The area of the possible

  • Hindustan Times
  • Updated: Nov 24, 2014 23:25 IST

In a democracy, reform — be it of policy or of institutions — is essentially a political process. Wider consultations assist in expanding the area of the possible.

Prime Minister Narendra Modi’s remark on Monday seeking the Opposition’s cooperation in Parliament to make it a “fruitful and result-oriented” winter session, needs to be seen in this context. For a capital-scarce economy, allowing overseas investors to deploy funds in high-growth sectors is the first step in seeking to spin jobs and multiply income.

The government has lined up a long catalogue of legislative business for the current session. Time is of the essence in many of these pieces of legislation. With no Leader of the Opposition in the Lok Sabha, the government plans to introduce a Bill to amend the Delhi Special Police Establishment Act to include the leader of the single-largest opposition party to be a member of the selection panel that chooses the CBI chief.

The government might also introduce, and pass, the Bill to amend the insurance laws to ease the FDI limit in the domestic sector from 26% to 49%. Insurers need funds to maintain a healthy capital base, offer a wider bouquet of products, protect consumer interests against insolvency and deepen insurance penetration. In another major move, the government plans to introduce a Constitution Amendment Bill to initiate India’s biggest tax reform initiative — Goods and Services Tax (GST). If adopted, GST can dramatically alter tax administration by giving a one-shot solution by subsuming a string of central and local levies and stitch together a common national market.

There is a strong constituency for reforms in India driven by aspirations and rapid upward mobility. One fact is indisputable: More than two decades of reforms have increased economic freedom by a large degree. Slow growth over the last two years has only fortified the argument in favour of reforms, particularly among young, lower-middle income groups in small towns and rural centres. Consultations and disagreements are perfectly legitimate, but these should not come at the cost of holding back business in Parliament.

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