Aadhaar Act to Data Protection Bill—Parliament isn’t playing a big role in lawmaking

The Digital Data Protection Bill is silent on details. The burden of making legislation has shifted from our elected representatives to unelected officials in the bureaucracy.

23 November, 2022
The Print

The draft Digital Data Protection Bill is out for public comments. The Bill has left several aspects of the law to be prescribed by the government at a later date. That is, the law is silent on the details, and the Rules will eventually be framed by the relevant Ministry. Previous legislation such as the Companies Act, 2013 and the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits, and Services) Act, 2016 has also left substantial parts of the statute to be filled by the Rules later. This new trend should make us revisit the fundamental role of Parliament in law making.

Parliament and the Executive

The role of Parliament (our elected representatives) in drafting laws has been diminishing. Increasingly, the initial law is drafted by officials (the bureaucracy or the Executive), and it leaves large chunks unspecified. Subsequent rules are also drafted by officials, and while placed before Parliament, they do not undergo the scrutiny that the parent law does. In fact, to avoid going to Parliament, regulators often issue circulars, which are not even law, but somehow have come to have the force of law. The burden of making legislation has shifted from our elected representatives to unelected officials in the bureaucracy. We need to make a distinction between the “policy” that is agreed by Parliament and the “technical details” of the policy. Delegated legislation can change technical details of a policy, but when large parts of the legislation are left to be drafted later, this distinction gets blurred. This is what has been termed as the “rise of the administrative state.”

The cost-benefit of law-making by the Executive

There are three possible reasons for this shift in responsibility. First, officials are seen to have sector expertise relative to elected representatives, and in a complex economy, they are considered better placed to draft the law. Second, making amendments to the law can be time-consuming, and going back to Parliament each time may become counterproductive. Third, perhaps delegation has become an easy way to show action— passing a law without building consensus and kicking the can down the road.

While there may be merit in some of the reasons, leaving critical elements of the law in the hands of officials is costly. First, the Rule of Law requires a clear distinction between what constitutes “guidance” and what constitutes “law.” But when the two are used interchangeably, we run the risk of giving arbitrary power in the hands of officials. It results in what is often alluded to as a democratic deficit.

Second, this has led to continuous changes in the Rules, creating an environment of uncertainty on what the intention of the legislature is. If one has to read the Act, the Rules, the regulations, circulars and FAQs to know the law on one point, then it increases the cost of doing business. While one could argue that frequent change is a sign of a responsive government, it also suggests that not enough thought is given to the draft in the first place. In any case, frequent changes imply that businesses will find it difficult to take long-term bets and will remain unsure of the policy position of the legislature.

Finally, courts could potentially strike down laws for “excessive delegation,” thereby weakening the case for quick turnaround times.

This phenomenon of delegated legislation is raising concerns in other jurisdictions as well. In the UK, for example, the Delegated powers and Reform Committee clearly articulated the need to rebalance power between the Parliament and the Executive. The administrative state in the UK is relatively small compared to the one in India. It also does not have the near-complete lack of separation of powers that is prevalent in large parts of the Indian state, in practice if not in theory. Officials in India make laws, conduct inspections, and adjudicate on cases themselves, giving them unchecked powers that would be unheard of in a good liberal democracy. This makes the practice of delegation of law-making in India more perilous for the Rule of Law.

Rebuild core institution

Parliament has to step up to its role of the law-maker. One has to admit here that much is broken about the Indian Parliament as well. However, instead of pushing the burden on the Executive as a way around these problems, we need to focus on the task of rebuilding the core institution. The first step towards this would be to understand the causes of the falling productivity, and how it might be repaired. The causes may be many—including the anti-defection bill, or the nature of technical expertise available to Parliamentarians, or the challenges of building consensus.

Parliament needs to take back its core responsibility of drafting legislation. It also needs to provide for adequate space for healthy debate on its proposed statutes. No legislation is complete, and some elements of it will always have to be delegated to the Executive. But every such delegation needs to include the principle that the subordinate legislation should follow, and clearly confine its scope.

