Modi makes final monsoon push to pass tax reform
The government of Indian Prime Minister Narendra Modi began a last push before the end of a stormy parliament sitting to pass a major tax reform aimed at boosting economic growth, but an opposition party dug in its heels to stop the bill.
Aimed at creating a customs union for India's 1.2 billion people, the Goods and Service Tax (GST) is the biggest revenue shake-up since independence from Britain in 1947. Supporters say it will add up to two percentage points to economic growth.
A series of obstacles to the prime minister's ambitious agenda of economic reform has increased a sense among debt-laden domestic companies suffering subdued earnings that India's fledgling economic recovery could take longer.
Indian shares fell about one per cent on Tuesday led by declines in banking stocks along with jitters over the parliament showdown and China's yuan devaluation. As monsoon rain lashed the colonial-era parliament building, Finance Minister Arun Jaitley introduced the bill in the upper house to yowls of protest from members of the opposition Congress party. Seconds later, the speaker adjourned the chamber, putting off any discussion until Wednesday. The Congress party is demanding the resignation of senior BJP leaders it accuses of graft before allowing parliament to work. It also wants changes to the bill, which it says has been diluted to win support from states. "They don't want the Indian economy to grow," Jaitley said, barely audible above opposition shouts of "this will not go on". Congress leader Anand Sharma said the obstruction replicated tactics by the BJP, which blocked GST and other reforms when Congress ruled India for a decade, before being defeated by Modi last year.