Indian Prime Minister Narendra Modi will face a test of credibility when big-ticket reform bills are taken up in parliament during the winter session, which started on Thursday. The bills include a national Goods and Services Tax (GST) that will be the biggest pan-India reform since the 1990s and is critical to boost foreign investments.
Although, Modi has a handsome majority in the Lower House, it is nullified in the Upper House where the opposition has more members — a major handicap for legislation. The session comes after the ruling Bharatiya Janata Party (BJP) suffered a crushing defeat in the Bihar state election. The defeat was partly blamed on Modi’s dwindling popularity due to his failure to create jobs and trigger growth — promises he made during the 2014 general elections.
The proposed GST, that will replace a dozen state levies, is considered a game changer, creating a single market of 1.2 billion people. Politically too, the passage of this tax law will give Modi a much-needed boost. In recent months, his government relied on executive orders, in the face of parliamentary deadlock, to change laws. This, however, has failed to impress foreign investors who want lasting laws with parliamentary approval. The tax law can only be passed if Modi reaches out to the opposition and take their concerns on board. Moreover, the session is being held amid a raging debate on growing intolerance and attacks on minorities, issues Modi’s adversaries want to be discussed in parliament. Modi will have to tread cautiously as politics can easily overshadow business, a situation his government needs to avoid.
