GST: Will economics win over politics

There is just no certainty which way the idea of the Goods and Services Tax Bill is going. The proposed legislation, it is being said of late, can now clear the Rajya Sabha hurdle even if the Congress party continues to play contrarian because many in the Opposition are now backing the Modi government on GST, which is intended to make India a common market for all practical purposes and that would give a fillip to the economy to the extent of pushing up the GDP by about two per cent per annum.

That’s alluring. Nevertheless, the Congress hasn’t played ball in the last two years and stepped forward to back the government, preferring to embrace media ignominy that comes from persistently opposing a popular view.

But there may be a twist in the tale. The Congress officially said on Monday that the BJP itself is divided on the GST, and that’s the real reason the government is failing to bring the bill to the Upper House, rather than any opposition from the Congress (which exists, of course).

In Congress’ view, sections of the BJP have grown GST-shy because the GST legislation of the present government has pitched the minimum tax rate for goods across states at about 22 or 23 per cent — while the Congress would not countenance anything above 18 per cent — and this would have an inflationary impact, says the Congress. The ruling party does not want prices shooting up further just months before the crucial UP Assembly election early next year.

We can’t know if this indeed is the case. Or, is the whole thing hot air manufactured by the Congress One way of dealing with the issue is to have the merits of the GST concept in our context debated in Parliament on a non-voting provision like the calling attention motion before the legislation is put to a vote in the Rajya Sabha.

The GST Bill had originally been brought by the UPA-2 regime. BJP was then an obdurate opponent of the measure, presumably because the then principal party of the Opposition did not desire that the Congress should corner the credit for introducing GST. Then Gujarat CM Narendra Modi had also opposed GST. The Congress has now turned the tables on the BJP. It says the party thinks of the consumers and wouldn’t let ordinary people pay a country-wise tax above 18 per cent (for goods and services brought under the ambit of the GST).

It will be seen with considerable interest if the GST Bill would be brought to the Rajya Sabha (where the ruling party is in a minority) in the present session of Parliament, as promised earlier. Will economics win or electoral politics