 "GST")
The outcome of the Assembly election results in four states and one Union Territory has brought hope anew on passage of the Goods and Services Tax (GST) legislation in the Rajya Sabha during the coming session of Parliament.
The Lok Sabha, where the government has a comfortable majority, has already cleared it. In the Rajya Sabha, it is in a minority. And, this is a Constitutional amendment, needing at least a two-third majority, not a simple one.
Till date, the ruling Bharatiya Janata Party (BJP) has been unable to get the Congress party to withdraw its opposition on key clauses. Now, with the big poll blows to the Congress and gains for the BJP, beside re-election of 56 members to the Rajya Sabha, the possibility that the government will be able to push the Bill has gone up, feel some.
How, ask many brokerage houses. “In theory, the BJP can already count on up to 68 per cent of the seats in the House, if it successfully reaches out to all the other small parties. In practice, this has proved difficult,” says a note by HSBC Global Research.
GST aims to simplify the current indirect tax regime by bringing all central and state levies under a single head, with uniform tax rates across goods and services. Passage is also likely to be sentiment booster for the stock market.
Thursday’s election results have also thrown in another trend. Regional parties have consolidated their positions in their respective states, even as the Congress has continued to lose. “The (results) underscore the importance of regional parties,” say analysts at Kotak Institutional Equities. The HSBC report agrees. “BJP will still have to reach out to smaller parties to ensure passage of upcoming bills, such as the GST.”
A third of Rajya Sabha seats are re-elected every two years. This time, 56 are up for election. “The Congress party faces a bigger challenge – while it holds 14 of these 56 seats, 13 are in states it does not control. This raises the chances that some of these seats will slip out of its grasp, increasing the number of seats held by smaller parties, with which the BJP can forge alliances,” says the HSBC report.
Say analysts at Edelweiss. “Our sense is that (the ruling) NDA will gain four or five seats, taking its tally to 70-71, whereas Congress stands to lose five or six, reducing its tally to 58-59 from 64.”
That's far from enough, as a two-thirds majority is needed. “Overall,” say analysts at Nomura, “the state election results will have no meaningful impact on the BJP’s seat tally in the House until 2019. Passage of GST will remain just as hard (or easy) as it was before these elections.”
