The Budget Session of Parliament: Achievements and Expectations
The Modi government plans to legislate important reforms during the second half of the Budget Session of Parliament, which runs from April 20 to May 8. Building on its success during the first half of the session, which ran from February 24 to March 23, the government may try to take forward its reform agenda despite not having a majority in the Rajya Sabha, or upper house. Although high productivity in the first half is an indication that the government may have found its rhythm, it remains to be seen whether it will be able to muster support among the opposition to pass controversial legislation in the second half of the session.
Budget Session – I: Highlights and Implications
The first half of the session saw an unusual number of bills passed – fourteen in the Lok Sabha, or lower house, and eight in the Rajya Sabha – in the nineteen sittings of each house. Five of the bills passed were promulgated as ordinances (temporary laws passed by the executive on urgent matters) before they were made into law. The government used the ordinance route to move bills forward because it holds only 60 seats in the 245-member Rajya Sabha.
The success of the government in the Lok Sabha does not come as a surprise since the ruling Prime Minister Modi-led National Democratic Alliance (NDA) coalition holds 336 of the 545 seats. However, its success in the Rajya Sabha, where it passed five out of six tabled ordinances, indicates that the government has been able to tackle one of its biggest challenges – the Rajya Sabha numbers conundrum – with deft political maneuvering. It even managed to get support from its main rival, the Congress, on some of the passed bills.
The most significant Bills passed were the Insurance Laws (Amendment) Bill, which raised the foreign direct investment cap from 26 to 49 percent; the Coal Mines Special Provisions (Amendment) Bill, which allows the e-auction of coal blocks; and the Mines and Minerals (Development and Regulation) Bill which extends the duration of a license and simplifies the transfer of mining rights.
The passage of these bills will have a significant impact on the economy. While the Insurance Bill might facilitate FDI inflows of up to $10 billion, the Coal Mines Bill and the Mines & Mining Bill will reduce the coal import bill substantially, and make the procurement and allocation processes much more efficient.
Members of the Lok Sabha registered a decade-high productivity rate of 121 percent, while the productivity of the Rajya Sabha was 109 percent. This is a significant departure from parliamentary productivity during the term of the previous ruling coalition, the Congress-led United Progressive Alliance (UPA). In the 2010 winter session, for example, the Lok Sabha worked only six percent, and the Rajya Sabha two percent of the time.
It is a heartening sign that the policy paralysis and parliamentary disruptions that characterized the UPA’s last few years in government is giving way to a healthy, functioning Parliament that is focused on legislative reform. Prime Minister Modi recognized this in a recent statement, saying, “I’m grateful to opposition parties for their cooperation in (the) previous session.”
Budget Session – II: Expectations and Challenges
Before Parliament reconvened on April 20 for the second part of the Budget Session. Prime Minister Modi tweeted “I look forward to a productive session with constructive debates on several issues.”
Two reforms that are high on the government’s agenda, as indicated by the Finance Minister Mr. Arun Jaitley during his recent visit to the U.S., are the Goods and Services Tax (GST) Bill and the Land Acquisition Bill. Both are being watched carefully by industry because of their implications for improving the ease of doing business. The GST Bill seeks to simplify the taxation system and could raise economic growth by as much as two percent, and the Land Acquisition Bill aims to make it easier for industrial and infrastructure firms to acquire land for new projects, particularly in rural India.
The government seems confident about the passage of the GST reform because it has the backing of the Congress party. However, since this is a Constitutional Amendment Bill, its real challenge will be getting the approval of 15 state legislatures after the bill is passed in Parliament.
Meanwhile, at his April 16 speech in Washington DC, the Finance Minister admitted that seeing the Land Acquisition Bill, which the government promulgated as an ordinance earlier this year, through the Rajya Sabha, would be more difficult. Already, on the second day of the reconvened session, there was hostility from opposition legislators. For instance the Congress Party and Communist Party of India have accused the government of backing a Bill which is “anti-farmer and pro-corporate.” Even the government’s own alliance partner, Maharashtra-based Shiv Sena, has conveyed to the ruling Bharatiya Janata Party (BJP) that it cannot support the bill.
If the BJP wants to replicate the ordinance-to-law success of the session’s first half in the second, it will likely have to not only maneuver its allies and opponents adroitly, but also make some political compromises.