The new Parliament session starts today. The main items in the legislative list are the Bankruptcy Bill and the constitutional amendment that enables the > Goods and Services Tax (GST) . In addition, Parliament will discuss matters related to the Union Budget.
The Bankruptcy Bill seeks to establish a new framework for quick resolution in cases where there is a default by a borrower. It creates a few new entities: information utilities to store data on debt and defaults, insolvency professionals to manage a defaulting company during the resolution process, insolvency professional agencies which will accredit and regulate the insolvency professionals, and a regulator. In case of a default, an insolvency professional, who will try to create a resolution plan, will be appointed. If a resolution plan is not approved by 75 per cent of lenders, the company will be liquidated. This Bill is being examined by a joint select committee of Parliament which is expected to give its report this week.
Objections to the Bill The fate of the Constitution (122nd Amendment) GST Bill depends on whether the government can build a consensus with the Congress party. There were three main objections raised by the Congress: abolition of the 1 per cent tax on inter-State movement of goods, the creation of a dispute resolution body over the GST Council, and setting a cap on the tax rate. The Arvind Subramanian Committee has also recommended the removal of the inter-State tax, and the government may agree. The Parliamentary Standing Committee that examined the earlier version of this Bill had pointed out that a judicial dispute resolution body may impinge on the fiscal autonomy of legislatures, and had recommended that the provision be removed. The current Bill adheres to this recommendation.
The demand for a cap on the tax rate is interesting. Constitutions usually provide a broad framework for laws to be made by legislatures. Except for professional tax, the Indian Constitution does not fix a limit on any other tax, including the various taxes that the GST will replace. However, given the frequent increases in excise duties on petroleum products through executive notification, there is a case to limit such powers. The government could address this issue by specifying that the rates be set only by legislatures.
The other major legislation is the Finance Bill. Other than changes in various taxes, this year the Finance Bill proposes some structural changes in other laws. For example, it amends the Reserve Bank of India Act to introduce a monetary policy committee. This raises the question whether the Finance Bill can be classified as a money bill. The Constitution defines money bills as those having “only” certain items related to taxes, government borrowings and government spending. Given the other provisions, the Finance Bill may need the consent of the Rajya Sabha too (unless the government drops these provisions when the Bill is discussed in the Lok Sabha).
The Budget session also focusses on the other key roles of Parliament as a financial sanctioning body and as an institution of accountability. The Lok Sabha will discuss in detail the demand for grants of a few ministries, and pass the rest without discussion (called guillotine). This year, the Lok Sabha is scheduled to discuss the following Ministries: Development of Northeastern Region, Housing and Urban Poverty Alleviation, Skill Development, Social Justice and Empowerment, Civil Aviation, and Tourism. The total allocation for these ministries is about Rs.14,000 crore, which is about 0.7 per cent of the total Union Budget. Thus, over 99 per cent of the Budget will be passed without detailed discussion in Parliament. Indeed, this is part of a longer term trend. In the last decade, rarely has the Lok Sabha discussed more than 10 per cent of the Budget. Part of the decline in the discussion can be attributed to the time spent on this subject. In the 1980s, the Budget was discussed for 100-120 hours every year; this figure has declined to 20-40 hours since the mid-1990s.
Accountability In a parliamentary democracy, the accountability of the government to citizens is implemented through scrutiny of its work by Parliament. In this context, the Rajya Sabha will be discussing the working of a few Ministries: Health; Human Resources Development; Finance; Micro, Small and Medium Enterprises; and, if time permits, External Affairs. The objective is for the House to examine how each ministry is implementing various policies and whether it is achieving various national objectives. One hopes that these discussions bring out the challenges faced in various areas, such as learning outcomes in education, improvements in health indicators, and so on. It is important that Parliament focusses on outcomes to be achieved by ministries, and monitors them effectively.
As an aside, the fact that this is a new session and not the second part of the Budget session carries a story. The first part was adjourned on March 16, with the announcement that the Houses will meet again on April 25, but the session was formally closed just before the end of March. This was done to enable the passage of the Uttarakhand Budget by executive order of the Central government after President’s Rule was imposed in the State. The Constitution allows Parliament to pass the budget of a State if it is under President’s Rule. It permits the Central government to do so if Parliament is not in session. Rather than call Parliament for a day’s sitting, the government chose the latter route. This is not the first instance of using the flexibility of Parliament sessions by governments to suit their ends. In 2008, the United Progressive Alliance government chose to continue the Monsoon session with breaks, until a couple of days before Christmas, rather than have a separate Winter session. The purpose was to use a rule that a no-confidence motion cannot be moved twice in the same session. Last year, the Budget session of the Rajya Sabha was curtailed to enable the reissuance of the land acquisition ordinance. Such tactics used by various governments to bypass parliamentary scrutiny need to be addressed. One way is to fix a calendar at the beginning of the year, with changes permitted only for an emergency sitting of Parliament.
(M.R. Madhavan is the President and co-founder of PRS Legislative Research.)