Top Indian tycoons on Wednesday begged feuding lawmakers to shed differences and approve a tax shake-up that will create one of the world’s largest single markets and drive economic growth, as time ran short in a summer parliament sitting.
The chances of approving the Goods and Services Tax (GST) in the “monsoon” sitting of parliament faded after opposition politicians yelled slogans and the speaker adjourned proceedings until Thursday, the last day of the session.
Supporters of GST say it will add up to 2 percentage points to economic growth by cutting red tape and making it easier to move goods and services around the world’s second-most populous country.
More than 20,000 people, led by dozens of top tycoons, have signed a petition urging politicians who have disrupted every day of the three-week session to approve the new tax.
“They should get together and pass this very beneficial reform for the country,” Adi Godrej, chairman of Godrej Group, told Network 18 on Wednesday.
“India could have five years of double digit GDP growth if the GST is in place.”
For years, businesses have lobbied for the new sales tax which will subsume myriads of federal and state tax levies, a chaotic structure that inflates costs.
Prime Minister Narendra Modi, on the back foot over popular opposition to his bid to make it easier to buy farmland for industry, made passing the less controversial GST bill his main objective in the session.
But the opposition Congress party Modi defeated in the general election last year seems determined not to give him any victory ahead of his annual Independence Day speech on Saturday, not even support for a bill it originally wrote while in office.
Congress members stormed the well of the Rajya Sabha, where the constitutional amendment to create GST needs two-thirds of votes to pass, shouting “this will not go on”. A ruling party member called their behaviour “hooliganism”.
“I don’t think there is going to be an amendment in this session of parliament,” Mani Shankar Aiyar, a Congress veteran, told Reuters.
The chaos contributed to a more than one percent fall in shares on Wednesday. The Nifty fell to its lowest level since July 29.
If GST is not approved this time, the government could call a special sitting of parliament. Otherwise, it may wait until a session late in the year, leaving little time to implement the tax by a deadline of April 2016.
Delays to GST and other reforms Modi is pursuing in land and labour risk slowing an economic recovery, but are par for the course in India’s unwieldy democracy.
June industrial output growth quickened to 3.8 percent, and July inflation cooled to 3.78 percent, data showed, signs of stability that has drawn $13 billion of foreign fund investment and a spate of foreign companies setting up shop in India this year.
“Everyone has managed for years without GST,” said R.C. Bhargava, the veteran chairman of Maruti Suzuki. “If there is a further delay of maximum one year, it is not as if an investment will become unviable because of that.”
(Additional reporting by Clara Ferreira-Marques in Mumbai; Editing by Frank Jack Daniel)