Here are parliamentary hurdles India must overcome

Land acquisition bill still on fire.

According to DBS, despite indications that a common stance had been arrived on the land acquisition bill ahead of the parliamentary session, corruption allegations and verbal crossfire between the political factions might delay the approval in the current sitting.

In addition to the high borrowing costs and sluggish demand conditions, timely acquisition of land/ other resources and lack of clarity in legal costs involved, have also hampered investment interests.

Here's more from DBS:

A failure to pass this bill could further impede a recovery in the capex cycle and validates our expectations of a delayed revival in the latter, only by FY14/15.

Separately, the government’s flagship food security bill is also lined up for this session. Although only INR 100bn was set aside at the budget for this program, this is only a faction of the INR 830bn cumulative cost of the program, according to the National Advisory council estimates.

The bill’s passage could push up the overall subsidy bill if the budgetary allotments are revisited in mid-term. Thereby, while on one hand, the pullback in the international crude prices will narrow the scale of price adjustments in the domestic retail prices to match market costs, the actual food-related subsidy requirements could lead the bill closer to 2.0%-2.1% of GDP (vs targeted 1.8%).

There are also expectations that the Finance ministry might push for an increase in foreign direct investment (FDI) ceilings for the insurance and pension sectors, alongside following-up with the GST and direct tax code bills.

These will mark a follow-up to the reform process that was kick started in September last year, though given recent resistance, we are sceptical on the progress to raise the FDI thresholds.

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The budget session is due to run till 10 May and while the domestic financial markets are presently tracking the economic benefits from the lower commodity prices, an unproductive parliamentary session could revive policy concerns and re-exert downward pressure on the rupee and stock markets.