Author: cprindia

Setting the context for real estate regulation

The establishment of a statutory regulatory authority for real estate regulation is a relatively recent phenomenon. The Real Estate (Regulation and Development) Act, 2016 requires each state to establish a Real Estate Regulatory Authority. As of July 2021, 26 States and Union Territories have established their own regulatory authorities. States are also mandated to set up a Real Estate Appellate Tribunal by this Act.

The real estate sector is subject to several types of regulation and control, such as building and planning regulations, environment law and labour law. Moreover, land itself is subject to a legal and administrative regime that controls its ownership and transfer.

However, as the real estate sector grew in the decades of the 2000s, there were concerns about the risky financial practices and misselling by promoter companies, the prevalence of black money and shady dealing, and the imbalance of market power between buyers and sellers. This gap was sought to be filled through the establishment of the real estate regulatory authorities.

Interestingly however, the regulation of the real estate sector in this way is not a widely prevalent global practice. The formulation of Indian real estate regulation seems to have been driven by the particularities of the Indian real estate sector.

In the Indian Centre-State scheme, housing, land and planning are largely managed by the State. The Authorities under this Act are established at the State level, with no centralized organizational hierarchy and no role for the Centre except to make law and rules. However, the fact that the law was to be made by the Centre was the subject of considerable debate in the run-up to its enactment. It was finally agreed that it would be in the general interest to have a uniform regulatory framework, which could be established and implemented at the State level. Moreover, the Centre’s role in the enactment of the law was justified on the ground that the law regulates contracts (between buyers and sellers), and the transfer of property, both of which are subjects of the Concurrent List on which the Centre and States share powers.

Scope and design of real estate regulation

The Act states that RERAs are to be established ‘for regulation and promotion’ of the real estate sector, to ensure that sales are carried out in an ‘efficient and transparent manner’, to ‘protect the interests of consumers’, and for speedy dispute resolution. This was re-stated by a former RERA chairperson as follows: (i) to ensure transparency through disclosures, (ii) timely completion of real estate projects, and (iii) rebuilding trust between buyers and sellers.[1]

The Act requires that all real estate projects (above <500 sq. meters land area or more than eight apartments) should be mandatorily registered with the Authority set up under the Act. The Act prohibits the advertisement and sale of real estate projects that are not registered. Registration includes details of the promoter or promoter company, and of all plans, approvals and clearances obtained for the project. The promoter is also required to declare the time in which it expects to complete the project. These details need to be updated periodically, and are maintained on a website available for public scrutiny.

The Act also provides for mandatory registration of real estate agents. By way of the Act, and through this registration process, many of the terminologies, legal obligations, commercial practices and contract conditions of real estate projects have been standardized.

Most significantly, it is mandated that 70 percent of the proceeds from project sales are to be maintained in a separate bank account of the promoter, and are to be used only for land and construction costs. Breach of this condition, or any of the other conditions can result in revocation of the project registration (after which further sales are barred) and freezing of the project bank account. The Authority can also issue other directions and take steps to protect the interests of allottees. Upon lapse or revocation of registration, there is an option for the Authority to pass directions for the remaining completion of the remaining work of the project through a state government agency, or by an association of the allottees.

The promoter is barred from making any changes in the sanctioned plan – such as by building additional sale units on the same property – without the consent of 2/3^rd of allottees. Any structural defects or defects in quality, workmanship and services that emerge within a period of five years from handing over possession to allottees are to be rectified by the promoter. The promoter is also not allowed to transfer its majority stake in the project without the consent of 2/3^rd of allottees and of the Authority.

In case a promoter fails to complete a project, or to complete it in accordance with the agreement or within the time specified, allottees have the option of withdrawing from the project and are entitled to be returned whatever money they have paid to the project, plus interest and compensation. Allottees who choose to remain invested in a delayed project are entitled to interest payments for every month of delay, until the time of handing over possession. Allottees are entitled to be compensated for any defects in the land title of the project.

As a corollary of its regulatory strategy, the Authority has a significant adjudicating role. Regulatory adjudication is initiated principally through compensation claims and complaints filed before it.  In the event of violations of any of the conditions specified in the Act, it can revoke registrations and also impose penalties and interest payments. The Act also mandates the establishment of an Appellate Tribunal.

The Authority however has a limited role in setting up rules and policy for the sector. Much of the work of norm-setting for the sector is already done under the Act. The Authority can make regulations on specified matters, and make recommendations to the state government, and provide an opinion on real estate law and policy when sought by the state government. Rule-making power in relation to the Act is vested with the State government. The Centre can also make rules under the Act. All rules and regulations made under the Act are to be laid before Parliament or State Legislature, as the case may be.

Issues and challenges

Many of the provisions of the Act are designed from a consumer protection perspective, with emphasis on compensation and on creating an exit option for buyers. However, regulators have found that these remedies could either not be enforced fully, if there were insufficient funds in the project, or would lead to the collapse of the project. This was prejudicial to the interests of both buyers and promoters as it leads to loss of value for all the parties concerned. For this reason, there seems to be broad consensus around the idea that promoters and sellers should be encouraged to come to a settlement and re-working of terms as far as possible. This is perhaps a practical solution, but quite a significant transformation in the role originally envisaged for the Authority. Notably, there is no structure for conciliation or mediation provided for in the Act, but nevertheless, many regulators have developed a framework to facilitate dispute settlement.

There is are also challenges around the enforcement of regulatory orders, and the extent to which wrongdoers can be brought to book through the provisions of the Act. This could be on account of the fact that RERA orders cannot be enforced beyond the project and promoter company, or that the promoter company’s lawyers can stretch out the legal process to such an extent as to reduce the salience of whatever remedies are awarded. The Act itself does not provide for a bar on registration of sales related to projects that contravene the provisions of the Act, but some RERA orders have asked registration departments not to register sales. This might help address some of these issues, but this issue is a subject of considerable debate at present.

