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Forecasts about the adverse impact of demonetisation on the economy have weakened the resolve of the Narendra Modi government to push the goods and services tax (GST) related Bills in the ongoing winter session of Parliament.
Finance Minister Arun Jaitley-chaired GST Council will meet on Friday, not just under the shadow of protests by the West Bengal and the Kerala governments — both of which are of the view that the time is not right for GST rollout because of the brunt that state finances have suffered after demonetisation — but also a “wait and watch policy” of the Congress-ruled state governments.
While the government has the option of ensuring the passage of these Bills as money Bills, there are voices within the government as well advising discretion on GST roll-out by April 1, 2017. They have argued the new tax regime could prove to be a double whammy for trade, which is already looking at a slump in the near term because of the currency purge.
Senior government strategists, however, were hopeful of officials reaching an agreement that would help the government convince Opposition parties.
But if consensus eludes, the government could blame the Opposition for defeating, yet again, its fight against corruption and black money.
Some in the government - if it is decided to defer introducing the GST related Bills in this session - don’t rule out ending the session before its scheduled closure on December 16. Parliament has been unable to transact any business, ever since the start of the session on November 16, and the Opposition parties showing little signs of relenting on their protests, the prospects of a smoother next week look dim.
The Congress parliamentary party is slated to meet on Friday morning to decide its strategy in the two Houses for the next week. A last-minute rapprochement with the government aside, the party’s disruption of the proceedings on Thursday indicated it might persevere with its protests.
In the Rajya Sabha, Prime Minister Modi made an appearance when the House convened at 2 pm, but Congress Members of Parliament continued to demand an apology from the PM for accusing the Opposition of supporting black money. Congress Vice-President Rahul Gandhi is likely to chair the meeting of the party's lawmakers, since party President Sonia Gandhi is unwell. In deciding its strategy, the Congress would factor the support of its Bihar allies, Janata Dal (United) and Rashtriya Janata Dal, to the note ban.
The Congress will also discuss its strategy on the Taxation Laws (Second Amendment) Bill, which the Lok Sabha passed on Tuesday and the government introduced in the Rajya Sabha on Wednesday. Even if the House does not discuss the ‘money Bill’, it will be deemed passed after 14 days. The Congress would weigh on whether it should let the House function, discuss the Bill and reject it, along with a united Opposition, to embarrass the government.
On GST, Congress insiders said they were awaiting the proceedings in the GST Council meeting on Friday. Congress-ruled state governments will oppose the four-tier tax structure and the highest upper limit of 28 per cent tax, against the 18 per cent it has demanded. The Congress Vice-President is unmoved in his view of an 18 per cent cap, having stated any percentage above this will adversely impact small traders and the aam aadmi.
As for the government, proroguing the House early has the added advantage of not waiting for 14 days to lapse before the Taxation Laws (Amendment) Bill is notified. It can then issue an Ordinance the following day, and will get a wider window to collect unaccounted money for the Pradhan Mantri Garib Kalyan Yojana.
