The Hindu Editorial Analysis- 2026-01-09

​​Conditional ease

Context

The CDSCO guidelines should not turn into a system where violations can be easily passed by paying fines, as this would weaken regulatory enforcement.

Introduction

The Central Drugs Standard Control Organisation (CDSCO) has introduced new compounding guidelines that signify a move towards decriminalisation and facilitating easier drug regulation. These guidelines allow for the settlement of minor violations through fines instead of prosecution, aiming to reduce over-criminalisation and enhance regulatory efficiency. However, the success of these guidelines hinges on preventing misuse and ensuring public accountability.

Context and Objective of the Guidelines

Background: The CDSCO has rolled out new guidelines for compounding minor drug violations, following a legal reform initiated in 2023.

Earlier Situation: Previously, minor or technical non-compliance under the Drugs and Cosmetics Act, 1940 often led to criminal prosecution, resulting in over-criminalisation and prolonged litigation.

Core Change: The guidelines represent a shift from criminal prosecution to administrative settlement through compounding for minor drug violations.

Meaning and Mechanism of Compounding

What is Compounding

• Definition: Compounding refers to the process where firms can voluntarily report violations and apply to pay a fine, thus avoiding court proceedings.

• Regulatory Discretion: The CDSCO has the authority to decide whether compounding is permissible before or after prosecution.

• Primary Benefit: If compounding is successful, it grants immunity from prosecution for that specific case.

• Policy Rationale: The compounding mechanism supports the broader goals of ease of living and ease of doing business.

Legal Backdrop: Jan Vishwas Amendment

Legislative Basis: The compounding guidelines are enabled by the Jan Vishwas (Amendment of Provisions) Act, which aims to decriminalise and rationalise offences under the Drugs and Cosmetics Act, 1940.

Expansion of Section 32B: The amendment has expanded the scope of Section 32B, making more offences under the 1940 Act compoundable.

Examples of Eligible Offences: The types of offences that are now eligible for compounding include:

• Manufacturing drugs in violation of the Act, provided the offence does not fall under serious categories specified in Section 27(a-c).
• Stocking or exhibiting drugs that are non-spurious and non-adulterated but still non-compliant with certain provisions of the Act.

Positive Outcomes of the Reform

• Reduced Criminalisation: The reform is particularly beneficial for violations related to record-keeping and disclosure, as it reduces the likelihood of criminal charges for minor infractions.
• Improved Regulatory Focus: By allowing for administrative settlements of minor violations, enforcement agencies can concentrate their efforts on addressing grave public health risks and serious violations, thereby enhancing the overall effectiveness of regulatory oversight.
• Administrative Efficiency: The compounding mechanism saves time, costs, and judicial resources by streamlining the process for handling minor violations. This efficiency not only benefits regulatory agencies but also contributes to a more conducive environment for businesses.
• Encouragement of Compliance: The reform promotes a culture of self-reporting and corrective behaviour among firms. By providing an avenue for voluntary disclosure and settlement of minor violations, the compounding guidelines encourage businesses to take proactive steps towards compliance and rectification. This shift fosters a more collaborative relationship between regulators and industry stakeholders.

Major Risks and Pitfalls

• "Pay and Pass" Concern: There is a risk that compounding could become a routine mechanism for paying fines, undermining the seriousness of regulatory compliance and enforcement.
• Broad Definition of Errors: The guidelines cover a wide range of conduct, from minor documentation lapses to serious compliance failures, which could dilute the focus on more significant violations.
• Weak Deterrence: If fines imposed through compounding are too low, inconsistent, or overused, it may lead to a decline in compliance among firms, as the deterrent effect of potential penalties diminishes.
• Repeat Offenders: Without mechanisms for transparency and accountability, firms may repeatedly benefit from compounding for similar offences, eroding the integrity of the regulatory framework.

Transparency and Accountability Issues

• Lack of Public Disclosure: The CDSCO is not currently required to publish important information related to compounding orders and case details, even in redacted form. This lack of transparency can erode public trust in the regulatory process.
• Erosion of Public Trust: The absence of disclosure regarding compounding cases can reduce confidence in the fairness and integrity of regulatory enforcement, as stakeholders are unable to verify the consistency and appropriateness of compounding decisions.
• No External Participation: Consumers and whistle-blowers do not have the opportunity to make representations or provide input regarding compounding cases, further limiting accountability and oversight.
• Auditability Gap: The lack of public records to verify patterns of repeat violations creates an auditability gap, making it difficult to assess the effectiveness and fairness of the compounding regime.

Need for Strong Follow-Up Measures

Corrective and Preventive Actions: Compounding should be linked to mandatory corrective steps to ensure that firms take necessary actions to prevent recurrence of violations.

Post-Compounding Oversight: There should be follow-up inspections and compliance verification after compounding to ensure ongoing compliance and address any lingering issues.

Public Health Safeguards: In relevant cases, there should be provisions for product recalls and public alerts to mitigate any potential risks to public health arising from compounded violations.

Long-Term Risk Reduction: Without robust follow-up measures, compounding may not effectively reduce systemic risks associated with violations, undermining the intended benefits of the reform.

Benefits and Risks of the Compounding Regime

Overall Assessment

• Direction of Reform: The policy is viewed as conceptually sound and progressive, indicating a positive direction in regulatory approach.
• Condition for Success: For the reform to be successful, it requires transparent reporting, consistent penalties, and robust follow-up mechanisms to ensure accountability and effectiveness.
• Bottom Line: Compounding should function as a tool for correcting compliance issues rather than a replacement for enforcement actions, maintaining the integrity of regulatory oversight.

