Regulatory Focus and Efficacy

Regulations are necessary in a progressive society for the purpose of maintaining discipline, order, balance in all spheres and protect interests of stake holders. It is more achievable by creating a framework that is open, transparent, consultative and rational. Regulations can be more effective if used in right measure. Imagine a society in absence of regulations, it could be truly chaotic with free will prevailing all around. At the same time excessive, faulty and irrational regulations can do more damage than good.

Advantages of Regulations

  • Holding people and businesses accountable for their actions
  • Ensuring balance between business and public interest
  • Protecting human rights and right to privacy
  • Encouraging healthy competition
  • Avoidance of business monopolies
  • Ensuring social, economic, health and digital security
  • Preventing revenue leakages
  • Ensuring quality products, services and manpower
  • Better working conditions

Limitations of Regulations

  • Time consuming
  • Non-uniformity gives birth to confusions, excessive discretions and subjectivity
  • Large amount of administrative work
  • Regulatory costs
  • Flawed regulations may prove ineffective and more costly
  • High level of regulations may affect competitiveness of a country
  • Regulations open to varied interpretations, may result in Legal challenges, disputes and more costs.
  • Over regulations may breed non-compliance and impede growth

Evolution is a natural, continuous and universal process. At any given time, there can be lot of unknowns that only come up over time. Expecting regulations to remain relevant and effective inordinately is unrealistic and unproductive. Changes are warranted as and when transitions happen. Lack of compliance to a particular standard is a matter of thorough study and no amount of over regulations can fetch compliance. What comes to my mind here is GATC Rules 2013 under Legal Metrology Act 2009. After thirteen years, it is still not implemented. No amount of enhanced eligibility criteria brought in, could make it implementable. Rather complexity has increased.

As per economic survey of 2020-21, increasing the complexity of regulatory provisions reduces verifiability and fosters opaque discretion in the hands of the enforcer. The optimal solution is to have simple regulations combined with transparent decision-making process. As per Economic Survey the solution is, to avoid substituting supervision with more complex regulations.

To regulate any subject, Legal Acts are framed by the act of parliament/legislature. To implement the provisions of the Act, enforcement Rules are made to act as supplements for ensuring compliance. In case of any doubt between the two parent Act prevails.

It will be pertinent to mention here that pendency of court cases in India has touched 5 crores. It is also estimated that government by far is the largest litigant with share percentage of 50%. Verdicts take too long and frequent adjournments are supposed to be the main cause of pendency. The first sufferers are litigants. It is rightly said, “justice delayed is justice denied”. Litigation is a costly activity and has macroeconomic effects when it comes to business.

Coming to Legal Metrology Act 2009, it appears to be well framed with least unclarity. The problem lies in misinterpretation of the provisions of the Act and the resultant ambiguity in combination with nonuniformity, in General and enforcement Rules, designed to implement the Act. It is further explained by way of few illustrations: –

Section 24 of the Legal Metrology Act 2009 makes verification and stamping mandatory for weighing instruments used in any transaction and protection barring some exemptions under section 55 of the Act. This substantiates that weighing instruments, not coming under the ambit of transaction and protection, need not to be verified and stamped.

As per section 2(u) of the Act “transaction means”: –

  •  any contract, whether for sale, purchase, exchange or any other purpose, or
  •  any assessment of royalty, toll, duty or other dues, or
  • the assessment of any work done, wages due or services rendered

As per section 2(k) of the Act “protection means” the utilization of reading obtained from any weight or measure, for the purpose of determining any step which is required to be taken to safeguard the well-being of any human being, animal, plant or vegetation.

Effects and after effects of misinterpretation

  • Weighing instruments used by industries for internal purposes do not fall under the definition of transaction and protection as per provisions of the Act, as explained above. Therefore, do not come under the ambit of stamping and verification. Enforcers on the ground interpreted it differently. Considering, Act came in to being in 2009 and was implemented from April 2011, for good 10 years misinterpretation ruled and industries continued to be victims of regulatory overreach till right interpretation was accepted in 2021.

  • Section 49 (2) of the Act under explanation column, allows the companies having different establishments or branches or different units in any establishment or branch to nominate an officer who has the authority and responsibility for planning, directing and controlling the activities of the establishments or branches or different units. For 12 years, until 2022, misinterpretation continued in General Rules by ignoring this explanation and allowing only Directors to be nominated for the purpose. Industries with pan India presence experienced great difficulty as every small matter had to be dealt with by the chief of the company himself besides managing over all affairs of the business.

  • One more misinterpretation of the provisions of the Act, that relates to domestic scales is yet to be addressed. Domestic scales are completely beyond the ambit of transaction and protection as defined in the Act. When we weigh baggage at home, the purpose is to assess the weight to keep it within permissible limits as far as possible. The actual weight/ allowable excess weight at an extra charge is determined by the scale used by airlines at the airport. Rightly the weighing scale used at airport falls under transaction and protection category and not the one used at home.  Same is the case with sample weighing of grocery at home. The scale used at grocery shop falls under transaction category and can be complained against in case of any doubt. Likewise, for body weighing, reading obtained that becomes the cause of action, emanates from the weighing instrument used at health center, doctor’s clinic, sports center or Gym that fall under protection category.

  • Practice of stamping and verification of domestic scales is prevalent only in India amongst OIML member countries and beyond. It is not a luxury to own such a weighing instrument and is also within the means of middle-class households. Middle class in India is surging with estimated yearly growth rate of around 6% and constitutes 31% of India’s population. Given, growing spending power of middle class, take off of such scales should have been much higher. Unfortunately, that is not the case. Regulatory constraints appear to be restricting growth of this business.

  • Silver lining is, the present positive situation. DOCA team, is holding consultations with stake holders to fast track resolution of issues and usher in an era of unambiguity, uniformity, rationality and transparency. In pursuit of this, series of meetings with stake holders have already taken place under the chairmanship of Hon’ble Secretary consumer affairs. Continuity of this process gives us confidence that new India is strongly on the path of reformation for all-round development and growth and the nation is well poised to become 3rd largest economy of the world in the next three years.

Share this post:

Leave a Reply

Your email address will not be published. Required fields are marked *

Recent posts: