HSBC, Mor­gan Ex­pect GST by Next Quar­ter

The Economic Times - - Money -

Mum­bai: HSBC and Mor­gan Stan­ley are con­fi­dent that the goods and ser­vices tax (GST) bill will be passed this year. The bro­kera g e s b e l i eve t hat t he r ul i ng Bharatiya Janata Party (BJP) may be able to muster enough strength in Ra­jya Sabha — the Up­per House of Par­lia­ment — to pass the GST bill by next quar­ter.

Goods and ser­vices tax, con­sid­ered the country’s big­gest tax re­form in two decades, is in a limbo as the Congress party, which en­joys a ma­jor­ity in Ra­jya Sabha, has op­posed its pas­sage in the cur­rent form. Re­duc­tion in the num­ber of Ra­jya Sabha mem­bers op­pos­ing the bill is the key for bring­ing in the GST re­form. That num­ber cur­rently stands at 91 and needs to fall to 82. HSBC and Mor­gan Stan­ley be­lieve the Congress will lose ground as 75 Ra­jya Sabha mem­bers are re­tir­ing be­tween March and July. Out of th­ese 56 seats are com­ing up for re-elec­tion. Among the Ra­jya Sabha mem­bers op­posed to the pro­posed GST re­form, 67 are Congress leg­is­la­tors. “The Congress party could lose ground. While it holds 14 of the 56 seats that will be re-elected, 13 are in states it does not con­trol. This raises the chances that some of th­ese seats will slip out of its grasp, in­creas­ing the num­ber of seats held by smaller par­ties with which the BJP can forge al­liances,” HSBC econ­o­mists Pran­jul Bhandari, Prithvi­raj Srini­vas and Stuti Sak­sena told clients in a re­port.

Mor­gan Stan­ley said the pro­por­tion of mem­bers sup­port­ing GST will in­crease to two-thirds. By July, the com­po­si­tion of Ra­jya Sabha will change in the favour of the govern­ment as changes to Ra­jya Sabha mem­ber­ship are fixed since they de­pend on the cur­rent com­po­si­tion of the state assem­blies.

“We cal­cu­late BJP will gain two seats, the Congress will lose seven in the re-elec­tion. The BJP gain an­other seven seats via newly nom­i­nated mem­bers in Ra­jya Sabha (a pre­rog­a­tive vested with the govern­ment of the day). The net re­sult of this and gains by BJP al­lies in­creases the num­ber of those sup­port­ing the bill, from 97 to 110, and de­creases those op­pos­ing to 81,” Mor­gan Stan­ley an­a­lysts Rid­ham Desai and Sheela Rathi said in re­cent re­port to clients. HSBC said that the Bankruptcy Code and the RBI Amend­ment Bill (which for­malises in­fla­tion tar­get­ing) too is likely to be passed in 2016.

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