Government pushes for GST but gets little comfort

Congress continues to oppose BJP version of signature tax reform

In a move that suggested that the government was firm in its resolve to push ahead with the Goods and Services Tax GST, Parliamentary Affairs minister Venkiah Naidu today stated that it could reconvene the Monsoon session of Parliament to get crucial legislations like the GST passed. For the first time it even formally reached out to the Opposition Congress with Naidu meeting Leader of the Congress in the Lok Sabha Mallikarjun Kharge.

Naidu went so far as to state that the government has an "open mind" on amendments to reform measures. However, despite the optics, there appears to be no change in the stance of the Congress with Kharge making it clear that the concerns raised by the Congress would need to be addressed. The government today also attempted to isolate the Congress alleging that barring the Congress, all other Opposition parties were on board in "national interest".

The bill being a constitutional amendment needs to be passed separately in each house with a two -thirds majority; the government lacks the numbers in the Rajya Sabha.

That the "current financial situation" was weighing on the government's mind was apparent when Naidu speaking of the urgency of economic reforms measures said "This is even more important in the backdrop of the current financial situation across the globe."

Even as the government attempted to pressurize the Opposition, mainly the Congress and the Left parties, Congress insiders made it clear there was no change in their stated position- they wanted removal of the one percent additional tax, a dispute redressal authority and local bodies to be also entitled to compensation apart from state governments. There was no reason, as one leader explained, that the Congress will let the Modi government run away with the credit of passing as major an economic reform as the GST, when it was the BJP itself which had opposed the GST and stalled it during the UPA years.

Government sources indicated that even if a Special session was to be called, they were apprehensive of Congress resorting to the same tactics which led to a wash out of the recently concluded Parliament session - namely disruptions. A senior government functionary said, "We have to ensure that a special session is convened when the numbers are there, now we feel we are very close to getting the numbers but we want to make sure that the numbers are there. The question has to be whether once the numbers are there, the Congress will still disrupt the parliament."

Responding to media queries on whether the Government is agreeable to making amendments in the constitutional amendment bill to the GST, Naidu said, "Amendments cannot be approved outside (Parliament). Even if you approve outside, they do not have any relevance. They have to be approved inside. The government will be going to Parliament with an open mind. Once the session is called, we will be able to sort out these issues."

Naidu maintained that the government and Finance Minister Arun Jaitely had taken into consideration most of the concerns expressed by different states -- manufacturing states, and non-manufacturing states. "He consulted almost the whole spectrum of political opinion, was agreeable on arriving at a broad consensus," he said.

Despite it being an open secret that the top leadership of the Congress, party President Sonia Gandhi and Vice President Rahul Gandhi were behind the tough stand being taken by the party despite the bill being "Congress' baby", the government has not interacted with them. Naidu today said that he is following the norms by meeting leaders of different parties of both Houses but has no problem in meeting either Sonia Gandhi or Rahul.

In the absence of a firm commitment from the Congress that the party will indeed support the constitutional amendment in a reconvened Monsoon session or a special session, the government and the party would try de-escalating its stress on GST as its big bang economic reform for 2015-16.

The government has found itself in an identical situation on the GST and the land acquisition Bill. A sizeable section in the BJP believes the government invested too much political capital on the GST, just as it did on the land Bill and needlessly magnified the two Bills in the public perception. Both the government and the party have already taken steps to take the focus away from the land Bill, and could do the same with the GST.

The government is set to change the 'terms of reference' of its economic reforms agenda by emphasizing in the coming days that it plans to take several other steps to ensure economic reforms, and that the country had recorded good GDP growth over the past decade even in the absence of the GST regime.