Related to this is the question of choice of forum, and accessibility of different legal options. RERA covers a subject matter that was previously covered by various other agencies: parties aggrieved of breach of contract, cheating, misselling could approach the regular law courts, and they could have also approached the Consumer Courts or Competition Commission of India. Promoter companies are also sometimes the subject of insolvency proceedings, where buyers are recognized as creditors. For an individual home buyer, it might be difficult to know where to go. And moreover, the costs of pursuing a claim through RERA could be quite high.

There is also a broader question about whether regulation can, or needs to respond to the external environment. Projects might be delayed because of delays in approvals to be given by other agencies. They might also be delayed because of external market conditions that were unexpected, but do not fit the definition of a force majeure event. To what extent are these factors reflected in the everyday work, and in norms and practices developed by the RERAs?

On 19th November 2021, Indian Prime Minister, Narendra Modi announced the repeal of the three contentious farm laws following one of the longest farmers’ agitation that the country has witnessed. The laws and the resultant protests brought agriculture back into the public discourse and the repeal has generated much debate on the political implications and the future of reforms.

In this episode of India Speak: The CPR Podcast, Yamini Aiyar (President and Chief Executive, CPR) speaks with two of India’s foremost voices on agriculture- Harish Damodaran (Senior Fellow, CPR) and Mekhala Krishnamurthy (Senior Fellow and Director, State Capacity Initiative, CPR). Damodaran and Krishnamurthy dissect the important questions around the issue and what this repeal means for the Indian economy, society and for the farmer. They explain what the protests brought to the table, what pushed policymakers to repeal the laws and what direction the policy discourse ought to now take. They also shed light on the need for a new vocabulary for thinking of agricultural reforms to ensure the country can realise the full potential of Indian agriculture.

At the State Capacity Initiative at the Centre for Policy Research (CPR), we were pleased to launch a new talk series titled: ‘Know Your Regulator’ on 15 September 2021, in collaboration with the National Council of Applied Economic Research (NCAER), the Forum of Indian Regulators (FOIR) and the Indian Institute of Corporate Affairs (IICA). In this talk series, we are talking to chairpersons and members of India’s regulatory agencies about regulation of Indian markets and the economy.

Dr M. S. Sahoo, Chairperson, Insolvency and Bankruptcy Board of India (IBBI) and Honorary Chairperson, Forum of Indian Regulators (FOIR) was the speaker for our inaugural event. He was in conversation with Dr KP Krishnan, IEPF Chair Professor in Regulatory Economics, NCAER and Dr Mekhala Krishnamurthy, Senior Fellow, CPR and Director, State Capacity Initiative. Arkaja Singh, Fellow at the Centre for Policy Research, along with Dr Abha Yadav, Director of the Forum of Indian Regulators (FOIR) Centre at IICA made a brief presentation titled ‘Regulating in the Public Interest’, which was followed by the discussion and audience Q&A.

In this note we provide a brief summary of the conversation[1]:

Regulators and their role in free markets

Regulatory agencies play a major role in the policy outcome of the state. The key functions of regulation (such as legislation and execution of regulatory mandates) are discharged through agencies existing in different forms across different levels of government. They can be seen as separate departments within a ministry or as separate entities with their own statutory foundation (independent regulatory agencies) or they can be supra national bodies. The actions of these regulators are of critical importance in the design and execution of regulatory functions. The regulatory bodies were established to create a transparent, accountable system free of political interference and protect consumer interests while allowing for market freedoms to exist.

Regulation is a specialised form of administration. Regulators have special powers and there is a formal separation from the ministries indeed but within an institutional mosaic. The regulatory bodies also provide a structure for making settlements and negotiating contentious and unsettled questions of public policy.

A short history of regulatory agencies in India

Why are there many statutory regulators in India? Why is there an increase in the number of this new form of organisation of government? (Dr Sahoo refers to these agencies as a “mini state” or “neo state”)

In the 1990s, market participants were given economic freedoms. From 1900-1957 when there was no economic freedom, India’s growth rate was under 1% and from 1947-1992 when we had only civil freedom, India’s growth rate was around 3.5%, but between 1992 and 2021 (except for the covid event), our growth rate has been on an average around 7%. There are several empirical studies that have tested the benefits of liberasation and we have embraced these institutions to regulate market freedoms in order for them to work.

There are many kinds of regulators, and their functions are linked to economic reforms. When India liberalised her economy, her goal was to move away from control and towards regulation. We moved from a control regime (licensing) to a regulating regime (registration) where we specified the requirements for doing business. This led to a creation of market regulators to regulate businesses. Before the 2000s, we were not in favour of monopolies, and this was reflected through the Monopolies and Restrictive Trade Practices Act. The Act did not allow for businesses to do business beyond a scale. But in the early 2000s, India recognised that monopolies aren’t bad, but abuse of dominance is bad. This thinking led to the legislation of the Competition Act for businesses to compete at a marketplace.

The rationale for regulation is that businesses must be free to compete in a marketplace without interfering in each other’s freedom. In 2015-16, we also made laws for businesses to exit a marketplace (“the ultimate freedom”) if they were unable to compete in the ecosystem. These set of reforms brought about one category of regulators called the resource allocation regulators. The securities law, competition law and insolvency law are non-sectoral laws because they are meant to ensure the right allocation of resources. We have other kinds of regulators that are sector specific too.

If economic freedom is misused, it is likely to be abused. We were inspired to create regulators because we had seen the benefits of liberalisation and we wanted to make sure that market failures were avoided. Entry into a market, ease of doing business, and exit for businesses are functions that the regulators deal with. We started setting up regulators in 1992, and we are still experimenting within this frame. But there is a general understanding that if we pass something on to a regulator with a pre-defined framework, then the outcomes are better. The government also expects for the regulators to be insulated from political and other kinds of pressures and there should be stability in the regulatory regime.

