India Politics | 13 January 2015
India Politics
A walk down 'ordinance' lane
Please refer to our India Strategy
report highlighting government’s
reform agenda through ordinances
Ten effected under NDA-2; expect more
The government has indicated serious intent to push reforms by issuing six ordinances
within a 20-day span following the impasse in the Rajya Sabha during the winter
session. The most recent one paves the way for auctioning of major minerals (iron ore,
bauxite, limestone and manganese ore). This takes the total number of ordinances
issued by NDA-2 to 10.
The government has clearly indicated that it will not allow Parliament to be an
impediment for the reforms process.
Empirical evidence suggests that ordinances are not new to India – 644 ordinances
have been issued over 1952-2014 (average of 10 ordinances per year). Further, judicial
pronouncements have proved that actions under any ordinance stay valid.
In our note, we analyze four different scenarios (Best, Bad, Worse, Worst) under which
these ordinances can become Acts.
We also understand the various nuances with respect to joint session of Parliament,
which can be used by the government as the last resort. However, it is noteworthy
that Money Bills and Constitutional Amendment Bills (GST Bill is pending in Lok Sabha)
cannot be placed through the medium of joint session.
Historically, the joint session route has been opted only thrice – in 1961, 1978 and
2002. If a joint session were to be held, the NDA would be able to have any bill passed,
given the higher number of members in Lok Sabha.
Key bills pending in Parliament
Insurance Laws (Amendment)
Bill, 2014
Cos (Amendment) Bill, 2014
Coal Mines (Special Provisions)
Bill, 2014
Electricity (Amendment) Bill,
2014
Constitution (One Hundred and
Twenty-Second Amendment)
(GST) Bill, 2014
Lokpal and Lokayuktas and other
related Law, Amendment Bill-14
Government exploring options for passage of key bills
“The government is
extremely determined to go
ahead with reforms and will
not allow a parliamentary
disturbance to obstruct or
delay a reform of this kind”
–
Arun Jaitley, Finance
Minister
The winter session of Parliament saw 18 bills being passed by the Lok Sabha,
however, only 12 bills were passed by Rajya Sabha due to various disruptions.
The productivity of Lok Sabha (98%) was much higher than that in Rajya Sabha
(59%). Rajya Sabha worked lower due to 52 hours being lost on account of
disturbances over issues related to a minister’s remark, religious conversions
and arrest of state minister by CBI and opposition’s demand for a statement
from the Prime Minister.
Due to the disturbances, several bills were not discussed/are pending in Rajya
Sabha. These include the Insurance (Amendment) Bill, Companies (Amendment)
Bill and Coal Mines (Special Provisions) Bill. Further, the Electricity (Amendment)
Bill, Constitutional (Amendment) Bill on GST, and Lokpal and Lokayuktas Bill
remain pending at the Lok Sabha.
The government is exploring various options for passage of key bills. In a key
step to indicate its resolve to move ahead on crucial reforms, in the absence of
majority in the Rajya Sabha, the government took up the ordinance route to
step-up the reforms agenda.
Ashish Gupta
(Ashish.Gupta@MotilalOswal.com); +91 22 3982 5544
Dipankar Mitra
(Dipankar.Mitra@MotilalOswal.com); +91 22 39825405
Investors are advised to refer through disclosures made at the end of the Research Report.

India Politics
Exhibit 1: Lok Sabha bills passed higher than UPA average
Bills passed by Lok Sabha
19
Exhibit 2: Rajya Sabha bills passed lower due to disruptions
Bills passed by Rajya Sabha
17
18
12
12
12
14th Lok Sabha
(UPA-I)
15th Lok Sabha
(UPA-II)
16th Lok Sabha
(NDA)
14th Lok Sabha
(UPA-I)
15th Lok Sabha
(UPA-II)
16th Lok Sabha
(NDA)
Source: Lok Sabha, MOSL
Source: Rajya Sabha, MOSL
In this backdrop, we understand the various nuances with respect to Ordinances
and the possible scenarios shaping up.
Promulgation/re-promulgation of ordinances common in India
#1: What an ordinance is
Under the Constitution, the power to make laws rests with the legislature.
However, the Constitution also provides for ordinances for the purpose of taking
immediate action under exceptional circumstances when Parliament is not in
session.
The President issues ordinances based on the advice of the Union Cabinet.
“There
are enough
safeguards, and
constitutional system can
deal with and effectively
defeat this policy of political
obstructions”
–
Arun
Jaitley, Finance Minister
#2: Period for which an ordinance remains in force
The Constitution has also introduced checks and balances by mandating that
every ordinance be approved by Parliament in its next sitting.
Further, an ordinance ceases to operate at the expiration of six weeks from the
reassembly of Parliament.
#3: Validity of actions under an ordinance
The Supreme Court has held that all actions under an ordinance while it is in
effect remain valid forever.
#4: The number game
In India, 644 ordinances have been promulgated over 1952-2014, implying an
average of 10 ordinances per year.
The NDA-2 government under Mr Narendra Modi has already issued ten
ordinances including re-promulgation of ordinance on coal e-auctions. Of these,
three ordinances have been passed and become Acts, while six are pending to
be presented in Parliament (one ordinance on coal has been re-promulgated).
The minority government of Mr Narasimha Rao promulgated 77 ordinances
between 1991 and 1996. The next three short-term governments - Vajpayee (13
days) followed by Deve Gowda (11 months) and I K Gujral (also 11 months)
collectively promulgated 77 ordinances between 1996 and 1998. The 13-month
NDA government in 1998-99 under Vajpayee promulgated 25 Ordinances and 33
Ordinances during the full term (1999-2004).
2
Key statistics on ordinances
Number of ordinances
issued from 1952-2014
No of ordinances per year
No of ordinances in NDA-2
644
10
10
13 January 2015

