Unless BSP supremo Mayawati’s decision to vote in favour of the government on the issue of foreign direct investment (FDI) in retail and a possible change in the SP’s stance come to the government’s rescue in in the Rajya Sabha on Friday, the question of whether amendments of rules/regulations under the Foreign Exchange Management Act or Fema need the approval of Parliament would finally be left either for the Supreme Court to decide on or the President who might call for a joint session of both Houses for a reconciliation of their views.
While the legal eagles in the government maintain that the regulations notified by the Reserve Bank of India (RBI) in this regard — which are necessary for implementation of the decision to allow 51% FDI in multi-brand retail — don’t require Parliament’s assent, others quoting Section 48 of Fema contend that any change in the rules/regulations made under the Act requires the approval of both Houses.
“The power given to the RBI to change the regulations under Fema is a delegated one. Parliament indeed has the authority to decide if the delegated powers have been used in a way it thinks desirable,” said Ajay Dua, former secretary at the department of industrial policy and promotion (DIPP).
Quoting Sections 46, 47 and 48 of Fema, he added that any rule change notified by the government or change in regulations by the RBI would need the consent of both Houses of Parliament in the ensuing session. Only those change that are of procedural/clarificatory in nature (as is the case with press notes issued) can be made without Parliament’s assent. This means that if the Rajya Sabha votes in favour of the motion against FDI in retail or if any modification of the Fema regulations sought by a member is accepted by the Upper House, then a joint session of both Houses will take a final call
A public interest litigation on this issue is pending with the Supreme Court already, on which the court on October 15 asked the central government to carry out the necessary amendments in Fema rules and get them