By abandoning confrontation and seeking consensus, Indian Prime Minister Narendra Modi has pulled off his biggest reform yet, securing the unanimous support of both houses of parliament for a planned Goods and Services Tax (GST).
Here’s a timeline of how Modi and Finance Minister Arun Jaitley first brought India’s federal states on board, before finally closing the deal at a series of meetings with an opposition Congress party that had become increasingly isolated.
May 19 – Congress, which suffered its worst-ever election defeat at the hands of Modi in 2014, is punished by voters in a round of regional elections.
June 11 – Further losses in elections to the upper house mean that Congress and its fellow holdout, Tamil Nadu’s ruling party, would struggle to muster the one-third of votes needed to stop a constitutional amendment to enable the GST.
June 15-16 – Jaitley wins the full support of West Bengal, a key swing state. Congress’s anti-GST front is crumbling.
July 15 – Jaitley holds formal talks on the GST with Congress party negotiators for the first time in nine months.
July 17 – At an all-party meeting, Modi urges opposition parties to put national interests above all else and back the GST bill.
July 19 – Jaitley holds a second round of talks with Congress. He also meets Bihar Chief Minister Nitish Kumar, who rules in an alliance with Congress. Kumar is placated by a government offer to delay a controversial piece of legislation and his party publicly backs the GST the next day.
July 26 – Jaitley offers to compensate states for five years for all revenue losses arising from the GST. The states are fully on board.
July 27 – Congress proposes tweaks to the GST amendment. They are approved by Modi’s cabinet that evening.
July 28 – Two more meetings are held but Jaitley resists a Congress demand to anchor the GST rate at 18 per cent.
Aug 1 – Congress tells Jaitley it will back the bill.
Aug 3 – The constitutional amendment bill passes the upper house, with 203 votes in favour and none against, after lawmakers from Tamil Nadu walk out.
Aug 8 – The lower house unanimously approves the amendment.
What happens next
– At least half of India’s states and self-governing union territories need to back the GST amendment.
– The GST Council, a forum bringing together the center and the states, should draft the key terms and scope of the GST. The government’s chief economic adviser has recommended a main rate of 18 per cent, but many states want it to be higher while Congress wants it to be capped.
– Two new GST bills are expected to come before parliament in the winter session that begins in November. The states, too, are required to pass their own GST bills.
– The government targets a GST launch date of next April 1, the start of India’s financial year, although experts say that deadline is likely to slip.
