The winter session of the Parliament, which has just commenced, is of critical significance to the country and its economy. While some may link the importance of this session to the much awaited Lokpal Bill, which both the Houses had pledged during the last session, the real significance rests on the sheer number of Bills that it would have to clear in order to address the growing perception of "policy paralysis." Of late, the ruling coalition is under attacks from various quarters, especially leaders of industry and foreign investors for dragging its feet on critical economic policies and its indecisions on vital national issues. Such a perception of 'policy drift' has acquired greater currency in the background of rapid deceleration of industry outputs, slow down of growth following the volatile world economy and the looming threats of another recession. The clearest evidence of such a gloomy scenario came from none other than the Prime Minister himself. Speaking to the media after the early adjournment of both houses of Parliament on Tuesday, Dr. Manmohan Singh cautioned: "As you all know, the global economy is facing serious difficulties and if we don't manage our affairs well, we can also go down. Our country's sustained development and prosperity demand that many of those bills should be converted into Acts of our parliament". In short, the statement amply signifies the importance of this session for the country and its economy.
Bills to Watch
There are Bills of all kinds before the current session, from anti-graft legislations (creation of Lokpal, money laundering) to bills on diverse sectors of political economy (direct taxes code, companies regulation, mines, insurance, multi-brand retails, higher education etc). While each Bill is unique and important in addressing specific policy issue(s), there are few Bills that, if cleared, can make a paradigm shift in the manner in which public institutions are being run in the country. There are Bills on the second generation economic reform which if enacted can fundamentally reshape Indian economy and have far reaching consequences for everyone. Out of the 50 odd Bills that might receive Midas touch from the law-makers in the session, few Bills merit wider discussion.
Lokpal Bill
The controversial Lokpal Bill which aims at establishing the institution of Lokpal to enquire into allegations of corruption against public functionaries would be a 'litmus test' of the government's drafting and political management skills of reconciling diverse and competing provisions under a single Bill. It may also test the government's ability to arrest the growing public perception of the government dragging its feet on graft and back money. The key areas of contention are the inclusion of the office of the Prime Minister, higher judiciary and the Central Bureau of Investigation under the purview of the Lokpal, apart from the issue of vesting prosecution powers with this all powerful institution. While the Parliamentary panel has to make an arduous journey to redraft the Bill and make it effective, the real challenge is the government's political management skills while the Hazare camp keeps shifting its goal posts.
Food Security Bill
Another important Bill that would test the legislative skills of the government is the much publicised National Food Security Bill 2011. Drafted by the National Advisory Committee and endorsed by the Congress Party President, this Bill (likely to be used as a strategic electoral tool in the similar fashion as the Mahatma Gandhi National Rural Employment Act was used in 2009) is of enormous significance from the point of the very objectives that it seeks to serve and the kind of economic or financial implications that it would have for the country. The Bill puts into the form of law several existing government schemes for food security (such as the mid-day meal scheme and the PDS) and shall endeavour to guarantee at least 75% of the total population (90% of the rural population and 50% of urban households) a minimum of 7 kg of foodgrains per person every month. The Bill contains many additional features, including the provision for nutritious food, instead of just food grains to children below 14 years of age and 'destitute' women. If enacted, the food security Act will cover about two-thirds of India's 1.2 billion people and may cost the exchequer a hefty $20 billion annually. It is this sheer size of economic cost and possibility of widespread leakages and misuse which is making many economists and policy planners, including senior ministers, to oppose the enactment of another 'wasteful' Bill. But with several state level elections being round the corner and food inflation maintaining higher trends, this expensive Bill may find favour over other important Bills by the lawmakers.
Mines and Minerals Bill
The Mines and Minerals (Development and Regulation) Bill, 2011 which will replace the 54-year-old legislation governing the sector seeks to address some of the issues, including the raging issue of illegal mining. The fact of the matter is that India's mining sector is the chief source of some of the country's biggest corruption scandals in recent times. Apart from corruption, this sector is mired in a growing number of protests around land acquisitions, the issue of sharing profits from mining activities and so on. It is against this background that this Bill is going to be a significant piece of legislation to regulate this unholy sector while providing a fair deal to those affected by the mining projects. The mining Bill, however, faces serious objections from the corporate organizations and government owned companies, mainly on the issue of sharing 26% of profits with project affected populations. Their fear is that it will dry up their profit margin and escalate input costs. With serious shortfall in coal output and its cumulative effect on the power situation in the country, the government has little luxury to delay it. Yet, this would be an easier Bill to get through than many other Bills, provided the government can get its act together.
