The Congress has two choices: Be isolated in the Opposition or allow the BJP to pass a major reform.
When the Congress came out all guns blazing last week, insisting that the Bharatiya Janata Party had been involved in a Rs 45,000-crore telecom scam, it seemed like the perfect gambit to ensure yet another unproductive Parliamentary session. The Congress’s own attempts at passing the Goods and Services Tax Bill, which is aimed at getting rid of the current patchwork of indirect taxes and improving compliance, were often washed out by BJP obstructionism, with a corruption scandal as the pretext. So it wouldn’t have been surprising if the Congress simply flipped the script. Instead, something else entirely seems to be happening.
Anand Sharma, deputy leader of the Congress in the Rajya Sabha where the GST Bill is in limbo, told the Indian Express on Saturday that it was ready to talk to the government. That in itself is not unusual. The follow-up, however, was: Sharma said the Congress could drop its objections to the GST Bill if the government gave an assurance that it would “ring-fence” the tax rate. PTI promptly published a story quoting an unnamed “top government functionary” calling this a “sensible suggestion”.
In other words, the parties might actually be talking and the GST Bill, a Constitutional Amendment, could turn into reality in the Monsoon Session, which begins next week.
But lets not count our chickens just yet.
The Congress first officially proposed the GST in 2009, but didn’t have the numbers to get a constitutional amendment through Parliament. At the time, the BJP was firmly opposed to the reform which aims to consolidate all the various indirect taxes – central excise duty, service tax, Value Added Tax etc – into one combined GST. For a quick primer on what it is, and why it was proposed, read this.
When the BJP came to power, it reintroduced the GST Bill, arguing that this would be one of the biggest taxation reforms in the country and have a major impact on tax collections as well as efficiency. But the Congress, emboldened by its success in preventing the Land Acquisition Bill from being passed, decided it would oppose this too.
Murmurs from the party featured the suggestion that it didn’t want to give the BJP a major policy victory – or at least not till closer to 2019 since GST will make taxes more expensive in the short run, which might in the Congress’s favour. But over the last year or so, more states have started to come on board with the government on the GST issue and the Congress has become worried that it might be isolated and end up looking petty.
Its official stance on the Bill includes three demands: An 18% cap on the tax rate that would be mentioned in the Constitutional Amendment, formation of a disputes settlement authority, and the scrapping of a 1% additional tax aimed at giving more revenue to producer states.
The latter two suggestions were dismissed by committees that featured Congress-run states as well, so adjustment on those counts is unlikely. But Sharma’s suggestion of a ring-fenced tax rate – essentially an official assurance that the rate will fit within a certain band rather than putting the exact number down – might actually be the way forward. It is a reasonable presumption that the “top government functionary” quoted by PTI would not have done so without the assent of Finance Minister Arun Jaitley, who has in the passed tried to rubbish the Congress’s objections (and rather pettily complained about the very existence of the Rajya Sabha).
Sharma added that the government hasn’t actually spoken to the Opposition on the Bill, even though Jaitley has been accessing them through state finance ministers. The appointment of a new Parliamentary Affairs ministers just ahead of the Session might also be significant here, since Venkaiah Naidu’s time in that post was woeful.
But one big obstacle remains: The schizophrenic Congress. There was a time when the party was called a Big Tent, because it featured so many people from across the political spectrum. Down to very few states and 44 Members of Parliament in the Lok Sabha, the Congress is no longer a big tent, but there’s still plenty of confusion about its official stance.
Sharma may have opened up the window of opportunity, but the Congress Working Committee remains divided about the matter. The party is afraid of being left isolated with the Opposition but it also does not want to give the BJP a major reforms victory. Voices within the party suggest it is still unsure about how to go ahead, despite Sharma’s public comments.
Congress Vice President Rahul Gandhi has just returned from his holiday abroad and the party will now presumably carve out its strategy for this session. The telecom scam has already disappeared, subsumed by a quick reaction from the government and developments in Kashmir.
The Congress has no easy issue to brandish that would align the rest of the Opposition and prevent Parliament from working. Sharma’s comments make it seem like the Congress is prepared to give way to the BJP and pass the GST. If the Congress were a competent party, it would spend this week deciding on its Parliamentary strategy. Considering the Congress’s glorious history of indecision though, there is a good chance we will be going into the Monsoon Session without any further clarity.