Government of India Transaction of Business Rules, 1961

Reading time: 8-10 minutes.

In the existing corona times, where businesses are mostly doomed and recession is bound to creep in the economy, Cabinet Secretariat has amended Government of India Transaction of Business Rules, 1961 to widen powers of two committees to meet the economic crisis, using the powers under the Act. The two committees which now enjoy widened scope and powers are the cabinet committee on investment and growth, and the cabinet committee on employment and skill generation. These committees were set up on June 5, 2019, after the Modi Government was re-elected for the second term, in response to growth slow-down and joblessness in the country. Both these committees are headed by the PM itself.

Significance of this development

Rectify the declining exports situation in India:

Earlier the cabinet committee on investment and growth was given a job to identify the various key projects which are needed to be implemented on a time-bound basis requiring an investment of Rs. 1,000 crore and above, particularly in the field of investing and manufacturing. But, now as the government is highly concerned about the declining export situation in the country, the latest amendment has discarded the limit of Rs 1,000 crore and has also included ” sector-specific reforms and other measures aimed at export promotion, import-substitution, accelerating capital inflows, etc.” This will increase the emphasis of the committee on the exports and imports balance of the country to further save her from balance of payments deficit in the times of economic crisis.

Ease of doing business:

The cabinet committee which is responsible for investment and growth will now also work towards ease of doing business which shall include rationalization and simplification of the rules and regulations; action to fast-track requisite approvals and also the implementation of key ongoing as well as new projects, and any other issue relating to boosting investment and growth. This will encourage more start-ups and also many multi-national corporations to set up their industries in India, which again will counter the GDP-drop and joblessness in the country in the wake of countrywide lockdown amid the corona crisis.

Emphasis on women workforce:

 The amended act also calls out the need for a “particular emphasis on women workforce” as they are the most wasted resource of the country. They constitute the biggest chunk of voluntary unemployment due to a number of issues like patriarchal society, unsafe work environment, and needs of family and children, etc. This is the time when the government can make the most use of this valuable wasted resource of the country and come out of the clutches of an economic crisis.

Meeting the emerging requirements of the society:

Earlier the cabinet committee on employment and skill generation worked on the policies, programs, and schemes for skill development and increasing employability of the workforce in the context of “emerging requirements of the rapidly growing economy and mapping the benefits of demographic dividend”. While the amendment has retained the brief of the committee, but it has now aimed at “effectively meeting the emerging requirements of the economy” which will suggest the government on meeting the GDP-drop and unemployment due to the lockdown situation. By changing the context under which the committee works, it will lead to more specialized and focused laws in the wake of lockdown and economic crisis.

Salient features of the act

Comprehensive rules:

 This act covers almost every field of policy-making of the government. Committees on particular areas like economic affairs, parliamentary affairs, appointments, investment and growth, security, etc are made to ensure specialized and better policies. The committees are made on an area as niche as accommodation to ensure clarity and remove any ambiguity in the working of the government. This leads to a smooth channel of communication; increased efficiency in work; and harmonious inter-department relations.

Specific roles assigned to each committee:

Each cabinet committee has been assigned specific roles, laid down in very clear terms and numbers to avoid any ambiguity. Further, authority and responsibility is stated clearly to avoid any inter-department clashes. This ensures a smooth flow of work; avoids ego clashes and leads to a better work environment.

Powerful role of the Prime Minister:

A powerful role has been assigned to the Prime Minister in the Act. He or she can call papers from any department at any point in time. Also, he or she has the power to amend the schedule to add or reduce the number of such committees. The standing committee which again has some very important roles to play is appointed by the prime minister. Ultimately, he or she also has the power to permit or condone a departure from these rules to the extent he or she may seem necessary.

Human Resource Department of the government:

It would not be wrong to call the “Appointment Committee of the Cabinet” the human resource department of the government due to the roles it has to play. The committee is responsible for several empanelment, extension of tenures, inter-cadre deputation and transfer of All India Services officers, extension of services beyond the age of superannuation, the pay scale of various officers and a lot more. The committee is also responsible for inter-company transfers of chairmen and managing directors of the various public sector undertaking and assumes the role of a mediator in case of disputes in the preference of board of meeting or employments on several important posts of the government officials. In short, the committee manages all the aspects of human resources of the government and thus labeled as human resource department of the government.

Rules maintain inter-department harmony:

Also many rules and guideline have been laid down to avoid any inter-departmental issues. Clear rules have been laid in case more than two departments of government are involved to avoid any further clash of powers. For example, in every case, when a decision taken in one department is likely to affect the working of the other department, no decision is taken until all the departments have concurred or at the instance of failing such concurrence, the power to take the final decision rests with the cabinet.

