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Transporters' Shares Slide As GST Bill Hits Roadblock

Shares in logistics companies fell on Wednesday (09 December) as hopes faded for a quick approval by lawmakers of a key tax reform seen as beneficial to the firms, after the main opposition Congress party disrupted Parliament for the second day in a row

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Shares in logistics companies fell on Wednesday (09 December) as hopes faded for a quick approval by lawmakers of a key tax reform seen as beneficial to the firms, after the main opposition Congress party disrupted Parliament for the second day in a row.

Prime Minister Narendra Modi's long-awaited national goods and services tax (GST) is expected to spur investments and boost economic output by simplifying a thicket of local levies. But regular opposition protests this year has delayed its passage in Parliament.

With Congress party politicians forcing the session to be adjourned in the upper house by shouting slogans on Wednesday, shares of logistics companies took a hit.

Transport Corporation of India fell 8.8 per cent, Gati dropped 8 per cent, while Allcargo Logistics fell 5.2 per cent.

The broader 50-share Nifty ended down 1.2 per cent, extending its losses for the week to 2.2 percent.

"The logjam in the winter parliamentary session and subdued corporate earnings have added to the cautious mood," said Radhika Rao, a Singapore-based economist at DBS.

Modi's slow progress on economic reforms has worried investors, and he could struggle to implement GST by the April deadline if the bill is not passed in the current parliament session that ends on December 23.

Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance Co., said there was "less chance" of the GST bill being passed in the current session.

The latest row in Parliament stems from a New Delhi judge's order that Congress president Sonia Gandhi and her son Rahul must appear in court next week, in a case brought by a member of Modi's party.

The Gandhis have accused the federal government of a "political vendetta" against them, a charge Modi's officials deny.

Congress says the protests are not aimed at blocking the GST, but such roadblocks have raised worries that Modi, despite striking a conciliatory note by meeting Sonia Gandhi last month, will now struggle to reach a consensus on the tax bill.

"The government should approach the opposition again to find a way," said Satish Misra, a political analyst at the Observer Research Foundation.

The legal case against the Gandhis, brought by BJP member Subramanian Swamy, alleges the mother-son duo used $13.5 million of their party's funds to pay debts accrued by a now defunct newspaper business. The Gandhis deny wrongdoing.

The Gandhis are due to appear in court in New Delhi on December 19.

(Reuters)


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