Politics threatens GST schedule

It is almost certain that the April 1, 2016, deadline to roll out the goods and services tax (GST) will be missed. The government on Wednesday abandoned plans to hold an extended monsoon session of Parliament and recommended the President prorogue it, or officially call the session to an end.

The winter session, scheduled for the end of November, is the next window. However, that session seems set to be as fractious as the monsoon session amid what promises to be a bitterly contested election campaign in Bihar. This will inevitably affect the mood in Parliament and further derail the law-making schedule and, along with it, the GST Bill.
 

Initially, the government had planned to hold an extended monsoon session, sometime around August 25 and, in a swift three-day operation, get the Rajya Sabha to clear the GST Constitution amendment Bill. However, when it became apparent that the Congress wasn't ready to play ball and other fringe allies, including the All India Anna Dravida Munnetra Kazhagam, weren't on board, the matter was referred to the prime minister.

While Parliamentary Affairs Minister Venkaiah Naidu could scent the mood and made it clear that little would be achieved by an extended session because the Congress wasn't ready to cooperate, Finance Minister Arun Jaitley was of the view that the Congress should be made to expose itself. The matter was discussed at a meeting of the Cabinet Committee on Political Affairs.

Ultimately, Prime Minister Narendra Modi decided an extended session wasn't an option. On Wednesday morning, Jaitley was hopeful of the Upper House passing the legislation. "It is only a matter of time before GST is passed; almost all parties are supporting it," he said at an event organised by The Economist. He said once the Bill was approved by the Rajya Sabha, other steps would not take time, as the government was ready with supporting pieces of legislation, of which one had to be passed by the Centre and two by states. "Our draft pieces of legislation are almost ready. We will require a meeting of the empowered committee to clear those and they can be passed. We need the IT backbone, and those handling the IT infrastructure inform us they are in a position to put it in place by April 1, 2016, comfortably...we are keeping ourselves in readiness," Jaitley said at the event.

After a Cabinet meeting later in the day, however, the mood changed. Jaitley said the government had opted against an extended monsoon session "for the time being", as talks with the Congress didn't yield results. On whether the government would be able to stick to the deadline of April 1, 2016, for rolling out the GST, he said, "Your guess is as good as mine." The GST Bill, passed by the Lok Sabha in the Budget session, was stuck in a political logjam in the Rajya Sabha, where the ruling National Democratic Alliance does not have a majority.

Accusing the Congress of delaying the GST, the finance minister said, "The only veto is the right to disturb the Rajya Sabha so that the chairman can adjourn it." He added the Congress had raised certain demands that weren't there in the GST Bill prepared by the United Progressive Alliance (UPA) in 2011. Jaitley said it wasn't possible for the government to put a cap of 18 per cent on the GST rate in the Constitution amendment Bill, as suggested by the Congress. It was for the proposed GST council to decide the tax rates, he said, adding, "Suppose tomorrow states agree and alcohol comes under GST, should medicine and alcohol be taxed at the same rate? This wisdom has dawned on the Congress party only after it lost power," the minister said.

The Congress, however is jubilant. It plans to hold a 'victory rally' on September 20 to celebrate the reversal of the changes visualised in the land acquisition Bill. If the Bihar election results see Nitish Kumar's alliance (in which the Congress is a partner) coming to power in the state, the party is likely to be even more assertive in the coming winter session of Parliament.

Congress spokesperson C P Joshi rejected the charge that his party was being obstructionist and said while in Opposition, the Bharatiya Janata Party had stalled the GST, a UPA government initiative. He said as far as the GST was concerned, the Congress had made it clear that "three issues are non-negotiable --- a cap of 18 per cent on the GST rate, a disputes re-dressal mechanism and doing away with the one per cent additional tax".

After a Congress Working Committee meeting on Tuesday, Ghulam Nabi Azad, Congress leader and leader of Opposition in the Rajya Sabha, said, "What is the use of having a special session? Nothing has changed between the just concluded Parliament session and now." Without mincing words, he spelt out the two conditions without which the Congress would not budge on the GST - resignation of the Union external affairs minister and the chief ministers of Madhya Pradesh and Rajasthan, as well as the government addressing its concern on the GST Bill. "That demand remains," Azad asserted.

He added the "government was trying to give the impression that the Congress was stalling the economic reforms process but the truth is the changes we are demanding in the GST is for the benefit of industry".

Azad said the government had made "no attempt to have a face-to-face meeting with his party; Venkiah Naidu merely telephone" him. Following that, he told Naidu the Congress's stance was unchanged, implying the party would again disrupt the Upper House.