Having failed to get Rajya Sabha approval for bills on auctioning coal blocks and raising foreign investment in insurance to 49% of equity, the government has issued ordinances to give both the force of law. Finance minister Jaitley says this should convince investors that parliamentary chaos won't thwart economic reforms.
Alas, foreign investors are aghast at the government's revealed weakness. Ordinances are supposed to be emergency measures when Parliament is not in session. They have to be validated by the next legislative session, or else they lapse. Nobody can argue that raising FDI in insurance, however desirable, is an emergency measure that cannot wait. The ordinance is not evidence of a strong government's resolve but of a weak government's incapacity. There is no indication of how or when this will be overcome.
The coal ordinance issued before the winter session of Parliament has lapsed. Re-issuing it is in one limited sense urgent: new auctions have already been scheduled in coming weeks. But a government that can't get Parliament's approval and repeatedly re-issues ordinances is clearly misusing the Constitution to rule by decree.
This makes a mockery of democracy. Once, people sneered at Bihar for its ordinance raj. The Bihar assembly was so disorderly that it never allowed legislation to be passed, and so the state government kept issuing ordinances. These lapsed after every assembly session, and were then reissued, ad infinitum. Sadly, Parliament is now approaching a similar condition.
When Narendra Modi won a clear victory in the general election, many critics claimed he would be dictatorial. Actually, he is now looking as weak as sundry Bihar chief ministers. The institutions of India provide so many checks and balances that authoritarianism is well nigh impossible. The greater danger is that improper use of the checks and balances will result in governments incapable of functioning properly.
After Modi's big Lok Sabha victory, analysts noted that although his party had only 45 seats out of 250 in the Rajya Sabha, he and his allies would have a majority in a joint session of the two Houses. The Constitution provides that if a Bill is passed by one House but rejected by the other, a joint session can be called to settle the issue.
But the problem in the latest session was not that the government lacked a majority in the Rajya Sabha, but that unruly opposition parties stalled its functioning totally. The first step towards a joint session is to get beaten in the Rajya Sabha, and the government was unable to even get defeated!
There's absolutely no guarantee that similar disruptions will not stall legislation session after session, a la Bihar. The BJP cannot take the moral high ground since it resorted to similar tactics when it was in the opposition.
In the 1950s and 1960s, the political class generally frowned on rowdy disruptions, and expelled disrupters from the House. The sergeant at arms would physically pull disrupters out of the House. But since then all parties have so routinely become disrupters that none can dream of having members pulled out of the House physically. MPs have in effect created a Right to Disrupt that trumps other conventions. Even if Modi one day gets a majority in both Houses, a rowdy minority can still hobble him. This reveals deep, serious institutional rot.
No foreign investor will invest 49% in insurance till both Houses of Parliament clear the legislation. Investors are increasingly apprehensive that Indian institutions no longer provide stable decisions or secure property rights.
Past investors in telecom and coal blocks have been burned badly. India stands exposed as a country where neither contracts nor government assurances mean much. The courts are so incensed about possible corruption that they have cancelled coal blocks and telecom licences that seemed entirely legal when given, with no compensation for those that have invested millions and not been found guilty of corruption. The government was found guilty of wrongful coal allocations, but suffered no penalty. Instead, mine operators not found guilty of anything had to pay huge fines to the guilty government!
As a nation, India is losing its way. An implicit party consensus facilitates unending disruptions that make legislation impossible. Ordinances are used when there is no emergency or urgency, and their re-issue after lapsing means they are becoming a substitute for parliamentary approval. Even if a law is passed, it can too often be stayed or reversed by a public interest suit. The courts are willing to levy massive penalties on and strip the property rights of companies that have not been found guilty of anything. This is a deep institutional mess. It's no way for a respectable democracy to function.