Reforms push – with or without numbers, the intent is clear
By Dhirendra Tripathi
NEW DELHI: Judgement on the pace and quality of economic reforms of a government is often an outcome of perceptions, expectations, hopes, one’s own affiliations and hopeless comparisons. Objectivity is a natural casualty in most such cases.
But as the Narendra Modi government completes one year in office, skeptics can have their moment too. After all, the hype and the hope surrounding Modi’s victory in the May elections last year was unprecedented.
What blurred the line between hopes and fantasies was the 282-seat majority the Bharatiya Janata Party got in the elections. A majority government, one coming after five years of a regime that came to be known for its policy paralysis, was expected to start firing from Day 1.
The man who could do no wrong had to have the panacea of all the ills. One year on, the music from Raisina Hills may sound a bit jarring but it’s no gainsaying that the government, despite not having a majority in the Upper House, has managed to get key laws passed.
Critics have accused the Narendra Modi government of governing by executive action, having taken the ordinance route as many as 11 times in its very first year. This included two re-promulgations. The government on its part has accused the opposition, particularly the Congress, of positioning itself against growth.
The government does not want to be cowed down by its minority status in the Upper House and believes ordinances are only a reflection of its resolve to push key reforms through.
And it has employed all the legerdemain at its disposal to achieve this – splitting Opposition ranks, smoking peace pipe with smaller regional parties, showing them the benefits of voting for the Bills and so on.
Undoubtedly, last one year has been most productive as far as conduct of key legislative business is concerned with several bills, pending for last many years, getting Parliament’s approval.
In a country still obsessed with Leftist-Nehruvian idea of a welfare state, a sector being opened to foreign direct investment is called a reform. Be that as it may, the Modi government’s first reform was raising of FDI cap in insurance to 49% from 26%.
It required deft floor management and political acumen to win some adversaries over to get the insurance amendment bill, pending Parliament’s approval for more than 10 years, passed in the Rajya Sabha.
The government is now also inviting 100% FDI in railway infrastructure. Up to 49% FDI in defence manufacturing, in line with Modi’s ‘Make-in-India’ initiative, has also been permitted.
Not entirely government’s credit since they came out of Supreme Court judgements, but the government also managed to get two key bills on auction of coal mines and minerals passed.
The result was that the government got bids worth more than 2 trln rupees via auction of 29 coal blocks. Auction of many more blocks is to follow. Monday, the mines ministry also issued the final rules for auction of minerals in various states.
The political hot potato of labour laws has also been touched but much work needs to happen there. The labour ministry plans to consolidate 44 laws broadly into five legislations. It is also working on allowing women to work in night shifts, showing its sensitivity to changing social and economic structure of the country.
Another proposal is to let small factories comply with just one labour law instead of 14. It has also proposed to exempt the entertainment industry and family enterprises from laws barring employment of children below 14 years of age.
The original child labour law banned employment of such children in 18 hazardous industries. All the labour laws still need Parliament’s ratification with trade unions already threatening to go on strike in September.
In line with its objective of making it easier to do business in India, the government got Parliament to clear 14 amendments to the Companies Act, 2014, in the Budget Session. One such clause now makes it possible for companies to carry out related-party transactions with an ordinary majority.
Deregulation of diesel prices, an issue that the previous government had nudged was seen through by Modi despite its economic and political ramifications.
Direct cash transfer for better targeting of subsidies — a scheme initiated by the United Progressive Alliance regime but slowed down in the last few months of the government — was also resumed by the Modi government. The government de-linked it from the unique Aadhar ID — an aspect that had not gone well with the masses during UPA time and hence got the axe.
There are two key legislations now that await Parliament approval and point out to Modi government’s resolve to push reforms, the opposition inside Parliament and outside notwithstanding.
The first is the Goods and Services Tax that seeks to replace a multitude of central taxes like excise duty and service tax and state levies such as octroi, sales, value-added, entertainment and purchase taxes. Dubbed the most important legislative tax reform in India since independence, implementation of GST is expected to improve India’s GDP by 1%-2%. The constitutional amendment bill has now been referred to a Rajya Sabha panel.
After passing the Constitution amendment bill, three other legislations — the Central law, the state law and Integrated GST — have to be passed before GST can be rolled out in the country and the government seems determined to get this done in July.
The second and seemingly the most important piece of legislation – since the government almost seems to be basing its prestige on it — it promulgated and re-promulgated the Bill — is the land acquisition Bill.
Called The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, the Lok Sabha has referred the land acquisition Bill to a joint Parliament panel.
Dubbed as ‘pro-corporate and anti-farmer’, the government is keen to implement the Bill that it thinks is key to resolving issues holding back infrastructure development in the country.
How serious is the government about getting it passed this time – the joint panel has been instructed to give its reports to the House on the first day of the next session.