The real story in the new bills will be the institutional one.
Who says big changes are not possible in India? The last session of Parliament was,arguably,one of the most consequential sessions in its history. The enormity of the bills passed is truly staggering: food security,land acquisition,street vendors rights,pensions,manual scavenging. There are two puzzles. The first is the newfound consensus across political parties. How did the opposition suddenly decide to be statesman-like? Did fear of Modi actually make the BJPs parliamentary leadership suddenly find its statesman-like niche? The second puzzle is this. Such far-reaching legislative accomplishments should have been greeted with triumph. But in one narrative,quite popular in the press,the politicians,driven by a combination of cognitive disability and venal electoral calculations,have decided to stymie Indias growth prospects forever. The only thing worse than Parliament not functioning is Parliament functioning. The triumph of democratic consensus is overshadowed by the cloud of economic foreboding.
A second possibility is that the gap is not actually that stark. There is genuine anger at government for failures on corruption and the abdication of basic functions. We are now projecting that anger on everything. This anger can be politically productive as a pressure tactic. But it can also cloud fine distinctions. In calmer moments,we could be persuaded that while legislators may make mistakes,they are not intentionally paving only roads to economic hell. They are smart and are doing a complicated balancing act. They will preserve their rents,but compatible with that is doing things you may disagree with,but which are not patently irrational. In the case of the land acquisition bill,for example,what rankles with industry is not so much the inherent unworkability of the bill. Rather,it is two other things. The first is timing. The government has worked hard to make life difficult for industry on so many fronts that adjusting to this large-scale change seems so much more difficult. The second is the framing. When ministers blame industrialisation for everything,from Naxalism to inequality,you wonder whether they will ever have the commitment to use the opportunities for growth.
A third possibility is that an honest assessment of the consequences of these bills should be one word: depends. People will wait and watch. Large-scale changes have multiple possible outcomes,depending on implementation and context. My friends Sanjoy Chakravorty and Rajiv Kumar have apocalyptic predictions about the price consequences of this bill. That is one possible outcome. But whether it comes to pass will depend on a whole range of other things: the political economy of circle rates,the gap between the acquisition market and the open market,whether the spread of infrastructure gives buyers more options etc. The price story is tricky to assess because the current high prices are also distorted consequences of a bad regulatory system. What price discovery will be like in a new regulatory system is a bit of an open question. It will probably be higher. But industry seems somewhat less worried about this than economists. Maybe it is because the small guys are priced out already and could not care less,and the big guys think they can handle anything. Or maybe because they realise that this is indeed work in progress.
So the gap between politicians and others may not be so much over the substance as over how much government can be trusted. This kind of difference is not easily settled ex-ante with arguments: it is just as easy to imagine government messing up perfectly good pieces of legislation as it is to imagine it doing creative things with bad ones. The real story in many of these bills,particularly land acquisition,is going to be the institutional one. The one thing the bill will not do is diminish corruption; it may,in fact,increase it since even more political mediation will be required to get anything done. The promise of completing social impact assessment in six months seems hugely optimistic,but whether the bill does a good balancing act or brings the economy to a grinding halt depends on how credible this mechanism will be. There is a real risk here that,as always,the more capable states will actually run with the bill,be proactive,create industrial parks,show more skill at political negotiation,while the laggards may have the worst of all worlds.
The land bill also has potentially transformative implications for panchayats. Now that the stakes in gram sabha decisions have been raised,what new structure of conflicts will we see? Old political oligarchies manipulating outcomes? Or a heightened political consciousness? Again,not a question with an ex-ante answer. Incidentally,something analogous is going to be an issue with the much-needed street vendors bill. The importance of this bill for protecting livelihoods,the vitality of cities,access to small business cannot be overestimated. But it also has an intriguing institutional mechanism: the local vendors committee. This is going to be hugely interesting in terms of the local conflicts it generates.
A new governance pattern is empowering new stakeholders. There is no escaping this fact. We simply do not know how this will all turn out. Cutting deals with a few bureaucrats and venal politicians is a different cup of tea from conducting negotiation with large numbers of stakeholders. We are entering uncharted territory,where new legislative frameworks will create new kinds of conflict. And the issue is whether we can manage them. And politicians dent our confidence by being Janus-faced. They dangle intriguing new changes on the one hand. On the other hand,they can go back to the communal politics being played out in UP. (Just try to imagine a gram sabha meeting on economic development in Muzaffarnagar right now.) It is their duality that makes us worry about even the good they do. The problem may not be in the bills,it is in the credibility of those likely to implement them.
The writer is president,Centre for Policy Research,Delhi,and a contributing editor for The Indian Express express@expressindia.com
