GST bill in winter season

Dated 30th October, 2014

While the government has done well to decontrol diesel prices as well as hint at the likelihood of introducing commercial mining in the coal sector, a lot depends on whether it is able to pass critical legislation in the coming session of Parliament. While there are more than five dozen pending Bills, the really important ones are those relating to insurance, land acquisition, GST as well as various amendments to the Apprentices Act—the ordinance on coal also needs to be ratified in the coming winter session. The insurance changes are expected to be cleared by the select committee before the winter session, and if things go as per plan, FDI levels will rise to 49%, opening another avenue for foreign investors. As for GST, while the government has already put a time frame for implementing it, there has been considerable back and forth, making it unclear as to what shape, and when, the Bill will get passed. So far the government has made it clear it is willing to be flexible, and it helps that the BJP has come to power in two more states of Haryana and Maharashtra.

The amendments to the land acquisition Act, similarly, are critical since even if all other clearances are speeded up, the present Act makes it impossible to acquire land for even small projects. Given the government’s minority status in the Rajya Sabha, the government tried to get all states on board when it came to power. With states like Tamil Nadu and Uttar Pradesh pointing to various problems in the land acquisition law, it does seem the government has a fair chance of being able to push the legislation through the Rajya Sabha as well, though a lot will depend upon the kind of bargains various political parties are able to strike. While labour law changes are another important reform that needs to be pushed, the government appears to have taken a different tack on this—get the states to make their changes to the law and under Article 254(2), get the President to give assent to the Bill. The Bill for Rajasthan, as this paper has reported on the front page, has been approved by the government and has been sent to the President for his signature. Once this happens, and it is expected soon, other states are likely to follow suit. Once the winter session is over, many missing pieces of India’s reforms roadmap will be in place.