Just a week or 10 days ago, fears of a parliamentary logjam preventing the passage of important legislative Bills loomed large and prospects of further economic reforms appeared bleak. Today, the outlook is completely different with the chances of important legislative Bills being introduced in Parliament and even passed appearing bright.
The differences between the Congress and the ruling Bharatiya Janata Party (BJP) over the insurance reforms legislation seem to have been resolved. It is still not clear in what shape the final Bill will be passed by Parliament and what safeguards there will be to ensure that the proposed liberalisation actually results in the strengthening of the insurance firms' capital base. But there is now a broad consensus that the foreign investment cap in the insurance sector should be raised to 49 per cent of the total equity.
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The change in the mood in both the houses of Parliament also suggests that the ordinance allowing the auction of the controversial coal blocks will be passed. This will be a significant development as it will allow resumption of mining in a large number of coal blocks. More importantly, this will eventually pave the way for commercial mining by the private sector. Even though there are inherent problems with commercial mining by the private sector without an independent regulator in place, it seems the Bill will face no hurdle in Parliament and some progress in making the coal sector more efficient and competitive would have been achieved.
Capitalising on the current mood in Parliament, the BJP-led government has also moved ahead in other areas. Bills to set up an independent regulator for the real estate sector and lay the ground for launching the goods and services tax (GST) will be introduced in the Lok Sabha before the current session ends on December 23. Now, nobody expects these Bills, particularly the one for GST, will be passed in this session. But their introduction will set the ball rolling and hopefully one will see further progress in the Budget session of Parliament in 2015. Remember that the Lok Sabha has already passed the Bill that would allow the repeal of all redundant laws and the Rajya Sabha, too, is not likely to oppose the legislation.
What has changed? And how long will this peace and bonhomie between the BJP and the Congress remain intact to facilitate more legislative reforms in the coming months? To seek an answer to these questions, it is important to understand the nature of the stalemate that seemed to have stalled work in Parliament in the first couple of weeks in its winter session. Unlike in those sessions of Parliament when the United Progressive Alliance (UPA) was in power, the Congress opposition in the last few weeks appeared to be very mild in nature and sprang from some specific incidents - the government's handling of the black money controversy and the deeply problematic statement by a minister in Narendra Modi's government. The Congress-led UPA government also was attacked on corruption-related issues, but the BJP leaders succeeded in bringing Parliament's functioning to a halt.
You may argue that the BJP leaders during the UPA regime were more aggressive and disruptive, leading to the stalling of proceedings in Parliament. The BJP leaders were also criticised for their lack of political maturity for which the Indian economy had to pay a heavy price. This is true, but equally true is the complete absence of any strategic response from the Congress leaders to engage with the BJP leadership and come to an understanding so that at least a compromise formula could be worked out to resume the proceedings in Parliament. The Congress also suffered from an absence of leadership within the two houses of Parliament to ensure effective floor management and collaboration with like-minded parties.
In sharp contrast, the BJP leadership in the last few weeks showed remarkable resilience in responding to the Congress challenge. Remember that on various occasions and even days before the start of the winter session of Parliament, senior leaders of the BJP were making critical comments both about the Gandhi family's poor leadership and the overall failure of the UPA in its 10-year long rule. But when the Congress reacted by getting tough and threatening that it would oppose the various Bills to be introduced by the government in Parliament, the BJP leaders changed their tune. Consultations with Congress leaders began in earnest to agree on a common acceptable agenda and the BJP leaders even softened their criticism of the Congress.
Even Mr Modi was persuaded to offer his apology for the statement that his colleague had made. A statement from the Rajya Sabha deputy chairman, condemning the statement, was also arranged to appease the opposition parties including the Congress. And to the Congress' credit, it has accepted the BJP's gestures gracefully and softened its stance.
If the mood in Parliament has changed with the prospects of its passing some Bills in the winter session appearing bright, the credit for all this should go to the maturity of the Congress and the political management skills of the BJP. Unfortunately, both the BJP's maturity and the Congress' political management skills were missing in the last few years of the UPA rule for which the economy had to pay a heavy price.