The monsoon session of Parliament likely to disappoint on the reform agenda: Credit Suisse

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● The Monsoon session of Parliament is expected to run mid-July to
end-Aug. At a time when reforms need a kick-start, in the absence
of which the economy is slowing, we think this session should be
an opportunity for the government to pass some important bills.
● The spate of scandals hitting headlines since Nov-10 has affected
the legislative atmosphere, and law-making has slowed visibly.
We note, however, that even before these scandals broke out, the
pace of law-making was among the slowest ever seen (Figure 1):
UPA-I had the lowest number of bills ever; UPA-II could go lower.
● The last two sessions were the worst two “normal” sessions ever,
in our opinion. Quality matters more than quantity, but most of the
important bills seem stuck too. Some investors expected lawmaking
to pick-up after the 13-May state election results but it did
not happen.
● Recent events reduce the probability of the monsoon session
achieving much. In addition to the noise on corruption, the LokPal
bill, etc, we now have leaders of the two main parties arguing over
the police action last weekend at protests in Delhi. Those
expecting progress on major bills (Figure 3) may be disappointed.
A lot expected from the Monsoon session
The Monsoon session of Parliament is expected to start mid-July and
end by August. In a typical year, the Indian Parliament meets three
times: the budget session, the monsoon session, and then the winter
session. In addition there are special sessions of the Parliament called
for specific purposes. Monsoon sessions have accounted for ~30% of
the days that Parliament has worked, and for 30% of bills ever passed.


The spate of scandals that have hit headlines since November 2010have affected the legislative atmosphere, and law-making has slowed
visibly. We note, however, that even before these scandals broke out
the pace of law-making was among the slowest ever seen (Figure 1).
UPA, in its first stint 2004-09, had set the record for the lowest number
of bills passed. At the current pace, the UPA in this stint could set a
new low. The last two sessions have seen a total of seven bills
passed – among the worst two “normal” sessions ever. The number of
days the Parliament meets has been falling over the decades (Figure
2), though the number of days matter less than number of bills passed.

A worrying run-up to the monsoon session
At a time when the government needs to kick-start reforms in the
absence of which the Indian economy is slowing, the monsoon
session was being perceived as an opportunity for the government to
seize the initiative and push through some important bills. Indeed,
some investors even expected this to happen after the 13 May state
election results.
Worryingly, events over the past week, in our view, significantly
reduce the probability of meaningful legislative activity happening in
the monsoon session. In addition to the regular noise over drafting of
the LokPal bill (corruption watchdog) with civil society representatives,
repercussions over several important DMK leaders being in jail and
the media routinely exposing new scams by the week, we now have
leaders of the two principal political parties (the ruling Congress and
the Opposition BJP) indulging in name-calling over police action last
weekend at Baba Ramdev’s protest in New Delhi. Add to these
continuing investigations by the CBI and proceedings of the Joint
Parliamentary Committee (JPC) on the Telecom scam, and we think
chances of important bills passing this year seem remote.