Congress would back GST if in opposition - Jairam Ramesh

NEW DELHI Fri May 2, 2014 3:23pm IST

1 of 2. Rural Development Minister Jairam Ramesh speaks during an interview with Reuters at his office in New Delhi May 1, 2014.

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NEW DELHI May 1 (Reuters) - If the ruling Congress party is pushed into opposition after a general election, it would give its backing to a major tax reform it tried to bring in during 10 years in office, a government minister and party strategist said on Thursday.

Jairam Ramesh, a senior adviser to the Nehru-Gandhi dynasty controlling the party, criticised opposition leader Narendra Modi for blocking the goods and services tax (GST), which is aimed at easing doing business, raising revenues and boosting growth.

"If the people of India want us to be in the opposition, we will not do what Mr Modi did to us on GST, he single-handedly derailed the most important economic initiative of (our government)," Ramesh said in an interview as the world's biggest election reaches the final stage.

Results are due on May 16.

BJP-ruled states, including Gujarat, which Modi governs, stymied efforts by two successive finance ministers to bring in the new indirect tax regime, which would replace some state taxes.

Modi, who opinion polls favour to form the next government with his Bharatiya Janata Party and allies, now says he will bring in GST if he wins office, blaming the delay on the government's poor coordination with states, whose support is needed to implement the reform.

The measure, stuck for years, would convert the country into a single fiscal union and add 2 percentage points to overall economic growth, economists estimate.

The BJP had become the party to beat in this election but claims of victory were premature, Ramesh said. He said the mammoth election - with 815 million eligible voters - remained a close fight between the Congress-led coalition and the Hindu nationalist opposition. It was far from certain that Modi will become prime minister, he said.

Most opinion polls have forecast the BJP to emerge as the single largest group in the election and best-placed to form a coalition government, riding a wave of anger and discontent over graft scandals and a slowing economy.

But Ramesh's remarks suggested that the Congress was not about to give up the fight and that it would try and stop Modi - whom it deeply reviles - from cobbling together a simple majority in parliament required to rule.

"With almost 75 to 80 percent of the (election) over, I am reasonably certain it will be a very, very close contest," said Ramesh, who heads the rural development ministry.

"It is becoming increasingly apparent that the so-called sweep for the BJP is not going to happen. The polls have vastly overestimated the BJP's performance while downplaying the Congress performance."

Opinion polls have a mixed record in India which has an electorate bigger than the United States and Europe put together.

Ramesh said the party's own assessment was that it had picked up support in states such as Punjab, Jharkhand and Chhattisgarh and Karnataka that went to the polls in the second half of the campaign.

The BJP's power base is in the Hindi heartland in the north and the west of the country and it needs to lure in regional players in the south and east to build a stable coalition.

Failure to win big could be a problem for the Hindu nationalist Modi, seen as a polarising figure mistrusted by the country's sizeable Muslim minorities.

He has been unable to shake off criticism that he failed to protect Muslims in a spasm of bloodshed in Gujarat that he governs, even though a Supreme Court ordered inquiry absolved him of any responsibility.

"Modi's track record in Gujarat is one of political authoritarianism, social divisiveness and some sort of economic cronyism. It is a dangerous cocktail," Ramesh said.

(Additional reporting by Frank Jack Daniel; Editing by Sanjeev Miglani and Angus MacSwan)

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