Column: Siding with growth

Updated: Apr 29 2014, 07:56am hrs
Parliament, in the last five years, has been criticised for not having transacted much business. However, on several fronts in the legislative domain, there has been considerable progress. The UPA government introduced Bills across sectors. Many of these have been examined by standing committees of Parliament. The committee reports suggest cross-party agreement on many Bills, including recommendations for some changes. This means that there is sufficient ground work for the new government to move forward quickly, if it chooses to do so. We discuss some key Bills where a broad political consensus has been built.

The issue of introducing a common goods and services tax (GST) has been talked about for over a decade. The proposal is to subsume most indirect taxes into a GST, which will be imposed on the basis of the value added at each stage of the manufacturing and supply chain. The benefits are that this eliminates the cascading effect of taxes while deterring tax evasion as each person in the chain has the incentive to ensure that the previous person has paid the tax. The GST is expected to simplify taxes and create a more uniform national system. Some experts have computed that there would be a boost to the GDP to the tune of 1% to 2%.

While some taxes that are proposed to be subsumed within the GST fall within the jurisdiction of the Centre (such as customs duties), others (such as sales tax) fall within the purview of the states. A unified system will require an amendment to the Constitution, and the government had introduced a Bill in Parliament for this purpose. The Standing Committee on Finance has recommended that Constitutional amendments be made with some changes. One of the main concerns seems to be from producing states which feel that they will suffer a revenue loss. This concern can be addressed by the Centre by underwriting the tax revenue for the initial years based on current levels and adjusting for economic growth.

The importance of higher education reform cannot be overstated if India has to reap the demographic dividend. The

National Knowledge Commission and the Yashpal Committee have made recommendations on restructuring the regulatory architecture for higher education. The government introduced a set of Bills that seek to achieve the following objectives: unify various regulators across subject areas (UGC, AICTE, etc) to enable cross-subject education, separate the regulation of education and practice for professions such as law, medicine, nursing, etc, increase autonomy for universities, allow new innovation universities, permit foreign universities to operate in India, increase transparency and accountability by introducing quality ratings for educational courses, minimum standards for prospectuses and abolition of capitation fees and, create new educational tribunals for resolving cases.

There is a broad agreement over many of these proposals. Only a few of the objectives, such as that of permitting foreign universities, have seen significant opposition. Given that all-party standing committees have made their recommendations on all these issues, the new government could try to push through some of these plans after modifying them to address the concerns expressed by the committees.

Several Bills had been introduced to address the issue of corruption and service delivery. The last session of Parliament saw the Lokpal Bill being passed. Key Bills that have not been passed include one to redress grievances of citizens, one to require all government departments to deliver services using electronic means, and one to create norms for procurement of goods and services by the government. These Bills create systems for reducing discretion of government officials and require them to act in a time-bound mannerand there is no significant political opposition to these Bills. Three other Bills related to the appointment of judges to the Supreme Court and high courts, and setting norms for their accountability (including removal), have similar broad support.

The agriculture sector figures in most electoral manifestos. The Seeds Bill, introduced in 2004, proposes to ensure that seeds sold to farmers meet certain minimum quality norms. The standing committee had made some recommendations, which included the exclusion of intra-farmer sale of seeds from the quality requirement. There were also some amendments related to approval of genetically-modified seeds. The government had agreed to most of the recommendations but was unable to get the Bill passed. This Bill as well as the Pesticides Bill would be worth a close look by the new government as it looks to boost the farm sector.

To sum up, the new government may have to take a number of steps to boost growth and job creation. Some of the second generation reforms may be relatively difficult. These include rationalisation of labour laws to encourage more jobs in the organised sector. However, there are a number of legislative proposals that enjoy cross-party support as seen in the all-party standing committee reports. These proposals provide an opportunity for the new government to take a running start when it takes office.

M R Madhavan

The author is president, PRS Legislative Research, New Delhi.

Views are personal