New Delhi: The National Democratic Alliance (NDA) government on Wednesday managed to get key bills on coal and insurance through the Lok Sabha but will face an uphill battle in the Rajya Sabha, with the option of a joint sitting being its only hope to get the important reform measures enacted into a law.

The Lok Sabha on Wednesday passed the Insurance Laws (Amendment) Bill, 2015, that proposes to raise the foreign direct investment (FDI) cap in insurance to 49% from 26% ; and the Coal Mines (Special Provisions) Bill, 2015, that aims at making the process of issuing coal mine leases more transparent.

The bills must now be passed in the Rajya Sabha—where the NDA is in a minority—before it becomes law.

In a signal that the government will face a united opposition in the Rajya Sabha, the Congress and the communist parties opposed the bills in the Lok Sabha.

After the passage of the insurance laws (amendment) bill in the Lok Sabha, minister of state for finance Jayant Sinha said that if the bill is defeated in the Rajya Sabha, it would open an opportunity for the government to convene a joint session and get the bill passed.

The government promulgated an ordinance last year for allowing higher FDI in insurance after opposition parties stalled the passage of the bill in the Rajya Sabha. But the slew of ordinances, followed by the government’s attempt to withdraw some bills, including the insurance bill, from the Rajya Sabha, had sparked accusations by opposition parties that the government was trying to bypass the legislature.

Shashi Tharoor, Congress member of parliament, said the government has violated Article 107 of the constitution by bringing the bill in the Lok Sabha despite the fact that it was pending in the Rajya Sabha.

“The government’s contention is that the bill in the Rajya Sabha is Insurance Laws (Amendment) Bill 2014 while the bill tabled this week in the Lok Sabha is Insurance Laws (Amendment) Bill 2015. This shows that the National Democratic Alliance is a name-changing rather than a game-changing government," he said during the debate on the bill.

He added that the Congress supported higher FDI in insurance sector in principle but does not support the inclusion of FII (foreign institutional investor) investment in the overall 49% FDI cap.

Moving the bill for passage, Sinha said the higher FDI cap will help in improving insurance coverage in India.

The NDA government has a commanding majority in the 543-member Lok Sabha with 334 seats, but is in a minority in the 245-seat Rajya Sabha, where it has just 57 members.

The government is expected to call a joint sitting of both the houses so that the bill can become law.

A political analyst said a joint session was not a desirable option.

“Since the government does not have a majority in the Rajya Sabha, the only option left is to take the route of a joint session. This is not a right option as it shows the government’s inability to convince the opposition of what it is trying to achieve," said Bidyut Chakrabarty, a professor of political Science at Delhi University.

Addressing the Lok Sabha, Piyush Goyal, India’s minister for coal, power and new and renewable energy, stressed the “urgency" for passing the bill, as the expiry of the ordinance on 31 March could bring power production to a halt.

The coal ministry plans to allot 101 of 204 blocks, which were cancelled by the Supreme Court in September.

Of these, 42 blocks with a production capacity of 90 million tonnes are operational and have to allotted by 31 March.

The controversy over irregularities in the allotment of coal mines snowballed in 2012, with the Comptroller and Auditor General of India estimating in a report that the allocation of coal mines caused the national exchequer 1.86 trillion in notional losses over the years. The NDA government has already kicked off the process of allocating such coal blocks, marking the beginning of the government’s effort to clean up the coal mess through a mix of allocations and auctions.

It is crucial for the government to get production up and running in the cancelled coal mines. Coal India Ltd, the world’s largest coal producer, is struggling to meet rising demand for the fuel. While India’s power generation capacity grew 60% over the last five years, coal production expanded by about 6%.

“The bill has an enabling clause to facilitate mining for sale (or commercial mining) but to translate it into reality may take time. Before this is done, there has to be a policy and regulatory framework to make it a level playing field. The profits to be allowed in commercial mining have to take into account recent high premiums paid by companies in the ongoing auction process," said Sambitosh Mohapatra, a partner (power and utilities) at PricewaterhouseCoopers in India.

The Coal Mines (Special Provisions) Bill, 2015, states that a firm “may carry on coal mining operations in India, in any form either for own consumption, sale or for any other purpose in accordance with the prospecting license or mining lease, as the case may be".

A senior government official requesting anonymity said, “This is an enabling provision for commercial mining. This is an reiteration of the ordinance and was there earlier as well."

Goyal said that transparency was ensured through e-auctions, with states being consulted and views being exchanged with them, prior to taking decisions.

The first round of auctions saw aggressive bids from project developers, bolstering the national auditor’s claims that allocation of mines over the years had caused substantial losses to the national exchequer.

Goyal added that the proceeds of the auctions would go to the states and the bill proposes strong measures for rehabilitation and compensation for farmers who are displaced. In addition, illegal mining will be strictly punished.

The coal block auction proceeds would help develop the eastern parts of the country, with states such as Jharkhand and West Bengal standing to gain as much as 2.5 trillion and 1.5 trillion, respectively, over a period of 30 years.

While the prices of cement, steel and sponge iron may rise because of the aggressive bidding by companies, electricity tariffs won’t increase as mines for the sector are being auctioned through so-called reverse bidding, where the lowest bidder wins the auction.

Pretika Khanna and Monalisa contributed to this story.

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