To isolate Congress on GST, govt plans to reach out to parties

Nitish Kumar says he is against GST cap, after meeting finance minister

The government is readying to isolate the Congress in the Rajya Sabha on the Compensatory Afforestation Fund Management and Planning Authority (CAMPA) amendment Bill and, if need be, even the Goods and Services Tax (GST) constitutional amendment Bill.

The government is mulling a three-pronged strategy to spur Congress to support the GST.

A senior government minister on Tuesday said negotiations with the Congress on GST were on but now it would reach out to all other parties by holding an all-party meeting. The Congress, averse to such a meeting, wants the government to negotiate with the principal opposition party in the Rajya Sabha, where the GST Bill is pending. Finance Minister Arun Jaitley and senior Congress leader and deputy leader of the Opposition in the Rajya Sabha, Anand Sharma, met briefly on Tuesday.

Second, the government is ready for a vote on CAMPA as a pointer to the Congress that it could employ a similar strategy on GST. The Congress has moved several amendments on CAMPA. The government is unwilling to accommodate most of these. Government strategists are convinced that they have the support of all regional parties. The Finance Minister Jaitley told a BJP parliamentary party meeting on Tuesday that once the Bill was passed, the states would gain nearly Rs 42,000 crore for afforestation. He said Congress’ opposition meant release of funds couldn't be done before the monsoon. "The Congress will be extremely unpopular in states if it continues to oppose this Bill," a government source said.

The CAMPA Bill was moved in the Rajya Sabha at the fag end of the proceedings on Tuesday amid protests by the Congress members. Congress members said there was no consensus on it and the government should achieve that before the Bill is moved in the House.

Third, the finance minister will reach out to more regional parties. He will be travelling to Hyderabad this weekend and is slated to meet Telugu Desam Party (TDP) and Telangana Rashtra Samiti (TRS) leaders. The TDP has six members in the Rajya Sabha, while TRS has three. Janata Dal (United) chief and Bihar CM Nitish Kumar met Jaitley on Tuesday.

According to sources, Kumar told the finance minister he supported the government position that the tax rate, whether 18 per cent or any other, should not be mentioned in the Constitution amendment Bill and that it should be left to the GST Council to determine. This is a line distinct from that of the Congress, Kumar's ally in Bihar.

Talking to the media after his meeting with Jaitley, Kumar said any cap on the GST rate would be discriminatory on states as it would take away their powers to generate revenue. Bihar's tax revenue had sharply plummeted after Kumar's government imposed prohibition in April.

The Congress wants the overall rate to be capped at 18 per cent and scrapping of an additional one per cent tax as compensation for manufacturing states, apprehensive about losing revenue.