With GST Almost Live, What is Next for Modi?

By Shefali Dhar —

What piece of legislation will Prime Minister Narendra Modi of India tackle next? Source: Presidencia de la República Mexicana’s flickr photostream, used under a creative commons license.

Significant items on Prime Minister Narendra Modi’s legislative agenda — such as the Coal Mines (Special Provision) Bill, and the Insurance Laws (Amendment) Bill, have been passed by India’s Parliament despite the Bharatiya Janata Party’s (BJP) lack of majority in the Rajya Sabha (upper house of Parliament). Additionally, in the past year attention was almost exclusively placed on the Goods and Services Tax (GST) reform, and its passage has left behind speculation about the next major legislative reforms the BJP would like to implement.

Based on the Bharatiya Janata Party’s (BJP) election manifesto, and major reforms the BJP decided to tackle upon consolidating power, below are some likely targets for future legislative reforms that the Modi government may pursue in the coming years.

  1. Labor Reforms: Reforming restrictive labor laws, including the Industrial Disputes Act, the Factories Act, and the Contract Labor Act, that place heavy burdens on small and medium businesses.  The Industrial Disputes Act currently requires companies with more than 100 employees to acquire government permission to terminate employment. This encourages firms to keep their employee numbers below a certain level to maintain management flexibility.
  2. Land Acquisition: Reviving the 2015 campaign to amend the United Progressive Alliance’s (UPA) land acquisition law to make it easier for state governments to exercise eminent domain. Currently, states are required to obtain approval from at least 80 percent of the residents of the land the state wished to purchase. This complicates plot acquisition for infrastructure and industry stakeholders.
  3. Simultaneous Elections: In their 2014 manifesto, the BJP stated its intent to hold Legislative Assembly and Lok Sabha elections simultaneously as opposed to the current system of staggered Assembly elections.
  4. Communications Convergence Bill: A Communications Convergence Bill would combine carriage and content regulations for the telecom, internet, and television sectors in India. A bill along these lines was introduced in Parliament by the Vajpayee government in 2001, but it was never passed. While the UPA and National Democratic Alliance (NDA) governments since then have not pursued this reform, the BJP’s 2014 manifesto describes the BJP’s aim to simplify complex legislation by “converging overlapping legislations
  5. Smaller States: Breaking states up into multiple smaller ones. The BJP outlines its support for “greater decentralization through smaller states” in its 2014 manifesto. The party believes that a decentralized governance model would better accommodate India’s diversity. Uttar Pradesh, with over 200 million people, has long been a target for division.
  6. Financial Sector Overhaul: Carrying out the recommendations of the Financial Sector Legislative Reforms Commission, which called for clearer regulations for the financial sector – including explaining the purpose of new regulations, mandatory notice and comment periods, and impact studies.
  7. Foreign Investment in Insurance: Raising the cap on foreign investment in insurance companies beyond 50 percent. In his Budget speech, Finance Minister Arun Jaitley announced that foreign direct investment in the insurance and pension sectors would be automatically routed up to 49 percent.
  8. National Agricultural Market: Creating a single national agricultural market by:
    1. Putting in place special courts to reduce hoarding
    2. Setting up a price stabilization fund
    3. Unbundling Food Corporation of India’s operations
  9. Uniform Civil Code: Replacing separate civil codes for each major religion with a single set of laws, as is called for by Article 44 of the Indian Constitution.
  10. Article 370: Removing or abrogating Article 370 of the Indian Constitution, which grants the state of Jammu and Kashmir autonomous status. One of BJP’s national spokespersons, Sambit Patra, has stated in the past that the removal of Article 370 “continues to be a part of the core ideology of the BJP” and alluded to a lack of majority in both houses being a main hindrance in achieving this goal.

The above list has been curated from statements by BJP’s spokespersons, their election manifesto, feedback from various experts, and two different polls conducted by the CSIS Wadhwani Chair. Lacking a majority in the Rajya Sabha for the remainder of this Parliament term, the government must still take the time to bring other parties together to move legislation. With recent state electoral victories like in Uttar Pradesh, the Modi government’s legislative agenda is expected to move progressively faster over time — particularly if the people grant Mr. Modi a second term as prime minister.

Ms. Shefali Dhar is a researcher with the Wadhwani Chair in U.S.-India Policy Studies at CSIS.

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