NEW DELHI: The winter session of Parliament, which got under way on Thursday, will be in focus for most market participants, as they hope to see key bills get passed in the House.
The emphasis is more on the goods & service tax bill (GST), and the government is doing everything to bring the opposition on a common platform in an attempt to ensure the passage of the crucial bill.
If the BJP and the Congress reach an agreement on GST and all stakeholders agree on the rate, the chances of the GST bill getting passed during the winter session are bright, experts said.
However, finance minister Arun Jaitley told Times Now in an interview that India can’t have GST with a flawed architecture.
Jaitley said he was in discussion with every leader of the Congress party to get the GST bill cleared in this Parliament session. “Out of the three objections the opposition has raised, if there is validity in any of them, I am with an open mind and positively willing to discuss it with the Congress, as also with any other political party,” he said.
“I have one bottom line and that is in the process of a political compromise. India cannot have GST with a flawed architecture, because once you amend the Constitution, it is going to take decades before you can correct those errors,” Jaitley said.
Prime Minister Narendra Modi on Wednesday reached out to the main Opposition party, seeking its support for the smooth functioning of the House. The government plans to roll out the GST bill from April 1, 2016. But opposition Congress has stalled the passage of the Constitution amendment bill in the Rajya Sabha.
he party has sought some changes, including capping of the GST rate at 18 per cent in the Constitution amendment bill as also scrapping of the 1 per cent tax on inter-state trade. The Constitution amendment bill proposes to create a GST council that will fix the new levy.
Some experts on D-Street are hopeful of a quick resolution of the concerns raised by the opposition party. If the bill gets through, it will be a huge positive for markets as well as the economy.
“I am hopeful that GST will see the light of the day. Considering the maximalist position that the opposition – particularly the Congress – had taken last time, the sense one gets is that they have moved away from the maximalist position and now the debate is more around two or three key issues,” said C Jayaram, Joint Managing Director, Kotak Mahindra Bank.
“One issue they have raised is the 18 per cent cap on that rate through the Constitutional amendment bill, an 1 per cent inter-services tax and a dispute resolution mechanism. These are two or three issues. These are the issues on which the Congress is sort of willing to engage with the government,” he added.
Jayaram said GST is the top of the puff. So they (government) will make sure that there is some discussion on that and, hopefully, it can see the GST bill being passed in this session.
What makes GST important for Dalal Street is the fact that it could raise gross domestic product (GDP) growth by 50 bps – 100 bps. “Some positive movement on the GST would certainly be taken very favourably by the market, and there are enough studies about how GST implementation has helped economies, where it has happened,” said Ajay Tyagi, EVP & Fund Manager – Equities, UTI MF.
“In the last decade, where-ever GST has been implemented, it has added about 50 bps or 100 bps to the GDP. A timely GST implementation can definitely help the domestic economy,” he said.