What does it mean ‘to regulate’?

The regulators focus on promotion of an industry, producers, and certain types of market structures. The acts have terms such as “promotion” (to promote a market where things are asymmetric) and “regulation” (to regulate a market where enterprises are encouraged to compete) that have a common end goal in mind, but promotion and regulation are slightly different functions. Similarly, “development” (where the state places a role in developing sectors) and “regulation” also go together but they are distinct functions. In the framing of our agencies and in our understanding regulatory purpose, sometimes all these ideas are conflated and have resulted in challenges in understanding the public purpose of regulation.

There is no textbook definition of a regulator. There are commissions, boards, authorities, but there is no agency that that only does regulation. Those who call themselves as regulators such as SEBI or IBBI do not just regulate but they also have other functions. But within a particular sector, these agencies hold monopoly positions in regulating that sector. In the developmental space, the regulators are not monopolies, but they have a developmental role. SEBI is the most evolved regulator and the oldest regulator in India. In the SEBI Act, they are responsible for the protection of securities, promotion, and regulation of the markets. The word here is not “to develop” because there was already a developed market to regulate.

In 1992 when we started the reforms, there were questions around what to regulate if there is no market. But markets also don’t develop without comfortable regulations. Development and regulation must go hand in hand especially during the initial stages of reforms. As an example, in 1996, the Securities law was amended to include derivatives. We at that time thought that the derivatives market will develop, but it did not develop. We then released a regulatory framework in 1999 for derivatives that led to certain market developments. Similarly, in the insolvency space, we came up with a regulatory framework for regulating pre-packaged insolvency processes. It exists in the United Kingdom without any statutes, but in India, we needed a framework to start this process. Development and regulation must go together, and every regulator will also have some developmental role in their mandate. Development can mean many things. It can mean promotion, or it can mean just having a fair, simple trustworthy regulator. In some cases, the regulator could be the market player, or the regulator will offer incentives for people to do business. So, every policy must be neutral and consider what they are trying to develop in their relevant sectors.

There are three broad types of regulators.

• Regulators who regulate professionals (Doctors, Chartered Accountants)
• Regulators who regulate markets (SEBI, IBBI) and
• Regulators who regulate utilities (TRAI, PNGRAB, RERA).

In the utilities sector, there are structural problems in developing ease of entry and exit and hence it is difficult to catalyse competition in this space. But the stock market is a great example for perfect competition. Millions of people simultaneously buy and sell, and trade happens in seconds, and no one has any control over the price. In utilities regulation, we have not been able to achieve perfect competition since there are structural issues.

Powers of a regulator

In the constitutional scheme of things, we have fused three major functions in one body. The power to effectively legislate, the power to execute these legislations, and in many cases, the agencies also have the power to adjudicate disputes arising between itself and an entity in the market that is supported by the legislations. Is it necessary and if so, are there adequate checks and balances to ensure that this is not an agency with too much concentration in power?

CV Bhave used to say that the job of a regulator is to hit a moving target. Stock markets are too dynamic, and they cannot wait for the State’s “almost complete law” for them to be regulated. We moved from “almost complete law” to “almost incomplete law”. An example of a complete law is the Indian Penal Code. There has not been a single amendment made for this law because this legislation is meant for static issues. In market situations, these kinds of complete laws cannot work because then, the whole purpose of giving freedom to businesses is lost. In dynamic markets, there are the regulators and the regulations, and we moved to the skeleton type of parliamentary legislations in sync with market developments.

There are many standard techniques that have come up to think about structural issues. For example, we have created three separate wings in the IBBI with three different full-time members to make sure that there are strong accountability functions where all the functions are subject to scrutiny. There must be checks and balances but there are benefits to giving these powers to regulators.

Regulatory design and capacity

The regulatory agencies must have greater depth of capacity to tackle the risks and benefits associated with regulating individual sectors. What are the internal measures of effectiveness and impact since we know very little about the capacity of regulatory agencies?

How does one build-in into the regulatory design of these institutions adequate capacity to deal with technically complex functions and their associated risks, but also quickly and effectively solve for market conditions?

Every regulator has two broad functions: the first is the legislative activity irrespective of the kind of business. The second is the subject matter knowledge required to regulate. Both these functions are critical to regulators, and one must start somewhere. Once a regulator is created, then we need to think about capacity. Regulation is a public good and regulatory capacity is vital to this function. Academics have a business opportunity here to come up with frameworks to build capacities. We don’t have a course on how to inspect and investigate businesses. We create agencies and we are keen to put the cart before the horse, but we end up with sub-optimal outcomes. We want immediate outcomes, but it is hard to build capacities in a day or in one classroom in eight months. How can one convince parliament and government on the need to hasten slowly?

Every idea has a time. We can never have best conditions to make things happen and this is true for any democratic system. We need to catch on when the idea has its moment and follow it through.

We also draw on former civil servants and bureaucrats to run our regulatory agencies. The regulator is both the authority and the agents who regulate. What is the relationship between the regulatory bureaucracy and public administration at large? It will be useful to understand the kinds of people who need to come in to build regulatory capacity.

The impression that regulatory bodies are manned by bureaucrats is not correct. SEBI for example has its own cadre with 1000+ members now. The Government only appoints the top people, but these organisations build their own internal capacity. We need to give these bodies time to build capacity. There is a difficult tension between the insider outsider mix required within the regulatory agencies and these are going to be complex questions. Regulation is a cross cutting function and involves many realms of knowledge such as principles of law, constitution, economics, and relevant sectoral knowledge. but is there scope identify common skillsets that the regulators need? Can SEBI regulators, for example, move to the Competition Commission?  These questions will gain more traction in the future.

