Modi to End India Parliament Session, Delaying Sales Tax

  • Move jeopardizes efforts to implement GST by April target date
  • Next parliamentary session is expected to occur in November

India Prime Minister Narendra Modi’s government will officially end the latest parliament session, a move that jeopardizes his ability to implement a goods-and-services tax by an April target.

Modi’s cabinet decided to prorogue the session that was adjourned last month, Finance Minister Arun Jaitley told reporters in New Delhi on Wednesday. The next parliamentary meeting is expected to take place in late November.

Modi’s party had been in talks with the opposition to revive the parliamentary session in a bid to pass a constitutional amendment that would pave the way for the GST. The tax, one of India’s biggest economic reform proposals in decades, would create a single market among the country’s 1.2 billion people.

“In truth, not only does the finance ministry’s hope of introducing the
GST by April 2016 look unrealistic, implementation by April 2017 would be a stretch too,” Shilan Shah, a Singapore-based economist at Capital Economics, wrote in a report on Wednesday. The federal and state governments are yet to reach a consensus on compensation and coverage of the tax, he said.

Modi this week urged India’s tycoons to invest in the country to help build the nation at a time of global economic volatility. Last month he stepped back from a move to make it easier for companies to acquire land after increased opposition from farmers ahead of a key state election.

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