Ordinance Raj should not be the way forward for Modi government

Jan 6, 2015

- By Vivek Kaul

Vivek Kaul
The union minister for parliamentary affairs M Venkiah Naidu made an interesting comment in July 2014, when he said that the Congress led United Progressive Alliance (UPA) government had promulgated 61 ordinances when it was in power between 2004 and 2014.

This comment has since then been used as an explanation to defend ordinances promulgated by the Narendra Modi government. If they could have done it, why can't we? Since coming to power the Modi government has promulgated nine ordinances. The latest set of ordinances to be issued included the ordinance to amend the land acquisition act and the ordinance to allow foreign direct investment in insurance companies to be increased to 49% of equity, from the current 26%. Another ordinance regularizing e-rickshaws in Delhi has also been issued.

The reason for the government issuing these ordinances lies in the fact that the opposition parties did not allow the Rajya Sabha to operate in the recent winter session. The Bhartiya Janata Party (BJP) has only 45 out of the 250 MPs that make up the Rajya Sabha. Hence, with the opposition ganging up together, there is no way that the BJP can get any legislation passed through the upper house of Parliament.

This has led to the BJP government promulgating ordinances. The article 123 of the constitution empowers the president to promulgate an ordinance if the Parliament is not in session, provided he is convinced that the situation demands so. What this also means is that ordinances should not be used to get around the opposition that the government might be facing in Parliament. If the government decides to do that, it is in a way putting to test the basic tenets of democracy.

A report in The Indian Express points out that the president Pranab Mukherjee asked the government "to explain the urgency behind the [land acquisition] ordinance." Three union ministers "put forth the government's viewpoint and persuaded the President about the need to move swiftly," the report points out.

--- Advertisement ---
When Little Known Companies Delivered Massive Returns...

Big opportunities in life don't come very often. But when they do come, they have tremendous potential to deliver big profits.

We discovered some such big opportunities in little known small cap companies. And investors who put their money in such stocks have probably made enough money for their next few generations to come!

Some of our own small cap picks in the past have delivered returns such as: 240% in Just 3 Years & 3 Months, 160% in 1 Years and 11 Months, and 171% in 2 Years and 6 month...

Now we want to introduce these companies to you and help you benefit from such rare but amazing opportunities too.

Just click here for full details about them...
---------------------------


The president has the power to return the ordinance to the government if he feels that the ordinance requires reconsideration. Nevertheless, if the government sends back the ordinance to him, he needs to promulgate it.

After promulgating the ordinance allowing the foreign direct investment in insurance companies to be increased to 49% of equity, the finance minister Arun Jaitley said: "The ordinance demonstrates the firm commitment and determination of this government to reform. 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."

Jaitley further added that "already there is too much delay, which is why there is urgency."

What Jaitley is not saying is that the BJP in its role as the principal opposition party until May 25, 2014, has also been responsible for this delay. In December 2013, Yashwant Sinha, a senior BJP leader and a former finance minister had said that the BJP was willing to support the insurance bill provided the "government shed its obstinate stand of providing 49 per cent FDI in the sector".

Further, as the principal opposition party in the previous Lok Sabha, BJP regularly stalled proceedings. It is now being paid back in the same coin in the Rajya Sabha. Hence, the party taking a moral high ground on the issue is rather comical. At the same time, the opposition parties not allowing the Rajya Sabha to function is also not democratic. A major function of the Parliament is to legislate and a Parliament that does not legislate is not fulfilling one of its basic purposes.

Another important point that needs to be made here is that justifying the promulgation of ordinances just because the UPA government did the same is a rather weak justification. The UPA government is not really a benchmark for anything when it comes to government or governance. The BJP can and needs to do substantially better than that. They shouldn't be setting their benchmarks so low.

Further, an ordinance is valid upto six weeks from the date on which the next session of the Parliament starts. After that it lapses. There is no upper limit to the number of times an ordinance can re-promulgated. But that is easier said than done. In this context, the case of DC Wadhwa versus the State of Bihar needs to be discussed here.

The Article 213 of the constitution allows the governor of a state to promulgate an ordinance provided the legislative assembly is not in session. The Bihar government abused this provision to the hilt. Between 1950 and 1966, the Bihar legislature passed 444 Acts. The number of ordinances promulgated during the period stood at 76. The situation then deteriorated and between 1967 and 1981, the number of Acts passed by the legislature were at 180, whereas the number of ordinances passed stood at 2014. As many as 50 ordinances were passed on a single day.

