Governance Model under Coalitions

Source-This post on Governance Model under Coalitions has been created based on the article “Governance challenges for a coalition” published in “Business Standard” on 5 June 2024.

UPSC Syllabus–GS Paper-2– Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.

Context- The article discusses the governance model that should be adopted by the new regime at the Centre, given the electoral results indicating a possible return of the coalition era. It questions whether a coalition government can deliver better governance results than the previous government, which held a single-party majority.

What economic reforms have been undertaken by the previous government?

1) Inflation targeting monetary policy regime with RBI

2) Insolvency and Bankruptcy Code

3) Goods and Services Tax (GST)

4) Real estate regulatory system

5) Improving digital public infrastructure\

Read more– Five Years of GST: Achievements, Challenges and Way Ahead

What reforms are still pending?

1) Progress on key economic reforms like rationalizing GST rates, privatizing non-strategic PSUs, and reforming land, labour, and farm laws was limited.

2) Despite the passage of four labor codes, the Center did not garner support from all states.

What are the prospects of economic reforms under coalition?

1) There are lesser chances of implementing long-pending economic reforms because the ruling party in its election manifesto has been mostly silent on land and farm sector reforms.

2) Given the government’s significant reliance on its coalition partners for its survival, it may not go ahead with reform initiatives.

3) There is a lack of clarity on renewing efforts to bring trade unions and states on board for implementing labour law reforms.

4) Throughout history, coalition administrations have traditionally advocated for reforms mainly in times of economic crisis. However, that’s not the situation now

What should be the way forward?

1) Governance Reforms –

A) Reviving institutions like the Industrial Management Pool (IMP) could help break the dominance of the Indian Administrative Service (IAS) and encourage the appointment of domain experts and technocrats in key ministries.

B) The new government should form a committee with representatives from all states to develop a plan. Involving states in both shaping the new governance model and maintaining investment momentum would be beneficial.

2) Cooperative Federalism– A coalition structure should encourage adoption of a positive approach towards cooperative federalism and try to minimize the strain in Centre-state relations witnessed during the previous decade.

3) Consensus Building-There is a need to build consensus among coalition partners for initiating crucial governance reforms.

A performance-oriented team of ministers with political resolve and economic intent could pursue these reforms.

Question for practice

What are the prospects of economic reforms under coalition? What steps can be taken to build consensus and advance reforms?