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BW Businessworld

Lots Of Bills, No Acts

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When the house is on fire, everyone is busy dousing the flames. Who in his right mind will think of structural improvements to it? That has been the predicament of the United Progressive Alliance (UPA) II, which came in with a thumping majority in May 2009. Since it had a decisive mandate, many expected several key reforms to be pushed through in the first two or three years of governance.

On the contrary, UPA II has simply lurched from crisis to crisis (the Commonwealth Games mess, Adarsh scam, the 2G spectrum issue, Anna Hazare and Baba Ramdev and their fasts). It is hard to remember the last important  policy decision or reform pushed through by this government.

On some fronts, in fact, the UPA II seems to have regressed. Take for instance, the tax reforms. The goods and services tax (GST) was meant to come into force by April 2010. In December 2010, it was announced that the new tax regime would be delayed. Now, the government has promised its implementation by April 2012, but many are taking the announcement with a large dose of salt. The direct taxes code — which was designed and ready under former finance minister P. Chidambaram — is a watered down version of the initial draft, and many involved with the first draft are of the view that the country is better off without the watered down version.

Bereft of headline material on the policy  front, business newspapers every once in a while talk of foreign direct investment being permitted in multi-brand retail. An inter-ministerial group recently suggested that this be done. But many Congress ministers and most bureaucrats do not expect this to happen in a hurry, if at all.

On banking, every once in a while there have been some noises on allowing companies in the financial sector space to set up retail banks, but there has been no action so far. There was talk of allowing the foreign banks local incorporation — another issue still hanging fire.

Some sundry Bills — most of which have generated more fuel than fire — have been ready for sometime, but UPA II is yet to clear any of them. None — the food security Bill, the right to education, the women's reservation Bill — have  been ratified by Parliament and become an Act. Thirty eight Bills of 2010 and eight Bills of 2011 (no Acts have been cleared in all of this year and only three Bills have been passed) are pending in Parliament as of date. Thirty five draft Bills are also gathering dust. After some initial noises, nothing further has been heard on the new Companies Bill. In aviation, airlines have been pressing the government to allow foreign airlines to invest in Indian carriers. But the matter has not even reached the proposal stage.

The Congress spokesperson cited the UID (unique identification) project and MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) as big achievements of the UPA II. But neither can be classified as a reform. And sceptics say that if the UPA II did not take any bold steps within the first two years, there can be little hope it would do so as it approaches the next general elections. The policy paralysis gripping this government can only get worse.

(This story was published in Businessworld Issue Dated 04-07-2011)