One of independent India’s biggest economic reforms, the goods and services tax, may miss its rollout deadline next year as an acrimonious face-off between the government and Opposition threatens to wash out Parliament’s monsoon session, sources said on Friday.
The key reform bill that aims to create a unified national tax market has a slim chance of making its April 1, 2016 deadline if the government fails to pass a pending Constitution amendment bill during the ongoing session because the states may not have enough time to approve it.
A Constitutional amendment has to be passed by a majority in both Houses of Parliament with two-thirds of the members voting – a condition likely to be fulfilled only in the winter session, usually held in December.
Once it passes Parliament, it has to be approved in the same manner by a majority of the 29 states but the GST’s road is made tougher by looming state elections next year. By March, assemblies in five states would be dissolved in the run up to the polls, making it difficult for the necessary 15 states to pass the bill between January and March, especially because assemblies are expected to take a longer time to discuss the legislation.
“After the pending bill is cleared, it has to be ratified in a majority of the state assemblies. Only then the main GST bill can be passed in Parliament. If the Constitution amendment bill is passed in the winter session, it is impossible to meet the deadline,” said a senior Union minister.
Parliamentary affairs sources said the 122nd Constitution amendment bill for the GST may be tabled only in the last week of the session.
The bill – which aims to dramatically alter the country’s tax administration by replacing a string of central and local levies such as excise and octroi with a single tax – is a key constituent of the government’s reform agenda that has run into rough weather in Parliament.
Led by the Congress, the Opposition has repeatedly disrupted both Houses, demanding the resignation of top BJP leaders over the Vyapam and Lalit Modi controversies but the NDA has indicated it will yield no ground, creating a stalemate.
“So what if this GST bill misses a deadline? During the UPA rule, we missed two deadlines in 2010 and 2012. For us, the GST stands for Good and Simple Tax. Arun Jaitley’s GST bill is neither good, nor simple,” Congress strategist Jairam Ramesh told HT.
Congress leaders also pointed out the BJP had washed out two Parliament sessions in 2010 and 2011 over coal scam and the 2G scandal when it was in the opposition.
The GST is key to Prime Minister Narendra Modi’s promise of injecting investment and boost ease of doing business in the country because a single tax would come as a boon for industry, which has to often deal with multiple levies within the country.
Another crucial piece of reform legislation that may have to wait longer is the real estate bill, which intends to create a regulator in the fast developing sector, as the Congress is in no mood to allow its passage.
A bill to curb atrocities against SCs and STs may also not get the Opposition’s support though Congress president Sonia Gandhi had demanded early clearance of the bill in the past.
The government has slated 11 bills for passage during the session but the Congress is confident it would be able to stall proceedings till the end of the session. During the past few days, the Congress has even tried to reach out to regional rivals like the Biju Janata Dal, AIADMK and Trinamool Congress to build a broader front on the issue of corruption in the NDA administration.
“Govt's responsibility to let House function. If govt acts on what we r suggesting, Parliament will function without any hindrance,” CPI(M)’s Sitaram Yechury tweeted.