About Narendra Modi Highlight
It took him more than two years, but Prime Minister Narendra Modi has finally discovered the art of the deal.
Realising that a frontal assault wasn't securing the votes needed for India's biggest-ever tax reform+ , Modi and finance minister Arun Jaitley changed tack this spring, government and ruling party sources have told Reuters.
First, they sought to build a coalition among the nation's 29 state governments to isolate the Congress party, which despite losing heavily to Modi in 2014 had blocked a new Goods and Services Tax (GST) Bill in the Rajya Sabha — the upper house of Parliament.
Early standoff
Despite winning India's biggest mandate in 30 years, PM Modi has struggled to advance his agenda.
Congress, though reduced to a rump opposition, has resisted. As the largest party in the Rajya Sabha, it had blocked the GST and derailed Modi's land acquisition bill which critics branded as being "anti-farmer".
While that tactic proved effective, it wasn't winning public support. Congress took hits in state elections and in June lost the Rajya Sabha votes it needed to be sure of stopping the GST.
This was the cue for Jaitley to court the states+ , with key swing state West Bengal soon declaring its support. In July, he targeted Bihar, while at the same time re-engaging with Congress after nine months of radio silence.
Jaitley's promise to the states to compensate revenue losses for five years, made at talks in New Delhi on July 26, won them over, West Bengal's finance minister Amit Mitra told Reuters.
Congress moved to cut a deal, while Modi and Jaitley were ready to offer concessions - including scrapping a levy of 1 percent on the movement of goods between states - that experts say would actually make the GST a better tax.