For far too long, the crucial GST Bill has been a victim of political partisanship. This must end at least now
Despite the BJP’s efforts, the Goods and Service Tax Bill is still a victim of politics. While the BJP blocked the Bill when the UPA was in power, it is now the Congress’s turn to do so. During a speech in Parliament, Prime Minister Narendra Modi said, “In a democracy, consensus is what gives the greatest strength.” It is exactly consensus that is delaying the GST Bill.
Why are the political parties, particularly the Congress, playing politics over a crucial BillIJ The BJP Government is short of a two-third majority to pass the Bill. In the Rajya Sabha, the ruling alliance has 63 seats, but needs 160 to pass the Bill. The current mobilisation includes National Democratic Alliance (63); Trinamool Congress (12); Bahujan Samaj Party (10); Janata Dal-United (12); Biju Janata Dal (six) and perhaps the All India Anna Dravida Munnetra Kazhagam (12). The Samajwadi Party too may come on board, but it has dawned on the Modi Government that the Bill cannot be passed without the support of the Congress.
That is why, since the beginning of the Winter Session, Mr Modi has been making conciliatory noises to the Congress. It is perhaps the Bihar setback, pending Bills in Parliament and the need to let Parliament function, that made Mr Modi melt down.
Besides showing a draft resolution on the Constitution debate, Mr Modi also referred to the speech of Congress president Sonia Gandhi and Congress leader Ghulam Nabi Azad. He also accepted the Congress’s three suggestions on GST.
Throughout the session, Mr Modi has been chanting the consensus mantra. He also invited Ms Gandhi and former Prime Minister Manmohan Singh for tea to resolve the GST issue. Ever since he assumed office, this was the first time that Mr Modi reached out to the Congress.
Communist Party of India (Marxist) general secretary Sitaram Yechury said, “We have no objections with their meeting, but they should have included everyone.”
The Government was enthused by the fact that Ms Gandhi appeared open to suggestions during the meeting while Mr Singh has been all for the GST. She reportedly demanded that tobacco and alcohol taxes be part a of the GST, as Congress-ruled States such as Kerala and Karnataka might stand to lose if these products were excluded from their taxation list.
The Congress has brought down its key amendments to three from eight, which Congress vice president Rahul Gandhi calls non-negotiable.
They are: (1) capping the rate of GST at less than 20 per cent, (2) scrapping a proposed State levy, and (3) creating an independent mechanism to resolve disputes on revenue sharing between States. These demands had not been part of the UPA-sponsored original Bill. It may be difficult for the Government to accept the additional one per cent tax, as this was specially introduced to compensate manufacturing States like Gujarat, Maharashtra and Tamil Nadu. While the Government may not agree to all demands, it can find a middle ground to resolve the issue.
While politics may have its own reasons, it is the economy which is getting affected. RBI Governor Raghuram Rajan recently observed that the passage of the GST Bill was crucial for the economy. What the political parties should understand is that delaying the legislation any further will hurt the economy in the long run. It is estimated that the GST could boost the economy by 2.5 per cent of the GDP, which will be a huge thing for a developing country.
The proposed GST is to be levied concurrently by both the Centre and the States. Many States are apprehensive that it will lead to loss of revenue. They want petroleum, alcohol and tobacco out of the GST as these form their major sources of revenue. The nine Congress Chief Ministers have also opposed the GST Bill in its present form. BJP Chief Ministers from Madhya Pradesh, Chhattisgarh and Gujarat are concerned that GST could erode their revenue base. But other consuming States like West Bengal, Odisha and Uttar Pradesh have been votaries of the GST. The left parties have given a dissent note to the Parliament committee, which examined the GST bill. The AIADMK hasdemanded keeping petroleum products and tobacco outside the GST regime.
Union Finance Minister Arun Jaitley is hopeful of a positive outcome. If the GST Bill doesn’t get passed in the Winter Session, the Government will miss the April roll-out date. That’ll be bad.