1. Narendra Modi government to walk ‘extra mile’ in Budget session today

Narendra Modi government to walk ‘extra mile’ in Budget session today

Reddy panel to boost states’ kitty, end Plan/non-Plan divide

By: | New Delhi | Updated: February 23, 2015 10:43 AM
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Narendra Modi government on Sunday promised to walk the “extra mile” to accommodate opposition’s concerns and sought to invoke a “spirit of mutual cooperation”. (PTI)

Having to legislate six Ordinances in the first half of Parliament’s Budget session starting on Monday and looking forward to converting the slated 45 sittings of the House spread over three months into an opportunity for making big-ticket policy announcements, the Narendra Modi government on Sunday promised to walk the “extra mile” to accommodate opposition’s concerns and sought to invoke a “spirit of mutual cooperation”.

Parliamentary affairs minister M Venkaiah Naidu who met Congress president Sonia Gandhi on Sunday morning to seek support for the government’s plan to have a productive legislative session later in the day hosted a meeting of leaders of all parties in both the Houses, which was also attended by the prime  minister.

However, the political setting did not look very promising for the government given that the Congress was prepared to launch an agitation this week over the land Ordinance that obviated the consent and social impact assessment requirements for large swathes of PPP and private-sector projects and Gandhian Anna Hazare was scheduled to hold a two-day protest against the Ordinance from Monday at Jantar Mantar.

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The Budget session, to begin with President Pranab Mukherjee’s address to members of both Houses, will see the tabling of the report of the 14th Finance Commission early enough for the Budget to follow it up with a bolstering of the process of fiscal empowerment of states, which have long pitched for a greater say in the way projects are designed and funds are disbursed.

The commission, headed by former RBI governor YV Reddy is believed to have recommended a 10 percentage point increase in the states’ share of the central taxes and duties to 42% for the five years starting FY16. For states, which saw an unprecedented 49% increase in net resources transferred to them in the FY15 Budget, the likely acceptance of the commission’s recommendation by the Centre would indeed be another boon.

The development is also in consonance with Modi’s promise of cooperative federalism and his intent to bring the states to the forefront of policy-making and project implementation.

While this would mean a cut in the spending capacity of the central ministries, the transfer of additional  fiscal resources to states could also make it easier for the Centre to launch the proposed economic-value-creating goods and services tax (GST) that involves a rebalancing of taxation powers of the Centre and states. The states, despite having been benefited from the value added tax system introduced a decade ago, are concerned over the perceived loss of their fiscal autonomy  in the GST regime, which gives the Centre power to tax transactions beyond the factory-point.

The coming Budget, which will be the first full-year Budget of the Modi government, could also be marked for the removal of the already blurred distinction between Plan and non-Plan funds, according to sources. With the replacement of the Planning Commission by the newly-formed Niti Ayog, the finance ministry has become the sole arbiter of the allocations to ministries and programmes.

In the Budget FY-15 presented in July last year, finance minister Arun Jaitley restructured 126 centrally sponsored schemes (CSS) to 66, including the 17 flagship schemes and funds, have been provided under these schemes as extra central assistance to the Plans of states and union territories. As a result, the Centre’s contribution to state/UT Plans for FY15 was budgeted to increase sharply to Rs 3.38 lakh crore  from Rs 1.19 lakh crore (revised estimate) in the previous year. In other words, as a share of net resources transferred to states/UTs, the central assistance to state/UT Plans is seen to double to 42% in FY15. With this huge increase, despite an estimated 20% increase in states’ share of the Centre’s tax revenue in FY15, these transfers are seen to be just 49% of net resources to be obtained by the sattes from the Centre compared with 61% in the previous year.

To show its determination to implement reforms even if the Opposition disrupted House proceedings, the NDA government recently brought in six ordinances, including the Insurance Laws (Amendment) Ordinance, 2014, the Coal Mines (Special Provisions) Second Ordinance, 2014, the Mines and Minerals (Development and Regulation) Amendment Ordinance, 2015 and the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Ordinance, 2014. The coal Bill, crucial for taking the ongoing coal block auction process to conclusion, was approved by the Lok Sabha in the last winter session, but it couldn’t be taken up in the Rajya Sabha due to frequent stalling of proceedings. The government will now have to seek Parliamentary approvals for these Bills in the current session, else they will lapse. It has already hinted that it could convene a joint session of both Houses to make up for the lack of adequate strength in the upper House and get the crucial Bills passed.

Despite its thumping majority of 335 in the 543-member Lok Sabha, the Modi government continues to be in a minority in the Rajya Sabha, having only 65 seats along with its allies — just 45 on its own — in the 245-strong House. Although the Congress’ strength of 44 in the 16th Lok Sabha is its lowest ever, with 69 members, it is still the largest party in the Upper House where other parties opposed to the BJP like SP (15), JD-U (12,) the Left (11) and the volatile Trinamool Congress (12) are rather strongly represented too.

It is reckoned that to achieve majority (123) in the Rajya Sabha, the BJP has to add reasonable numbers of MLAs to its kitty in Bihar (which is to go to the hustings later this year) and West Bengal, Tamil Nadu, Kerala and Assam, where polls will be held in 2016.

In the last session of Parliament, a total of 18 Bills were cleared by at least one of the Houses. At least 60-odd Bills, including the Constitution (122nd Amendment) (Good and Services Tax) Bill, 2014, the Real Estate (Regulation & Development) Bill, 2013 and the Prevention of Corruption (Amendment) Bill, 2013, apart from the six ordinances, are awaiting Parliamentary clearances.

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