Jait­ley Ques­tions Ex­tent to which RS can Block Pol­icy

Says he would again seek to reach out to Congress for sup­port on the GST bill

The Economic Times - - Economy - Our Bu­reau

New Delhi: 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 amend- ment. 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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