India: SISYPHUS REVISITED: Passage Of The GST Bill The First Step Or Just Another Flash In The Pan?

Last Updated: 26 August 2016
Article by Phoenix Legal

Having castigated successive governments for policy paralysis and generally deriding the Indian democratic polity as being beset with problems of bureaucratic red tape and the need for consensus building amongst varied stakeholders and vested interest groups, commentators are now somewhat dumbfounded by the swift political two-step that saw the kinks in the goods and sales tax (GST) bill ironed out practically overnight. While the GST bill had been proposed by different governments, the current government had been unable to push this through, despite the majority of the NDA in the Lok Sabha (the lower house of the Parliament). Through deft maneuvering to create a consensus and enforcement of whip mandates, the efforts of the government came to fruition (and to widespread media attention) over the course of the last week before the actual passage of the bill in the Rajya Sabha (the upper house of the Indian Parliament).

The passage of the GST bill is by no means an end – it is merely the beginning, as the GST bill now has to be passed again in the Lok Sabha to approve the changes made by the Rajya Sabha, and also has to be ratified by at least 16 states. If successful, the process for the actual implementation of the bill will begin, which will require new infrastructure to be created on the ground and will also require the constitution of a GST council comprising of representatives of the centre and the states. Given that a whole lot still remains to be done, the most obvious lines of enquiry are whether the passage of the GST bill is actually as momentous as it has been made out to be, and whether the passage of the GST bill is a sign of things to come.

The passage of the GST bill is a good thing, because it establishes that there is still a great deal of possibility that the government will indeed fulfill the immense promise on which it come into power. It also establishes that the Indian polity is not, as is widely imagined, split across party and ideology lines, and that there is room for compromise and accord (even if it is not unanimous) so as to keep moving (albeit slowly) forward.

It has long been understood that policy making in India is often stuck at the doors of the legislature. In marked contrast to previous sessions, the Indian legislative machine has been working at a scorching pace. According to statistics from PRS India, while the winter session (circa December 2015) saw the Lok Sabha working for 98% of scheduled hours and Rajya Sabha for 51% of scheduled hours, the budget session saw the Lok Sabha working for 121% of scheduled hours and Rajya Sabha for 91%!

Silently in the background, in the monsoon session, the Parliament has already conducted activity on bills that are unheralded but very important. The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016 was passed by the Lok Sabha on August 1, 2016 and is now pending passage in the Rajya Sabha. Among others, this bill seeks to create a time bound process for a District Magistrate to complete possession over collateral in case of enforcement under the SARFAESI Act, and remit stamp duty payable on transfer of financial assets to asset reconstruction companies. While the former will speed up the process of enforcement and should provide banks another tool in their armoury to deal with delinquent loans, the latter is crucial as stamp duty on transfer of delinquent assets to assets reconstruction companies is substantial, particularly in cases of states that do not have a cap on stamp duty on assignment, and prohibitive stamp duty costs are somewhat considered as a barrier to doing business in the asset reconstruction industry.

The budget session saw the passage of the Real Estate (Regulation and Development) Bill, 2013 by both the Rajya Sabha and the Lok Sabha. This bill had been pending for some time, and had been keenly awaited particularly by consumers as it provides a much needed regulatory structure (and consumer protection measures) to the real estate development industry. The budget session also saw the passage of the Insolvency and Bankruptcy Code by both the Rajya Sabha and the Lok Sabha. This consolidates and replaces existing insolvency and bankruptcy protection laws and establishes mechanisms for time bound resolution of insolvent companies and individuals, and also introduces new measures such as the appointment of insolvency resolution professionals to assist in the insolvency resolutions process.

Similarly the winter session saw the passage of the Negotiable Instruments (Amendment) Bill, 2015 by both houses of Parliament. This bill introduced amendments to the Negotiable Instruments Act, 1881 to amend the definition of "cheque in electronic form" (to introduce the concept of digital signatures), and to clarify the jurisdiction of courts where cases of cheque bouncing can be commenced. This bill replaced a previous ordinance. Importantly, the winter session also saw the passage of the Arbitration and Conciliation (Amendment) Bill, 2015 by both the Rajya Sabha and the Lok Sabha. This bill too replaced an earlier ordinance. These amendments introduced included limitations on the scope of the term public policy (as a ground for setting aside an arbitration order), time bound conduct of arbitration proceedings, and limitations on the nature of interim orders that can be passed by courts.

Recognizing the importance of the Public Private Partnership (PPP) in development of infrastructure, the budget proposed 3 initiatives to re-invigorate this sector: (a) the introduction of a Public Utility (Resolution of Disputes) Bill to streamline arrangements for resolution of disputes in infrastructure related construction contracts, PPP and public utility contracts; (b) the issuance of guidelines for renegotiation of PPP concession agreements which shall consider the long term nature of such contracts and potential uncertainties of the real economy; (c) the development of a new credit rating system for infrastructure projects which emphasizes 'in-built credit enhancement structures' to enable lenders to discontinue their reliance on a standard perception of risk which often results in mispriced loans.

All these measures have not gone unnoticed by the domestic and international investor community. Until the passage of the GST bill, these measures were considered as important but ancillary to the crucial legislative reform of introducing GST, a measure that some estimate can boost India's GDP by 1-1.5%. With the passage of the GST bill, there is renewed hope that, while the pace of reforms is infuriatingly slow, these are, in a sense, inevitable. Specifically, the passage of the amendment to the (Indian) Arbitration and Conciliation Act, 1996 and the Insolvency and Bankruptcy Code have been welcomed by the investor community, as these are much needed reforms and do a great deal to further align India with global standards. Notably, the government has also liberalized foreign direct investment in many sectors such as investment in asset reconstruction companies, defence, and brownfield pharma. As part of these reforms, the government has also announced relaxations in sourcing requirements in single-brand retail, thereby showing that it has the ability to deal with issues that are considered politically sensitive.

The government has been appreciated for reaching out to the opposition and compromising on some of its positions, so as to create a consensus and thus ensuring the near unanimous passage of the GST bill in the Rajya Sabha. There is a general view that with the passage of the GST bill, and the newly acquired momentum gained by the government through its victories in the recently concluded state elections, the phase of legislative gridlock that has defined the Indian policy environment should soon come to an end. Stringent inflation targeting (now formalized by the notification of inflation targets by the government), and the government's adherence to fiscal deficit targets have also boosted investor sentiment. While expectations have been tempered by tapering job growth figures and the negative Index of Industrial Production (IIP) data, as an international investor notes , the government is now moving into the "pay-off stage" where the benefits of its reform measures will become visible.

See: (last visited on August 7, 2016).

While the prevalence of cheap international capital and low crude oil prices certainly helps the government in its cause, these alone would not account for the gradually improving health of the Indian economy. One hopes that the hard-acquired momentum towards pushing through reforms will not be stalled and that it will only become stronger in the days ahead.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions