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What should Modi do? PDF Print E-mail
Tuesday, 11 August 2015 04:34
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Lots more to do even without legislative agenda

 

With the Congress party determined not to let Parliament function, the question is whether it is the BJP’s poor management that has brought things to this pass, and what it is that the prime minister can do to make Parliament function again. If he cannot, it is obvious his majority in the Lok Sabha will mean little. Indeed, it was the majority in Parliament that made many feel the government could even, if need be, call for a joint session of both houses and get various Bills passed. As the GST Bill shows—the Bill not getting passed in this session will be a big setback to the plans for introducing GST by April 1, 2016—getting Bills passed in a joint session is easier said than done. More so since, by ill-advisedly pushing through with the land Bill, the BJP gave disparate Opposition parties a golden opportunity to unite and, more important, the BJP was never able to explain why, if the Bill was so flawed, it had joined the Congress party in helping pass it just 23 months ago. While the Congress is undoubtedly exacting revenge for all the times the BJP didn’t allow Parliament to function—minister of state for finance Jayant Sinha has justified the BJP’s stand saying Parliament was blocked only when there were major scams involved—it is also true the BJP has not been willing to discuss issues threadbare. The 1% additional tax, for instance, was something the government was pushing while experts, including the chief economic advisor, warned against it—the government would have done well to concede this before the Rajya Sabha Select Committee came out against it; abolishing this was a Congress-party demand, so conceding would have been good both politically as well as economically.

That the government will have to be a lot more conciliatory is obvious—taking action against 25 Congress MPs, in retrospect, was a bad move politically—and it has made a start by agreeing to drop various clauses from the land Bill. As this newspaper has argued, since land is a state subject, changes in the law are best left to the states—indeed, the government could coax BJP-led states to quickly come out with progressive land legislations that make it easy for industry to acquire land. Meanwhile, the government would do well to improve the business environment. This includes making life easier for firms that have the capacity to invest billions of dollars—the government has already lost more than a year in both raising prices of natural gas for oil and gas exploration firms, and in making adequate spectrum available for telcos. Clearing of old tax cases have been very slow and, in many cases such as Cairn—and even Reliance in the oil and gas sector—the government appears to be stalling for time. The issue of MAT on FPIs was badly handled and, even after the AP Shah panel report on this has been submitted, there is no clarity on what the government’s final stand is going to be. Indeed, for a government that is keen on pushing SEZs and NIMZs, it is odd that there is still no clarity on what kind of tax incentives will be made available for such units. Ditto for the confusion on whether FDI is to be allowed in B2C e-commerce or in multi-brand retail. None of this is related to the logjam in Parliament, so while that is sorted out, the government would do well to deal with these issues.

 

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