Key bills on insurance, bankruptcy may face delays as BJP gets diminished

New Delhi: The new government may reconsider some of the pending bills and other proposed legislations, as the ruling Bharatiya Janata Party (BJP) has failed to secure a clear mandate, and its dependence on allies has increased due to a reduction in its Lok Sabha seats from 303 to 239 (as of 7.05 pm) in the 2024 elections.

The BJP will now have to depend on its allies such as the Telugu Desam Party (TDP) and the Janata Dal (United), among others, to build a broader consensus on several important issues.

This may delay the passage of key bills, including the insurance laws amendment, IBC amendment bill, Digital India Act 2023, Pesticides Management Bill, Seeds Bill, and Drugs, Medical Devices, and Cosmetics Bill 2023, among others.

Some of the bills in line for introduction faced stricter scrutiny in parliament that got delayed for more than two years.

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The insurance sector may have to wait further for major reforms. The insurance amendment bill, considered a pathbreaking legislation, is unlikely to be passed in its original form as the government may delay its introduction in the upcoming session of parliament to be commenced after the government formation.

Facing a relook

Besides, key bills like the National Financial Information Registry (NFIR) Bill, which seeks to provide a 360-degree information system that will be readily available to lending institutions to quicken the process and cost of credit, would now face a relook before being passed by parliament.

The bills that may face delays also include amendments to the Insurance Act, 1938, and the IRDAI Act to allow composite licensing for insurers, amendments to the Insolvency and Bankruptcy Code (IBC) to include cross-border and group insolvency mechanisms, and changes in rules under the Companies Act, 2013 to bolster the National Company Law Tribunal (NCLT) and finalize a stricter governance framework for large unlisted firms.

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The lack of a full majority for the BJP will impact the finalization of rules for the Digital Personal Data Protection Act (DPDPA) and amendments to the IT rules, which were expected within the first 100 days of the new government's formation at the federal level.

Additionally, an amendment to the IT Rules 2020, to address emerging issues related to AI, particularly deepfakes, is unlikely until the Digital India Act is finalized.

Not seeing eye-to-eye 

The Digital India Act, intended to replace the Information Technology Act, will focus on cybersecurity, AI, privacy, and other relevant areas. But the opposition and the incumbent government do not see eye-to-eye on many of these issues.

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The Electricity (Amendment) Bill, 2022, introduced in August 2022, is pending in both houses of parliament. The legislation may not be tabled in the same format due to a much stronger opposition now in parliament.

“The immediate impact of the Lok Sabha poll verdict will be that the government will have to reprioritize its schemes from capital-intensive to labour-intensive projects. Funds will likely be diverted from national highways and rail freight corridors to labour-intensive sectors such as rural job guarantee schemes, etc," said Arun Kumar, a former professor at JNU.

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“Since the organized sector has sufficient capital, funding will be redirected to the unorganized sector to boost demand. Legislation will now focus on supporting the unorganized sector,” he said, adding that the BJP will face pressure from its allies as well as the opposition, which has emerged stronger after the polls.

Leaning on allies

"The recent reversal in the BJP's fortunes will compel the party to lean more heavily on its allies, a scenario not commonly observed in right-leaning governments. This shift implies that, in addition to their pro-business policies, the government will be pressured to address critical issues such as unemployment and inflation. In the long run, this could be beneficial for the country," said Utkarsh Sinha, managing director of Bexley Advisors, a boutique investment bank.

“Things will not be the same as they were when the BJP had over 300 MPs and was leading the government from the front. Bills were passed without debate in the past, and ally partners had no role in decision-making,” political analyst Shivesh Garg said.

“In the given situation, the ally partners will be crucial in determining policy when the BJP is far below the magic number of 272. In order to advance politically, they will push their own agendas while taking into account their own electorate," Garg said.

According to the Election Commission of India website, as of 7.05 pm, BJP had won 95 seats and leading in 144 constituencies, while the Congress had won 41 seats and was leading in 58.

Leslie D'Monte also contributed to this story.