Out-Of-The-Box Ideas For Modi Govt To Get Around Cong-Created RS Logjam

If the Modi government is to salvage the remainder of its three-plus-year term, it has to push both the legislative envelope in parliament and executive action outside it to bypass Congress and Left obstructionism.

If the Modi government is to salvage the remainder of its three-plus-year term from legislative blockades and logjam, it has to think out of the box. Whether it is the goods and services tax (GST), or the land bill or privatisation of public sector banks or other companies, it has to push both the legislative envelope in parliament and executive action outside it to bypass Congress and Left obstructionism.

There is, in my view, no point in trying to placate the Gandhi dynasty repeatedly to get things done in the Rajya Sabha, especially by going easy on the National Herald case or the Robert Vadra land grab. Atal Behari Vajpayee let the Gandhis off the hook on Bofors by not even questioning Sonia Gandhi on the payoffs (Ottavio Quattrochi was her pal, and the payoffs to him needed her to at least be questioned, but this never happened). But there was no gratitude from the Gandhi family for this huge political favour shown to them, possibly at the behest of Brajesh Mishra, the then PM’s all-in advisor.

So letting the Gandhis off lightly by executive inaction in their cases should not even enter the discussion. The Gandhis will swallow the favours and still work against the government. But in order to get things done before 2019, the Modi government has to move smartly – both legislatively and outside the legislative domain. Here’s what it could do.

First, it should use the first half of the budget session to pass all the laws it wants to in the Lok Sabha, and then hand them over to the Rajya Sabha. The upper house will, presumably, bottle them up, but it cannot do so indefinitely. At some point, if the laws are neither rejected nor passed, there would be a case for calling a joint session of parliament, where the NDA has the upper hand. So, even if the laws, amended or modified, are passed a year later, it is worth investing the time in them now.

The repeal of all nationalisation acts, giving Aadhaar legislative backing, the creation of a public sector golden share where economic rights can be separated from voting rights are some examples of legislation that can be passed. The bankruptcy code too can be passed, possibly as a money bill, though the government seems to have had second thoughts on that.

Second, we know the GST is stuck. After the imposition of President’s rule in Arunachal, and the Rohit Vemula suicide, it would be foolish to expect the Congress to be in a benign mood during the budget session. So Arun Jaitley has to think up a different way to progress. For example, is there any reason why the GST cannot be applicable only to central excise and service tax?

What prevents the government from framing a new Central GST law that unifies central excise and service tax, with the same setoffs now available for excise? The states can join in later. Also, what stops the government from even allowing setoffs of specified state VAT payments in the central GST rate?

Third, privatisation may need legislation, especially for companies that were nationalised through acts of parliament. But surely the sale of assets is possible. Take the case of ITDC. What stops the centre from selling a hotel or two, with some of the staff attached, who can also be given generous handshakes, from selling the asset without privatising ITDC? ITDC would become a shell company, but it would remain in the public sector.

It can be denationalised when the actual repeal of the act takes place. Similarly for Air India. What stops the government from selling all the planes, and giving the employees the option to remain public sector employees, or a lucrative exit? The salaries would have to be paid from the exchequer, but this small accretion in government employee figures can be justified as the necessary price to be paid for giving Air India euthanasia.

Fourth, land. The real problem with the UPA’s growth-retarding land bill is not that it seeks to pay more for acquisitions, but that acquisition processes become so long as to destroy the basic viability of a project, especially an infrastructure project. It is now time to think different – and bolder and more radical.

The NDA government should move a constitutional amendment restoring property ownership as a fundamental right, where no one can be disposssed of his property without being given a fair market price. Even in the case of compulsory acquisitions, prices have to be marginally above market.

The more fundamental problem is that we do not have a proper land market. Thanks to high stamp duties, the existence of many properties in benami names, and the avoidance of capital gains taxes on land sales,  the so-called ‘market price’ of land is actually far below the actual market price. Hence the effort of the UPA Land Act to pay four times the market price – which is a fictitious figure.

The fact is India needs a robust land market that represents the real value of land and not an unreal one. Once this exists, the Land Acquisition Act actually needs to be repealed, not legislated for further reforms.

The best reform is its repeal after the creation of proper land records, establishment of correct market prices to reflect demand and supply, transparency in land and building laws, including zoning, construction and clear procedures for announcing changes in land use. Policy ought to replace discretion in these matters.

This is the work of half a decade at centre and state levels. The Modi government might as well begin this journey, even if it does not actually complete it by 2019. Moves to make property a fundamental right are politically sensible, as it can then be packaged as an effort to help small landowners get fair prices for their land. The fact is no one will be unwilling to sell land at slightly above market prices when agriculture is not very viable in small farms despite umpteen subsidies on procurement, power, seeds, diesel and fertiliser.