In the next few months, India will undertake what is perhaps the largest democratic exercise in the world – its next general election. Every election has a profound economic and social impact. Elections 2014 will be no different for India. On its result will depend the bold economic reforms and ambitious development programs India needs. Over the next few months, as election fever intensifies and the next government takes oath, MSLGROUP will roll out a content and insights program based on the elections and titled ‘Voice Of India 2014’. It will include infographics, blogs, editions of this newsletter dedicated to the elections, and much more. The December 2013 edition of MSLGROUP in India’s Public Affairs Round-up (PAR) newsletter is the first offering of this program. Respected public affairs veteran Bipul Kiran Singh analyses the impact of coalitions on the pace of reforms and our insights team analyses how the new Land Acquisition Bill will impact votes and industry.

1. MSLGROUP IN INDIA
Public Affairs Round-up
December 2013 | Vol 1 | Issue 4

2. 02
Content
Lead: Elections 2014: Light at the end of the
tunnel for reforms?
04
Policy round-up: Land Acquisition Bill 2013:
Electoral gambit or long overdue change?
10
Number view
14

3. 03
In the next few months, India will undertake
what is perhaps the largest democratic
exercise in the world – its next general
election.
With an estimated 72.5 crore (725 million)
voters, of which almost 15 crore (150 million)
*
are expected to vote for the first time , it’s a
mammoth undertaking that will make a nation
of 120 crore (1.2 billion) stop in its tracks. The
impending election has already consumed the
national debate; there seems to be little else
people are talking about.
Every election has a profound economic and
social impact. Elections 2014 will be no
different for India. On its result will depend the
bold economic reforms and ambitious
development programmes India needs.
Over the next few months, as election fever
intensifies and the next government takes
oath, MSLGROUP will roll out a content and
insights programme based on the elections
and titled ‘Voice Of India 2014’. It will include
infographics, blogs, editions of this newsletter,
and much more.
* As per Election Commission of India sources
Stay tuned.

4. 04
Elections 2014: Light at the
end of the tunnel for reforms?
Bipul Kiran Singh is a public affairs and strategic
communications adviser
Prime Minister Manmohan Singh often cites the compulsions of
coalition politics to ward off criticisms of his government, especially
those related to slow decision-making and policy paralysis. The
United Progressive Alliance’s (UPA’s) second innings is fast
approaching its end; the Winter Session of Parliament is the last
window for legislative work. India has already shifted gear to poll mode, and
businesses and investors seem to be waiting for the 2014 elections to impart a fresh
push to further open up the economy. With yet another coalition expected to come
to power, what are the prospects for reforms?
photo by firstsikh.com on pinterest

5. 05
It is interesting that Prime Minister Manmohan Singh holds coalitions
responsible for the gridlock in the reforms process. That coalition governments
need not necessarily resist reforms is borne out by experience. It was as finance
minister in PV Narasimha Rao’s minority government in 1991 that Singh
introduced reforms in India, gradually integrating it with the global economy.
Apprehensions on the fate of reforms after Rao demitted office in 1996 were
belied. Later regimes, all coalitions, continued with liberalisation despite the
fact that the Communist Party of India was part of two governments during
1996-1998 and supported the UPA (2004-2009). The Bharatiya Janata Party
(BJP), which ruled for six years (1998-2004) as leader of the National
Democratic Alliance (NDA), carried forward the reforms agenda,
notwithstanding its Swadeshi rhetoric.
Even after India’s fragmented polity has sustained reforms for more than two
decades, if Singh believes coalition politics is a key roadblock, then it is
necessary to examine what – if anything – has changed to merit this observation.
Was this unique to the UPA or will it impact the next government too?

6. 06
Regional politics
The rise of strong regional parties and the fragmentation of Indian polity in the 1980s are
well recognised. Regional parties have eroded the electoral base of national parties to the
extent that a Central Government without them is improbable. Together, they have accounted
for more than 40% of the seats in the Lok Sabha (the lower house of Parliament) since 1998.
Further, as national parties ceded ground in larger states to regional parties, the latter
acquired greater strength in the Rajya Sabha (the upper house of Parliament) to which
members are chosen by an electoral college comprising state legislatures. At present, the
Congress and the BJP have only 71 and 48 seats respectively in the 245-member Rajya
Sabha, and the UPA does not enjoy a majority in the House.
While the march of regional parties has been impressive, their vote share may already have
plateaued after peaking in the mid-1990s. “India’s regional parties have indeed already risen;
whether they can rise further is unclear,” writes Milan Vaishnav, an associate with the South
Asia Program at the Carnegie Endowment and a post-doctoral research fellow at the Center
for Global Development, in ‘The Complicated Rise of India’s Regional Parties’.
REGIONAL
POLITICS

