Pranab Mukherjee reaches out to the BJP on GST

Finance Minister Pranab Mukherjee extended a hand of partnership to the opposition Bhartiya Janata Party (BJP) to push through financial reforms.

Mukherjee, who was addressing industry concerns over flailing pace of economic reforms, after the budget, said he is willing to meet other parties and governments “halfway.”

“It is not that we have back-tracked on reforms,” he told industry captains who wondered whether the Congress Party has abandoned the reforms agenda, going the way of populism with its ‘inclusive’ budgets. “We just don’t have the required votes to push through some of these legislations,” he said.

Mukherjee said 6-7 key pieces of legislation, ranging from increasing foreign investment limits in insurance and retail to overhauling the tax system, are yet to be placed in front of the Parliament for lack of support from other parties.

The Congress Party, he pointed out, has only 206 out of the 545 seats in the lower (and more powerful) house of the Parliament. “To push through these laws, we need, in the Lok Sabha, 270 votes; in Rajya Sabha, I require 125. As leader of the coaltion, we [the Congress] don’t have the numbers,” Mukherjee said.

The statement is both seen as a friendship and compromise gesture to the BJP as well as part of the political posturing assumed by senior Congress leaders recently.

Prime Minister Manmohan Singh and leader Rahul Gandhi have both blamed “coalition politics” for Congress’ party’s inability to take tough decisions on corruption and issues like price rise. Mukherjee’s statement too indirectly implies that not all the Congress allies would support the party in pushing through reforms, some of which are unpopular.

Mukherjee pointed out that Goods and Services Tax — a single tax to replace the numerous commercial taxes imposed by the Centre and the States, can only be passed with help from the opposition.

Not only does it require two-thirds majority in the Parliament, but also requires more than half of the state governments to approve it. Many crucial states ruled by the BJP, such as Gujarat, are opposed to the tax in its proposed form.

“I am ready to cover an extra mile to accomodate the views of the various state governments on GST, but let them also agree to travel with me, so that collectively, we can achieve the purpose,” he clarified.