Slowdown in law-making

Last year saw a 26 per cent drop in the passage of new laws, but prospects this year may be worse

The 2017-18 financial year ended about a month ago and it is time, therefore, to assess how the Narendra Modi government fared last year in terms of decision-making. This was a year which broadly corresponded to the fourth year of the Modi government. As has happened in the past, the fifth year of a government does not usually see much activity since it gets busy for elections. 

It would be interesting, therefore, to evaluate if the past year saw an improved pace of activity just before the slowdown in decision-making that everybody now expects during the current year. Remember that 2018-19 will see major state assembly elections like those in Karnataka in May and later in Madhya Pradesh, Chhattisgarh and Rajasthan. And then there will be the general elections in May 2019!

On the legislative front, a fair idea can be formed after studying the data put out by PRS Legislative Research. Excluding the bills pertaining to the Budget, the Modi government succeeded in getting 25 laws passed in Parliament during 2017-18. 

This is a steep decline from the 34 laws that Parliament had enacted in 2016-17. Disruptions of proceedings in the Lok Sabha and the Rajya Sabha certainly had an adverse impact on the government’s law-making ability last year.

However, the performance in 2018-19 was actually better than what it was in the first two years of the Modi government. Only 24 laws each were passed in Parliament in 2014-15 and 2015-16. 

In other words, the momentum that the Modi government had generated at least in law making in 2016-17 was lost in the following year. The government perhaps should introspect on how it could have engaged more constructively with the Opposition to maintain the momentum of 2016-17 and if possible make amends for the future. 

It is interesting that almost half of the 107 laws that the Modi government passed in the past four years pertain to the financial, infrastructure and education sectors. This gives a fair idea of the government’s focus and priority areas in governance. The largest share in these laws, of course, belongs to the financial sector. There are as many as 27 financial laws that the Modi government passed in the last four years, which among other things were aimed at facilitating insolvency resolution, higher foreign investment in insurance companies and disclosure of concealed income. 

For instance, there were as many as 13 infrastructure-related laws that covered almost all the key sectors including coal, mining, energy, aviation, shipping and telecommunications. Three of these laws pertained to the transportation sector. 

Last year may have seen the passage of fewer laws, but the government managed to roll out many significant reform initiatives. The goods and service tax was rolled out from July 2017, though it was initially feared that the launch of the new taxation regime might be postponed yet again. The government also decided to privatise Air India and relax the norms for foreign investment in the state-owned airline. Air India’s privatisation is facing some hurdles, but it seems the government is keen on completing the process in the current financial year. 

In 2017-18, the government also decided to set up the railway development authority, which would now decide on the fares and freight rates for passengers and goods. Two more reformist decisions were to free the Indian Railways from the responsibility of paying dividend on the Budget support it got from the Centre and provide greater autonomy to the Indian Institutes of Management through a legislative change. 

Also, the government allowed the hiring of workers on fixed-term contracts, which has already given a boost to hiring in many seasonal industries and the construction sector. This comes as a relief for industry as it is still not clear if the promised Labour Code, a unified piece of legislation encompassing all labour laws after their simplification, will be notified. 

In contrast, 2016-17 would be largely remembered for the disruptive decision to annul the legal status of high-denomination currency accounting for about 86 per cent of the total currency in circulation in November 2016. The only notable reformist moves initiated in 2016-17 were the doing away of the separate presentation of the railway Budget, the passage of the Insolvency and Bankruptcy Code to facilitate resolution of stressed loans and the introduction of a regional air connectivity scheme.

It is unlikely that any new economic policy initiatives will be taken during the current year. A few laws including the conversion of the Ordinances already promulgated may have to be passed in the coming sessions of Parliament. Apart from that, all that one can hope for in the remaining 12 months of this government is the implementation of the decisions already taken last year.