With the second half of the Budget session starting from Monday set to be stormy due to the Uttarakhand developments and Ishrat Jahan issue, the biggest challenge before the NDA government would be to at least get the Bankruptcy Bill passed before the session ends on May 13, if it is not possible to convince Congress to also clear the Goods and Service Tax (GST) Bill.
The Insolvency and Bankruptcy Code, 2015, introduced by Finance Minister Arun Jaitley in the Lok Sabha on December 21, 2015, which has been referred to a joint committee of Parliament, is a legislation that will have an immediate impact on improving the business environment in the country.
The unified framework to be created under the law for resolving insolvency and bankruptcy matters is expected to act as a key element in the government’s plan for tackling the sticky bad debt problem.
It will make the exit easier for companies that cannot run profitably, and insure that workers and secured creditors get their dues, ahead of tax recovery, in case of winding up of a firm.
There is no point in delaying the passage of this legislation and considering there is no GST-like opposition to the Bill, the government should be able to get the revised Bill (based on the recommendations of the joint committee expected within the next week) passed without much of a problem.
The chances of the GST Bill passage, however, which appeared better after Congress supported the Real Estate Bill in the Rajya Sabha in the first half of the session, again appears to be receding with the party still not giving any clear signal on supporting it despite the government willing to accommodate its demands including that of finding ways to keep the GST rate below 18% without mentioning this in the legislation itself.
As in the absence of a majority in the Rajya Sabha, the NDA is dependent on the Congress for passing the GST Bill — it has to find a way to co-opt the party for this with the support of other non-Congress opposition parties.
But, even if the GST Bill remains stuck due to the Congress opposition, the passage of the Real Estate and Bankruptcy Bills in the Budget Session would mean a significant achievement for the NDA government in terms of getting important legislative business done.