D C Wadhwa, who was the director of the Gokhale Institute of Politics and Economics in Pune, filed a writ petition on this in the Supreme Court. As Swaminathan Aiyar points out in a recent column in The Times of India: "in the Bihar Ordinance Raj case, the Supreme Court said that repeated ordinances were undesirable but not illegal." PRS Legislative Research points out that: "The Supreme Court argued that if Ordinance making was made a usual practice, creating an 'Ordinance raj' the courts could strike down re-promulgated Ordinances."

The point is that if the Modi government keeps promulgating and re-promulgating ordinances someone could easily challenge it in court. Hence, none of those constituents who are likely to benefit from an ordinance will act on it unless it is passed by both the houses of the Parliament. This means you won't see any foreign company increasing its stake in the insurance business that it runs in India to 49% any time soon.

The government does not have the numbers to push these laws through the Rajya Sabha. So what can it do? It can call for a joint session of Parliament and hope to pass these laws. But calling a joint session isn't exactly easy.

A joint session can be called if a bill is rejected either by the Lok Sabha or the Rajya Sabha. Given that the opposition parties haven't allowed the Rajya Sabha to function, no bill has been rejected. Secondly, a joint session can be called if the there are disagreements regarding amendments between the two houses. That hasn't happened either. Finally, more than six months need to have passed since the introduction of the bill in either house. If the bill still hasn't been passed then a joint session can be called.

While the third condition isn't fulfilled (for the lack of a better word) currently, this is precisely what the government seems to be aiming at. Nevertheless, it needs to be pointed out that only on three previous occasions a joint session of Parliament has been called (the Dowry Prohibition Bill, 1961, the Banking Service Commission (Repeal) Bill, 1978, and the Prevention of Terrorism Bill, 2002).

A joint session is not a workable solution to this deadlock. First and foremost because it delays legislation. A joint session of Parliament cannot be called overnight. Secondly, for a government which has time and again told the country that it has a huge reform agenda, it cannot be held to ransom by the opposition parties, every time it tries to introduce a new legislation. This is likely to be the case over the next few years, until the BJP state assemblies are able to elect enough MPs to the Rajya Sabha. Thirdly, the opposition parties can get together and try and stall a joint session of Parliament as well.

Given these reasons, it is time that prime minister Narendra Modi and his lieutenants drop the aggressive posture and try to engage the opposition parties. The aggression that suited them when they were in opposition will go against them now that they are in government. This is something that they need to think about.

Do you think the government should engage with the opposition parties in Rajya Sabha to ensure that it functions properly during the budget session? Post your comments or share your views in the Equitymaster Club.

Vivek Kaul is the Editor of the Diary and The Vivek Kaul Letter. Vivek is a writer who has worked at senior positions with the Daily News and Analysis (DNA) and The Economic Times, in the past. He is the author of the Easy Money trilogy. The latest book in the trilogy Easy Money: The Greatest Ponzi Scheme Ever and How It Is Set to Destroy the Global Financial System was published in March 2015. The books were bestsellers on Amazon. His writing has also appeared in The Times of India, The Hindu, The Hindu Business Line, Business World, Business Today, India Today, Business Standard, Forbes India, Deccan Chronicle, The Asian Age, Mutual Fund Insight, Wealth Insight, Swarajya, Bangalore Mirror among others.

Disclaimer: The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

Recent Articles

India Has 8.4 Crore More Workers in Agriculture Than is Economically Feasible December 12, 2017
A new NITI Aayog discussion paper points this out.
Using Deposits to Rescue Banks is a Bad Idea; It Needs to Be Nipped in the Bud December 11, 2017
The Financial Resolution and Deposit Insurance(FRDI) Bill proposes to do just this.
5 Agents of Change Investors Need to Know About Now December 11, 2017
The world is changing fast right now in ways that many investors might not easily recognize or want to admit. If you're not paying attention, you could be letting opportunities pass you by without even realizing it.
Why Economists Are Morons December 9, 2017
Why are most modern economists such nincompoops? The quick answer: because it pays.

Equitymaster requests your view! Post a comment on "Ordinance Raj should not be the way forward for Modi government". Click here!

13 Responses to "Ordinance Raj should not be the way forward for Modi government"

Balasubramanian R

Jan 7, 2015

Desperation on the part of government is understandable since it can not get bills cleared in Rajya Sabha. While BJP did similar in opposition, it never enjoyed such a clout being the untouchable among the political parties. Rajya Sabha is made of "elders" who are supposed to take non partisan view. But Congress has over the years packed RS with their supporters and results are for all to see

Like (3)

Ragini Ghanekar.

