Have sunset clause for economic laws constraining growth: Vijay Kelkar

Economic laws lose relevance after a few years and may also become a constraint for growth, chairman of the Thirteenth Finance Commission Vijay Kelkar said on Tuesday, pitching for a “sunset clause” for such statutes. Kelkar, who has also served as the Union finance secretary, cited the Land Act and Rent Act while illustrating the constraints posed by laws which were revolutionary at some point of time.

“I see devastating effects… (we need) to build-in a sunset clause for many of our economic laws,” Kelkar said.

He was speaking at an event to launch the Vidhi Centre for Legal Policy’s state office in Maharashtra.

Kelkar suggested a system for periodic review of economic laws, howsoever revolutionary they might be when they are passed.

He said the Land Act has adversely impacted productivity in Maharashtra, pointing out that even a farmer cannot lease out a piece of land to another farmer because of the legislation.

Similarly, the Rent Act has led to a “perverse effect” on supply of dwellings and decent living spaces in the financial capital of the country, he said.

Kelkar also pitched for making it mandatory to assess the cost of a legislation through a cost-benefit analysis before Parliament passes it.

He rued that there is a “great deal of passion” to introduce new laws without understanding its impact on the citizenry, industry and the overall system.

Kelkar also urged both central and state governments to formulate a “litigation policy” to ease the burden on the judiciary by lessening the quantum of matters which reach the courts.

Nearly half of the pending cases in courts involve the government as either the defendant or the litigant, while some are also inter-departmental matters which go to the judiciary for adjudication, he said, adding that a policy on litigation can reduce the burden.

Meanwhile, Kelkar said the country is ripe for third generation of reforms which should focus on the institutional arrangements in the republic, which rests on the judiciary, legislature and the executive.