Dr Subha Rao of the RBI was not a trained regulator, but he was a classic civil servant who had experience in a variety of finance roles. He was also not a trained lawyer. It is not easy to do regulation if you are not a trained lawyer but a lot of people with experience and wisdom can be excellent regulators. Dr Bhave instinctively understood rule of law because they came from their own experience of government and principles of natural justice are ingrained in such people.

The ‘Know Your Regulator’ series

A lot of discussions on economic governance in India centre around deregulation. The need to setup regulatory institutions came in in the 1990s when India’s economy was liberalised. We have set up many regulatory bodies, but we have spent far little time to understand what it means to build effective public regulatory institutions in the country and the need to deepen public engagement with regulatory institutions. We need to discuss capabilities and transparency of regulatory institutions since we know very little about what we know it is to regulate. KYR is a series that will introduce a public dialogue with our regulators.

In this series, we aim to listen from regulators who are currently serving. Our aim is to make their challenges and functions visible.

There are different ways in which regulators are perceived by the public. There are some perception issues as well. In the early 1990s, people knew what SEBI did but that was because the regulators allowed themselves to be visible. Also, there are people do not allow regulators to be visible since they do not want their regulators to perform their functions. Different people also look at different aspects of the regulator. In the insolvency law, people who have lost because of these laws do not favour the regulator and those people who gained because of these laws will favour the regulators. There is very little visibility for the complete picture in these situations because people and groups project their interests. People judge regulators on some yardstick that is readily available. For example, people judge SEBI just based on the market indices. We need to draw attention to regulators because the movement away from a producer state to a regulator state means there is going to be a proliferation of these agencies and regulators are going to touch our lives regularly. With services becoming a dominant indicator of our GDP, consumer protection issues will come to dominate our daily lives. Telecom, banking, insurance, security markets, technology etc are riddled with many issues, so knowing your regulator is intended to throw light on what is to be done when the consumer is frustrated with a particular regulation.

What is food regulation?

Food is regulated in order to ensure that it is safe for human consumption. Food regulation guidelines help set reliable standards of disclosure, so people know what goes into an item of food, and can make informed choices about what they eat. The institutionalisation of food regulation also serves the purpose of providing the public with assurance that food is certified as safe for consumption.

This is however a complex task as there are a very large number of persons and enterprises are in the business of food, and by the diversity of enterprise-scale, food cultures and knowledge systems. Food regulation is a public good: everyone benefits from having a credible framework. Food regulation also has economic effects on the production side. It interacts most directly with food processing and production industries, but has effects for every type of food-related economic activity from farm to fork. Moreover, its effects are both domestic and international, as food regulators determine what foods are permitted for importation into their country. There are also legal requirements of inter-legibility between domestic and international standards by virtue of WTO treaty obligations, in which food regulation plays a part.

Regulations must necessarily contend with vast amounts of scientific uncertainty on many issues relating to food. Food regulators therefore formulate their regulations based on an assessment of risk to human health. These regulations are expected to be reasonable in relation to the anticipated risk, and to balance the concerns of health and safety with the economic interests of food businesses.

Scope and Design of Food Regulation

Food is regulated through activities that include setting food safety standards, developing guidelines, mandating disclosure, devising certification standards, testing of products, monitoring and supervision, and the imposition of sanctions and penalties. It also includes public education about food safety amongst the general public and to people and enterprises in the business of producing and selling food.

Food regulation requires scientific expertise and infrastructure. It also has economic and administrative dimensions. It needs to have feet on the ground in every single place where food is made and sold. It needs to be agile, to keep pace with changing marketplace conditions.

In terms of regulatory design, it might be useful to think of food regulation as a domain of specialisation. Food regulation does not need an arms’ length relationship with government, except to establish a domain of specialisation. In fact, India’s food regulation system is quite closely integrated with the executive state for monitoring and enforcement activities, although it has some financial and administrative independence. The parent ministry for food regulation, i.e., the Ministry of Health and Family Welfare, is responsible for providing approvals and support to FSSAI. Food regulation also has a quasi-judicial side, to support its penal and sanctions-making powers.

The Food Safety and Standards Act, 2006 provides the legal framework for food regulation in India. This law was enacted with the objective of consolidating numerous laws and regulations relating to food regulation. It also established an agency to make and implement science-based rules and guidelines applicable to the manufacture, storage, distribution, sale and import of food. Following this law, the Food Safety and Standards Authority of India (‘FSSAI’ or ‘the food authority’) was established in 2008. The law also provides for monitoring and enforcement, and for a system of integration and coordination between regulation, policy and compliance aspects of food regulation. It also provides for coordination between various agencies and officials of the central and state governments in their regulatory work.

FSSAI’s principal function is to make regulations and policy. It lays down standards and guidelines in relation to articles of food, and provides for licensing, registration and accreditation for food business operators. It is mandated to specify systems for enforcing its standards, for accreditation of certification systems and for certification of food safety management systems for food businesses.

FSSAI lays down procedure and guidelines for regulatory activities, including for quality control of food imports, for accreditation of testing labs, for labelling of food articles, and for sampling and analysis of food items. The manner and procedures for risk analysis and risk management in relation to food are also to be laid down by it.

FSSAI also has broad market shaping roles. It may be called upon to provide scientific advice and technical support to central and state governments for framing policy in areas that have a bearing on food safety and nutrition. It can take up initiatives to educate both food business operators and the general public on food safety, hygiene and nutrition. It can also take up self-regulatory interventions – such as through labelling and information campaigns – to encourage manufacturers and consumers to make and eat healthy food.

FSSAI is expected to collect and collate data regarding food consumption, incidence and prevalence of biological risk, contaminants in food, residues of various, contaminants in foods products, identification of emerging risks and introduction of the rapid alert system. It is also expected to contribute to the development of international technical standards for food, sanitary and phytosanitary standards.

