Modi's Parliament strategy will be to exploit cornered Congress and pass GST - Firstpost

Modi's Parliament strategy will be to exploit cornered Congress and pass GST

Prime Minister Narendra Modi hopes to have a smooth Monsoon Session of Parliament that begins Monday (18 July). But, most likely, he won’t. That’s the sense one gets after Sunday’s all-party meet called by parliamentary affairs minister Ananth Kumar and a dinner meet convened by Lok Sabha Speaker Sumitra Mahajan.

The Opposition is armed with a handful of fresh issues, including Arunachal Pradesh, Uttarakhand, the Kashmir unrest, Kairana communal violence and the Nuclear Supplier Group (NSG) policy. Then there are usual topics of price rise and farm stress. All of them critical issues which warrant debates in Parliament.

PM Modi. Image:

PM Modi. Image:

But, what about the business of lawmaking? There are 16 Bills lined up for clearance this time, including the crucial Goods and Services Tax (GST) Bill that has been pending in Parliament for eight years. The Bill has been a casualty of the Bhartiya Janata Party’s (BJP) weak numbers though passed in the Lok Sabha last year.

At this stage, the GST is a must-do for the BJP government to save its pro-reforms face but a hot potato for the Congress to handle. The deadline for GST implementation has already been delayed by a year and further delay will act as a turn-off for international raters and investors looking at India.

In the all-party meet on Sunday, Modi rightly pinpointed the basic problem on the GST political deadlock — the question of who is getting the credit for getting the prize home. GST is the biggest indirect tax reform India has ever seen so far.

It promises to subsume several state, Central-level levies that make life difficult for the taxpayers at all levels and turns off the foreign money managers from the convoluted tax regime. In the long-run, history will remember only the government who converted the GST dream to a reality, not the party who was forced to give in.

The Congress realises it too and so they wouldn’t let it happen until they run out of the last possible excuse. The BJP too knew this when it was in the opposition. In fact, Modi, as the Gujarat chief minister, himself was at the forefront of those who opposed GST at that point. It is mere politics.

Therefore Modi’s comment that, “The issue is not which government gets credit,” will be received with a wink and grin by the old warhorses in the Congress. For this reason, it won’t lay off easily. The grand old party didn’t have to struggle in the previous three sessions to put up a fight against the BJP on the GST because there were enough on the plate — the JNUs and Rohit Vemulas, intolerance, Vyapam, Agusta and Vijay Mallyas.

But this time, its arsenal is weak, hence it was forced to dig out a weak unconvincing case, not really a Congress method to make some noise — the ‘Rs 45,000 crore telecom scam’ citing a CAG report. But, the ripples of the ‘scam’ didn’t reach far since there was no scam to begin with.

As for the remaining issues on the plate, including Arunachal and Uttarkhand, none is strong enough to blackball the GST. For the first time, the Congress is pushed back to the corner to discuss the core “issues” in GST. But, it doesn’t have a strong ground there.

Of its three major demands, the only major issue — capping the GST rate in the constitution — doesn’t have any major supporters possibly even within the Congress party, both among intellectuals and infantry. The demand is the last, weak point of defence.

That’s the reason why senior leaders like Anand Sharma and Jairam Ramesh have signalled a dilution in the stand from inclusion of the GST rate in the constitution to working out an alternative modal like weaving into the GST Bill. Also, the GST council, which comprises of Union Finance minister, revenue minister and state finance ministers can be given the power to alter the GST rate time to time when situation demands.

As far as the Revenue Neutral Rate (RNR) rate is concerned, there seems to be a broad understanding — about 18 percent. A panel headed by Chief Economic Advisor Arvind Subramanian had suggested a three-tier rate structure and a standard GST rate of 18 percent. Both the BJP and the Congress are scheduled to discuss GST on Tuesday.

FP_GSTThis time Modi has made it extremely difficult for the Congress to blackball the GST Bill by bringing up the issue of ‘larger national interest’. At a time when the Congress party has hopes of a revival (especially after winning back Arunachal and Uttarkhand, thanks to judiciary) and UP polls are at the door step, the Congress party wouldn’t want to test the patience of middle class voters by creating further impediments to reforms progress. Modi knows this and hence rightly used the phrase ‘suicide’ by opposing GST.

“The public in states like UP, Bihar and West Bengal will be the biggest beneficiaries. Therefore, I do not think any political party will try to commit suicide by opposing GST,” said Modi.

That’s a veiled threat to the Congress party that it shouldn’t risk battling GST any longer and consensus will be a better option. Also, there is a general agreement among experts that time is running out for the country to initiate the GST reform. In series of columns run by Firstpost recently, industrialists, economists and academics pointed out the pressing need to pass the GST as early as possible considering the time required for the final roll out (states have to separately pass the GST and systems need to be put in place) and the larger benefits of the reform.

GST, in due course, will help broaden the tax base, bring in transparency and create a unified tax regime big enough to add 1.5 percent- 2percent to the GDP.

For the first time, the Congress is cornered on the GST issue and probably for the first time there aren’t any major weapons in the Congress’ arsenal to take on the ruling party strong enough to cause a wash-out.

With most regional parties, except for the Left parties and AIADMK, favuoring the GST and the BJP improving the numbers in Rajya Sabha post the recent polls, the Congress’ fight against the Bill wouldn’t have any major support from political allies or voters.

The big reason it highlights to stall the Bill — capping the rate in the Constitution — was a mistake from the day one. In this context, it makes more political sense for the party to settle for a truce and score a point by emerging as the saviour of larger national interest.

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