Once Bitten, But Not Shy

THE United Front government's tryst with economic legislation seems likely to turn into a high-speed head-on collision. And among the wounded could be Finance Minister P. Chidambaram.

While its attempts at framing non-economic legislation like the Women's Representation Bill have met with mixed response within and outside Parliament, the government's luck with economic bills seems to have run out. The monsoon session of Parliament saw stormy scenes when the bill to set up the Insurance Regulatory Authority (IRA) was introduced. Finally, faced with wrath from both the Left and the BJP, the government was forced to withdraw the bill. Its efforts at other economic legislation have also been subject to severe criticism by both United Front constituents as well as the opposition in previous Parliament sessions.

The Winter session begins on November 19. But hostility is already brewing in the opposition and in the Left parties over the economic bills slated to be introduced in the session. The government plans to reintroduce the IRA Bill. And among other economic bills proposed to be taken up are the Foreign Exchange Management Act (FEMA) replacing the Foreign Exchange Regulation Act (FERA), the Money Laundering Bill, the long-pending modified Companies Act and the Sick Industrial Companies (Special Provisions) Act (SICA).

It is highly unlikely that the IRA Bill, if re-introduced in its present form, will be passed. Which will be a serious blow to both the United Front government and the finance minister. The Left parties are opposed tooth and nail to the bill, since they fear that insurance industry trade union members, traditional Left supporters, will be affected if private players are allowed to set up companies competing with the LIC and GIC. But CPI(M) politburo member Prakash Karat insists that the IRA Bill was more than just a trade union issue: "We are opposed to this bill because the government's priorities here are not for this country but for other countries, either directly, or through Indian private partners."

 On the other hand, the BJP is not opposed to the concept of insurance privatisation per se. Explains the party's economic think-tank member Jay Dubashi: "We support the openness in the insurance sector but we just cannot accept opening it to foreign companies. Privatisation here should be restricted to Indian companies only."

 According to former finance minister and BJP spokesperson Yashwant Sinha, the party has a well-defined policy on the insurance issue: "The public sector should continue to run the insurance sector in the country along with the Indian private sector. Foreign players have necessarily to be kept out of this." He says that the catch in the IRA Bill, which, at first glance, is simply aimed at setting up an Insurance Regulatory Authority on the lines of the Telecom Regulatory Authority, is that it gives the IRA power to allow private parties. And, in doing so, it does not close the option for the IRA to allow foreign companies in. "We have asked the government to close this option. Unless this is done, we cannot support the bill," says Sinha.

Thus, the situation hasn't changed at all since the government sheepishly withdrew the bill in the monsoon session. In fact, the Left has drawn up an ambitious opposition plan for the bill and does not want it to see the light of day ever. "We do not and cannot support anything like this. As far as the Left parties are concerned, we have made it clear to the government that the insurance bill is a persona non grata in Parliament. Such bills should not be introduced at all," says Karat.

Indeed, a section of the Left brigade is surprised that the United Front government is even attempting to re-introduce the bill in the coming session and feels cheated at being left out of the gameplan. "We were not consulted regarding the introduction of a bill we are totally against and which we have been opposing all along. It was also not brought up or discussed in the steering committee meetings," says D. Raja, central secretariat member of the Communist Party of India (CPI).

"This bill has led to a loss of face for the government when it had to be withdrawn in the last session," adds Karat. "There is no reason why the government should undergo a similar exercise in the winter session specially when the amount of opposition to the bill remains the same and when the Left parties are not ready to accept the bill in any form."

LEFT-AFFILIATED trade unions are also waiting in the wings to launch agitations in case the government goes ahead with the re-introduction. Says a member of the CPI-affiliated All India Trade Union Congress (AITUC) which has held several demonstrations and dharnas since the last introduction of the bill: "If public opinion is against such legislation, the government has no business in going ahead with it. If it still does, we will hit the streets."

And it's not just the IRA Bill that is going to face flak in Parliament. Other economic legislation like the FEMA and Money Laundering Bills are also not assured of safe passage. Says Karat: "I don't understand why the government is bent upon forcing the economic bills in parliament first, specially when several other, equally important, Common Minimum Programme (CMP) promises—like the bills on agriculture and agricultural labour, lokpal and representation of women in Parliament—are also waiting to be implemented and fulfilled. There is no reason why bills like the IRA and FEMA, against which there has been and is so much opposition, should have precedence over other important issues." Sinha too feels that the government should not act in haste. He says that the bills have not fully cleared the standing and select committee stages as a proper consensus was yet to emerge on these.

As for FEMA, says Karat: "We would not like to see any dilution of enforcement powers under the new law from what it was under FERA because dilution of enforcement powers would be advantageous for law evaders." The BJP is also of the view that any dilution of powers would have adverse effects. Says Sinha: "The government has to choose between two alternatives: either to retain the Enforcement Directorate (which deals with FERA violation cases) with all its powers or to scrap it altogether. Anything other than this would be impractical."

 However, the government is determined to see the process to its logical end despite the protests. Says a bureaucrat involved in the legislation process: "If one is afraid of opposition, no legislation would ever be passed in India. The government will try to put the bills through in the coming session as these are also important promises made in the CMP. "

But the government has still not decided on a definite agenda on the bills that would finally be introduced in this session of Parliament. But if it does go ahead with its programme and the opposition remains adamant, one could be looking at some messy scenes in Parliament. And possibly some more embarrassment for the Gujral Cabinet.