The smooth functioning of Parliament could be in jeopardy with the Opposition parties, particularly the Congress and the Trinamul Congress, flexing their muscles on big-ticket reforms like the Insurance Bill. The Trinamul Congress has said it will oppose the government on all issues, obviously in retaliation for the CBI inquiry into the Saradha Ponzi scam and the Centre’s inquiry into the shelter being given to terrorists from Bangladesh.
The government has a majority in the Lok Sabha and may be able to get some bills — those which cannot be blocked in the Rajya Sabha — passed. But the Opposition can disrupt the House and not let it proceed with its business. The situation is tenuous and the government does not seem to have done enough to bolster its credibility. Finance minister Arun Jaitley’s explanation on Wednesday of the government’s action, or rather inaction, on getting back even a single rupee of black money kept abroad, almost parroted the Congress’ position when it was in power and for which it was mocked ruthlessly by the BJP.
The government has also not shown any seriousness in even tackling areas where black money is being generated. Mr Jaitley mentioned real estate as one generator and the black money portion is now 60 per cent in any transaction. The stock market is another area where, according to reliable sources, black money is made white and white money is turned into black at a cost of 7-12 per cent. There are special CAs who operate these companies, and if Mr Jaitley, who is scheduled to visit the BSE on Saturday, is really serious, he can look into this issue and convince himself of its veracity.
Whilst the drama from both sides of the House will be played out, among the first casualties will be stock markets. The markets were anyway due for a correction as they ran on the hope factor pre- and post-May 16, ahead of the realities on the ground. But the correction could be steeper if the reforms are delayed further. The markets, which ride on sentiment and perception, are already nervous because of Sebi’s action in curbing the free run enjoyed by dubious investors through participatory notes (P-Notes). October saw investments through P-Notes touch a staggering Rs 2.65 lakh crore. P-Note holders are reportedly unwinding their investments. There are several other issues of concern to stock market investors, namely lack of industrial growth, lack of investment in manufacturing, high interest rates, etc., and if the reforms are derailed, the market indices will go down by at least 10 per cent.