Both the content and the rule-making process of food standards are also required to follow India’s commitments to the WTO, under the Agreement for Sanitary and Phytosanitary Measures and the Agreement on Technical Barriers to Trade, which require for standards to be non-discriminatory to international trade. In this, our food standards often guided by the Codex Alimentarius, an international compilation of food standards, although this is non-binding and its local application is sometimes controversial.

Representation, transparency and consultation are important features of food regulation. The law provides for the representation of consumers, farmers, retailers, and food industry, including small scale industry in the composition of the food authority, and in its various panels and committees. Several other ministries of the central government and the state governments, and experts and food scientists are also represented in it. The law also provides – perhaps uniquely for a statutory regulatory authority – that one-third of its 22 members should be women. The law provides for consultation in the regulation-making process, for formal representations by stakeholder groups, and for the disclosure of scientific opinions that it has received and adopted.

The administrative structure of food regulation is made up at the central level of FSSAI, which is advised by several Scientific Panels, a Scientific Committee and a Central Advisory Committee. The administration of food regulation is headed by the Chief Executive Officer (‘CEO’), who is both member secretary of FSSAI and Chairperson of the Central Advisory Committee. At the state-level, food regulation is administered by Commissioners of Food Safety appointed by state governments. Designated officers and food safety officers function at district and local level in coordination with state and local authorities. They have a frontline role in monitoring, inspecting and ensuring compliance with regulations at the local level. In addition, there are Adjudicating Officers and Food Safety Appellate Tribunals, to carry out the adjudication of offences and penalties under the Act.

The Central Advisory Committee and the CEO are responsible for providing administrative coherence to the overall framework for food regulation.

Issues and Challenges

Food regulation has a critical role to play in allaying public concerns about food adulteration, junk foods and the indiscriminate use of chemicals in farming and food processing. This has some Indian dimensions: poor hygiene practices and lack of enforcement capacity. There are also growing concerns about  unhealthy fats, salt and sugar in processed foods, that are to be addressed through food regulation.

There is also the challenge of having differing requirements for small and big enterprises. Regulations that are appropriate for large and organised manufacturers might be quite difficult for small operators to comply with. Perhaps for this reason, our food regulations tend to treat small scale and micro enterprise food businesses as a distinct category from larger businesses, and the rules differently applicable to these categories. This approach might help rationalise the cost of regulation for small enterprises, while ensuring that they are not left out of the regulatory system or made illegal for their inability to comply with regulatory mandates.

Uncertainties about the regulatory process might also be an area of concern for the food authority. The food authority’s actions have been struck down by courts for procedural shortcomings in some instances, whereas in others the courts have directed the authority and food commissioners to ensure improved implementation of the law and regulations.

Some of the other challenges of food regulation include staffing shortages and inadequate laboratory infrastructure, which means that food businesses might see regulation as paperwork rather than as a credible threat of being inspected.

The integration with international markets is another area of challenge. There are several instances in which Indian exporters have been prevented from selling their goods in other countries for failure to comply with local regulations. This could be because of the difference between Indian regulations and international standards, or because it was difficult to monitor and enforce standards for small scale and unorganised suppliers. The Indian government and the food authority have opposed the use of international standards as a backdoor trade barrier, while also promoting increased participation of developing countries in the formulation of international standards.

In this edition of CPR Faculty Speak, Damodaran talks about his work and interests at CPR, why they matter, what impact he hopes to achieve and more.

Tell us about your research work and interests at CPR.

My main area of interest – both as a journalist and now researcher at CPR – is agriculture. Working at CPR has given me the opportunity to look at this sector from a more long-term and strategic perspective rather than being focused on the immediate. As a reporter, I would be primarily concerned about the progress of the current monsoon, the impact of its late withdrawal on the standing kharif crop, and whether the government’s recent slashing of import duties on edible oils and pulses may hurt farmers more than leading to any real softening of food inflation for consumers. But at CPR, I am able to think beyond the next harvest/sowing season of how global sugar and coffee prices will behave in response to continuing dry weather in Brazil. And that’s necessary for my own understanding of agriculture.

Why do these issues interest you?

The government’s latest Periodic Labour Force Survey report for 2019-20 has shown that agriculture employs 45.6% of India’s workers, despite contributing to only 16.7% of its GDP at current prices. Any poverty reduction or growth strategy in India is contingent upon agriculture’s performance – its ability to generate employment and incomes. These, I believe, needn’t be just in the farms, but also outside: Crop production per se may take place in farms that cannot absorb more labour. But there is far more potential to create jobs in aggregation, grading, warehousing, processing, transporting and retailing of farm produce – not to speak of supplying fertiliser, seeds, agri-machinery, extension, financing and other services to farmers. Agriculture’s links to the rural or the wider economy is something that most policymakers and economists inadequately appreciate or understand. Nor are the solutions offered – “we need to get people out of agriculture” – particularly helpful, as they don’t answer the simple question of “how” and “where”. In fact, given how little Indian agriculture’s true potential, whether for domestic value-addition or exports, has been exploited, one can even ask “why”!

How does working at CPR help in pursuing your above research interest?

Much of my professional career has been in newsrooms or editorial meetings and focused mainly on the next day’s big story. At CPR, I have been fortunate in interacting with scholars who are as much, if not more, passionate and optimistic about Indian agriculture than me. I would like to specifically mention Mekhala Krishnamurthy and Shoumitro Chatterjee here. Equally, there are many others, including Partha Mukhopadhyay and Yamini Aiyar, who are deeply engaged with issues concerning state capacity that is important when it comes to framing and implementation of policies on agriculture and rural sectors. I have also benefited from participating in conversations with colleagues at CPR’s Initiative on Climate, Energy and Environment. All these interactions would, of course, have been more satisfying without the restrictions on physical meetings imposed post-Covid; I joined CPR this April just when the second wave had hit!

What impact do you aim to achieve through your research?

