Best Chance for GST Bill to see the Light of the Day - June 23, 2016

GST is believed to be the most comprehensive tax Reform in our country since 1947 and is believed to be a game changer for India and our Make in India initiative. The Latest round of nomination and election to Rajya Sabha has made the balance of numbers tilt in NDA’s favour albeit very slightly. The BJP’s numbers have finally crossed the 50 mark and now stand at 55. Congress has 60 members but the gap between the 2 has now been reduced from 15 during last Budget to just 5 now. More importantly NDA together accounts for 74 MP’s whereas UPA has been reduced to 71.

The regional parties together have a strength of 89 MP’s in the Rajya Sabha. Barring AIADMK which has a strength of 12 in the Upper House all others have primarily agreed to support the GST in the monsoon session. Some of the UPA allies have also promised to support the Bill. It is important to note that the Bill would require a 2/3rd Majority in the Upper House for it to take effect. Furthermore it has to be passed in the monsoon session itself if we wish to make it applicable from 1st April 2017. 

Even though the numbers look in favour of the NDA it would be in the larger national interest to have even the Congress party on board. Its demand for 18% cap for taxes is unreasonable to say the least as it would be imprudent to mention numbers in the Bill as any change in the same would need Constitutional Amendment which would not be feasible.

If the Congress fears that the passage of the Bill might be advantage NDA in 2019, that isn’t quite true as experiments from other countries would prove. It would take at least 2 years for the results to show and more interestingly no country which has seen the passage of GST has seen its Central Government repeat except Australia whose then Government in power benefitted as the Bill was implemented within the first 2 years of government formation. So it also makes political sense for the Congress Leadership to support the Bill now. The Congress party should keep its obstructionist tactics aside and let National interests and Pragmatism prevail. Various Congress Chief Ministers are in favour of the bill. The developments from here on till the beginning of the Monsoon Session will give us a better picture of where the fate of the Bill shall hang.

- Prof. Manish S Kelkar

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