India's National Magazine
From the publishers of THE HINDU
Vol. 15 :: No. 26 :: Dec. 19, 1998 - Jan. 01, 1999
POLITICS
A house divided
The strong opposition to bills of far-reaching implications, from within and outside the BJP-led coalition, indicates that the ongoing winter session of Parliament is unlikely to depart from the established pattern of default.
SUKUMAR MURALIDHARAN
in New Delhi
A RANCOROUS dispute within the ruling coalition was virtually foretold when the Union Cabinet decided on November 23 to open up the insurance industry to overseas private sector participation. It is likely that in arriving at this decision, the Cabinet also thought up some crisis management measures to deal with the inevitable backlash. Uncertainties of the political context made this a less-than-secure strategy of fire-fighting. There was no way the section of the Bharatiya Janata Party which was party to the decision on insurance liberalisation could have foreseen the multitude of sources from which turbulence could originate. Circumstances were irretrievably changed with the BJP's ignominious electoral rout in November which provided a new impetus to dissidence within the ranks. The proposed changes in the insurance sector then became one among many issues agitating the aggrieved attention of the party's followers.
BJP president Kushabhau Thakre fired the first salvo the day after Prime Minister Atal Behari Vajpayee, seemingly in defiance of the party's ideological mentors, expanded his Cabinet. There had been no prior consultation within the party on the insurance industry reforms, complained Thakre. It was a mystery, he said, how the Union Cabinet could have taken a tack which was contrary to all that the party had stood for.
Pramod Mahajan, the freshly inducted Minister for Information and Broadcasting, confessed to a similar sense of bewilderment. It had always been the party's posture that insurance should be opened up to the domestic private sector alone. This was consistent with the BJP's position while in Opposition that domestic liberalisation should precede (and perhaps even preclude) the entry of overseas players into the strategic financial sectors.
Among others to join the chorus of dissent were K.R. Malkani, senior parliamentarian, Arun Shourie, newly inducted Rajya Sabha member, Uma Bharati, Minister of State for Human Resource Development. Murli Manohar Joshi, Human Resource Development Minister, maintained an enigmatic silence. He perhaps did not need to speak, since his viewpoint was already eloquently clear from his record of participation in the activities of the Swadeshi Jagran Manch.
AJIT KUMAR / AP
Trinamul
Congress leader and Member of Parliament Mamata Banerjee speaks to the press
after leaving the Lok Sabha in New Delhi on December 11.
The BJP's parliamentary leadership clearly had no need for fresh controversy. Having made the decision on insurance liberalisation as a signal to the international financial community, whose favours are seen as vital in a context of global economic insecurity, there was no room for retreat either. At a meeting of the top leadership on December 8, Home Minister L.K. Advani made a forceful plea for "flexibility" in thinking on policy issues. This had been the distinctive feature of the Congress(I)'s approach to governance, he argued. There was hence no need for the BJP to remain wedded to the ideas of the past, which would only impede a creative response to the exigencies of governance.
Finance Minister Yashwant Sinha was concurrently assuring the Rajya Sabha that there would be no retraction of his Government's announced policy line. In party conclaves, he reportedly admitted that he had erred in not building a consensus within the party prior to the final decision on insurance liberalisation.
Vajpayee lent his authority to the demands of liberalisation. As a leader under siege from his own party, he was inclined to view the decision on insurance as a test case of his autonomy from the conflicting pulls and pressures of his disparate alliance. In his appeal to party colleagues, Vajpayee put his personal prestige on the line, warning that any hint of prolonged turbulence over a crucial policy issue would deal a fatal blow to the Government's credibility.
The stock markets, which have been privileged as a unique indicator of economic health in the era of globalisation, were clearly waiting for a signal from the Government. For the first time in a decade, the month of November passed without any activity in the primary segment of the stock markets. This situation capped a six-month period of declining activity, when the only signs of life came from the bonds and stock floatations of public financial institutions. Manufacturing enterprises are in headlong flight from the primary market and are desperately looking for signs that fresh funds will flow in to underpin any entry in future. Such a signal could presumably have come from the liberalisation of insurance, which is why the Government tends to view it as a crucial component of its efforts to revive the economy.
SANDEEP SAXENA
A protest
march by insurance sector employees against the Insurance Regulatory Authority
Bill in New Delhi on December 2.
The leadership meeting on December 8 clearly formulated the range of choices available to the BJP: either to do nothing as the economy wound down into a recessionary spiral or to set its face decisively against the accepted economic orthodoxy of the past. The fraught circumstances that prevailed would have ruled out any manner of debate on the fundamentals of the argument, that the stock market, rather than direct investments in languishing sectors, hold the key to economic revival. After first having sounded the note of dissent, Kushabhau Thakre led the party in its ideological retreat. Seemingly mollified by the Government's contrition over its failure to initiate prior consultations, Thakre threw his weight behind the liberalisation of insurance.
Reciprocal concessions, if any, were slight. The Government maintained the equity ceiling for foreign investors at 26 per cent, with another 14 per cent permitted for non-resident Indians. No portion of insurance premia would be allowed to be invested overseas. And the Insurance Regulatory Authority would be vested with wide-ranging powers to ensure the security of insurance funds.
Other elements of the BJP's wider political family were far from satisfied. The Bharatiya Mazdoor Sangh, the BJP-affiliated trade union, insisted that it would continue with its campaign against insurance liberalisation, if necessary through protests and demonstrations. And although the top leadership of the Rashtriya Swayamsevak Sangh remained non-committal, its sense of resentment is nowhere near assuaged.
THE crisis over the Insurance Regulatory Authority (IRA) Bill having momentarily passed, the BJP-led Government turned its attention to the issue of gender-based reservation in legislative institutions - a piece of legislation that has become the focus of bitter recrimination between those who insist on a sub-category of reservations for women from backward sections and those who believe there is no cause for such a special dispensation at this stage. Curiously, the day the IRA Bill was expected to be introduced in Parliament, the Government chose to open another front by introducing the Women's Reservation Bill. Expectedly, there was little reasoned argument or debate. Members from the Rashtriya Loktantrik Morcha (RLM) alliance stormed the well of the Lok Sabha and scuffled with combative members of Mamata Banerjee's Trinamul Congress, forcing repeated adjournments, which returned the issue to where it was before the session of Parliament opened.
Further acrimony, though perhaps not on the same scale, is expected when the Government introduces the bill to amend the Indian Patents Act. The RLM has already made known its opposition to this piece of legislation, as has the Left. The BJP itself remains divided on the issue, perhaps as deeply as on the insurance sector move - which may necessitate another phase of agonising within the ranks. If the time spent in the process of building support for ill-conceived and hastily-executed legislative business is factored in, there seems little likelihood that this session of Parliament will depart from the established pattern of default. Other vital bills, including parliamentary ratification for the ordinances on the Central Vigilance Commission and the Prasar Bharati Corporation, seem, on current reckoning, to have very slim chances of passage.
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