Understanding India’s political system—making decisions

In India, the decision-making process isn’t fast. It’s affected by the current assembly’s constitution. Coalition governments and fractured parliaments negatively affect the decision-making process because individual interests prevail over the public’s general interest. Slow decisions hurt a nation’s image. Foreign investors are reluctant to invest or establish businesses in a country that can’t make decisions quick enough.

A broad overview of India’s decision-making process will help you assess the current government. You’ll also understand what improvements need to be made.

India’s political system includes the following three branches:

1. executive
2. legislature
3. judiciary

The executive branch is made up of the president, the prime minister, and his council of ministers.

The legislative functions are carried out by the two houses:

1. Lok Sabha—the House of the People
2. Rajya Sabha—the Council of States

The judiciary branch includes the Supreme Court, 23 High Courts, and other subordinate and lower courts. India follows the British law. It’s suitable for the country because various amendments were made.

Passing a new bill into an act starts with its introduction in both houses in parliament. After the bill’s “first reading,” it’s put to a vote in the house. Then it’s published in the Official Gazette. The presiding officer of the house in question then refers the bill to a standing committee. The committee examines the bill and submits a report.

Then, there’s the first stage of the “second reading.” It’s a general discussion of the bill. It’s up to the members of the house to refer it to a select committee of the house or a joint committee of the two houses. The second stage involves a clause-by-clause consideration of the bill—as introduced or reported by the select or joint committee. After discussions, bill amendments are suggested.

The “third reading” is restricted to arguments either supporting or rejecting the bill—without referring to the details. For an ordinary bill, a simple majority of the house’s present members is enough to pass the bill. However, a bill that requires amendments to the Constitution of India requires a two-thirds majority of the present members from both the houses.

Once the bill is passed by one house, it’s sent to the other house for agreement. All of the stages, except the introduction of the bill, take place in that house as well. Then, a bill becomes an act of parliament.

You can see why a stable government is necessary for quick decision making in India. Coalition governments had a hard time getting important bills through parliament. Also, the current government’s expectations are high for quick decisions. The BJP was able to form a government without needing support from its alliance partners.

If the party practices what it promised, India’s exchange-traded funds (or ETFs)—the WisdomTree India Earnings Fund (EPI), the iShares MSCI India ETF (INDA), the iShares S&P India Nifty 50 Index Fund (INDY), the PowerShares India Portfolio (PIN), and the iPath MSCI India Index ETN (INP)—will benefit the most. They have broad-based exposure to Indian stocks.

In the next part of this series, we’ll discuss India’s economy and where it’s placed in the world.