With the Bihar result, opposition parties will become emboldened and will make passage of bills like GST difficult in the upper house, say analysts, especially since non-Congress parties too would be in no mood to oblige
The defeat of Bharatiya Janata Party (BJP) in Bihar Assembly election is unlikely to affect the Narendra Modi government in Rajya Sabha but at the same time it may hit the Central government's plan to pass pending Bills, including the Goods and Services Tax (GST) Bill through the Parliament, say analysts.
According to Fitch Ratings, even a big win for BJP in Bihar would not have translated into to sufficient support for the party in the Rajya Sabha anytime soon. This is because only five of the 16 seats that the state has in the upper house are being vacated in 2016. "With continued opposition, the Modi government will likely continue to try and pass legislation via ad hoc political deals, and if that does not work it may continue to resort to implementation of reforms at the state level," says Thomas Rookmaaker, Director for Asia-Pacific Sovereigns at Fitch Ratings.
Jay Shankar, Chief India Economist and Director, Religare Capital Markets, based on an analysis, feels that the National Democratic Alliance (NDA) led by BJP, is unlikely to gain even a simple majority in the Upper House until 2018, assuming that they do well in the state assembly elections wherever they are traditionally strong. He said, "Bihar election result was not expected to move the needle much in favour of NDA in this regard immediately, as only five of the 16 seats that the state has in Rajya Sabha gets vacated in 2016. Of course, now with the huge loss, the NDA's hope of improving its tally to that extent gets extinguished."
The central government has set the target for implementing the pan-India GST from April next year, but it is currently stuck in the Parliament, especially over the cabinet's nod to some changes recommended by a Parliamentary panel, notably an extra 1% levy to compensate the states for potential tax losses. The opposition has been against the extra 1% GST levy as they feel this would not only push up prices, but also have a cascading effect.
However, according to Religare Capital, the GST hope now lurks in the big churn in 2016 as 75 seats get vacated in Rajya Sabha.
Religare said the NDA is likely to add 14 seats to its current tally of 64, while the Congress alone is likely to lose nine seats from its current tally of 68. This has relevance for the passage of important but stuck-in-Parliament-logjam bills like the GST, which require constitutional amendment such that a majority of the total membership of the house (122 of total 244 in Rajya Sabha) and a special majority of two-thirds of members present and voting to support it.
"Thus, with a reduction in its own tally, the Congress would find it that much difficult to stall the GST, after the Rajya Sabha vacancies get filled next year. And one can only hope that the NDA is able to elicit support from non-Congress opposition parties like Samajwadi Party (SP), Bahujan Samajwadi Party (BSP), All India Anna Dravida Munnetra Kazhagam (AIADMK), Trinamool Congress (TMC) and even Janata Dal (United) (JD(U)) and Rashtriya Janata Dal (RJD) to sail it through," Religare said in a note.
While the ruling NDA won only 58 seats (BJP 53) in the 243-member Bihar Assembly, the Grand Alliance got 178 seats. The alliance comprises JD(U), RJD and Congress.