 "Will the BJP scuttle UPA's unfinished agenda?")
Counter intuitively could the emergence of India’s pro business party – the BJP’s possible arrival at the centre derail crucial reforms and economic bills pending in parliament? The UPA government often accused of creating the infamous policy paralysis has, for all its failures, done significant legwork at the tail end of its 2nd term in pushing through a raft of reform measures. Many of these are on the verge of realization and a change of guard at the centre could be disruptive given the BJP’s opposition to several of the proposals.
Just this week, reports suggest that a parliamentary panel has asked the RBI to refrain from giving bank licenses to corporate entities. These suggestions follow similar recommendations made in the past by the Standing Committee on Finance headed by Yashwant Sinha, BJP’s former finance minister under the NDA regime. But corporate entry into banking is not the only issue on which the BJP and Congress have serious differences. There is a long list of approved and pending economic bills that the BJP has been vociferously opposed to, raising questions as to how quick the party will be to push them ahead if it comes to power.
Let’s start with FDI in insurance. The bill which was first introduced way back in 2008 has been stuck in parliament because the government hasn’t been able to evolve a consensus with the BJP. The opposition party is bent on keeping foreign direct investment capped at 26% as against 49% proposed by the government. The only narrow window for this legislation to get through is the remaining part of the winter session. MNC insurance behemoths have been making a loud pitch for its passage with people like the US ex-envoy to India, Frank W Wisner leading lobby groups in India. It could bring in much needed capital flows into India as big insurance giants like Nippon Life and Allianz are reported to have been waiting in the wings to take their relationship with their local partners to the next level in anticipation of a hike in limits.
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The question is, will the BJP give in?
Even the more touchy issue on enhanced FDI in multi-brand retail which has already passed the parliament’s muster could face implementation resistance if the BJP comes into power. The party had threatened to revoke the law after it was passed and as recently as in September this year, Yashwant Sinha told NDTV "multi-brand retail can fall aside”. Even if the policy is kept intact, the BJP has insisted that the likes of Wal-Mart will not be allowed to operate in states that are under BJP rule. No surprise then that global retailers are in wait and watch mode, looking for the elections to draw to a close before they take a decisive plunge.
But perhaps the prime item in UPA’s unsolved agenda that the BJP could halt in its tracks is the Indo-US nuclear accord, often seen as a crowning achievement in Manmohan Singh’s otherwise lacklustre tenure as Prime Minister.
Despite clearing several stumbling blocks, India is facing difficulty in sealing the civilian agreement because of the liability clauses in the nuclear damages bill. Ahead of his visit to Washington in September, Prime Minister Singh made a last ditch attempt to water down the liability provisions by citing the Attorney General’s opinion that it was up to the operator of a nuclear plant to decide whether or not it wished to exercise the ‘right to recourse’ provided under the bill’s section 17. But the move faced severe backlash from opposition parties, and was dropped. The BJP has never shared the UPA’s enthusiasm on the N-deal, and is unlikely to budge to US companies’ demands on liability going forward.
Reports say there are growing signals that the US establishment will dilute its stance on Modi & the visa issue, and will engage in a dialogue with him to deal with the changes in New Delhi. But whether the nuclear deal, often seen as a plank on which bilateral ties between India and the US were reinvigorated will feature as a hallmark of that relationship any longer, is anybody’s guess.
This government is already being called lame duck in several quarters making it difficult for it to push through key bills ahead of the national polls. Given the limited room for manoeuvre, whether Manmohan Singh stands firm and steers through some of his pet policies for which he’s often staked the survival his government, remains to be seen.