Hard Bargains and the Art of Policy making

Context: The ongoing farmers’ agitation epitomises the need for detailed discussions and consultations in the law making process.

Significance of Parliamentary process in Law-making Process: with the case of the passage of Goods and Services Tax (GST) Act in consideration

• Builds consensus:
  • GST, as a constitutional amendment, required not just the support of two­- thirds of members of each House of Parliament, but also ratification by half the state legislatures.
  • It garnered support across party lines and State governments, as value chains for goods and services run across States.
• Strengthens discussions: An empowered group of State Finance Ministers was set up in 2007 as a key forum for discussing and negotiating the new tax.
  • This body was chaired by a State Finance Minister from a party in the Opposition at the Centre.
• Generates feedback: through various consultative mechanisms and Parliamentary committees
  • e.g. the Select Committee of Rajya Sabha in 2015 recommended dropping of interstate changes to make India a single market and guaranteed compensation to states for five years.
• Sustains confidence: Deliberated law-making process retains the confidence of states in the instances of compromise:
  • e.g. There were compromises made, such as multiplicity of rates and generous compensation for States, but these helped get the new tax off the ground.

Issues with the process of formulating the new farm laws: as compared to the passage of GST

• Executive bypassing: The laws were passed through executive decision (ordinance).
• Dilution of consultative mechanisms: The Bills to replace the ordinance were introduced in Lok Sabha and passed within three days with­ out being referred to a Standing Committee.
• Absence of pro-active engagement with stakeholders: Since agriculture is a state subject, they are threatened due to the loss of taxes due to the absence of proactive engagement.

Conclusion: Parliament needs to perform its function as a deliberative body that enables compromises to assuage concerns.