Indian legislators yesterday delayed voting on a proposal to create a national sales tax, setting back Prime Minister Narendra Modi’s plans to boost growth in Asia’s third-largest economy.
A committee would now scrutinise the bill and submit its report in the first week of the next parliamentary session that typically starts in July, Finance Minister Arun Jaitley told lawmakers. The delay makes it tougher for Modi to meet his April 2016 deadline for implementing the goods and services tax, one of India’s biggest economic reforms in decades.
“The honeymoon is over,” said Sandeep Shastri, pro vice-chancellor at Jain University. “Things won’t be getting easier for the government.”
Modi has found it difficult to pass legislation through the opposition-controlled upper house despite winning control of the lower house in an election a year ago.
India’s benchmark stock index, among the top gainers globally last year, has been the world’s worst performer over the past month, losing more than 9 percent in that time.
The tax bill aims to ease the transfer of goods across the country and reduce opportunities for bribery. The National Institute of Public Finance and Policy initially estimated it would add about 2 percentage points to India’s gross domestic product before it was diluted to win political support.
The bill would amend India’s constitution, a move that would need to be approved by more than half of the country’s 29 states.
Bloomberg