Kidnappers come in two basic varieties. Those who demand money in return for the hostage’s return with life and limb intact; and those will take the money and still retain the hostage for making future demands. The Congress ransom note to the Modi government falls in the latter category. It reads something like this: "First give us what we demand (the heads of three of your top political leaders), and then we may consider returning the hostage (the reform bills and the Indian economy’s future)."
After Sushma Swaraj's efforts to explain her stand on Lalit Modi, which the Congress dismissed today (3 August), the Congress party reiterated its stand that it will not allow parliament to function.
The Congress has made plain its basic ransom demand is the resignation of External Affairs Minister Sushma Swaraj, and two Chief Ministers - Vasundhara Raje and Shivraj Singh Chouhan. While the latter two can't be delivered by the central government, the more important point is that the Congress cannot - and will not - deliver its part of the bargain no matter what the government does to meet it halfway. Even if BJP offers Swaraj's head on a platter, Congress has promised no help in getting any of the reform legislations passed.
The main reason is this: the Congress’s main point of economic outperformance is high growth during UPA-1 and half of UPA-2, largely due to favourable external factors. It then left the economy in a mess over 2011-2014 as it refused to reform. Any reforms passed now by the NDA will allow the BJP to also show a return to growth by 2017. Which does not suit the Congress.
While its position on the land bill is well known (it will oppose, no matter what), on goods and services tax (GST) its position - though logical - is not going to make any difference to its passage. There is considerable disquiet about the bill even within the BJP’s top states (Gujarat and Maharashtra), both manufacturing states which fear a loss of revenue. Tamil Nadu is another holdout. However, the weight of pro-GST states is probably tilting towards the GST, in whatever form it is passed. Since a bad GST will only bring the NDA more heartburn over the next two years, GST is not something the Congress will lose sleep over. A badly formulated GST suits the Congress’ purposes.
But the Congress’ future ransom demands will come from another quarter. We are forgetting that many more reform bills are also slated for introduction in parliament - among them, the real estate bill, various labour reform bills, and the small factories bill that seeks to exempt small companies from the heavy burden of regulation. All these are vital to get jobs and growth moving in the right direction.
The chances are the Congress will do everything to scuttle these bills too. Rahul Gandhi, for example, has already accused the government of being "pro-builder" in the real estate bill. One can guarantee that the more contentious bills on labour and small factories will be similarly blocked since opposition to them is in line with the Congress party's ideological refrain of painting itself as “pro-poor” and the government as a "suit-boot-ki-sarkar."
So, even if the government offers some heads on a platter to the Congress to rescue some of its legislation from the Rajya Sabha trashcan, the Congress party will up its demands soon. There will be new ransom demands.
The disruptive Congress strategy of today has to be seen as a continuation of its scorched earth policy of the final two years of UPA-2, when the worst growth-retarding and fiscally bankrupt policies were put in place as the Congress party saw defeat staring it in the face. Periods of impending political defeat are when the worst laws get passed, and the Food Security Act (which will ruin the food market), and the Land Acquisition Act (which will distort the already skewed market for land) were passed. Earlier, various rights-oriented laws like the Right to Education skewered private schooling that was showing some signs of making up for the deficit in state-run schools that form 90 percent of the total.
The UPA left behind several time-bombs beyond the food and land mines. They are now going off one by one. The banking sector is at its weakest ever, unable to support an investment revival. The infrastructure sector is a mess. Agriculture, despite high food support prices and rural spending, has been in a tailspin, with rural wage growth at new lows. Corruption corroded faith in government so much during the UPA that the judiciary got into every area of executive action – making governance tougher than ever for the NDA despite a parliamentary majority.
It is this kind of scorched-earth that the Modi government is seeking to mend, and which the Congress will not allow. Reason: it does not suit the Congress to allow the NDA to introduce reforms early in its tenure so that the benefits start flowing before 2019. The Congress will not gain from any economic revival before 2018-19. This is why no matter what the NDA does on Sushma Swaraj, Raje or Chouhan, the Congress will only up its demands as this parliament session and the financial year proceed.
The Congress will send more ransom notes in 2015 than the NDA can ever hope to meet in reasonable time.
The NDA should thus reject the Congress ransom demand in order to let parliament function. The Gandhi family's real agenda is to hold the economy hostage so that no gains accrue to the NDA till it is too late to save the 2019 elections.
The way forward for the NDA is thus the following:
One, make ease of business the focus by changing rules and regulations that don’t need legislation. Even the UPA land law can be made ineffective through rules to subvert its intent. A permanent committee merely to look at rules that retard business growth is the need of the hour. This committee should keep chipping away at pointless rules or regulations that merely irritate or hinder business.
Two, use article 254(2) liberally to encourage BJP and other non-Congress states to legislate land and labour reforms. This article allows state laws to supersede central ones on the concurrent list as long as the centre agrees.
Three, use the budget more effectively for reforms. Budgets being money bills cannot be blocked by the Rajya Sabha.
Four, introduce all reform legislation at one go and get them passed in the Lok Sabha, preferably in the monsoon session. Then, if the Rajya Sabha sits on them endlessly, the government should be able to call a joint session of parliament to get them passed. Joint sessions can be called only if one of the these conditions is fulfilled: a bill passed by the Lok Sabha is rejected by the Rajya Sabha or amended by it; or the Rajya Sabha sits on a bill beyond six months. If all bills the government wants are passed by the Lok Sabha in the monsoon session, the government can let the Rajya Sabha sit on them till February 2016 and then call a joint session for final passing – that is assuming it can’t get the opposition to help out.
What the NDA cannot afford to do is pay the Congress ransom demand. The current Congress ransom demand is unlikely to be its last. Blackmail cannot be allowed to win.
Updated Date: Aug 03, 2015 14:45 PM