Lack of RS numbers no hurdle to Narendra Modi govt?s reform agenda

The Financial Express, May 20, 2014

Despite the BJP getting majority on its own in the Lok Sabha with an impressive tally of 284 seats and the alliance it leads forming 61% of the crucial Lower House, the Narendra Modi government will not have secured a lead in the 245-member Rajya Sabha before 2016.

But that doesn?t necessarily mean that its reform-oriented legislative agenda would suffer, analysts said, given that many of the ?pending? Bills are the brainchild of the UPA which it can?t be seen scuttling.

What would also matter is whether the Modi government would adopt a consultative and consensus-building approach in the conduct of parliamentary business to avoid an escalation of political tensions. A good part of the intended reforms, going by the BJP?s poll manifesto, anyway falls purely in the administrative domain.

Indeed, the Modi government has the option of convening joint sessions of both Houses to get key Bills passed if its reform agenda gets thwarted by a hostile or indifferent Opposition (currently the NDA with 398 members in Parliament crosses the halfway mark of 394, with the combined strength of both houses being 788). But this option has been exercised only three times in India?s parliamentary history, the last being by the AB Vajpayee government which got an anti-terrorism law (POTA) passed in 2002, only for it to be repealed by the UPA government two years later. (Although a joint session was called in 2008 for the Women?s Reservation Bill, it could not be passed.)

What would temporarily constrain the NDA in its Rajya Sabha presence despite recent electoral advances is primarily that the current composition of the House is very dispersed ? the BJP-led NDA?s current strength is 62 while the Congress-led UPA?s is 82, together 59% of the total strength of the House. Also, a third of Rajya Sabha members retire every second year. The electoral college to pick members for the House consists of members of the Lok Sabha and state assemblies.

The BJP?s and its partners? strong showing in the elections to the 16th Lok Sabha, the BJP?s sweeping wins in Madhya Pradesh and Rajasthan in the assembly elections late last year, gains of NDA allies Shiv Sena and TDP in the Lok Sabha polls (also in the Seemandhra assembly polls in case of the latter) and possible NDA gains in the upcoming assembly elections (in Maharashtra, for instance) are what would go in the ruling alliance?s favour in the Rajya Sabha over the next couple of years.

Modi could reach out to J Jayalalithaa?s AIADMK (with 46 members in Parliament) for issue-based support to consolidate his position in case joint sessions are summoned.

Except for money Bills, all Bills need Rajya Sabha?s ratification, along with, of course, their passage in the Lower House consisting of members directly elected by the people. Money Bills are essentially ones involving real (and immediate) sanction/release of funds from the exchequer. The Lok Sabha enjoys an exclusive prerogative in their case. Broadly, taxation-related Bills, Finance Bills and other appropriation Bills that by their very nature necessitate an immediate outgo of funds from the Consolidated Fund of India are treated as money Bills and need only Lok Sabha approval.

The Civil Aviation Authority Bill, which the UPA introduced in the 15th Lok Sabha, could eventually lead to an outgo from the exchequer as the setting up of the authority would entail some expense. This Bill, however, essentially seeks Parliament?s approval for acting on a policy intent ? replacing the Directorate General of Civil Aviation as the civil aviation safety regulator with the proposed authority ? and doesn?t seek any immediate release of funds. It is, therefore, not a money Bill as is the case with scores of other pending legislation with a significant content of economic reform such as the Forward Contracts (Regulation) Amendment Bill, Insurance Laws (Amendment) Bill, Microfinance Institutions (Development & Regulation) Bill and the Bill proposing entry of foreign educational institutions. These Bills, therefore, would require the Rajya Sabha?s ratification.

(Incidentally, if the NDA wants many of these Bills to be passed, it would need to reintroduce them as they were tabled by the UPA only in the Lok Sabha and are, therefore, liable to lapse).

As for the Goods and Services Tax Bill, another key legislative initiative of the UPA, the requirement of legislative support is different from (and more than) the other ?policy Bills? as it involves a Constitutional amendment given that states are being given powers to tax services and the Centre taxation powers up to the retailing stage. In the case of this Bill, consent of two-thirds of both Houses of Parliament (or 50% of the members present) plus its passage by 14 of the 28 state assemblies are a must. Given that the UPA has been pushing the GST Bill and faulting the BJP for non-cooperation, it can?t be difficult for the Modi government to secure legislative support for the Bill.

The GST Bill that would follow the current Constitutional amendment Bill would, however, propose changes in tax rates and require to be passed only by the Lok Sabha, being a money Bill. The NDA hasn?t spelt out its intent on the Direct Taxes Code (DTC) Bill, again a money Bill, involving changes in tax slabs/rates.

The Modi government?s immediate reform priorities could include investor-friendly steps like hiking the price of natural gas and elimination of subsidy on diesel. All these are executive prerogatives. Steps to allay the fears of ?tax terrorism? by reviewing the UPA?s policies with respect to indirect transfers of Indian assets abroad and retroactive taxation require only Lok Sabha approval.

It remains to be seen what the Modi government?s approach is to the Bill to raise the cap on foreign direct investment in the insurance sector to 49% from 26% and address the capital constraint in the sector, given that standing committee headed BJP leader Yashwant Sinha did not favour the proposal.

Relaxing the conditions specified in the Land Acquisition Act for the private sector, perceived as crucial for investor confidence, would need both Houses? approval. Modi?s longer-term legislative agenda could also include denationalising coal mining to ensure private participation in commercial mining.

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