Bills seeking to reform Financial Sector
There are at least ten Bills
i of varied significance that are being readied by the government to further accelerate the opening up of the financial sector. Delaying of these Bills is what makes the corporate sector to accuse the government of indecisions and the consequent policy paralysis. Bills ranging from insurance regulatory reforms, Direct Taxes Code (DTC), Goods and Services Tax (GST), pension and banking sector reforms to companies Bill are pending parliamentary approvals. For instance, after years of dithering on pension sector reforms, the Union Government has finally proposed a Bill that would open up the once prohibited pension sector for foreign investment (up to 26 percent). If enacted, the global players will have access to roughly $12 billion worth assets and can benefit millions of workers in the private sector. But this Bill is being opposed by the main opposition over its key demand of fixing a minimum return. The Direct Taxes Code (DTC) Bill is another important piece of economic legislation that can reshape the manner in which tax issues are managed now. This ambitious tax reform will replace the country's existing, half-century-old direct tax laws (1961). Under the Bill, the government seeks to widen tax slabs to levy 10 per cent tax on income between Rs 2 lakh and Rs 5 lakh, 20 per cent on Rs 5-10 lakh and 30 per cent above Rs 10 lakh, among other things. Despite its significance, the Bill is still held up in the Standing Committee of the Parliament mostly on technical questions. Of equal significance is the pending Bill on Goods and Services Taxes (GST) which seeks to rationalise complicated indirect taxes in the country. This apart, there are other important Bills such as multi-brand retailing, aviation, companies act, etc seeking the Parliament's nod in this session. The passage of these Bills is critical for the financial sector which is facing severe investment crunch and slowdown as a result of policy indecisions.
Higher Education
Finally, there are at least four crucial Bills that seek to change the higher education landscape in India. The four draft education Bills are National Accreditation Regulatory Authority Bill, Foreign Education Institutions Bill (Regulation of Entry and Operations), Prevention of Malpractices Bill and the Education Tribunal Bill. If enacted, these Bills can potentially overhaul this vital but least reformed sector. Other pending Bills on higher education include the establishment of innovation universities, amendments to the IIT and NIT Acts and extension of the time for reserving 27 per cent seats for students belonging to Other Backward Classes. But the given the experience of NCHER Bill 2010, which was dropped in the last minute largely owing to strong opposition from the treasury bench, there is little hope that these Bills will get priority in this session. But if one hears correctly what Union Human Resource Development Minister Kapil Sibal said other day, then there seems to be some hope. According to the minister, the Higher Education Ministry has launched an innovative lobbying process among legislators belonging to ruling coalition (meeting them outside Standing Committee) to get them on board on these Bills.
Great Expectation vs. Reality
While the current session is extremely critical for lawmakers to conduct important legislative business that would clear the cobweb of doubts, pessimism and gloom descending over economy and other key sectors of the government and private business, there is little reason to be optimistic. While the winter session has just about 21 working days, it has to do legislative business over more than 50 crucial Bills. To be precise, the short winter session will have to deal with 31 pending Bills and 23 new drafts, apart from its usual debate on issues of national importance as and when demanded by the opposition. What makes one more cynical is the past records. Rarely have the lawmakers from the ruling coalition and opposition got their act together on a situation like this. Even when best of the debates were conducted and opposition grudgingly cooperated, the Parliament could at best conduct less than 50% of listed legislative business. And on some occasions (like last winter session), it has wasted the entire session on acrimonious debates. With key lawmakers burning candles day and night over the drafting of the Lokpal Bill and main opposition party pulling all socks to corner the government on 2G probes, price rise, black money and Telangana, it will be a miracle if they reach half the mark at least. While some senior members of the government, including the Finance and Higher Education Ministry, are trying to reach out to the opposition lawmakers, the government's order of expanding the 2G probe to include the NDA regime, the session would turn acrimonious with adjournments and walk- outs. Added to this is the Anna Hazare threat which would keep the legislators sweltering in winter. Yet nothing is impossible provided the ruling coalition rises to the occasion by using deft political management skills.
i At least 10 financial sector reform bills are awaiting for parliamentary approval. While some of these bills have been vetted by parliamentary standing committees, there are few that have been pending for several years. They include the Banking Laws (Amendment) Bill, 2011, the Companies Bill 2009, Constitution (One hundred and fifteenth amendment) Bill, 2011, Direct Taxes Code Bill, 2010, Forward Contracts (Regulation) Amendment Bill, 2010, Pension Fund Regulatory and Development Authority Bill, 2011, Securities and Exchange Board of India (Amendment) Bill 2009, Insurance Laws (Amendment) Bill, 2008 and Regulation of Factor (Assignment of Receivables) Bill, 2011.
Niranjan Sahoo is a Senior Fellow at ORF Centre for Politics and Governance.
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