India Politics
Ordinances promulgated
between 1952 and 2006
Percentage of ordinance
promulgated (%)
42.4
34.8
#5: Motive behind ordinances
Often ordinances are used by governments to pass legislation that is currently
pending in Parliament. Examples: the UPA’s Food Security Ordinance, and the
current ones on Coal Mine Auctions and Insurance Bill.
According to Shubhankar Dam’s book, “Presidential Legislation in India: The
Law and Practice of Ordinances (Comparative Constitutional Law and Policy)”, of
the ordinances passed between 1952 and 2006, ~35% were promulgated just 15
days before Parliament was supposed to be in session, while 42% were
promulgated within 15 days of Parliament finishing its session.
#6: Re-promulgation of ordinances
The Constitution also allows for re-promulgation of an ordinance. Until 1991, no
ordinances at the national level had been re-promulgated.
Between 1991 and 1999, 53 ordinances were re-promulgated and some were
re-promulgated at least five times.
The last re-promulgation (thrice) was of the SEBI Amendment Bill in September
2013 to give additional powers to SEBI (urgent need to deal with the Saradha
Scam).
#7: Comparison with foreign countries
Most democracies including UK, USA, Australia and Canada do not have
provisions similar to that of Ordinances in the Indian Constitution.
The reason is because legislatures in these countries meet year long.
Exhibit 3: On an average, 10 ordinances are promulgated every year
Bill Passed
487
333 327
272
336 355
216
38
99
135
28
58
35 63
16
284
77
77 64 60
25
302
261
185
33
36
25 30
10
Ordinances Promulgated
15 days before Within 15 days
Parliament was of Parliament
supposed to be finishing its
in session
session
39
20
31
Source: PRS, MOSL
13 January 2015
3

India Politics
Exhibit 4: Ten ordinances promulgated/re-promulgated in NDA-2 regime
Sr No Names of ordinances
The Telecom Regulatory Authority of India
(Amendment) Ordinance 2014
Andhra Pradesh Reorganisation
(Amendment) Ordinance 2014
The Coal Mines (Special Provisions)
Ordinance, 2014
The Textile Undertakings (Nationalisation)
Laws (Amendment and Validation)
Ordinance, 2014
The Coal Mines (Special Provisions) Second
Ordinance, 2014
The Insurance Laws (Amendment)
Ordinance, 2014
The Right to Fair Compensation and
Transparency in Land Acquisition,
Rehabilitation and Resettlement
(Amendment) Ordinance, 2014
The Citizenship (Amendment) Ordinance,
2015
The Motor Vehicles (Amendment)
Ordinance, 2015
Date of
ordinance
28-May-14
Status
Passed in
Parliament
Passed in
Parliament
Re-
promulgated
Passed in
Parliament
Pending
Pending
Brief about ordinances
Makes Chairperson and whole-time members of TRAI
eligible for any employment under Central Government or
State Government or any company in business of telecom
service
Alters the boundaries of the states of Telangana and Andhra
Pradesh
Procedure for auction of coal blocks that were cancelled by
the Supreme Court
Allows the National Textile Corporation to continue with
the lease-hold rights vested with it, even after the
completion of the lease-hold tenure
Procedure for auction of coal blocks that were cancelled by
the Supreme Court
Raises FDI limit to 49% and allows entry of foreign re-
insurers
Key amendments include waiver from requirement of Social
Impact Assessment study (SIA) for five categories viz.
infrastructure projects, industrial corridors, national
security, affordable housing, and rural infrastructure.
Consent requirements have been waived for PPP projects.
Seeks to merge Person of Indian Origin (PIO) and Overseas
Citizenship of India (OCI) schemes, by which PIOs will also
get life-long Indian visa
Brings e-carts and e-rickshaws under the Act, provides for
issuing of driving license and registration of e-carts and
e-rickshaws
Paves the way for auctioning of major minerals including
iron ore, bauxite, limestone and manganese ore, along with
certain other conditions
Source: PRS, MOSL
1
2
3
4
5
6
29-May-14
21-Oct-14
24-Oct-14
26-Dec-14
26-Dec-14
7
31-Dec-14
Pending
8
6-Jan-15
Pending
9
7-Jan-15
Pending
The Mines and Minerals (Development and
10
Regulation) Amendment Ordinance, 2015
12-Jan-15
Pending
Possible scenarios for ordinance replacing bills presented in Parliament
The government has adopted the ordinance route to address the impasse in the
Rajya Sabha. However, these ordinances have to be passed by both houses of
Parliament in the upcoming budget session for them to become Acts.
In the exhibit below, we have listed four scenarios along with the probable
timelines by when the government can clear these ordinances in Parliament.
The ‘Best’ and most ideal scenario would be if the ordinances are approved by
both houses with simple majority in the upcoming budget session.
However, we have also assumed an extreme ‘Worst’ scenario wherein no
business is transacted in Rajya Sabha in either the budget session or the
monsoon session due to disruptions and hence no bills are voted. In such a
scenario, based on our understanding, a joint session cannot be called for
clearing the ordinance replacing bills. Hence, the government would be forced
to continue the provisions in the form of repromulgation of ordinances.
13 January 2015
4

