Opposition parties are lambasting government for enacting legislation through promulgation of ordinances. Some of them like CPI (M) have even urged the President not to give his assent to recommendations of the Union Cabinet in this regard.
What has prompted them to get in to get in to a belligerence mode? Are they justified in leveling such allegations? Does government’s action violate the constitutional provisions? Could it not wait for the bills to be passed by the parliament?
The immediate trigger for these provocations is government’s decision to re-promulgate Coal Mines (Special Provisions) Ordinance and promulgate an Ordinance to give effect to provisions of Insurance Act (Amendment) bill to raise FDI (foreign direct investment) limit from extant 26% to 49%.
At the outset, it is important to understand as to why the government had to bring in an ordinance on coal mining in the very first place? About 3 months back, Supreme Court had cancelled 204 coal blocks that were awarded illegally during 1993-2010. These included 42 mines which were already producing.
The cancellation of these allocations – without alternate arrangements – would have led to disruption of coal supplies affecting availability of at least 50 million tons annually (estimated production from 42 operational mines). In turn, this would have affected power generation and production of steel, cement etc thereby having a debilitating effect on the economy.
The apex court had anticipated these problems and accordingly directed government to expeditiously put in place arrangements for e-auction of cancelled blocs to new allot tees and complete the process by March 31, 2015. Till that time, original allot tees were allowed to continue production on payment of penalty @ Rs 295 per ton.
The government took all administrative steps necessary to complete the process of re-allocation within the deadline. However, it also needed to make requisite amendment to existing laws to ensure compliance with order of the court. Since, getting an amendment passed by parliament would naturally take time, it brought in the Coal Mines (Special Provisions) Ordinance in October, 2014 which is valid till January 5, 2015.
The procedures require that the ordinance be approved by the parliament within 6 weeks of commencement/re-assembly of the session. Accordingly, the government also introduced a bill in the winter session to replace the ordinance. The bill was passed by Lok Sabha where ruling NDA (National Democratic Alliance) has an absolute majority.
However, its passage in Rajya Sabha was stalled by an un-relenting opposition which did not allow the house to function on extraneous considerations viz., row over religious conversions (pertinently, they had allowed the bill to pass in Lok Sabha clearly revealing their double standards and malafide intent as regards its conduct in Rajya Sabha). This left the government with no other option but to re-promulgate the Ordinance as time was running out.
The reforms in the insurance sector have been stuck for about a decade. The hike in FDI cap was mooted way back in 2004 but a bill in this regard was introduced in Rajya Sabha in December 2008. It languished for 5 years and re-introduced in Rajya Sabha by then finance minister, P Chidambaram in August, 2013 with official amendments incorporating recommendations of a Standing Committee. Yet, again it was left in cold storage.
Industry and businesses had huge expectation from Modi-government that it will kick start pending reforms. The latter responded by introducing the bill with official amendments in Rajya Sabha in the monsoon session on July 30, 2014. In deference to the wishes of house and build a consensus, the bill was referred to the Select Committee which completed its job in record time and submitted the report on December 10, 2014.
Armed with Select Committee report, the government was seriously looking for a window of opportunity to get the bill passed in Rajya Sabha followed by approval in Lok Sabha. This could have been done in the just ended winter session but for an obstructionist opposition whose sole objective was to embarrass the government and deny it the credit for doing the right things for boosting the economy.
Faced with blockade in the parliament and yet determined to go ahead, as in case of coal, the Union Cabinet has rightly decided to hike the FDI cap in insurance through the ordinance route. Both the decisions are guided by the over arching economic interest and welfare of the people at large. These are also in consonance with provisions of the constitution and there are precedents too.
The opposition charge that parliament has been by-passed is completely untenable as government was forced to take recourse to ordinance route because of avoidable speed breakers put up by the former and extreme urgency to accelerate reforms and prevent economic disruption. Having obstructed proceedings of the house and not permitted even introduction of the bill despite there not being a single area of disagreement on merit, it is morally repugnant on their part to blame government for allegedly scuttling legislative process!
The lingering doubts in the mind of foreign investors are without any basis as investments made on the basis of ordinance will remain valid even if it lapses as a result of not being replaced by an act within the specified time period. They need to overcome their reluctance and come forward to bring in the expected investment (US$ 6-7 billion as per government’s estimate).
Even so, the government is committed to getting the bill passed by the parliament. Conscious that it does not have numbers in Rajya Sabha, finance minister, Arun Jaitely has given a clear indication of its intent to convene a joint session of both the houses and get bills passed as it can then leverage its strength in Lok Sabha.
Going forward, true to his unique and innovative ways of governance, Team Modi should keep up the momentum and if need be, follow the ordinance route for other legislative amendments viz., Land Acquisition Act etc in overall interest of accelerating reforms and catapulting economy on high growth path.