Year-ender: Bills such as Land bill, DTC, Companies bill will not be killed, awaits Parliament in 2012
December, 30th 2011
When finance minister Pranab Mukherjee presented Union Budget 2011-12, he listed out an ambitious agenda of proposed legislations that could change the way businesses are regulated, taxes are paid, and the limits of foreign direct investment in a clutch of sectors are set.
Nine months later, Mukherjee, the government's chief troubleshooter, is struggling to make progress. An indicator of work pending in parliament can be gauged from numbers collated by PRS Legislative Research, a not-forprofit institution. It says the government planned to pass 31 pending bills in the 21 sittings slotted in the ongoing winter session of the Parliament - a tall order given that both the Lok Sabha and Rajya Sabha did not function for many days. In addition, it also wanted to introduce 23 new bills.
The government is way behind schedule but it can still attempt to make haste. It has to at a time when factory output has dipped for the first time in over two years; when inflation has soared; when the rupee has lost a fifth of its value against the US dollar in four months; thereby, imports have become dearer. Clearly, it's time to bite the bullet.
"The time to initiate reforms was from the very day they [the UPA] came into office," says Sunil Sinha, head of research and senior economist, CRISIL, a research and ratings firm. "It seems that the political management is going out of control and the government is not able to build political consensus on important issues. Time is running out on reforms."
All is not lost. One view is that a depreciated rupee can be turned into an advantage. "Bringing in the Land Acquisition Bill can be a positive in the current scenario," says Richard IIey, chief Asia economist with BNP Paribas.
"Indian real estate has suddenly become 20% cheaper for foreigners in the recent months (because of the depreciated rupee), which could help the market." But a leading political analyst says that land acquisition is a tough legislation to pass given the current mood, as it falls in a category where it is important both politically and economically.
"The government should focus on bills that are economically important in the current scenario. There is little chance that politically-sensitive bills will be passed now," adds the analyst on condition of anonymity.
However, there are many that fall in the apolitical category and are important from the economic point of view. Two such reform measures are: The Direct Tax Code (DTC) and The Companies Bill. While the Direct Tax Bill will change how income taxes are levied and collected, the Companies Bill will change the landscape for corporate regulation like creation of a one-person company and class-action suits.