Projects worth billions of dollars stalled
The monsoon session of Parliament has been effectively washed away. And, with it, the prospect of getting extremely important executive policy moves through. The passage of the Land and GST Bill has faded into oblivion.
The BJP-led NDA government is already about 15-months old, having spent 25 percent of its tenure before the next Lok Sabha election. If any stakeholder is really upset with the poor pace of legislative business in the country, it is the group of foreign direct investors, who banked big on India after BJP acquired the pole position in the 2014 Lok Sabha elections. It is safe to say that Big Capital is upset.
Prime Minister Narendra Modi’s Make-in-India call had bolstered foreign investment sentiment significantly around the globe. By the end of 2014-15, foreign direct investment (FDI) inflows were up by over 61 percent or nearly $35 billion. The amount was small compared to the requirement of at least $100 billion in FDI inflows per annum.
In the current financial year, FDI in India could go up to anywhere between $50 and $90 billion. Moreover, India is regarded as the best investment destination by global business leaders, including those from China. The Asian giant is currently witnessing a massive economic slowdown and a crash in stock prices despite frequent government attempts at a bailout.
Last year out of the blue, India suddenly emerged as the most promising region for foreign direct investment (FDI). But, foreign investors have started to rethink this default position. Executive ordinances are no substitute for laws in a democratic country. The government has promulgated an ordinance for the second time to push through a new land bill. Even this one is set to be fruitless and futile soon.
The paradox is that this government, despite a massive public mandate, has been held hostage in both the houses of Parliament. Can the Indian economy in its current condition be trusted by serious long-term global investors?
Among those lined up for large investments in India are: Alibaba (China), Foxconn Technology Group (Taiwan), Google (US) in education, Google Fibre broadband services and Street View, Warburg Pincus (US), Gap Inc. (US), Dalian Wanda Group (China), Microsoft Corporation (US), Royal Dutch Shell PLC (UK and the Netherlands), Nando’s (South Africa), BrightSKY (US), Carlyle Group US), Bosch (Germany), Softbank (Japan) and Wal-Mart (US). Moreover, a host of global pharmaceutical giants from the US, EU and Japan are planning to invest in India. Both defence manufacturers and insurance companies have big plans for India too.
India is expected to add at least one trillion dollars to its GDP in every five to six years. The International Monetary Fund sees India overtaking even the US and China in due course if it is able to maintain an 8 to 10 percent growth rate in the next 15 years. Presently, India is the fastest growing large economy in the world.
Despite these bright signs, the painful reality is that of the performance of BJP or NDA in Parliament. The ruling dispensation is unable to manage the floor despite its combined strength of 337 in the 543-member House. The BJP alone occupies 280 seats. The function of the lower house which should have preeminence in the scheme of things is blocked by a small shouting brigade of 25 to 30 Opposition members led by the Congress.
It is rather inexplicable that despite possessing 337 MPs in Lok Sabha, the NDA is unable to move proceedings along in the House. Both the NDA and Lok Sabha speaker appear to have let down the people of the country, who gave and overwhelming mandate to BJP and its allies to guide the country’s economic development, provide political stability and national security. On a few occasions this year, Union Finance Minister Arun Jaitley spoke about passing key bills in Parliament through joint sessions.
What is holding the NDA back? Without even a clear mandate in all-important Lok Sabha, Congress and its allies have ruled the country for 15 years – first, under Narasimha Rao and, then, under, Sonia Gandhi-Dr. Manmohan Singh. The global financial crisis of 2009 followed by repeated financial scams unearthed by the Comptroller and Auditor General of India (CAG) and the Central Bureau of Investigation (CBI) left the Congress-led UPA government stumped till it was shown the door by the public in Lok Sabha elections.
The country’s economy suffered badly for a full five years between 2009 and 2014. No constitutional authority such as CAG or an independent investigation by the CBI or CVC is yet to put the Narendra Modi government or BJP in a similar awkward situation yet. As of now, the BJP holds a majority in eight state assemblies. In addition, the BJP and its political allies are in power in four other states and one union territory. Unfortunately, the party is getting cornered <g data-gr-id="75">everyday</g> by its opponents on issues – from foreign infiltration to flood – that seemed to have remained constant and endemic since the country’s independence.
BJP’s inability to take strong decisions and get them implemented despite the public mandate have been causing much concern among overseas investors, who thought India could be a safe haven for at least the next 10 to 15 years, especially in the wake of China’s seeming economic meltdown, poor EU growth rate and falling oil prices that threaten to bring down a host of economies around the world except probably India. For the uninitiated, India is one of the world’s largest importers of fossil oil and energy.
Falling investor confidence in India poses a threat to the BJP’s ability to rule smoothly and fulfill its promises of grand economic reforms to the electorate. Industry associations in India, including an apex body like the Confederation of Indian Industry (CII), have already voiced concern over the continuous blockade of parliamentary proceedings. At stake is India’s development, its future. If this deplorable trend of partisan politics follows, no party in power would be able to ensure operation of the country’s legislature. IPA