No party wins majority: What does a coalition government mean for economic reforms in India?

Sub: Polity

Sec: Executive

Context:

The NDA has returned to power for a historic third straight term at the Centre, but the BJP itself has fallen short of the majority mark of 272.

Key Highlights:

Since 1991, when India was forced to open up its economy and give up on the planned economy model, all governments were coalitions of the sort where even the lead party was quite far from the majority mark of 272.
The process can be aptly described in terms of Montek Singh Ahluwalia (former Deputy Chairman of the erstwhile Planning Commission) as creating a strong consensus for weak reforms.

What is a Coalition Government?

A coalition government, or coalition cabinet, is a government where political parties enter a power-sharing arrangement of the executive.
Coalition governments usually occur when no single party has achieved an absolute majority after an election.
A party not having a majority is common under proportional representation, but not in nations with majoritarian electoral systems.
The first time that Independent India saw parties stitching up a coalition government at the Centre was in 1977, right after the Emergency.
The first successful coalition government in India which completed a whole five-year term was the Bharatiya Janata Party (BJP)-led National Democratic Alliance with Atal Bihari Vajpayee as Prime Minister from 1999 to 2004.
About the earlier regimes of Modi government:
Modi’s first two terms saw several reforms such as the introduction of the Goods and Services Tax (GST) and the creation of the Insolvency and Bankruptcy Code.
The Modi government failed to bring about reform of land acquisition.
During the second term, the Modi government could not convince farmers about the farm reforms and was forced to repeal them.

What were the notable reforms brought by the previous coalition governments?

P V Narasimha Rao government:

The biggest example is the whole host of reforms during the P V Narasimha Rao-led government, which was essentially a minority government.
It discarded centralized planning and opened the Indian economy to global completion by removing the license-permit raj.
The country also became a member of the World Trade Organisation.

Deve Gowda government:

The Minister P Chidambaram came out with what is still referred to as the “dream budget”.
It placed faith in the Indian taxpayers and cut tax rates — both personal income tax, corporate taxes, and customs duties.

Atal Bihari Vajpayee-led National Democratic Alliance (NDA) government:

India framed the Fiscal Responsibility & Budget Management (FRBM) law for fiscal rectitude, and limited the government’s ability to borrow within prudential limits.
The Vajpayee-led coalition further advanced the push towards disinvestment of loss-making Public Sector Undertakings (PSUs) and focused on boosting rural infrastructure and connectivity through the PM Gram Sadak Yojana.
The very first NDA also brought in the Information Technology Act, in 2000, that laid the foundation for the bustling e-commerce giant that India is today.

Manmohan Singh-led United Progressive Alliance (UPA):

One of the initiatives in the educational sector is Sarva Shiksha Abhiyan to initiate the Right to Education Act.
Right to Information Act, which boosted transparency in India’s democracy, and the Right to Food, which ensured that no Indian should go hungry.
The UPA brought in the Mahatma Gandhi National Rural Employment Guarantee Act (MG-NREGA), which provided minimum employment to the rural poor.