Telecom bill will choke one of India’s great success stories, take us back to licence raj

We have walked some distance from central planning since the 1991 reforms. But the 2022 draft telecom bill shows old instincts die hard.

09 November, 2022
The Print

The deadline for public comments on the 2022 draft Indian Telecommunication Bill ends tomorrow. Much has been written and said about the adverse implications of this bill on India’s digital ecosystem. It is a reminder that we didn’t leave the licence raj behind in the 1990s. Going ahead with this bill would mean choking off the one success story that has emerged from India.

The world of telecommunications has changed. There was a time when making calls meant using landlines. Then came mobile phones. Now, we use Voice over Internet Protocol (VoIP) applications such as WhatsApp. We buy educational services and groceries through apps. We consume entertainment through OTT services such as Netflix and Amazon Prime Video. Internet-based applications made it possible to survive the Covid-19 pandemic.

Carriage and content

In this world of the Internet of Things (IoT), it is useful to distinguish between carriage and content.

Carriage is the highway that allows us to go from one place to another. This is the telecommunications network that carries bytes from one machine to another. Content is what rides on this carriage. It is akin to a bicycle or truck that rides on the highway. It is the message that you send to your friend on WhatsApp. Netflix, for instance, creates and curates content, and it uses the carriage, i.e. the internet, to bring it to your home. You pay Netflix for the content and your internet service provider for the carriage.

Carriage works on wire and spectrum. There is a market failure as spectrum is like commons, and the government regulates its allocation. Once allocated, property rights on spectrum have to be enforced so that one firm is not unduly using more than its allocated share. There is no market failure in content.

A developer sees an opportunity, builds an app, and a customer is free to not use it. A developer may make money, but taxation is the purview of the department of revenue. There is no case for mandating that content seek permission from the carriage. There is a reason why cars and bicycles do not need a licence from the NHAI (National Highways Authority of India) to use the highway. Just as there is a reason why content providers do not need a license from the Department of Telecommunications.

A reminder of the licence raj

The bill in question grants the government the exclusive privilege of providing telecom services. Any service made available through the internet is under the Centre’s purview. If you have developed an app, and users access your app through the internet, the app will need a licence to operate. This is like saying that it is the exclusive privilege of the government to run a car. Any car that rides on a highway will first have to get a licence from the NHAI that builds the road. Also, the possession of any wireless equipment will need authorisation from the government. So, if your toaster has a wireless component of some sort, you will need government authorisation to bring it home.

A licensing regime is all too familiar to those of us born before the 1990s. If you wanted to start a factory, you first needed a licence from the government. How much you could produce, what equipment you could use, and at what price you could sell were decisions the government made. Such control over decision-making by the government dampens private initiative and leads to rent-seeking. It is no surprise that the Indian growth story did not take off in those years.

We have walked some distance from central planning since the 1991 reforms. But the draft bill is a demonstration that old instincts die hard. In 1951, the Industries (Development and Regulation) Act paved the way for the central government “to take under its control” the industries specified in the First Schedule. In 2022, the telecommunications bill will give the government exclusive privilege to provide telecom services. This will bring every service on the internet under a licensing regime.

Lessons from China

Many businesses outside India may prefer to not go through a licensing regime. The result will be a ‘firewall of India’ that prohibits residents from access to such services. In this, we will be competing with friends who set up ‘the great firewall of China’. While many in India suffer from China envy, it is pertinent to point out that the China model hasn’t worked so well.

Today, there is a crackdown on its technology companies. The sector is weaker and has impacted both financial and job markets. Our own experience with national champions should remind us of the low innovation and degradation in quality of service that soon follows. The firewall of India will be detrimental to the industry. It will also deny Indian residents the benefit of services from across the world.

Software and software services are one of the most important industries in India. Digital India is a core pillar of this government’s policy strategy. The industry relies on being able to operate in an environment that prizes innovation and is not choked by regulatory compliance. The government has said that there will be “light touch regulation.” But in a non-rule-of-law environment, the government will have a chokepoint over the business. Even light touch regulation creates regulatory uncertainty and business risk. Private players will not be keen to build a business in India. The bill needs to be redrafted in its entirety.