Legislative paralysis spells RIP for UPA

Governance on auto-pilot


Prasanna Mohanty | December 14, 2011

Only spiders seem busy these days
Only spiders seem busy these days

On November 21, Montek Singh Ahluwalia, deputy chairman of planning commission and a key policymaker of the UPA, made a confession: "By February (2012), you will have the January data and if it turns out that inflation is not coming down by then, then we really don't know what we are doing."

This came after three years of consistently predicting that inflation would come down after the next rabi or kharif harvest. Harvests have been consistently good too, but inflation shows no abating, barring a marginal dip so typical at this time of the year. He may still be hoping for a miracle but few would wait until February to endorse that he and his mentor prime minister Manmohan Singh, or anybody else in the UPA for that matter, really know what they are doing.

Look at some recent developments:

* Last week, the government rolled back its FDI policy after the cabinet endorsed it;

* Two bills – Copyright (Amendment) Bill and Commercial Divisions in High Court Bill – were withdrawn in Rajya Sabha on Tuesday. The first one because of conflict of interest: Kapil Sibal  was piloting the bill, but his son is counsel for a music company which stood to benefit from it. And the second one because even Salman Khurshid piloting the bill, which had already been passed by Lok Sabha, acknowledged that it had far too many flaws.

* Tuesday saw the cabinet holding back the Food Security Bill because of strong protest from the allies - NCP and Trinamool Congress.

* Lokpal Bill is stuck because not only the opposition but even the ruling Congress members disagree to some of its key formulations through their dissent notes to the standing committee report. Everyone agrees, and that includes the Congress, the bill is flawed. Anna is waiting to start his next round of fasting from December 27.

* Parliamentary standing committees have shot down three bills relating to UID and higher FDI in insurance and pension, saying these are flawed, directionless or simply, bad policies to adopt.

* Two key economic reforms – (i) Direct Tax Code (DTC), proposed in the budget a couple of years ago, is yet to be notified or implemented and (ii) Goods and Services Tax (GST) is stuck because of strong political opposition.

* Cabinet cleared three bills on Tuesday – Judicial Standards and Accountability Bill, Public Interest Disclosure and Protection to Persons Making the Disclosures Bill and Right to Grievance Redress Bill.

All the three are flawed and fail to address the issues they seek to address. Their passage, which looks highly unlikely in this parliament session at least, will in no way make a material difference to the existing arrangement.

There are other worries.

*Apart from these, the Index of Industrial Production (IIP) for October 2011 reflects a recessionary trend. It shows a minus 5.1 percent growth. Manufacturing, mining and capital goods are all showing negative growth. And this has a lot to do with 13 hikes in interest rate that the RBI has affected in the past two years.

The RBI wanted to check inflation by interest hikes but such hikes have ended up spiking industrial growth as investment has dried up. Economists have been crying hoarse that inflation is a supply side issue while interest hikes are meant to address the demand side issues and would prove counter-productive. It has.

*Revenue collection is way below the expectation and deficit is growing. Money has weakened considerably – a dollar now costs close to Rs 54, from Rs 45 or less in August this year.

The UPA II began its innings in 2009 with confidence. There was no Left Front to arm-twist it and hence there was no CMP (common minimum programme) – the policy framework that guided UPA I. Confidence seemingly turned to over-confidence and policy paralysis set in. A series of scams followed - 2G, CWG, Adarsh, IPLA, Isro spectrum etc. Simultaneously, a runaway inflation struck. Then came Anna Hazare and now, a legislative paralysis.

Nobody is talking about the mid-term polls yet. Polls are expensive business. The opposition is not yet ready to throw its hat in the ring. So the government survives, but only technically, like a brain dead man. Unable and seemingly incapable of doing anything.



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