any government. At the same time, I feel since this is going to be such an important legislation it has to go to a standing committee.
Have you made a request for its quick disposal?
No.... But we are going to do that now. Even while it is a lengthy process, we will try to push it in six months. But it takes time (in getting these things done) and cannot be done overnight.
The Limited Liability Partnership (LLP) Bill has been passed in the Rajya Sabha. When will you take it up in the Lok Sabha?
We will take it up in the Lok Sabha in December when Parliament resumes...we are doing our home work, rules are being framed and kept ready. Also, the e-governance programme is being pursued. Like in the case of companies, all documents are filed online through MCA 21 (ministry’s e-governance programme), the same process will apply to LLP firms. We would have the first LLP on 1 April (limited liability partnership is an alternative business structure falling between a partnership firm and a corporate body, combining the limited liability benefits of a company with the flexibility of a partnership).
When do you expect CCI to start operations?
CCI should start soon. The process of appointment of the chairman and members is going on and is in the advanced stage. I think by the year-end or so, CCI should be functional. But you see certain procedure and formalities have to be followed...that’s why the delay.
And now you are working on another Bill for professional valuers. When do you plan to introduce that in Parliament?
Here too we want to follow a consultation process. We are in the process of forming an expert committee headed by a top professional and comprising professionals such as chartered accountants, company secretaries, as also representatives of the chambers of commerce.
In the past one month, your ministry is probably one of the few ministries that have been successful in pushing some marquee reform initiatives. This was also perhaps the most progressive phase during the UPA government’s tenure.
No, I beg to differ with you here. From Day 1, we have gone the reform way. We have amended all the three statutes governing Icai, ICSI and Icwai. We have given them more autonomy and self-regulation with least intervention from the government. And their disciplinary mechanism has been strengthened. Then we have worked on vanishing and defunct companies, (and) we have introduced a scheme that simplified exit route for defunct companies through which names of 180,000 firms were struck off the registrar of companies. And MCA 21 was one of the biggest success stories of the UPA government.
My question was in a situation when other ministries—for instance, labour—which tried to push several reforms but have not been successful, your ministry could push some big-ticket reforms. How did you manage it?
I cannot say what others could not do, I can only say what we have been doing. If you take out records of the Rajya Sabha, in case of LLP, not one party, be it the BJP (Bharatiya Janata Party), the Left, DMK (Dravida Munnetra Kazhagam) or AIDMK (All India Anna Dravida Munnetra Kazhagam) opposed. This is because we adopted a consultative process. While two hours were allotted, the LLP Bill was passed in one hour itself and nobody had anything to criticize. The Competition Act also was passed without opposition.
This raises curiosity about how you are managing this politically, amid diverse opinions and with parties such as the Left and the BJP having their own point of view.
What I have seen in my past 13 years in Parliament is that if you adopt a consultative process and do not hurt anybody, normally there is no problem. There is a difference in reforms processes that you adopt. One is a blind reform—because Americans or Europeans have done it we should also do it. We (ministry) have adopted reform processes based on what is in our interest and that makes a difference. Like for the corporate sector, while giving them (the industry) a free hand, we have asked them to declare whatever they are doing in their balance sheet and then it is for stakeholders to decide.
In the case of the Competition Act, industry has resisted reforms on mergers and acquisitions (M&A). Is it happy with it now?
I personally feel what industry did was a reaction without studying the Act properly. In my opinion, prior notification to the CCI before M&As is good for the corporate sector. Suppose two firms decide to merge and one year later, CCI or the courts find that the alliance is anti-competitive or has led to cartelization. (So) it is better that prior notification is made. Besides, we have fixed time limits at every stage (of M&As). Out of 105 countries having a competition body, at least 100 countries have a system of prior notification.
What is your vision for the ministry?
We have laid the foundation of being relevant at least up to 2020. In many things, we are ahead of many other countries. The Indian Institute of Corporate Affairs (IICA) is coming up which would act as a think tank and train our officials. We are involving top-notch of the corporate sector for this. I believe this foundation cannot be uprooted. Before the term (UPA government’s) is over we would have CCI and LLP in place, funds and land allotted for IICA, MCA 21 fully established. The Valuation Professionals Bill would also hopefully be introduced.
Parliamentary process has moved rather sporadically in the 13th and 14th Lok Sabha. There was no monsoon session and Parliament met intermittently. What are the challenges before you as a policy maker?
I personally feel smooth functioning of Parliament is essential to ensure proper debates and interaction on issues of national importance. Also, I don’t approve of showing banners or shouting slogans or showing disrespect to the Chair. There are different ways to express dissent. It’s better for all of us to think about it. Besides, the NDA (opposition BJP-led National Democratic Alliance) was not allowing the session to happen—even the question hour—which is the least they could have done.