Objectives and purpose of the Act:

Specialized and more focused working of the government:

Each cabinet committee has many specialists working under it, which can analyze the situations and provide indispensable advice to the government. This advice can help in preventing a crisis and also in tacking one. Thus, by creating a cabinet committee for each field of working of the government, it leads to more specialized and focused policies of the government which ultimately leads to better governance.

Harmonious inter-departmental relations:

The act states very specific roles in very clear terms and figures for every department. Rules have been laid out in the case where more than one department is concerned. Thus, this clarity in terms of authority and responsibility, and inter-department relation leads to a smooth flow of communication; no ego clashes; avoids duplicity of work and thus increases efficiency and effectiveness of the working of the government.

A Balance between authority and responsibility:

More authority than responsibility leads to misuse of power, whereas more responsibility than authority acts as a hindrance in the efficient working of any organization. Thus, a perfect balance needs to be struck to ensure smooth working. This act attempts to do the same. It lays out various responsibilities and gives away matching authority to various departments. For example, when Cabinet Committee on Accommodation is given the responsibility to “determine the guidelines or rules and terms of conditions to govern out-of-turn allotment of government accommodation, the act gives the matching authority to decide upon the allotment of government accommodation to various categories of non-eligible persons and organizations and the rate of rent to be charged from them; to consider the question of allotment of accommodation from the General Pool to the Members of Parliament; to consider proposals regarding shifting of existing Central Government Offices to places outside Delhi and the location of new offices in Delhi; etc.”

Critical analysis

  • Certainly, these rules are indispensable to the government as they help in more focused and specialized policies and also ensure harmonious inter-department relations which lead to more effective and efficient government and governance.
  • The rules are laid down in a very clear and crisp manner which leaves little room for interpretations. While it is beneficial in normal circumstances, it can prove to be a little hazardous in special circumstances as it also limits the scope. The rules will have to be time and again amended to accommodate the situations of crisis. Sometimes, committees are also unable to take the appropriate measures to tackle an upcoming crisis due to the limitation of scope and powers.
  • Also, the powers are very much centralized, which means that most of the decisions are taken by upper authority and then passed on to the lower ones. It also means that every task has to go through multiple stages, before getting approved. This may ensure accuracy of work but the same reason is responsible for the delay of important decision making, red-tapism, bureaucracy, and also corruption. The idea of centralization might be a good idea for a small organization, but when it comes to bigger organizations like government, they have to practice decentralization to avoid delay and red-tapism in its working.
  • The rules also help the government in tackling unforeseen circumstances as the prime minister has the power to add or reduce the committees and also the limit or increase the functions of these committees according to the need of the hour. For example, the scope of the cabinet committee on investment and growth has been widened to tackle the situation of declining exports in the country in the wake of a global pandemic crisis.
  • The supervisory role of the cabinet and Prime Minister helps in avoiding any cases of mistakes and corruption. The periodic assessment of these committees also helps them in keeping the workings of these cabinet committees on track.  

Need of reforms

The only need for reform in these rules is the decentralization and dispersal of more power to the lower authorities. Also, the scope of the powers of the committees should increase so that they can take the necessary action as and when required. Additionally, a balance in authority and responsibility of these committees should also be ensured to avoid misuse of power and for the sake of completion of all the necessary tasks on time. While it will avoid red-tapism and delay in decision makings, it will also ensure more efficiency and effectiveness in the working of these cabinet committees.  


Thus, the latest amendment to the functions of the two committees under the Government of India (Transaction of Business) Rules 1961 which came in the wake of a 21-day lockdown to contain the spread of COVID-19, are of immense importance. The rules are modified in a way to tackle the effect of the global pandemic crisis on the domestic economy. These rules which determine the functioning of various cabinet committees, which are made in almost every niche area of policymaking, aids the government in various decisions as well as performs several other indispensable functions. These cabinet committees are very specialized and focused in nature which again contributes to the better policy-making of the government.

The rules are laid out in very crisp and clear terms and figures which avoids any confusion and any possible inter-departmental ego clashes but again at the same time it tends to limit the scope of these committees which can make the situation worse at times of crisis. The only solution of which is to amend the rules, time and again to suit the need of the hour. Also, the Act follows a regime of centralization which can be a little harmful when it comes to delay in decision making, red-tapism and bureaucracy. Thus, a perfect balance needs to be struck between authority and responsibility to avoid misuse of the powers and at the same time avoids any delay in decision making.

Author: Divyani Saldi from RGNUL, Patiala, Punjab.

Editor: Arya Mittal from Hidayatullah National Law University, Raipur.

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