Lokpal Bill May Overshadow Economic Reforms in Parliament Session

The next parliament session will focus on passing the controversial Lokpal Bill, overshadowing calls for a renewed push on economic reforms seen as urgent as growth slows and inflation stays stubbornly high.

The legislation to create an ombudsman's office, or Lokpal, to investigate and prosecute suspected government corruption is seen as crucial for the government of Prime Minister Manmohan Singh as parliament reconvenes for a month-long session on Tuesday.

If the bill is delayed or watered-down, the Congress party-led coalition risks renewed national protests organized by the legislation's architect, social activist Anna Hazare, who led a hunger strike in August to protest a string of corruption scandals in the past year.

The prime minister has assured us of a strong Lokpal Bill and we sincerely hope that we get it in this session, said Arvind Kejriwal, an aide to Hazare, on Friday. If the parliament fails to pass the one it promised us, then there will be another agitation, he warned.

It is still unclear whether the bill will give the ombudsman powers to investigate the prime minister, judges or lower grade civil servants, key demands of activists.

Bills to expand food subsidies for the poor and share the profits of mining firms with local communities may also be introduced during the session, as part of a populist push to shore up support ahead of polls due by May 2012 in Uttar Pradesh, a political weather vane.

I think the Lokpal Bill will likely be a focus, but there's still a lot of discussion and uncertainty on whether the bill can be brought for consideration and passage, said Seema Desai, an Asia analyst at the Eurasia Group, in an email. I think that the worst of the policy paralysis has lifted in the sense that the government has partly regained its footing, she added.

OPPOSITION

The main opposition Bharatiya Janata Party (BJP) will attack the government on slowing growth and inflation, which is close to 10 percent despite 13 interest rate rises by the Reserve Bank of India (RBI) since March last year. The BJP may also try to once again disrupt the session to stall any votes, a party source said.

The details have yet to be decided, but naturally if the government does not agree to our demands, then there may be disruption in the house, a senior party leader who declined to be named told Reuters.

Much-anticipated economic reforms - such as rationalising the messy tax system, liberalising the insurance sector or giving farmers a better deal when their land is acquired for industrial projects -- are not slated for passage.

A bill that could open Indian pension funds to foreign direct investors for the first time however has made major progress, although it could still get bogged down in wrangling between Congress and the BJP.

I wouldn't be surprised if very little work gets done, said political analyst Paranjoy Guha Thakurta.

M.R. Madhavan of PRS Legislative Research said there appeared to be a logjam in parliament even on smaller, relatively uncontentious bills such as letting chartered accountant institutes form Limited Liability Partnerships.

But another analyst said the Congress party has looked stronger in recent months and the political opposition and anti-corruption movement divided, creating guarded optimism.

We've seen the government try to pick up pieces and actually push through certain things, said Abheek Barua, chief economist at HDFC Bank. There is a chronic deficit in governance, policymaking, which maybe we have gotten used to. But within that, I think things have certainly have become a little better over the last few months, he added.