Prime Minister Narendra Modi had promised bold reforms in his election campaign. After a year in office, major reforms are still awaited and his government has not been able to get crucial legislation passed despite its overwhelming majority in the lower house.
In this session, the government has tried to pass four major bills — GST, Real Estate, Land Acquisition and Black Money — but has hit a roadblock again as smaller opposition parties have united in opposition. Here's what you need to know about these bills, which can change everything from your monthly budget to purchasing your first house.
1. Land Acquisition Bill: Acquiring land for new projects is such a cumbersome task that several foreign and domestic companies have put off investment plans for new factories. The new bill will amend certain sections of the bill passed by the previous UPA government — which did not solve the problem — by removing the clause that said land could be acquired only if 70 percent of land owners approved in case of public-private partnership projects. Private entities needed 80 percent consent to buy land. This obviously made it next to impossible to purchase large areas of land that are required to set up factories and industrial projects.
The Modi government amended it to say that the consent clause won't apply for five purposes, including industrial corridors, affordable housing and defence. However, the united opposition — who have the majority in the upper house — are insisting this clause be kept as it is. They are also adamant that if land remains unutilized for five years, it should be returned to the original owner. For businesses which plan projects in advance, such a clause can be an impediment to setting up infrastructure. Passage of this bill is crucial for foreign investment to begin. Read more about the controversy related to the bill here.
2. GST Bill: The Goods and Services Tax seeks to do away with the current system that imposes a bevy of federal and state taxes and replace it by an unified, single tax. This would be the most important reform in the Indian tax structure in the last couple of decades. Businesses support the move, but states are concerned their tax revenue will drop. The bill has been passed in the Lok Sabha, but faces more resistance in the Rajya Sabha. Implementation of its provisions will take its own time — around a year — to make sure systems are in place across the whole country. It is expected to raise India's GDP by as much as 2 percent. Read more about the bill here.
3. Real Estate Bill: This bill was first promulgated by the Congress-led UPA government, but the Modi government brought in amendments that opposition parties did not agree with. They allege that the new bill favours builders instead of home buyers. Parliamentary Affairs minister Venkaiah Naidu said he would consult all parties before trying to pass the bill. That might include referring it to a select committee, where the government is in a minority.
4. Black Money: While this is not going to transform a particular sector of the economy, it will make it possible to bring in stashes of unaccounted wealth which in turn can help the government spend more on public services. However, while the bill is likely to pass, bringing back money from countries will not be straightforward, particularly with nations with which India does not have a bilateral treaty. The bill's main provision is longer imprisonment for tax evaders for 10 years. However, this bill does not address the huge problem of black money circulating within India.