New Delhi:
After the ignominy of being forced to suspend its reforms in retail, the government suffered more injury today - a parliamentary committee has rejected three major bills that were meant to prove the UPA has not been reduced to a government incapable of strident reform.
The Standing Committee on Finance, which is headed by the BJP's Yashwant Sinha, has turned down the Insurance Amendment Bill, a bill on Banking reforms and the National Identification Authority of India Bill 2010 which births the ambitious "aadhar" or UID scheme that's being led by Nandan Nilekani. A fourth bill on pensions has already been withdrawn by the government because of overwhelming opposition from other political parties.
The government is not obliged to obey the Standing Committee. But its attempt to introduce reform in retail despite a lack of consensus taught it the hard way that it does not have the numbers to push through legislation or policy that its allies find contentious.
The Insurance (Amendment) Bill suggests raising the limit on foreign direct investment or FDI in the insurance sector from 26 to 49 per cent; the Prime Minister said earlier this year that the insurance industry needs more capital than what domestic industry can provide. This Bill was once seen as a key expression of the UPA's intent to introduce major reforms in the financial sector. Similarly, the Banking Laws (Amendment) Bill sought to increase the cap on FDI from 26% to 49%.
Today's rejection of the bills suggests what India Inc has been dreading - that when it comes to key legislation, the government will remain painfully pregnant, unable to deliver the economic reforms that the Prime Minister has been heralded for in the past.
The government has already withdrawn Pension Fund Regulatory and Development Authority Bill aimed to attract foreign capital and allow private fund managers to manage the savings of private and public sector workers. Investing in the stock market would be permissible. The Left has fought this on the grounds that it will put hard-earned savings of millions at risk. The BJP wanted the bill to specify a cap of 26% on FDI.
The starring role played by Mr Nilekani, the former main man at Infosys, had made the UID or Unique Identity scheme a high-profile one. The PM's vision, entrusted to Mr Nilekani, was for every Indian to receive a card bearing a 12-digit ID which will be stored in a central database and linked to the individual's fingerprints and other biometric data. But the Standing Committee on Finance has rejected the National Identification Authority of India Bill 2010, diagnosing it as directionless. Among the standing committee's concerns are whether the UIADI is legally empowered to collect biometric data, and the dangers of it being misused.
Last month, Home Minister P Chidambaram objected on grounds of security to the biometric data being collected by UIADAI officials. Other ministers in the cabinet are believed to have objected to the thousands of crores that Mr Nilekani wanted sanctioned for the scheme.