Tuesday July 16, 2019
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GST Bill: Time for Congress to question its means and ends

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By Gaurav Sharma

Photo credit: youtube.com
Photo credit: youtube.com

The current ruckus created in the Parliament over the introduction of the Goods and Service Tax Bill(GST), has resulted in a stalemate between the NDA government and opposition parties threatening a whitewash monsoon session this year.

Finance Minister Arun Jaitley blamed the impasse on the “obstinacy of two Congress leaders”, alluding to Congress President Sonia Gandhi and Vice-president Rahul Gandhi.

Jaitley alleged that the Congress’ demands for resignations of Sushma Swaraj, and two other ministers, was a pretext for stalling the GST bill. However, the Congress refused to backtrack from its stance and continued to shout its motto, “no resignation, no House”.

Meanwhile, JD(U) chief Sharad Yadav and other MP’s from the Samajwadi Party(SP) attacked Jaitley for his inability to push through the bill.

Why has the bill created such a mindless, bitter standoff so as to stall the functioning of Parliament, brazenly splurging precious taxpayer money in a sea of inactivity? Is it mere coincidence that the passage of the bill in the Upper House gratuitously timed itself with serious charges being leveled against top politicos?

This requires an understanding of the Goods & Services Tax.

GST is a tax initiative which aims to bring all indirect taxes under a single tax structure, whereby all goods and services are charged under a national sales tax. It is the backbone of the indirect tax reforms that the Indian government has been aiming to bring forth since 2010, when the then finance minister P Chidambaram proposed it in his budget speech.

GST is part of a constitutional amendment bill for which means it has to be passed by both the Houses of the Parliament.

Under the proposed harmonised taxation system, only the Central government would be able to levy an integrated GST on the interstate transfer of goods and services and imports. Rates of tax, supply principles, special state provisions and levy period for additional tax would be determined (recommended) by a GST Council.

How will it help the economy?

Although the provisions of the bill are not strictly conforming to an ideal GST regime, the tax would bring a sea change in the way business is conducted in the country and the way economy revolves.

It will iron out the kinks in the current indirect tax structure, broaden the tax base (thereby filling the government coffers), increase compliance and prevent the gory practice of double taxation.

Economic distortions which further make life difficult for businesses running at a pan-India level, will be wiped clean, providing much-needed ease-of-doing-business for corporates. Manufacturing activity would start rising and tax compliance would become simpler.

Finance Minister Arun Jaitley boisterously described the GST as the biggest tax reform in India and went to say that it would add a substantial 2 per cent to the growth rate of the country.

Issues pertaining GST

The GST has its fair share of  contentious issues. First of all, the provisions of the bill declare an additional tax of 1 per cent (for 2 years) on inter-state trade or commerce by the Centre, thereby precluding the visualized aim of taxing value addition and not trade.

Furthermore, the exclusion of alcohol and petroleum from the ambit of the GST Bill puts question marks on the resolve of the government to ushering forth a strong taxation regime.

Some states have voiced concerns over potential revenue losses in light of the change in tax infrastructure. Still, in the long run, one can expect prices to fall and delivery of goods and services to become more efficient, bringing much cheer to the inflation saddled shoulders of the consumer.

Indian products, both in domestic and international, can be expected to become more competitive due to the fall in price. A surge in exports would cut India’s current account deficit (CAD) significantly, which can have a cascading effect on the strength of the rupee.

It would not be too far-fetched to imagine a vast improvement in India’s standing in the global markets, if the GST is implemented swiftly, without any red-tapism.

Present Status

GST has not only caused a scuffle between politicians but has agitated the corporate groups. Most of the corporate honchos blame the Opposition for delaying the implementation of GST.

More than 61 per cent of the respondents of an ET poll felt that the delay would be a setback, a pushback to the economic recovery. Majority felt a complete economic recovery would be difficult to accomplish by April 2016, the deadline set for the passage of the bill.