7. 07
Crux of the matter
The prime reason for resistance to reforms appears to lie in the changing nature of reforms
itself. The focus initially was on promoting competition, enabling big business to thrive,
removing controls, allowing greater foreign direct investment (FDI), opening up sectors –
telecom, aviation, insurance, highways, ports – and providing a predictable environment
through regulators like the Telecom Regulatory Authority of India and the Insurance
Regulatory and Development Authority.
Even the early reforms faced opposition. Indian businesses, used to a protected environment,
were apprehensive. It was argued that multinational corporations were ages ahead in terms
of efficiencies, technology, marketing and financial muscle. However, these concerns did not
significantly move the regional parties to oppose reforms as big businesses were not
electorally important. Further, the government was savvy enough to steer the changes
through a give-and-take approach with Indian businesses.

8. 08
In contrast, many of the reforms now needed impact a wider set of electorally important and
well-entrenched interests.They strike at established systems of patronage and rent-seeking
that sustains the bond between political leaders and their followers. Take for example the
Foreign Universities Bill that would bring world-class educational institutions to India and
shrink the $10 billion (Rs 61,000 crore) foreign exchange outflow every year. But the Bill has
been vociferously opposed as ‘privatisation of higher education’, even though there are many
engineering, medicine and business schools already in the private sector. The fact is that
private educational institutions with capitation fees are a major source of patronage.
Similarly, public sector enterprises continue to drain public resources. Efforts to transform
them into efficient autonomous organisations continue to be checkmated by a strange
collusion of left-leaning parties, public sector staff and vested interests.
Another set of reforms that threatens the established patterns of a large section relates to
subsidised products such as petroleum, fertilisers and electricity.
It’s not that all policy changes faced resistance or that the UPA did not reform the system at
all. The Companies Bill, Pension Fund Regulatory and Development Bill, and the Banking
(Amendment) Bill have been passed. New banking licences are being issued and even FDI in
retail has been permitted after a year-long face-off. Most recently, the government is reported
to be working on a proposal to permit foreign universities to open their campuses in India
using the powers vested with it under the University Grants Commission Act.
However, when faced with strong resistance, Singh’s government has only sporadically shown
the tenacity or the dexterity to negotiate through it, as in the case of FDI in retail.
Reforms were a result of crisis, not consensus. So, even after the successes in the form of
higher growth and poverty alleviation, their acceptance is not a given. Witness the defeat of
the BJP-led NDA in 2004.
The economy’s performance and the corruption scandals related to allocation of resources
such as coal and spectrum have not helped. They have bolstered the perception that reforms
are merely efforts to promote the interests of powerful businesses, and they have slowed
decision-making.
The next government will face similar challenges: the arraying of electorally-significant
constituencies threatened by reforms and erosion in the support for them. Will it be able to
overcome them?
A few factors could help. One, at the start of its tenure, the government does not have to
worry about the electoral fallout of unpopular decisions. Two, as the UPA has started doing, it
could use administrative mechanisms to introduce reforms. Third, allies would be wary of
precipitating a mid-term election and that could give the new government some elbow room.

9. 09
Fourth, though it depends upon the political configuration that comes to power after the
elections, leaders more adept at negotiations may be at the helm.
The new government would be in a good position to push reforms, but whether it will have
the decisiveness to do so will depend upon the results. A coalition where one of the national
parties has more than 200 seats – a very unlikely outcome as per current assessments - will
bypass coalition arithmetic and have the elbow room to steer reforms. It will have the
advantage of political dexterity, which will be as critical in expanding that space to steer India
towards a new future.

10. 10
Policy round-up
Land Acquisition Bill 2013:
Electoral gambit or long
overdue change?
Land acquisition, a make or break issue for any development activity, was
governed by the Land Acquisition Act formulated by the British in 1894. This law,
however, was found wanting and led to cases like Singur in West Bengal, where
land-owners refused to part with their holding for the Tatas to build their
automobile factory.
But Singur was not an isolated case; land acquisition has been a hot-button
issue for a decade.
photo by apogeephoto.com on pinterest

