For Narendra Modi’s Bhartiya Janata Party (BJP), the number code to unlock big reforms such as the Goods and Services Tax (GST) puzzle has been always a major issue. This even belittled the party’s landmark victory in the 2014 general elections. While the victory helped the party to dominate the Lok Sabha in every session, the Upper House, Rajya Sabha, has been a no-go area for Modi and his team when it came to pulling off large ticket reforms due to their weak numbers there.
But, things are slowly changing now. With most regional parties coming in with support for the GST Bill and the Congress going easy from its earlier tough opposition, the chances of the constitutional amendment passing in the monsoon session appears greater than ever. There are encouraging signs.
The Indian Express, based on a poll it conducted among all parties, reported that 55 percent of the 243 member house(two seats are vacant) are now in full support of the Bill.These include Trinamool Congress, NCP, SAD, SP, JD(U), TDP, TRS, Shiv Sena, BJD and RJD. Among those who oppose the Bill outright are Congress, IUML and KCM and those who offer conditional support or undecided include CPM, CPI, BSP and AIADMK. If we add up all supporters, conditional-supporters and undecided ones including independent candidates and nominated members, the numbers are well past the 2/3 mark.
In that case, ie if everyone else supports (which is a highly unlikely scenario), the Congress opposition wouldn’t block the passage. But, if the Congress remains stubborn on its stance, the support of each member will matter. This is why negotiations with not just the Congress but all other smaller parties are critical for Modi.
The PM should let of the Big Brother approach to small parties and embrace the consensus mantra to get them into confidence. Even the BJP’s formal allies have sounded impatient and displeased with the party largely limiting their discussions on GST with the Congress party.
“There is no opposition to GST. We have submitted a memorandum on our demands to the government. But the BJP wants to pass GST by talking only to the Congress. They need to talk to allies like Sena and Akali Dal, either through an all-party meeting, a meeting of NDA constituents or one-to-one,” the Indian Express report quoted the Shiv Sena’s Rajya Sabha MP Sanjay Raut. Most other parties too have said that they wouldn’t stand in the way of the Bill if the government addresses their concerns.
The BJP has already indicated that it is willing to give up on two demands — 1 percent interstate levy and a strong independent dispute resolution mechanism. The 1 percent levy doesn’t make sense since it dissolves the very purpose of a uniform tax. Similarly, the dispute resolution mechanism isn’t a Himalayan task.
On the third demand of the Congress, capping the 18 per cent standard GST rate in the constitution, the Congress itself has begun realising the absurdity of that demand and has, instead, agreed for an alternative way wherein a rule can be written in the Bill to ensure the GST rate doesn’t go up too high in any scenario.
To be sure, the Congress’ demand for the GST cap is good on intention since too high a GST rate will kill the consumer spirit. But, weaving it into the constitution is a bad idea since future changes will be difficult.
One of the main reasons for the Congress’s face off with the BJP on the GST has been that pure politics dominated all these discussions than national interest. The so-called consensus discussions in the run up to the previous sessions started, in the fist place, with a prejudiced mindset on both sides.
The Congress party sat down across the table with the idea of not to agree for consensus in any case and the BJP not to give up its authoritarian approach bolstered by its 2014 poll victory. Remember, when the BJP was in the opposition, it too opposed the Bill. Now, the Congress is doing the same.
This meant that the fates of those discussions were sealed even before they began. This is why contradictory comments came on the issue in the media from leaders of both sides about consensus emerging or not emerging on GST.
Ultimately, two out of the three Parliament sessions ended up as total washout. The third was salvaged with the passage of at least one major reform Bill — the bankruptcy code. This time, chances for GST passage considered much better for two reasons.
One, there was no major point of contention between the BJP and Congress when the session began and the Congress’ opposition for GST was narrowed down to one point – capping the rate in the Bill. But, the outburst of the Dalit issue, when the session is on, has yet again spoiled the mood. Before the issue dominates the house, the BJP should make its big move on the GST.
Passing GST with an absolute perfect agreement will never happen. If there is a broad understanding between the political parties — both big and small ones — the political leaderships should join hands to push the reform Bill, the long-term benefits of which for the economy are agreed by all experts unanimously.
Imagine a country, where there are no multiple state-level levies and varying services tax rates and goods can be moved across state-boarders in a uniform tax regime.
That will mean more certainty for foreigners to invest here, more employment and more tax collection. If states will be compensated in the initial years and a three tier-tax structure (as recommended by the Arvind Subramanian panel) takes care of essential needs of consumers, nobody has a reason to complain.
True, when the GST is being rolled out, there will be some pain as the system will get adjusted to the new regime and a part of it could be inflationary. But, that’s a phase the economy must goes through. Firstpost has been running a series of articles under the #SupportGST campaign in the recent weeks. In the series, most experts (economists, industrialists and academics have strongly argued why the passage of the Bill now is critical to make sure it gets rolled out from April, 2017. This is because even after the Centre passes the amendment, state assemblies have to pass it separately and prepare the ground for its actual implementation. It is critical to pass the reform at this stage.
The point here is this: PM Modi should take the lead in the ‘project GST’ and get all the parties, including the tiny ones, on board so that none of them feel left out when the Bill comes up in the House. Narendra Modi should lay off his big brother approach and embrace the consensus mantra.