Narendra Modi Realizes Duties of PMO and Law Making

The Prime Minister of India seems to have finally come to terms with how bad the situation in the banking sector
is. His extended presence in New Delhi also seems to have galvanised Parliamentary activity. The penny seems to have
finally dropped on Modi that he needs to spend more time in India rather than being the External Affairs Minister of India.

In the second half of the Budget Session, most experts in New Delhi as well as an eminent member of the Opposition are of the opinion that the Bankruptcy Code is likely to be passed in the second half of the Budget Session (although several experts told us that they question the effectiveness of the code in helping creditors get even a part of their money back). The appointment of the former Comptroller & Auditor General of India as the chairman of the Bank Boards Bureau (BBB) is a move that can potentially expedite the clean-up of the bad loan problem and the lack of professionalism that plagues the banking sector. That being said, policymakers say that there is still a question mark on how much autonomy he will be given by the Finance Ministry.

The passage of the GST bill now appears likely in the Monsoon session of the Parliament. Of the three conditions imposed by the Congress (namely fixing the GST rate at 18%, non-imposition of the 1% production tax and formalisation of the dispute resolution mechanism); differences on two conditions seem to have been ironed-out with only the first condition now being an issue of contention. Even on the first condition – a GST rate of 18% – a prominent member of the Opposition told us that the solution could be worked out pretty quickly (in which case the GST bill could go through in the current session of Parliament).

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