The Winter is Coming, and the Govt should be ready!

Prasanth Aby Thomas
Published: November 2014

It’s been almost six months since Prime Minister Narendra Modi took office, amid much speculations on his capacity to revolutionize India and bring in something different from the corruption tainted UPA government period. And in these six months, he has managed to keep the people and the media interested in his decisions, intelligently paying special attention to some basic issues like cleanliness which are often ignored.

But beginning this week, he will have to start another phase of his administrative regime, as the Winter Session of the parliament begins. As experts might point out, making high profile PR campaigns outside the parliament is one thing, but the bigger challenge, one that is going to test the mettle of Modi, will be in the lower and upper houses.

The opposition parties would be gunning to make sure that BJP does not run away with their victory and this would mean that they would look to block bills and bring in protests that would force the speaker to adjourn the sittings. We have seen BJP doing this when the UPA held the reins in the last term, and it would be no surprise if the opposition decides to give the ruling party a taste of its own medicine.

In fact, Modi is already receiving flak for not being able to come up with concrete steps that would make real difference and is criticized for staying safe with publicity stunts. According to Swaminathan S Anklesaria Aiyar, consulting editor of The Economic Times, Modi has been luckier than constructive.

“Have six months of Narendra Modi’s rule produced the achhe din (good days) promised during his election campaign? To some extent, yes. But this owes more to good luck than good policy. The most dramatic improvement by far is falling inflation. After years of double digit inflation, consumer inflation is down to just 5.5%.Wholesale price inflation has fallen even more dramatically, to just 1.8%, with food inflation down to 1.4%. Petrol and diesel, which rose inexorably for years, are now falling steeply.”

One might say that six months is too short a term to draw verdict on a new government, and it is obvious that the Indian media are often quick to criticise and slow to appreciate. But that said, the winter session would be a decisive point in the government’s first year, especially since there are a lot of pending projects and policy decisions that have dragged the Indian economy in the previous years.

According to a report by the Reuters, Modi’s focus on boosting economy will face strong opposition. There are a few key projects that are pending and immediately requires attention.

  1. Foreign Direct Investment in Insurance Sector: This winter session, the government will be looking to get the parliament’s approval to raise FDI cap in the insurance segment to 49 percent, from the current level of 26 percent. The opposition have not yet given a green signal for this and hence the bill could face opposition in the Rajya Sabha where BJP lacks majority.
  2. Land Acquisition Rules: The government had made it clear that it wants to reform the land purchase laws so that infrastructure projects will not be further delayed. Difficulty in getting land, even for public roads, have proven to be a key stumbling block in development, but the opposition is expected to block any movement in this matter also.
  3. Changing Archaic Labour Rules: Reducing regulatory hand in the labour issues while providing more benefits to employees was something Modi had promised earlier. Reports suggest that the government would have handled any objection from unions in this matter.
  4. Goods and Services Act: This comes across as perhaps the most anticipated from business perspective. The government plans to pass a constitutional amendment in the winter session, then get the approval of state assemblies to put in place India’s first nationwide service tax union by April 2016. If this gets a go ahead, economists say the measure could add 2 percentage points to GDP growth. However, although most states seem to be agreeable to the idea, the main opposition, Congress has still not given an opinion.

 

  1. Selling stakes in public companies: The government wants to make about $9.5 billion by selling shares in public and private companies including oil explorer ONGC and Coal India. Experts remain sceptic on the target but market estimates are high and Modi seems resolute to get over any union resistance to the Coal India sale.

 

  1. Subsidies: The welfare schemes of the UPA government had come under wide criticism from economists across the globe. The subsidy system was said to be one of the main reasons India’s growth was restricted. Modi government is expected to focus on this matter and cut wasteful subsidies on fuel, fertiliser and food, estimated at over 21 percent of total estimated revenue receipts in 2014/15.

 

There are a few other issues that would further receive the government’s attention in this session. One of them is the auctioning of coal fields and permitting private parties to mine coal, along with inviting foreign coal explorers. Another matter in the pipeline is mobile and FM spectrum sales which are expected to take place in the beginning of next year.

That the Modi government faces its first real litmus test in the winter session is clear. Fortunately for them, the Lok Sabha will not be a hurdle where it has sufficient numbers to pass anything. But when it comes to Rajya Sabha, it would be different ball game, as the government will have to overcome the opposition’s resistance. It would also be interesting to see, after the recent regional elections in Maharashtra and the fallout with its ally Shiv Sena, how the two get along at the centre.

However strong be the resistance and whatever the arguments that the opposition brings forward be, it would be inevitable for the government to show at least half of the above mentioned projects as a success, else, it would face further criticism from experts and give an advantage to opposition parties.