India Politics
Exhibit 5: Scenarios for ordinances - our assessment of possible timings when these ordinances can become Acts
Budget session (2015)
Scenarios
I (Best)
II (Bad)
Monsoon session (2015)
Introduced
Introduced
LS status
RS status LS status
RS status
in RS
in RS
Passed
Passed
Yes
Yes
Passed
Rejected
NA
NA
NA
NA
NA
NA
Possible
timelines
Mar-Apr '15
Apr-May '15
Remarks
Post President's approval, ordinance will
be converted to an Act
Joint session can be called post Budget
session for approving the Bill
III (Worse)
Passed
Yes
NANR
IV (Worst)
Passed
Yes
NANR
Assuming RS is disrupted in budget
session, the ordinance will be re-
Passed
Yes
Passed
July-Sep '15
promulgated. It is assumed that the bill
will them be passed in Monsoon session
Assuming RS is disrupted in budget session
and after repromulgation of ordinance it is
Continue as
Passed
Yes
NANR
assumed again RS is disrupted in Monsoon
ordinance
session. Hence, government to continue
ordinance route
Note: NANR - Not approved or not rejected, ie, no action has been taken; Source: MOSL
Joint session of Parliament – the last resort
#1: When a joint session can be held
The Constitution allows the President of India to call for a joint session of the LS and
the RS if:
A non-financial bill (ordinary bill) passed by one house is rejected by the other
house, or
If the amendments proposed to a non-financial bill by one house are not
acceptable to the other house, or
Other house does not take any action on a non-financial bill remitted to it for
six months.
#2: Bills which cannot be undertaken in a joint session
There is no provision of joint sittings on a money bill or a constitution amending
bill.
Thus, the constitution amendment bill on GST cannot be passed in a joint
session of Parliament. A constitution amendment bill requires approval of two-
thirds majority of each house (LS and RS) and by at least 50% of the state
assemblies (15).
#3: Voting for joint session
The deadlock over a bill in a joint sitting is resolved by a simple majority of the
total members present and voting.
Since the Lok Sabha includes more than twice as many members as the Rajya
Sabha, in such a session, the members of the Lok Sabha would generally prevail.
#4: Speaker for joint session
The joint session is presided by the Lok Sabha speaker.
The Lok Sabha speaker does not vote in the house except on those rare
occasions when there is a tie at the end of a decision. Till date, the speaker of
the Lok Sabha has not been called upon to exercise this unique casting vote.
13 January 2015
5
Bills which cannot be presented in
joint session of Parliament
1) Money bills
2) Constitution Amendment Bill
(GST Bill introduced in Lok Sabha
requires 2/3 majority in each
house of Parliament and approval
of at least 50% of state assemblies)
rd

India Politics
Three Joint sessions held till date
Year
1961
1978
2002
Bills presented
Dowry Prohibition Bill
Banking Service
Commission (Repeal) Bill
Prevention of Terrorism
Bill
#5: Past instances of joint sessions
Such sittings are rare in India’s history.
Only three have ever been called – in 1961, 1978 and, most recently, in 2002 to
pass an anti-terrorism legislation that was later repealed.
#6: Strength of NDA in case of a joint session
At current strength, a joint sitting will have 784 members (541 LS + 243 RS), of
which the NDA has 393 (334 LS + 59 RS). This gives the NDA simple majority
(50.1%).
Assuming maximum number of members at the joint sitting (including two
vacant seats in LS, two in RS and two nominated members in LS), the maximum
members could increase to 790 (545 LS + 245 RS).
In such an instance, with 397 members (393 current + 2 RS vacancy-
Maharashtra and Jharkhand + 1 LS vacancy-BJP + 1 nominated), the NDA will be
in majority, with 50.3%.
Exhibit 7: NDA will be in majority at full strength of JS also
395
Others – 391
NDA – 397
Others – 393
Exhibit 6: NDA has majority at current strength of JS
392
NDA – 393
Total members
784
Source: Rajya Sabha, Lok Sabha, MOSL
Total members
790
Note: Source: Rajya Sabha, Lok Sabha, MOSL
13 January 2015
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India Politics
NOTES
13 January 2015
7

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