From some time in most of the political and economical debates one term that we can notice very frequently is ’Policy Paralysis’. Government is working hard to get rid of this word, and this picture is changing from last few months when government is kicking in many new regulations and policy measures. Winter session of the Parliament was relatively eventful one, with respect to the last two sessions of Parliament. Even first week was a total waste of time in adjournments.
Government introduced some important policy measures in this session, these are :
Foreign Direct Investment in Retail
Government finally succeeded in getting FDI in retail sector approved by the parliament after a lot of debate and discussions. Now there is no use of debating whether FDI in retail is going to help our people or not, the discussion should be on the implementation part. One thing is true, we need huge investment in the Retail Sector and Agricultural Infrastructure Sector. We can get that investment from government, private or foreign investors but we cannot rely completely on FDI in retail for taking care of the Agricultural Back End Infrastructural development. The profit that is going to farmers will be a function of the type of model which we are going to choose, because there are both stories in the world where farmers are benefited and ruined by FDI in retail. Government has done well on the name of Federalism by leaving the call to state whether they want it or not, but if we go according to authorities that is projecting FDI a big tool for Infrastructure development than we also have to make arrangements for the state which are not implementing this system to reduce inequalities between states.
Money Laundering Amendment Bill
According to experts this is a very welcome step and even that can be seen when this bill was passed in Rajyasabha by a voice vote. The Prevention of Money Laundering Act, 2002 (PMLA) was enacted in 2003 and brought into force on 1st July 2005 to prevent money laundering . As economy of the country is witnessing new complexities there is a urgent need for change in existing bill to meet new challenges. This regulation will help in checking money laundering, funding of terrorist activities and will act an important tool for eradicating black money generation problem. Major changes in the original bill are made in the form of Amendments and insertions in the definition. It was pointed out by FATF that concealment, possession, acquisition and use of the proceeds of crime are not criminalized by PMLA, but now with this amendment they are criminalized. So It actually enlarged the definition of money laundering and in a broad sense it is one of the tool among many tools which help in eradicating the black money problem.
Banking Laws Amendment bill, 2011
As it is a very known fact that India is largely an unbanked country, and the condition is worse in the rural areas. Government is talking about AADHAR system and Cash transfer system, these measures need a strong financial intermediation for their smooth functioning, as they are going to rely on the banking system for that. According to this legislation new licenses can be issued to the private corporates and forums with certain conditions. After removing the proposal of banks indulging in future trading the amendment bill was passed. Existing jurisdiction of Reserve Bank of India and Competition commission of India is maintained over the banks. RBI strictly wanted to the amendment in force before any forum apply for banking licenses for its regulatory work. In a major change bill seeks to increase voting rights of investors in private banks to 26% from existing 10%. I think now there will be more competition in the banking sector by allowing more banks in the market and that will help in financial inclusion. By this new legislation even LIC can open a bank with a new license. As a safety measure many constrained are arranged in the bill for the new players, and will be regulated by RBI which is known as a good regulator.
So overall this session was relatively active one, but still there are many sectors where more is required such as land acquisition, education reform, Infrastructure etc. We hope, some more steps will be there to boost the economy in next session. So that our country will be able to pass safely from current Infrastructure Cliff.