• GST clearance: Arun Jaitley questions extent to which Rajya Sabha can block policy

    Weeks before Parliament convenes for the second leg of the budget session, during which the government will make another bid to get legislation related to the goods and services tax (GST) passed, finance ministry Arun Jaitley questioned the extent to which the Rajya Sabha can stand in the way of policy change.

    The constitutional amendment bill to facilitate GST has been passed in the Lok Sabha but is stuck in the Rajya Sabha, where the ruling coalition is outnumbered.

    “To what extent our Upper House is going to be used to block economic decision making… In Australia, the debate is on, the UK has gone through this debate a while ago and Italy is having the same debate, because ultimately the weight of a directly elected House will always have to be maintained,” Jaitley said at the Growth Net Summit in the capital on Thursday, adding that he would again seek to reach out to Congress for support on the bill.

    The second leg of budget session is scheduled to begin on April 25. Being a constitutional amendment bill, the legislation needs to be passed by a two-thirds majority. Congress has raised three key conditions, including a low GST rate of 18% that’s specified in the constitutional amendment bill, which is not acceptable to the government.

    “It is now coming down really to one issue. The only opponent to GST is the Congress party. Curiously, the party which had sponsored the law in the first instance has some belated wisdom that you must have a constitutional cap.

    Now that seems a little difficult,” Jaitley said, adding that the government is also keen on a reasonable GST rate.

    “I have no problem with the rate,” he said but questioned where the rate should be prescribed. Putting a cap on GST rate in the constitutional bill will make changes hard as that will in turn require a constitutional amendment. Instead, this should be left to the GST Council.

    Jaitley was critical of the demand for a rollback of excise duty on jewellery imposed in the February 29 budget.

    Keeping luxury items out of the proposed taxation system would mean these being subsidised by essential goods.

    “I am then reminded of President (Bill) Clinton’s comment on the economy you can’t create a situation where GST moves up into the 20s by keeping luxury items (out) and then say now maintain it at 18%,” he said. There’s “greater need for a mature level of thought and discussions as far as these issues are concerned,” he said.

    He said this was not a problem specific to India. “As I travel around the world I see a lot of democracies having it.”

    Jaitley said the government has undertaken a series of incremental reforms that together pack a wallop. “This government is yet to commit its first mistake as far as economic policies are concerned. All steps which are taking place are in one direction and slowly and surely you are moving in that direction carrying the democratic opinion along with it,” he said.

    Jaitley said there was greater support for reforms now. “One of the great successes has been that today India doesn’t face any political opposition to reforms,” he said. “That’s because India is becoming more aspirational, people are feeling the benefit of the reform process and carrying that section of opinion along with you, I think, is a big challenge in which we have succeeded.” 

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