Conclusion

Compounding has the potential to be an effective compliance-correcting mechanism in drug regulation, but its implementation must prioritise transparency, deterrent penalties, and strong follow-up actions. Without measures such as public disclosure, audits, and corrective oversight, there is a risk of it devolving into a 'pay and pass' system, which would undermine public health protection and the credibility of regulatory authorities.

Top court's green governance, cause for uncertainty

Introduction

The Supreme Court of India has been taking on a more active role in environmental cases, moving from just reviewing administrative actions to giving regulatory directions. This shift happened because statutory regulators were not doing their jobs properly, forcing the Court into a management role. However, instead of fixing these regulatory failures, the Court has ended up being a substitute regulator, which worsens the problem. This ongoing involvement by the judiciary has serious effects on regulated entities, the State, and the public, and it's time for the Court to be more restrained and recalibrate its approach.

Rulings

• Supreme Court on Eco-sensitive Zones (ESZ): In June 2022, the Supreme Court directed that all protected areas must have an eco-sensitive zone (ESZ) of at least one kilometre for uniform environmental protection. By April 2023, this directive was relaxed, exempting areas with existing ESZs notified by the Environment Ministry, following feedback from States about implementation challenges.
• Ban on Diesel Vehicles in Delhi-NCR: In December 2015, the Supreme Court banned the registration of diesel cars and SUVs over 2,000 cc in the Delhi-NCR to combat air pollution. This ban was lifted in August 2016 and replaced with a compensatory charge, reported to be 1%-2% of the ex-showroom price, marking a shift from prohibition to mitigation.
• Guidelines on Old Vehicles: In 2025, the Court initially ordered no coercive action against 10- and 15-year-old diesel and petrol vehicles, respectively. Later, this protection was narrowed to vehicles below Bharat Stage-IV standards.
• Firecracker Regulations: In the firecracker cases, the Court fluctuated between imposing near-total bans in the NCR due to pollution concerns and allowing partial relaxations during festivals, permitting limited categories like "green crackers" based on enforcement and public order challenges.

Shifts in Judicial Approach

• The Supreme Court of India has increasingly stepped in to address regulatory gaps caused by fragmented enforcement, delayed notifications, weak monitoring, and ad hoc exemptions.
• Rather than pushing regulators to fulfill their statutory obligations, the Court often finds itself in a quasi-regulatory position, taking over roles meant for executive authorities.
• There's a noticeable shift in the Court's reasoning from focusing solely on legality to considering practical and economic impacts alongside environmental principles.
• For instance, in the Vanashakti vs Union of India case in May 2025, the Court stated that ex post facto environmental clearances go against essential environmental norms. However, in a review later that November, this stance was reconsidered to avoid disrupting ongoing commercial activities.
• The Court tends to establish broad, principled rules initially and then figures out how to manage their implications later, showing a tendency to govern rather than just adjudicate.

The Role of Expertise

• The Supreme Court of India has relied on expert input to guide its decisions, particularly when issuing forward-looking directives. For example, in the Aravalli case, the Court initially adopted a uniform definition of the "Aravalli hills and ranges" for regulating mining based on a committee's findings. However, this decision was later put on hold due to concerns about potential unintended legal and regulatory consequences, prompting the Court to consider establishing a new committee for a fresh perspective.
• A similar situation occurred with the eco-sensitive zone (ESZ) issue, where an initial consensus on a uniform buffer zone faced pushback from States and stakeholders once it became evident that ecological conditions and implementation feasibility varied significantly across regions.
• While the Court has used expert insights to compensate for its institutional limitations, it has also scrutinized or revisited expert assessments, creating a dynamic of tension that has led to policy reversals or U-turns at times.

Effects on Public Challenge

• The Supreme Court's role as a de facto approving authority has significant implications for public participation and challenge in environmental matters. Project proponents and governments are increasingly seeking Court permissions before statutory authorities complete their reviews, creating an early sense of finality that can deter objections and challenges before regulatory bodies or other courts.
• This practice raises concerns not only about potential technical errors but also about the Court's premature involvement in the approval process, which can hinder meaningful judicial review in other forums. When the Court modifies or reverses its earlier rules, it also reshapes the landscape of environmental adjudication by influencing who gets heard and what evidence is considered.
• The Court's approach alters the terrain of environmental adjudication by determining the evidence and arguments that are relevant, thereby affecting the outcomes of environmental challenges. This dynamic strengthens accountability and environmental protection by clarifying responsibilities and processes for challenging environmentally harmful activities.

Need for Stability

• Environmental disputes often unfold within continuing mandamus frameworks characterized by serial interim orders, committee reports, affidavits, and repeated modifications, which, while allowing for easy course corrections, can undermine regulatory stability.
• Instead of frequent recalibrations, the Supreme Court of India could adopt a more stable and restrained approach, focusing on environmental protection by compelling the State to return to effective regulation. This involves setting clear thresholds for when the Court will issue managerial or supervisory directions and requiring time-bound regulatory actions backed by reasons and publicly available data.
• The Court can maintain its core judicial role by limiting its focus to reviewing legality and procedural compliance rather than ongoing administration. Reducing uncertainty involves avoiding broad, sweeping rules that immediately require exceptions and clarifying in advance the types of evidence or implementation constraints that would justify future modifications of its directions.

Conclusion

• Embracing this approach would mean regulated actors are governed by clear and enforceable rules instead of flexible directives. Governments would benefit from the certainty of not having parallel decision-making structures, while the public would gain clarity on responsibilities and the appropriate forums for challenging environmentally harmful activities. This shift would enhance accountability and strengthen environmental protection.