During my short stint so far, I have been able to contribute to Understanding the Rural Economy, a CPR series that takes cognizance of issues of both current and long-term relevance. A couple of these notes – especially one that points to a possible reversal of dietary and cropping diversification in India during the last decade and another that seeks to estimate the country’s farming population which is significantly agriculture income-dependent – have, I believe, significant policy implications. I hope to write more such detailed notes relating to agriculture and rural policy in the months ahead.

Is there anything else that you are now working on while at CPR?

I have finished writing a firm history of Hatsun Agro Product, India’s largest private dairy company. This just-published book documents both the company that has traversed every potential stage of a business enterprise – from tiny to small, medium, big and, finally, large – and its “new capitalist” founder. Currently, I am working on another business biography project, which is on an “old capitalist” who headed India’s third largest industrial house at the time of Independence. I hope to complete a significant part of work on this project as well in the coming six months!

To know more about Harish Damodaran’s work and research, click here.

Bhubaneswar, Tuesday, 21 September 2021: The Centre for Policy Research, New Delhi under its initiative ‘Scaling City Institutions for India: Water and Sanitation initiative’ is pleased to announce the signing of a Letter of Understanding (LoU) with the Housing & Urban Development Department (HUDD), Government of Odisha (GoO), PR & DW, Odisha and UNICEF on 21 September, 2021.

Through this unique partnership, SCI-FI initiative will support the Urban –Rural convergence on Faecal Sludge and Septage Management (FSSM) and Plastic Waste Management (PWM) in Odisha to ensure Swachha Odisha and Swastha Odisha. This initiative aims to formalize the efforts to ensure district-wide sanitation by demonstrating the urban-rural convergence of FSSM and PWM services in seven identified districts- Angul, Balasore, Dhenkanal, Ganjam, Khurda, Mayurbhanj, Sambalpur and further mainstreaming across the state.

During the signing, Pratap Jena, Hon’ble Minister, PR&DW & H&UDD, Odisha said that this initiative would contribute towards fulfilling Hon’ble CM’s vision of Swachh Odisha and Sustha Odisha. He said that Odisha has emerged as a champion in managing faecal sludge and plastic waste in 114 ULBs, with this endeavour it will strive to serve the rural population by linking them to urban facilities like FSTPs and MRF for faecal sludge and plastic waste management. He further reiterated that this initiative will strengthen both Panchayati Raj Institutions and Urban Local Bodies to provide efficient services to the citizens of the district through a district wide sanitation approach.

G. Mathi Vathanan, Principal Secretary, H&UDD, Odisha highlighted the uniqueness of the model of urban rural convergence and said that Odisha is a pioneer state in management of faecal sludge and plastic waste. He said that Odisha’s efforts in these areas are getting recognition and accolades. This unique initiative will be able to promote good health of citizens by combating pollution of water bodies and land. He reiterated that this novel initiative will begin with a select districts and subsequently it will be up-scaled state wide covering 32 districts within a year.

Speaking on the partnership, Ashok Kumar Kaluram Meena, Principal Secretary, PR&DW Department said that policy making has to be at state level. Breaking artificial divide of urban and rural governance through convergence is crucial for improving FSM within the state. Urban-rural convergence will aim to achieve ODF sustainability in the State. Odisha has taken various innovative models in transforming sanitation landscape and this initiative is another novel initiative as it will serve rural areas by connecting it with urban facilities. He added that the Department has already notified Odisha Rural Sanitation Policy in 2020 which underscores adoption of safe and scientific management of solid waste with a special focus on plastic waste and liquid waste management.

Suresh Chandra Mahapatra, Chief Secretary, Odisha, delivered the Keynote Address. He said that Odisha has Odisha has made progress on FSM in urban areas through its interventions. Within the last five years, women and transgender groups have been mobilized in managing FSM operations. To sustain these efforts district wide through concerted efforts on FSM and PWM, this partnership would be crucial. This initiative will be operationalized in the first phase in 7 districts (Angul, Balasore, Dhenkanal, Ganjam, Khurda, Mayurbhanj, and Sambalpur) through collaborations with 43 urban local bodies.

Monika Nielsen, Chief Field Officer, UNICEF Odisha said that this is a scalable model. Convergence will attempt to promote cleanliness in villages. UNICEF Odisha team is happy to be part of this journey to scale up this initiative.

Yamini Aiyar, President and Chief Executive, Centre for Policy Research, Delhi expressed that inter department convergence has been part of debates from 90s, however with this unique partnership between urban and rural departments will be pivotal in improving sanitation through a district-wide approach. It will also serve as a lessons for such collaborations for future. She added that state level policies and implementation efforts that break artificial divide between urban and rural governance are crucial for improving sanitation for all.

Sangramjit Nayak, Director, District Administration & Mission Director, H&UDD thanked dignitaries including representatives from 43 ULBs present for the event and assured full support by the state Government to the districts, ULBs and PRIs on this path breaking initiative which will be the first such initiative in the country.

This event was attended by nearly 90 participants. There was representation from Housing and Urban Development Department, Odisha, Panchayati Raj and Drinking Water Department, Odisha, UNICEF Odisha, Centre for Policy Research, District Collectors and ULB officials from all seven districts selected for operationalizing the partnership.

A short presentation made at the event is available from here.

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For further information and to schedule interviews about the initiative, please write to: sci-fi@cprindia.org or shubhagato@cprindia.org or anju.dwivedi@cprindia.org or hrudananda@cprindia.org

Dear Friends,

As President, I have come to relish this annual ritual of writing the foreword to CPR’s annual report. This is my moment to bask in the glory of the awe-inspiring public service and high standards of scholarship set by my colleagues. I list here but a few highlights of CPR’s work through this year. I hope this will give you a glimpse of the depth and range of our intellectual and policy engagements and tempt you to go through the contents and publications in this report. In an increasingly chaotic and complex world, CPR scholars have valiantly sought to understand and interpret events through sober, evidence-based discourse. I am proud that through our work, we have stayed true to our fiercely independent spirit and commitment to democratic dialogue.

