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It's a tug of war in Parliament as India Inc pleads to push GST

Last updated on: August 12, 2015 16:22 IST

Leading Indian industrialists begged feuding lawmakers in vain on Wednesday to put aside differences and approve a major tax shake-up aimed at creating one of the world's largest single markets and driving economic growth. 

The chances of approving the Goods and Services Tax (GST) in the "monsoon" sitting of parliament looked very slim 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, Indian businesses have lobbied for the new sales tax which will subsume myriads of federal and state tax levies, replacing 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 a general election last year seems determined not to give him any major 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 upper house of parliament, where GST needs two-thirds of votes to pass, shouting "this will not go on". A ruling party member called their behaviour "hooliganism". 

If GST is not approved in this session, the government could call a special sitting of parliament once it has ironed out differences.

Otherwise, it will 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. 

"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."

Rajesh Kumar Singh and Clara Ferreira-Marques in Mumbai
Source: REUTERS
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