DMK pullout stalls reform bills' passage in Parliament

The Parliament was adjourned after uproar by members over issues of ethnic Tamils in Sri Lanka and alleged police atrocities against pro-Telangana activists in Andhra Pradesh, jeopardising the passage of key bills crucial for the government’s economic reform agenda before the house goes in for a four-week recess starting tomorrow.

The withdrawal of the DMK could hamper the government’s efforts to rein in the government’s fiscal deficit, spur growth and stave off the threat of a downgrade by global credit ratings agencies. Most vulnerable are contentious bills to open up insurance and pensions sectors, tax reforms and the privatisation programme.

The insurance and pension bills seek to raise the foreign direct investment (FDI) cap in the sectors from 26 percent to 49 percent and the Food Security Bill seeks to provide subsidised food grain to people below the poverty line.

The following bills were to be tabled in the Lokh Sabha for passage today but may now be put on the back burner given the disruption in the House: Securities and Exchange Board of India (Amendment) Bill, 2013, National Food Security Bill, 2011 National Institutes of Technology, Science Educationand Research (Amendment) Bill, 2013, Constitution (Scheduled Castes) Orders (Amendment) Bill, 2012 and Private Members’ Bills.

Of these, the landmark Food Security Bill which was passed by the Cabinet earlier this week is the most crucial since it will bring 67 percent of India’s population under its ambit who will have the right to get a monthly quota of 5 kg of foodgrains at highly subsidised rates of Rs 1-3 per kg.

All have now been put on hold till April 22, when the budget session of the Parliament resumes.

Other important economic reforms bills on the agenda include Forward Contracts (Regulation) Amendment Bill and the Companies Bill that is yet to be vetted by the Rajya Sabha.

It is still not clear what impact the withdrawal of the DMK would have on the bills as the party has previously expressed support for land acquisition, food security measures, insurance and pension bills. And with DMK out of the picture, the government has to rely on SP and BSP for support. However, SP has already said it will oppose moves to liberalise pensions and insurance.

A tottering UPA is bad for economic reforms and could make foreign investors pull out from Indian markets which have been tanking for the last three days.

The threat of an early poll could put every bureaucratic decision on hold and thereby bring to a halt the steps mentioned in the budget to spur growth. There is also the possibility that the government has to dole out more populist measures to keep t other allies happy.

“Going forward definitely both Samajwadi and Bahujan Samaj Party will be trying to gain the mileage out of any of the reforms move, because they can very well project that as an anti-common people,” market analyst SP Tusian said in an interview with CNBC-TV18.

The government had planned a heavy legislative agenda for passing as many as 35 bills during the current budget session apart from the Finance Bill, the Railway Budget and the anti-rape law which was passed by Lok Sabha on Tuesday.