Opposition may delay reforms in parliament

Reuters | Fri Jul 23, 2010 | 6:12pm IST

Indian parliament India’s ruling coalition faces an emboldened opposition raring to attack it on soaring inflation and other issues when parliament resumes on Monday, possibly distracting from debate on several key reform bills. The opposition is on a high after successfully shutting down parts of the country this month to protest against a fuel price hike, but their ideological differences will likely mean only a short-lived unity on some issues of the day. Besides high prices, opposition Bharatiya Janata Party (BJP) has a slew of issues to attack the government on, including last week’s failed talks between India and Pakistan and rising Maoist violence. This could delay the enacting of several key legislations. A government statement said on Friday it will try to get parliament to ratify bills to simplify taxation, including a proposal to introduce a goods and services tax (GST) and another to cap private firms’ liability in case of a nuclear accident.

The GST, the most ambitious indirect tax reform, would replace existing levies such as excise duty, service tax, and value-added tax. The government is aiming to implement it on 1 April 2011 and has been working for political consensus. Parliamentary Affairs Minister Pawan Kumar Bansal said the government was also readying a bill to guarantee subsidied food for the poor by expanding a scheme to provide cheap grains. This would boost the ruling Congress party’s chances in upcoming state elections, while tax reforms will cut business costs and raise government revenues. But these actions could be delayed if opposition protests shut down parliament. "Opposition actions will create some discomfort for the (ruling) Congress party, but will not derail the policy program of the government," Seema Desai of Eurasia consultancy group said in a research note this week. The communists will seek a special discussion on the fuel price hike and on high prices of essential goods, a demand that is certain to disrupt proceedings on the opening day as lawmakers troop to the speaker’s chair shouting for their cause. 


Food prices in India have been rising at double-digit annual rates for nearly a year and fuel prices were hiked thrice in 2010 in a country where over 40 percent of its 1.2 billion citizens live in abject poverty. The Congress-led government has said inflation should cool with the new harvest coming in and has refused to roll back on fuel prices, saying it is necessary to bridge a fiscal deficit. The often-squabbling opposition capitalised on public anger, and on July 5 rallied hundreds of thousands of people in a strike that shut down parts of the country. "Frankly, I’m not very sanguine. They’ll be at their disruptive best," a Congress leader, requesting anonymity, said referring to the opposition in parliament. But there is only so much the opposition can agree on, given the right and left have no history of long-term collaboration, a fact that the government might use to push through some bills. "On entire (range of) issues, how can you expect all opposition parties to remain united?" communist leader Basudeb Acharia said.

The left-of-centre Congress has 208 members in the 545-member lower house of parliament, with allies taking it past the half-way mark required to pass ordinary legislation. But reform-suspicious partners and a socialist old-guard have meant the government has, in the past, had to shelve big-ticket reforms such as opening up the retail, pension and insurance sectors to greater foreign investments. Reforms in the retail sector are seen helping rein in food price inflation by curbing waste, but this is opposed by smaller retailers who fear they will be wiped out. The government has tested the waters by floating a discussion paper on retail, but little movement is likely in this session. "We want that legislation marked up for debate and discussion be allowed," Congress spokesman Manish Tewari said.


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