Pushing economic reforms, Narendra Modi govt goes for the ordinance route

Government decides to move ahead with reforms on further opening up insurance sector and auctioning of coal mines as ‘the country can no longer wait’.

Arun Jaitley, Piyush Goyal, Coal reform, insurance reform, economic reforms, Narendra Modi reforms, coal ordinance, insirance ordinance

A day after the winter session of Parliament ended, the government on Wednesday decided to move ahead with reforms on further opening up the insurance sector and auctioning of coal mines as “the country can no longer wait”.

At a meeting chaired by Prime Minister Narendra Modi, the Union Cabinet on Wednesday approved promulgation of an ordinance on the Insurance Laws (Amendment) Bill, 2008 to enhance the foreign investment limit in the sector to 49 per cent as well as re-promulgation of an ordinance along with necessary guidelines to initiate the process to auction 24 coal mines from Thursday.

The two Bills were stalled in the Rajya Sabha in the winter session due to a logjam between the treasury and Opposition benches. While the Coal Mines (Special Provisions) Bill, 2014, had been approved by the Lok Sabha and was awaiting approval from the Rajya Sabha, the Insurance Laws (Amendment) Bill could not be taken up for consideration and passage in the Rajya Sabha despite the select committee submitting its report.

“The ordinance (on insurance) demonstrates the firm commitment and determination of this government to reforms. It also announces to the rest of the world, including investors, that this country can no longer wait even if one of the houses of Parliament waits indefinitely to take up its agenda,” Finance Minister Arun Jaitley told reporters after the Cabinet meeting, indicating that the government could also go ahead with a joint session of Parliament if the Bill is stalled once again in the Budget Session.

Opposition parties, including Congress, Trinamool Congress and the CPI(M), slammed the government’s move as “unethical” and termed it as an attempt to subvert established institutions. CPI(M)’s Sitaram Yechury wrote to President Pranab Mukherjee asking him not to sanction the ordinances, saying the move was a clear violation of parliamentary norms. “I am sincerely requesting you to intervene in order to ‘nip in the bud’ such tendencies which may result in imposing an authoritarian manner of parliamentary functioning. This would be completely antithetical to the letter and spirit of our constitutionally established parliamentary democracy,” Yechury said in his letter.

Congress spokesperson Shakeel Ahmad said his party was against ‘Ordinance Raj’. “Ordinances are issued when there is an emergency situation,” he noted.

Trinamool MP Derek O’Brien said it was extremely unethical to avoid and bypass the democratic process. A day earlier, he told The Indian Express that should the government take the ordinance route, his party would vote against its passage in the Rajya Sabha.

Noting that “stalemate and obstructionism cannot go on in perpetuity”, Jaitley said: “If Parliament is not allowed to function, the framers of the Constitution had made provisions so that decision-making does not come to a halt.” While he did not openly refer to a joint session, he stressed that there is a mechanism even if one of the Houses does not pass a measure. When asked about the urgency to promulgate an ordinance on the insurance law, Jaitley said, “There has been too much delay. That is why there is urgency.”

Enhancing the FDI cap to 49 per cent from the current 26 per cent in the insurance sector is expected to bring in over $ 6 billion in capital inflows into the sector, allowing the 52 insurance companies to enhance their capital base and improve penetration. Similarly, the re-promulgation of the coal ordinance will enable the government to go ahead with the process to e-auction 24 mines from Thursday, which would enrich the coffers of mineral-rich states by an estimated Rs 7 lakh crore. The Centre had originally promulgated the coal ordinance in October 2014.

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First published on: 25-12-2014 at 08:11 IST