Jan 7, 2015

Stalling Loksabha or Rajyasabha for issues unrelated to the work of the houses should be legally prohibited. Those who stall are not doing any favour to the nation. They do not want our country to progress. They are interested in showing the government in power in bad light and then point out that they did not do any work. And on the back of that come back to power and line their pockets for the next five years. They should not be given allowances or salaries whatever they get. Some stringent rules should be there to stop this circus.

Like (3)

Sibert Collaco

Jan 6, 2015

What you rightly pointed out it is comical indeed to see what the BJP DID IN OPPOSITION IT IS GETTING IT BACK when it is in power. This is exactly what is wrong the last 3 years were wasted because of the opposition disrupting the parliament and now another year OR 2 will be wasted. FII will take their money some where else after seeing this MAKE IN INDIA COMEDY. Well written article.

Like (3)

G Sahu

Jan 6, 2015

A completely politically biased view. The author would do better in shedding the mask of an economics article writer and wear the hat of a biased political jurno like we've so many in the country

Like (3)

Anand Chaudhary

Jan 6, 2015

The article is good and to some extent does justice but also lets remember that equitymaster is not a journalism team hence referring to the political commentary of news media (which are going through their lowest credibility phase and fighting for survival by hook & crook) is not appropriate. what I was expecting is how it will impact the growth story for India.

Like (2)

VJSARMA

Jan 6, 2015

In the present circumstances, when the opposition is not co-operating the govt is left with no other way. The opposition wants to put pressure on the govt and make them compromise for their vested interests.The govt is not falling to their game plan. The earlier govt never had the intentions to get the GST passed and were blaming the BJP for that.

Like (2)

Ajay

Jan 6, 2015

Unfortunately, major opposition parties are regional state based parties. All these state parties are facing elections in the coming years and are facing a election fear from BJP. So they are not going to allow the Government to function smoothly at any cost. You can see how Lalu and Nitish came together! Do you expect magmata's TMC to support any bill? None of the party is interested in national interest it is all about their survival and elections. I am not saying BJP was and is perfect. They were also equally disrupting the parliament as opposition. But today in the world which is facing deflation and de-growth, we have already lost at least last one decade with corrupt UPA government and here is a man who intend to do something for the country in next 10years and let us give him a fair chance. If Ordinance is a route to push forward and it is within the constitution, why not that way. I support the present government for this.

Like (2)

CA Ram Awatar Garodia

Jan 6, 2015

Although not desirable but the Govt. had no option because of the disruptive tactics of the Opposition mainly the Congress. Though it cannot be denied that BJP had started these disruptive tactics but then there is a difference- At that time the Congress Govt. was not in majority and it was taking the support of this or that Party by some dubious means to get so many Bills passed and that is why it had no right to promulgate so many Ordinances at the fag end of their rule. However the BJP has come to power with absolute majority for the 1st time in last 30 years. Moreover the Congress has lost even the post of Leader of Opposition in the recently held elections. The Congress has some hold in the Rajya Sabha only because of their past elections which cannot be compared with the recent elections.
Morally speaking- the present rul should be according to the recent elections and the Congress OR the so called Oppositions parties - all of which have lost their prestige in the recent elections have got no right to held the nation to ransom in this way.
They should allow the recently elected Govt. to function as per their wishes.
Further the Rajya Sabha was not allowed to function on some fishy grounds- the BJP Or the Govt. was not in any way connected to the matter of conversion- a ground which was the only reason why the Rajya Sabha was not allowed to function normally.

Morally or even legally it cannot be allowed and the Govt. has every right to tackle this kind of tactics in the best way they think suitable.

Like (3)

Prof. Deepak Dhole

Jan 6, 2015

The present government should remember what they did while they were in opposition. Now they can not put all the onus on opposition parties.

BJP, when in opposition stalled so many parliament sessions and also the delay in GST is solely due to them and BJP state govts.

Like (3)

Subir Roy

Jan 6, 2015

Yes, co-ordination is the best way forward. While "UPA took the ordinance route" is not an argument, it is also no argument that "BJP also stalled parliament" either. We need to look at the "issues" leading to disruptions. 2G/Coal/CWG are not comparable to Sharadha/Sadhvi's silly comment.Asking for the PM's statement on every issue is also not a sign of maturity.Derek Obrien's gloating statement "let us see how THEY pass the Insurance Bill" is an shining example--as if this is only NDA's business!
What is most disgusting in recent disruptions is total lack of concern for the country's interest.
Therefore I find it difficult not to support Ordinances this time.Atleast these are not similar to the "garbage" Rahul Gandhi assigned to dustbin.

Like (2)
   Next>>
Equitymaster requests your view! Post a comment on "Ordinance Raj should not be the way forward for Modi government". Click here!