NEW DELHI: Prime Minister Narendra Modi’s reform agenda suffered a major blow on Thursday when the Monsoon Session of Parliament ended without approving the biggest ever tax reform for India.
- The Goods and Services Tax (GST) Bill aims at boosting economic growth. It creates a national sales tax that would subsume a complicated network of central and state levies, a chaotic structure that inflates costs.
- Supporters say GST will add up to two percentage points to economic growth and boost domestic trade while creating a unified national market.
- The delay in the passage of the GST Bill will make it tougher for the government to meet a self-imposed deadline of next April for its launch.
- The PM has the option of calling a special sitting of Parliament to pass the Bill before the next scheduled session in winter. But that would be pointless unless the Congress agrees to a debate and vote on the bill. “We have not decided on that (special session) yet,” said Finance Minister Arun Jaitley today.
- After Parliament sanctions the GST, it must be approved by half of India’s states.
- The Congress says it will continue disruptions within and outside Parliament demanding the resignation of three of the PM’s colleagues, including Foreign Minister Sushma Swaraj.
- The GST was considered low-hanging fruit among free-market reforms as it has rare bipartisan support. The Bill was first introduced by the Congress when it was in power.
- Political opposition had already forced the government to abandon new rules it had suggested for how industry can acquire farmland. The changes to existing laws were seen as necessary for reviving stalled projects worth billions of dollars and for creating vital infrastructure and industrial corridors.
- Top Indian tycoons on Wednesday appealed to feuding lawmakers to shed differences and approve the GST which intends to cut red tape and make it easier to move goods and services around the country.
- Congress sources say the party was determined to deprive the PM of the chance to claim the GST reform as a major accomplishment in his Independence Day speech on Saturday.