11. 11
The new Land Acquisition Bill passed by Parliament during the Monsoon
Session has received the President’s assent and comes into effect from January
1, 2014. The Right to Fair Compensation and Transparency in Land Acquisition,
Rehabilitation and Resettlement Bill (2013) replaces the earlier law by
establishing new rules for compensation as well as resettlement and
rehabilitation.
This new law, perhaps the government’s most significant legislation after the
Food Security Bill in the run-up to the general elections, closely precedes the
Assembly elections in Madhya Pradesh, Rajasthan, Chhattisgarh and Delhi.
With this, the process of new legislation is well and truly on the fast track.
The law comes amid a tough political scenario for the United Progressive
Alliance (UPA), its image marred by numerous scams and many of its big guns
found guilty in corruption cases.
The UPA is also facing stiff competition from the Bharatiya Janata Party, which
has found a new posterboy in Narendra Modi.
It’s no wonder that the UPA is leaving no stone unturned to make a strong
electoral pitch.

12. 12
The concerns
There are concerns about the land acquisition law, however. Confederation of Indian
Industries President S Gopalakrishnan told the ‘Hindustan Times’: “...the bill compensates
different categories of affected families at par, not aligned to their losses.” Private developers
too remain unconvinced, saying it will make land acquisition tough and delay projects.
Many fear that the government’s efforts to boost investment and revive the industrial sector
by clearing projects worth billions will only dust because of the law.
As per the new law, developers will need the consent of 80% of those whose land is being
acquired for private projects and of 70% of landowners in the case of public-private
partnerships (PPPs). Besides, it provides for compensation that is four times the level now in
rural areas and twice that in urban areas. The new law will guide all land acquisitions by the
central or state governments, bringing in stricter norms and increasing landowners’
compensation significantly.
As per the new bill, the market value would be taken as the minimum value of the land,
specified as per the Indian Stamp Act of 1899. The government also plans to acquire land on
its own only for ‘public purposes’, a definition many private firms say is ambiguous.

13. 13
Measuring social impact
The bill includes the concept of ‘Social Impact Assessment’, through which the impact of
land acquisition on owners will be assessed by states. If the projects fall above the threshold
of social impact, consent would be required from 70% of land owners in case of PPPs and
80% of landowners in case of private projects. The clause has two loopholes: it does not
specify the parameters of the assessment and does not say what happens if the owners don’t
give consent.
Another bone of contention is the applicability of the resettlement and rehabilitation clause
to private land acquisition, which makes it mandatory for the acquirer to provide for the
resettlement of land owners in case of 50 acres for urban land and 100 acres in the case of
rural acquisition. The clause directs the acquirer to provide a compensation of Rs 5 lakh or a
job, if available, to the affected family (farm labourers, tenants, sharecroppers); subsistence
allowance of Rs 3,000 a month for a year; miscellaneous allowances of up to Rs 1.25 lakh per
family.
This will deal developers and, ultimately, customers a major financial hit. It might also
increase instances of unskilled or unfit labour being employed just to abide by the law.
Sanjay Dutt, executive managing director of South Asia, Cushman & Wakefield, told the
‘Economic Times’ that “the cost of land acquisition will surely go up for all projects,
irrespective of them being government or private or PPP projects as they will have to adhere
to the new norms”.
There are areas where clarity is required. While it gives land owners a stronger grip on their
holdings, the larger benefit of the law in the case of government acquisition cannot be
denied. But its implication on private acquisition is being questioned.

14. 14
Number view
72.5 14.93
crore crore
Number of voters
estimated by the
Election
Commission of
India for the 2014
Lok Sabha
elections
First-time voters,
according to
Census 2011 data,
representing
20.6% of total
voters. This
number will swell
to 16 crore by May
2014

15. 15
Gender break-up of
first-time voters
First-time voters:
Rural-urban spilt
Gender
Voters
(in crore)
%
Gender
Male
7.88
52.8
Male
5.48
2.39
Female
7.04
47.2
Female
4.90
2.15
Total
10.38
4.54
Sources: Election Commission of India & Census 2011
First-time voters:
Top 5 states
Rural
Urban
(in crore) (in crore)
Sources: Election Commission of India & Census 2011
Cost of conducting
polls
State
Voters
(in crore)
Year
Cost
(in Rs crore)
Uttar Pradesh
2.3
2014*
17,000*
Maharashtra
1.05
2009
10,000
Bihar
0.94
2004
4,500
West Bengal
0.9
1998
3,200
Andhra Pradesh
0.8
1996
2,200
Source: Draft electoral rolls
*Projected. Sources: Centre for Media Studies,
http://www.thesundayindian.com/en/story/the-hindsight-of-indianelections/22/36077/

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