GST delay: A sign of Congress atrophying

With the Goods and Services Tax (GST) constitutional amendment again in doubt in the Rajya Sabha, the process for what has been labelled the “most ambitious tax reform” in Indian history remains stalled. Given the timetable for GST, which will require a second legislation, after the constitutional amendment has been passed by Parliament and ratified by the requisite number of states, it would appear that the chances of introducing the new regime on April 1, 2017 are more or less over.

Any new tax regime, specially one as far-reaching as GST, will bring in a lot of confusion, possible inflationary pressures in pockets and sectors, and rollout niggles in its first few months. In the case of GST, it has been speculated that the fiscal benefits and advantages to businesses (particularly manufacturing businesses) will be evident only after two or three years. This suggests that any government would like to introduce GST at the beginning of a five-year cycle, rather than have it coincide with the run-up to a general election. This was the Congress’ calculation too, when it blocked GST between 2014 and 2016. Now, having painted itself into a corner, it doesn’t quite know how to get out of it. Some sections of the BJP too believe that it may be more prudent to wait for 2020 and leave it to the government of the day.

The Congress hasn’t been united on its GST obstinacy either. The leadership of the party in the two Houses has been wanting to compromise but has been thwarted by Rahul Gandhi, the Congress vice-president, who has pursued a non-cooperation movement with the government. Also, a former finance minister and somebody who should be aware of the need for GST, P. Chidambaram, has also been of the opinion that the government’s GST push should not be facilitated by the Congress. As such, his return to the Rajya Sabha recently was actually a negative signal on this count.

Unless there is a miracle, therefore, the Congress can go into the 2019 election with the singular achievement of having thwarted GST. Whether this will win it any votes remains to be seen. Indeed, following the recent advocacy by industry associations, the Congress vice-president seemed to say that a compromise was being worked out. Evidently, his party and he had changed their minds in the following days, citing the excuse that the opening of a corruption investigation against a former Haryana chief minister, Bhupinder Singh Hooda, and the company that once published the National Herald newspaper was an attempt to derail the spirit of cooperation that GST needed. This is bewildering logic. Should corruption cases — whatever their ultimate findings and fate — be pushed under the carpet to allow Parliament to do what it should be doing in the first place: passing important bills

For all its arguments and “achievements” in the Rajya Sabha, the fact is that the Congress is unable to sort out its electoral problems. A case in point is Punjab, where the Akali Dal-BJP alliance is said to be in trouble and the Aam Aadmi Party (AAP) is gaining momentum. The BJP has been trapped in an internal debate on the question of whether the alliance with the Akalis represents a social alliance between Punjab’s Sikhs and Hindus that is a national necessity, irrespective of which way an individual election goes — or if the pursuit of a pragmatic electoral strategy without the burden of a party that has been reduced to an extension of the Badal family is worth it. The departure of Navjot Singh Sidhu from the BJP, and the sense that he may soon join AAP, reflects the price of this dilemma.

However, while Mr Sidhu’s exit and the larger ambiguity in approach is costing the BJP in Punjab, what is worth noting is that the Congress has been virtually absent in the debates concerning the state. In the normal course, a two-term government, one with a severe reputational issue, would point to an advantage for the long-standing Opposition party. However, that the Congress is in danger of being upstaged by the AAP is indicative of an existential crisis for the party. Already there are reports in Goa, which also sees elections in 2017, of the AAP foraying into demographic territory that belonged to the Congress and emerging as the challenger to the BJP-led government.

In Uttar Pradesh, which sees the big state election of 2017, a social churn is evident and the BSP and BJP are competing to put together social coalitions to defeat the ruling Samajwadi Party. The Congress, for all the sound and fury, is expected to finish fourth and at best cut into the BJP’s Brahmin vote, though even that is only a theoretical proposition at the moment. In Gujarat, which votes in December 2017, the BJP faces a challenge and a chief ministerial change is on the cards. Nevertheless, few are willing to equate the BJP’s troubles with an outright victory for the Congress. As for Congress politicians from Karnataka, which has elections in early 2018, they are equally glum and fairly openly predicting defeat. It is only in Rajasthan, where voters decide in December 2018, that the Congress, under Sachin Pilot, believes it has scope for serious improvement.

India needs a unifying tax regime but if it has to wait for GST till 2020, it will. The Congress can only delay that passage; what can it do, though, to delay its atrophy

The writer is senior fellow, Observer Research Foundation. He can be reached at malikashok@gmail.com