A tax too far

The Bharatiya Janata Party (BJP)’s minority status in the Rajya Sabha has proven to be a big impediment to its legislative goals, and the long-delayed Goods and Services Tax (GST) — which needs a 2/3rds majority in the Rajya Sabha to pass — seems as distant as ever.

In the Rajya Sabha elections held for 12 seats this week in Assam, Kerala, Nagaland, Punjab and Tripura, the Indian National Congress (INC) dipped from 66 to 63 seats (in the 245-seat upper house), while the BJP was flat at 48. The INC might drop another seat in the Rajya Sabha in the coming 4-5 months while the BJP could gain another three, but the ruling coalition is unlikely to make any meaningful gains in the upper house until 2018, close to the end of its term.

This is what the Rajya Sabha could look like by August:

Screen Shot 2016-03-22 at 11.08.53 PM.png

Clearly, the BJP will need the support of several uncommitted regional parties to pass bills through the upper house until at least 2018, and probably beyond.

And what of the GST? In a recent investor note, Morgan Stanley argued that:

The key to the bill’s passage is a reduction in the number of Upper House members opposing the bill. That number currently stands at 91 and it needs to fall to 82 for the bill to clear – we forecast that to happen by July 2016.

Not so fast.  It seems as if the Morgan Stanley analysts are treating the Janata Dal (United) as a GST supporter and placing the AIADMK — a vocal GST opponent — into the “opposing” column. But that’s overly optimistic: the JD(U) has a coalition in Bihar with the INC and is unlikely to vote for the GST bill. Neither are the two Left parties that control nine seats between them. And the Kerala, and Tam

The conclusion: this round of Rajya Sabha elections changes nothing for the BJP, it’ll still need INC support to pass the GST.

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