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Modi's harsh winter test

The Winter Session of Parliament will be a litmus test for the PM's legislative reforms push & the market must prepare to be disappointed.

Nikhil Inamdar  |  Mumbai 

Narendra Modi
Narendra Modi

Prime Minister Narendra Modi continues to climb the popularity charts among the aam janta (and NRIs!) six months after he won a historic election. But hear economists, financial analysts and other better informed watchers of the Indian economy speak and you know that his honeymoon period is fast coming to an end. Modi's first 6 months in office have received at best, mixed reviews, with critics complaining that while the PM's grand social campaigns and masterful foreign policy maneuvers have far exceeded expectations, he hasn't quite pushed the buttons on big bang market friendly reforms to revive India's ailing economy.

Swaminathan Aiyar in his latest column for The Sunday Times of India calls Modi 'more showman than reformer'. Arvind Panagariya, Professor of Economics at Columbia University complains that the government's assurances on issues like retrospective taxation 'remain insufficient', while industry bodies like Assocham say the big drawback of this government is its 'slow pace of action'. Big on vision, short on execution is a common refrain being heard against the Modi sarkar these days.

The winter session of parliament gives the PM an opportunity to show the strength of his mandate and dispel much of this criticism. But we should be ready for real chances of disappointment and realistically speaking, a delay of at least another 6 months before concrete legislative action begins. Given the BJP's numerical shortfall in the Rajya Sabha, the truth is that Modi's team will have to display some deft floor management skills if it wants the load of ambitious bills and amendments passed.

ALSO READ: Govt to push economic agenda in Winter session of Parliament

The session has heavy legislative business at hand with 39 bills ready for introduction and consideration. These include key economic reforms like The Insurance (Laws) Amendment Bill, 2008 up for passage, The Coal Mines (Special Provisions) Ordinance, 2014 ready for replacement into bill, and the Goods and Services Tax (GST) Bill up for tabling. A discussion on amendments in the Land Acquisition Act is likely to be initiated and the market is also expecting the government to take a relook at retrospective taxation.

Hopes for execution are clearly high, but signs of an imminent winter storm in parliament are all too visible. The Mamata Banerjee led Trinamool Congress refused to attend an all-party meeting on Sunday convened by Parliamentary affairs minister Rajiv Pratap Rudy. The party has also said it will stage a dharna in parliament on a myriad issues ranging from black money to communalism. It has made its opposition to allowing more FDI in insurance amply clear.

ALSO READ: Trinamool to oppose bill on FDI in insurance: Mamata

The government must not expect much affability from the Congress either. The UPA faced severe disruptions from the BJP during its tenure and it won't come as much of a surprise to anyone if the Congress decides to play tit for tat politics and give back as good as it got. Former Commerce Minister Anand Sharma in a recent interview to CNBC TV18 has made obvious his party's stand on the insurance bill, saying substantive changes brought in by the BJP to alter the definition of FDI through the inclusion of foreign portfolio investments (FPI) in the policy, are unacceptable to them. The Congress' precise strategy on the GST as well as coal reforms (which analysts say will in any case procedurally take time to implement once the ordinance is converted into a bill, as it might have to go to the standing committee for ratification) is yet not known.

The BJP must also face up to the united strength of the JD-U, RJD, JD-S, INLD and Samajwadi Party which are reported to have joined forces (with 25 seats in the Rajya Sabha) with a collective counter strategy against Modi in parliament. JD(U) General Secretary KC Tyagi was quoted post yesterday's all party meet by the Times of India as saying the consortium will give a 'big no' to amendments in the land bill.

Consensus building and consultations with stakeholders have clearly not yielded much, and there are already murmurs that the government could convene a joint session of Parliament as a measure of last resort. Joint sittings are called when a bill passed in one house is either rejected by the other, the two houses finally disagree on amendments to be made in a particular bill or if six months or more have passed after a bill cleared by one house is awaiting passage in another. But as this Mint article points out, even if a joint session is called, clearing all the bills and amendments will require up to six months in the least, which in essence brings us closer to the budget session before big bang legislative reforms can become a reality.

For many, whose expectations were propped up by unrealistic election rhetoric about instant change, patience is already wearing thin. Modi's real test has begun.

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First Published: Mon, November 24 2014. 09:12 IST