The reporting year 2020-21 will find its place in history. At every crucial moment, from the national lockdown in March 2020 to the deadly second COVID-19 wave in April 2021, the farmer protests, the significant developments on India’s borders and the geopolitical shifts in our neighborhood, to debates on net-zero targets and building a resilient climate-ready State, CPR scholars remained at the forefront, contributing actively to policy implementation, forging new partnerships with governments, civil society and academia and initiating new research to enrich the policy discourse and interpret the impact of this historical moment.

The health and economic consequences of the pandemic dominated much of CPR’s policy work in this period. Within weeks of the first national lockdown being announced, CPR faculty reoriented their work to respond to COVID-19. Two notable engagements with State governments include appointments of CPR scholars to the COVID-19 Global Advisory Council of the Government of West Bengal and to the Government of Punjab Group of Experts, tasked with developing a post-COVID economic strategy for the state. In addition, CPR scholars were appointed as members of the Lancet COVID-19 Commission India Task Force and the Lancet Citizens’ Commission on Reimagining India’s Health System. Alongside with working at the state and national government level, our COVID-19 response involved active engagement at the grassroots. Accountability Initiative was instrumental in anchoring an alliance called PULSE (Platform to Understand, Learn, Share and Exchange), that includes over 100 members from government, civil society, academia and the donor community. The alliance focuses on ensuring that grassroots experience makes its way into the policy discourse. In addition, they launched a series called Inside Districts, documenting the trials and tribulations of frontline workers in responding to the pandemic. We also undertook several research projects, in partnership with government and academia, to build an evidence base on how to respond to COVID-19. Key research themes included internal migration, urban livelihoods, understanding transmission dynamics and the preparedness of the health system.

Beyond our COVID-19 response, the perils of work from home and tyranny of Zoom notwithstanding, 2020-21 remained a productive year for CPR. Our scholars continued the tradition of publishing path-breaking books, writing in the popular press and engaging in the everyday life of policymaking. We published two important books this year including, Shylashri Shankar’s masterful book, Turmeric Nation: A Passage Through India’s Tastes and Manju Menon and Kanchi Kohli’s Beyond the Coal Rush Rush: A Turning Point for Global Energy and Climate Policy?. Our national level policy contributions ranged from engagements with the Ministry of Jal Shakti, the Finance Commission, the NITI Aayog, the National Commission of Scheduled Caste and Scheduled Tribes, and the Ministry of Environment, Forest and Climate Change, amongst others. We also launched new research and welcomed new faculty in areas such as the rural economy & agriculture, state capacity and regulation, health financing, Dalit politics, election studies, national security and foreign policy.

In the last few years, we have broadened our approach to work more closely at the sub-national level. This year, we deepened our engagements by entering into long-term partnerships with the Government of Punjab and the Government of Odisha to work with the urban development departments on slum upgradation. We also signed two different Memoranda of Association with the Government of Meghalaya to support the planning and finance department and the State Capability Enhancement Project. In addition, new partnerships have been initiated with governments in Andhra Pradesh, Chhattisgarh and Karnataka.

This has been an important year for climate action across the globe, particularly with the release of the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) and preparations for the upcoming United Nations Climate Change Conference in November 2021. CPR, through its Initiative on Climate, Energy and Environment (ICEE), as you doubtless know, is home to the country’s leading voices on the issue. We have also played an important role on the global stage, shaping debates on climate change. Continuing this tradition, Navroz Dubash is the lead author for the IPCC chapter on national and subnational policies and institutions to address climate change. In addition, ICEE remained at the forefront of key debates, including on climate institutions, net-zero targets, energy transitions and air pollution. This formidable team is truly at the cutting edge of one of the most pressing issues of our time.

In 2020-21, we welcomed several new colleagues to the CPR family but also suffered difficult losses. In June 2020, we lost Ved Marwah, a long-term associate with CPR and just as I signed off this year’s annual report, we had the devastating news of the sudden passing away of Keshav Desiraju, our governing board member. Both men were amongst India’s finest public servants, whose integrity and commitment were unparalleled. We learnt from them the value of public purpose and CPR remains committed to fulfilling their legacy by remaining true to the values and principles they stood for.

As always, I am grateful for the unflinching support we receive from our governing board under the leadership of Dr Meenakshi Gopinath, whose guidance and commitment to our scholarship has been a consistent source of strength. Our fabulous finance & management team, led by Alaknanda Jain and Anup Roy, who have navigated the chaos of COVID-19 to ensure that our faculty have the space to do their best, even as we become more 21st-century in our day-to-day administration, and our communications team, led by Hemali Sodhi, who have ensured that we transitioned from the seminar room to the Zoom room with ease, while pushing us to reach out to newer audiences. Finally, to our funders. whose trust and support has enabled us to adapt to the new circumstances and new challenges that we confront today. I remain deeply grateful.

With warmest thanks,

Yamini Aiyar,
President and Chief Executive,
Centre for Policy Research

Rahul Verma is a Fellow at the Centre for Policy Research (CPR). He is also Visiting Assistant Professor in the Department of Political Science, Ashoka University. His research interests include voting behavior, party politics, political violence, and media. He is a regular columnist for various news platforms and has published papers in Asian Survey, Economic & Political Weekly, and Studies in Indian Politics. He has a PhD in Political Science from the University of California at Berkeley, US. He completed his MPhil in Political Science from Delhi University, MA in Development Studies from Tata Institute of Social Sciences (TISS), Mumbai, and BA from Kirori Mal College, Delhi University.

In this edition of CPR Faculty Speak, Verma talks about his work and interests at CPR, why they matter, what impact he hopes to achieve and more.

