NDA's stubborn attitude responsible for GST Bill delay: Congress

New Delhi: Blaming NDA's 'stubborn and unbending' attitude for the GST logjam, Congress on Friday said the ball was in the government's court even as it targeted the ruling dispensation over the handling of economy, which the party claimed was "stuck in a groove".

Former Finance Minister P Chidambaram said 2015 has ended on a "sombre and subdued note" and many promises of the government -- more jobs, greater investment and quicker infrastructure development -- have not materialised "...The economy is stuck in a groove," he said.

Addressing a press conference at the AICC, the senior Congress leader said Prime Minister Narendra Modi had invited Congress President and former Prime Minister Manmohan Singh to a meeting, where they gave their three precise objections on the GST bill.

"What did the Prime Minister say...we will come back to you after reflecting within the government. That's almost a month now. We have not received the written response of the government or the revised formulation of the government on the three principal objections".

He said the ball is entirely in the government's court and it is for them to come back and "tell us whether they accepting our objection (on GST bill), whether they are revising formulation, whether they are amending sections".

The former Union Minister further said the government has not been able to find a way to accommodate the views of the Opposition and pass the GST Bill. "I am afraid the government has only to blame itself and its stubborn and unbending attitude," he said.

Chidambaram also said that "two of the three objections" have been virtually endorsed by Chief Economic Advisor Arvind Subramanian.

The Congress wants a constitutional cap on GST rate, withdrawal of one per cent tax on inter-state movement of goods and Supreme Court judge headed dispute resolution panel.

He further said that after the Bihar elections, there were initial signs that the government would reach out to the Opposition and adopt a consensual approach.

That hope was short-lived and as a result, many important legislation remain stalled in Parliament, he said.

The Constitution amendment bill for introduction of Goods and Services Tax (GST), touted as a major economic reform, has been passed by the Lok Sabha, but is stuck in Rajya Sabha where the ruling NDA does not have majority of its own.

Citing the example of the GST legislation, Chidambaram said the Congress and some other parties had objected to some provisions of the Bill on weighty and well-reasoned grounds.

The government was outright dismissive, until the Chief Economic Adviser virtually endorsed two of the three principal objections and made no recommendation on the third, he said.

Referring to the state of the economy, the former Finance Minister said for the whole of 2015-16, GDP growth is not likely to be higher than 7 to 7.3 per cent, which means that it will be the same as, or lower than, in 2014-15.

Chidambaram said the mid-year economic analysis of has candidly admitted that private investment and exports -- two of the four drivers of demand - are languishing.

"The Indian economy is like a car running on two wheels. Corporate balance sheets are stressed, net sales have fallen by 5.3 per cent, and profit after tax is flat. Non-food credit growth at 8.3 per cent is the slowest in 20 years. Growth of credit to industry is 4.6 per cent while credit to medium enterprises has actually shrunk by 9.1 per cent," he said.

The government, he said, does not seem confident of meeting the fiscal deficit target of 3.9 per cent for the current financial year.

For 2016-17, Chidambaram said the government seems to be toying with the idea of departing from the path of fiscal consolidation -- already delayed by a year.

"These are ominous signals, and I would like to caution the government against following an ill-advised policy," he added.

The senior Congress leader further said the fiscal consolidation programme has been delayed by one year and "further delay would not be taken kindly by the world".

Chidambaram, however, said he was not yet prepared to say there has been a fiscal mismanagement. "...but reading the mid-year economic analysis, there are pointers to serious mistakes in fiscal management," he added.

At the beginning of 2015, he said the government had confidently predicted that the economy will grow at 8.1 to 8.5 per cent in 2015-16.

"Many promises of the government -- more jobs, greater investment and quicker infrastructure development – were premised on a high growth of GDP. I am afraid none of the promises has materialised. On the contrary, 2015 has ended on a sombre and subdued note," Chidambaram said. He said there was acute distress in rural India, especially in the farm sector and urban India was not much better.

"Just travel through rural India and talk to people in the villages. There is deep resentment about the tardy implementation of MGNREGA, the cut in the average number of days of work and the delayed payment of wages. Crop insurance is unavailable to most farmers," he said.

Chidambaram said education loans have "practically stopped", and the demand for security has discouraged many students and parents from applying for loans.

"People are unable to point to any central government scheme that is being vigorously implemented. Panchayats are starved of funds. The anger and angst of rural India was reflected in the recent elections," he said.

The 26th quarterly employment survey conducted between April and June 2015 showed that job creation in the manufacturing and export-oriented sectors fell by a net of 43,000 from the previous quarter, he said. In the same period of 2014, these sectors had added 182,000 jobs.

On exports that have recorded 12 successive months of decline, he said that it was "unprecedented".

Commenting on the Finance Minister's statement that the shrinking strength of the Congress party in Rajya Sabha will give way for passage of GST Bill, Chidambaram said this means Arun Jaitley does not believe in the intrinsic strength of GST.

"... he (Jaitley) believes in the numbers of the Rajya Sabha. I think one must sell an idea based on its inherent strength. The GST Bill is flawed and it is much better that he delays the Bill rather than pass the flawed Bill".

"... and the CEA (Subramanian) to the Government admits that two of the three objections the Congress Party has pointed out are valid. You cannot have the CEA sitting there raising the same objections and then saying my Bill is a perfect Bill," he said.

On inclusion of GST rate in Constitution, Chidambaram said there is already a Constitution provision regarding Profession Tax where the ceiling of Rs 2,500 is written in the Constitution.

"So, there are two examples. One the already exiting Constitutional provision and the other proposed Constitutional provision where the rate is mentioned. So mentioning the rate in the Constitutional Amendment is not unprecedented," he said.

He also said the government has not passed on the entire reduction in crude oil prices to the consumers. He said never before, at least in the last 12 years, has oil sold at under USD 40 per barrel.