November 29, 2010 / 9:37 AM / 9 years ago

Q+A-What next for India's deadlocked parliament?

NEW DELHI, Nov 29 (Reuters) - India’s parliament has been in deadlock for nearly three weeks, preventing bills from being passed as opposition parties keep up demands for a full investigation into alleged government corruption.

The government has refused to agree to an all-party investigation, saying a separate one is already under way. The speaker of the powerful lower house has called an all-party meeting on Tuesday in the latest attempt to break the impasse, though informal talks over the weekend showed scant promise of a breakthrough. [ID:nSGE6AS01P]

The Congress party-led coalition has said it had no intention of cutting short the winter session of parliament that runs to Dec. 13, though in practice the session could prove fruitless.

WHAT HAS CAUSED THE DEADLOCK?

The opposition, fresh from a landslide victory in the eastern state of Bihar with its coalition partner, is disrupting mandatory open parliamentary debate on bills by shouting down proceedings, leaving the speaker forced to adjourn every sitting.

The opposition, which includes the right-wing Bharatiya Janata Party (BJP) as well as left-wing parties, now has four corruption scandals with which to beat the ruling federal government.

In addition to a telecoms spectrum scam in which the telecoms minister has resigned, there is the issue of corruption in the run-up to October’s Commonwealth Games, a housing scam in the western state of Maharashtra and a banking scandal.

The Congress party has presented some proposals to break the impasse, including an investigation monitored by the Supreme Court, but the opposition has rejected them.

WHAT HAPPENS NEXT?

If the government can find a solution to break the logjam, parliament will run until mid-December. But efforts by the Congress party’s main dealmaker behind the scenes, Finance Minister Pranab Mukherjee, have failed and there could be an early end to the session. Should that happen, parliament would convene again in February to pass the budget for the fiscal year that ends in March 2012.

The government could reconvene parliament earlier than February if it felt there were a possibility of resuming business.

WHAT IS AT RISK?

A key bill needing approval for additional spending of about $9.8 billion to ensure the functioning of government, including interest payments on government debt and subsidies on food and fuel, until parliament reconvenes at the next session.

As a money bill, if the government fails to push it through, it amounts to a government defeat. Government sources say a voice vote, which can be used to circumvent debate, could be used to pass the bill.

There are very few other key bills slated for the session. One is a mines and minerals bill, which would provide for a 26 percent share of mining profits for people displaced by projects. Another seeks to empower banks to raise more capital.

HOW SERIOUS IS IT?

The length of the deadlock is unprecedented in recent memory. Although the situation does not threaten the stability of the ruling coalition, it is undermining its credibility with voters and tarnishing the image of Prime Minister Manmohan Singh.

The ruling coalition of the United Progressive Alliance still has the numbers for a majority in parliament. But with four major state-level elections coming up in the next few months, the government wants to avoid giving the opposition political ammunition. It feels a wider parliamentary investigation demanded by the opposition would be seen as capitulation.

The opposition senses an opportunity to draw maximum political mileage, driving home its point that the coalition is mired in corruption and misgovernance. Under pressure, Congress has lately sacked several senior figures in a bid to clean up its image.

In another blow to the party, a Congress lawmaker and son of a former chief minister of a key state has resigned amid a row over a TV broadcast by his channel criticising India’s most powerful politician, party chief Sonia Gandhi.

The resignation of Y.S. Jaganmohan Reddy, who now plans to create his own political party, threatens to wean support away from Congress in Andhra Pradesh. The southern state sends 42 out of 545 MPs to the lower house and a big margin there helped Congress win a second term in 2009.

HOW COULD THIS AFFECT LONGER-TERM REFORMS?

If the next session has to deal with delayed legislation, it means debate of some key reforms will be pushed back.

That could include landmark investor-friendly goods and services tax (GST) legislation — unifying a fragmented tax system — as well as direct tax legislation. It is possible that GST will not even be passed until after September 2011.

Reform initiatives such as opening up multi-brand retail — keenly awaited by foreign investors such as global giant Wal-Mart — will not be affected as they do not need parliamentary approval but can be implemented through executive decision.

Passing legislation is notoriously slow in India due to red-tape, something of which foreign investors are well aware. Short-term setbacks not likely affect capital inflows.

Government decisions regarding corporate majors such as POSCO and Vedanta over environmental concerns and a recent decision by Karnataka state to ban iron ore exports are taken outside parliament’s business remit.

WHAT’S THE IMPACT ON FOREIGN INVESTOR PERCEPTION?

The impasse may make foreign investors jittery and the spate of graft scandals could further undermine investor perceptions. The world’s second-fastest growing major economy after China is big enough to keep investor attention, analysts say. But it already ranks 87th on graft watchdog Transparency International’s list based on perceived corruption — behind rival China. (Editing by Daniel Magnowski)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below