Tell us about your research work and interests at CPR.

At CPR, I lead a team of researchers that broadly work on themes related to Indian politics and political economy. Specifically, my interests lie in voting behavior, party politics, and political violence. At present, we’re analysing the Parliamentary debates of the 15th and 16th Lok Sabha. I’m working on a manuscript with my colleague, Asim Ali on the Congress Party in India, and organising fortnightly discussions with scholars who study political parties on transformations within state-level parties across India. We are also in the final stages of completing an edited volume titled, “Dalits in the New Millennium” with Prof. Sudha Pai, Shyam Babu and 25+ chapter contributors. These research projects are supported by the Rosa Luxemburg Stiftung (RLS).

In addition to these issues, I work closely with the State Capacity Initiative (SCI) here at CPR where, for instance, we’re doing some work on Panchayats and Panchayat Secretaries which ties in with frontline bureaucrats – one area the SCI focuses on. Another key area of my work is the YouGov-Mint-CPR Millennial Surveys (conducted bi-annually) to understand the anxieties and aspirations of millennials situated across India’s towns and cities; financial, political, interpersonal, among others. We are in the process of building such collaborations with different organisations. For example, we have been organising a discussion series on topics of contemporary importance with the Trivedi Centre for Political Data (TCPD) at Ashoka University and a similar series with Lokniti-Centre for the Study of Developing Societies (CSDS). The idea behind undertaking all this research is to stress the importance of politically informed policymaking, in other words, to bring politics back into discussions related to public policies. Finally, apart from training young scholars, we wish to create a community and  network of scholars across the globe to interpret emerging politics in India.

Why do these issues  interest you?

I’ve always been interested in the ‘political’ as influencing everything around us. I believe that the imagination of modern India, especially post-independence, has been a political project. This is not to suggest that we do not have deep civilisational roots and ethos, but since 1947,  the “Idea of India” is deeply political. A project which many thought wouldn’t succeed. There were doomsday predictions about India’s chances to survive as a democracy. Not only have we defied those predictions, but Indian elections are the greatest show on the planet. For sure, democracy has changed India, but it is time that theorists engage seriously with what is happening in this part of the world as we are the busiest laboratory of democracy.

There are now many changes sweeping through our country, with sites of contestation growing, and it is interesting to understand how politicians and parties affect these. As actors with their own set of vested interests who are undoubtedly fallible, there’s no denying that they make mistakes. This strand of political psychology is something we’re looking to bring more into our upcoming research; understanding what shapes and motivates such actions– the ideology, beliefs, preferences and biases they hold. Caricatures aside, these complex actors are central in understanding politically and historically-informed policymaking. Simply put, it’s important to study these leaders as they are not simply prisoners of the past, but making history as we speak!

How have these issues evolved in the country and globally over the years?

Most often issues evolve slowly, even though one feels they’ve woken up to a sudden change. Globally we’ve been seeing a recession in democratic values. Simultaneously, newer forms of campaigning have emerged, and voters have become complex because of a whole host of emergent contingencies and issues. We see the political space fragmenting like never before; but all of this took time. It is just as important to study that interstitial period as it is to understand the contemporary political landscape. Again, we’re in a period of flux and paradoxes that necessitate research, even more so here in India, which offers fertile ground to study complex interrelated phenomena: the rise of a dominant-party system after 25 years of a coalition government, in the midst of a proliferation of numerous representative parties; the conservative beliefs amongst millennials coming up against the increasing political awareness and participation in protests among student-activists, material conditions having improved but citizens continuing to remain strongly rooted to their identities; the examples are many. These contradictions are inherent in the system itself; it has evolved in this way and will continue to do so.

What impact do you aim to achieve through your research?

As I said, the idea is to put the spotlight on politics in understanding the public policies. Institutionally, the idea is to see CPR develop as a hub of cutting edge research on politics and political economy in India. In doing so we would like to scale-up collaborations with scholars in India and across the globe, undertake research for a global audience, mentor young researchers into being ambassadors for CPR and ensure ours is an organisation which becomes a platform for robust debate, disagreements and discussions- the 3 Ds which are so essential in a democracy!

What does a typical day look like for you at CPR?

The pandemic created a ‘new-normal’ but now that some members of my team and I have returned to office, we are making efforts to return to the ‘old-normal’. The work day remains the same – I normally have meetings with my team: either in person or online, to discuss on-going projects and brainstorm on future plans. I try to keep the first half of the day reserved for my personal reading and writing. Apart from this, the day goes by in responding to emails, meeting with faculty colleagues at CPR, making other calls, or in the workshops or talks that we’re organising. I also enjoy spending time with my team, getting to know them more through conversation (and through what they bring for lunch!). This academic year, I’m also teaching at Ashoka University (as Visiting Assistant Professor in the Department of Political Science), so engaging with students takes up a large part of Tuesdays and Thursdays.

What are you currently working on and why is it important?

As I mentioned in the beginning, the team is working on a number of projects right now. Similarly, with the colleagues at the SCI we have created a research agenda on how politics and politicians impact state capacity. Our work on mapping the manifestos of three main national parties since Independence to understand similarities and differences in the issues they focus on is on its way to completion, while our draft manuscript on the Congress party is halfway done. We also have our fortnightly workshops to deliberate on the changing nature of state-level parties, and their future. These research topics coalesce to lend insights into the changing nature of India’s political landscape whereby the country’s arrival into the fourth party system has been informed by significant changes in the form and substance. The emergence of the Bharatiya Janata Party (BJP) as the nationally dominant party and the shrinking of the main opposition are the most important of these. Additionally, ideological shifts currently underway have the potential to transform citizen-state relations and federal dynamics in the coming years. Through our work at CPR, we wish to draw attention towards the operationalisation of this political change and what it means for India’s future.

To know more about Rahul Verma’s work and research, click here.