IS THE GST BILL LIKELY TO BE PASSED?

More than eight months after the NDA government first promulgated ordinance in the Land Acquisition Bill in Parliament, and after two more subsequent promulgations and several hours spent in discussing the amendment, in order to pass the bill, the NDA government finally blinked and swallowed the bitter pill. It has re-inserted the UPA’s Land Acquisition Bill’s key clauses, calling for consent and social impact assessment whenever land is acquired for infrastructure projects, or other uses. What does this reflect about a government which came to power with a thumping majority just 15 months back?

This move has definitely made the NDA government realise that it is not only the numbers that count but that proper floor management plays an equally important role in the smooth running of the Parliament. The earlier NDA government with lesser numbers had better working hours in Parliament due to better floor management. The climb down also signifies one important point and that is in a democratic system there is no place for arrogance. It was not only the main opposition party that was opposing the amendments; a few of the NDA members too were not happy with the changes the government was proposing.  Moreover, this also gave the opposition party a chance to paint the ruling government as anti-farmer or anti-poor and ‘suit boot ki sarkar’, which means a government for the corporate or pro-rich.

Does this mean that the government’s resolve to go ahead with reforms has suffered a setback or is it on a back foot, especially because amendments in the Bill were central to the government’s growth agenda and implementation of many of its development projects such as those based on the ‘Make in India’ campaign. I believe that the Bill passed in its diluted form will also serve the purpose of development as the 2013 law also provides for the government to acquire land either for its own use or for subsequent transfer.

Besides, this climb down makes me believe that the government is taking one step back to move two steps forward. The government may now try to focus its entire energy in the passage of the Constitutional Amendment Bill to roll out the Goods and Services Tax (GST). It will try to isolate the Congress party on this Bill and will lure other parties to support it in passing it. Even this will require an extension of the current session. One thing is clear: If the government is unable to push the Bill through in the current session of the Parliament, it will find it extremely difficult to meet the deadline of rolling out the tax by April 1, 2016.
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I think this is the most opportune time for the government to get through these important Bills because the external conditions in terms of commodity prices are also benign and that will add fuel to the growth curve if the domestic reform processes are expedited. Lower commodity prices augur well for us as this will lower our spending on infrastructure or get more for every rupee spent. A stable currency along with subdued commodity prices is also going to attract foreign money or foreign direct investment in infrastructure projects. This will help to create much needed employment.

Our cover story this time talks about how commodity prices in the last one year have panned out and how these will move in the next few quarters. Although there are some companies that are facing a problem due to this fall in commodity prices as well as certain banks that have an exposure to them, overall the falling commodity prices heralds well for our economy and the equity market.

In the last one year the broader equity index like BSE 500 has moved up by 18 per cent and for every three companies’ share prices that have gone up, there are two companies whose shares have come down. Now you must be wondering what our performance is. In the same period, the average return generated by our Low Priced Scrip column is 26 per cent while that of Choice Scrip is 20 per cent. When it comes to the strike ratio for Low Priced Scrip and Choice Scrip it is at 66 per cent and 79 per cent respectively, higher than the broader market. 

In this issue we are also publishing a feature on the National stock Exchange (NSE) along with an exclusive interview of Ms. Chitra Ramkrishna, MD & CEO of the NSE. We have also carried out an analysis of DishTV after the recent turnaround in its performance to see how much of that is sustainable. You will also find a special report in this issue on companies that have a high count of the pledging of the promoters’ shares and how they have run substantially in the last one year.