If the opposition comprising of 68 Congress, 10 Left, 11 AIADMK MPs continue to battle tooth and nail against the bill, their credibility as pro-reform political parties will be questioned.

While the Rajya Sabha requires the sanction of at least two-thirds majority to pass the bill, the prospective opposition alliance would fail the bill by seven votes in the house of 245 members.

Considering the fact that barely 2 days remain for the end of the monsoon session, it is highly unlikely that the government would be able to introduce the bill. The opposition in its political zealousness has resorted to a desperate measure of log jamming the Parliament.

Protesting against a pro-market, pro-economy legislation, shows the degraded levels to which our politicians have stooped to, without giving a hoot to the slick democratic machinery of the country.

Our politicians swear by the Constitution, it is time they start abiding by it.

Next Story

Will Congress Party be Able to Survive in Future in Face of Modi Onslaught?

It was India’s “Grand Old Party.” The Congress Party ruled the country for 55 out of 71 years since independence

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From left, Congress party leader Sonia Gandhi, her son and party President Rahul Gandhi, and former Indian Prime Minister Manmohan Singh attend a Congress Working Committee meeting in New Delhi, May 25, 2019. VOA

It was India’s “Grand Old Party.” The Congress Party ruled the country for 55 out of 71 years since independence. But following the party’s crushing electoral debacle for a second time, there are questions about its future as the Nehru-Gandhi political dynasty at its helm is unable to counter the most powerful leader India has produced in decades: Prime Minister Narendra Modi.

Contrary to expectations, India’s mammoth general election turned out to be virtually a no-contest between Modi and Congress Party president Rahul Gandhi as it became a presidential-style battle.

“It is not what went wrong with the Congress, it is more of a story of what went right for Prime Minister Modi. He stood as a tall leader, as an achiever, as somebody who understood people’s aspirations,” says political commentator Rasheed Kidwai, who has authored a biography of Rahul Gandhi’s mother, Sonia Gandhi. On the other hand, “Rahul Gandhi is temperamentally not a power wielder. He is a trustee of power.”

The sixth member of the Nehru Gandhi family to lead the party, Rahul is often seen as a “reluctant politician”, despite his spirited campaign to revive the party and challenge Modi after its rout in 2014.

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India’s Prime Minister Narendra Modi waves toward his supporters during an election campaign rally in New Delhi, May 8, 2019. VOA

Gandhi’s rallies drew crowds, but his efforts to project Modi and his Bharatiya Janata Party as a threat to India’s secular traditions or to highlight issues of economic distress failed to resonate. His attempts to nail him for corruption in a deal to buy Rafale French fighter jets fell flat. His promise of a minimum wage for India’s poorest families was met with skepticism, even among the poor.

On the other hand, Modi, successfully wooed voters with his message of strident nationalism and subtle appeal to the majority Hindu community. Along with it, there was another theme: he projected himself as the humble son of a tea seller, a self made man who fought all odds to reach the top post in contrast to what he called the “entitled” Gandhi who had inherited the mantle of leadership of the Congress Party. It drew cheers from the country’s emerging middle and lower-middle classes, exhausted with dynastic politics.

The Congress Party’s tally of 52 seats in parliament was only a notch higher than the 44 seats it won in 2014 in the 545-member parliament. The party’s candidates returned empty-handed in half the Indian states and in several others the party only mustered a single digit tally.Modi’s BJP won 303 seats.

The scale of its losses not just crushed hopes the Congress Party would either lead a credible challenge to Modi or return as invigorated opposition – it once again raised questions over the leadership of the Gandhi family.

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The sixth member of the Nehru Gandhi family to lead the party, Rahul is often seen as a “reluctant politician”, despite his spirited campaign to revive the party and challenge Modi after its rout in 2014. VOA

Rahul Gandhi has offered to resign, but expectedly the party that has no second rung of leadership has turned it down. “The party will fulfill its role as a strong opposition. We need Rahul Gandhi to lead us in these challenging times,” Congress Party spokesman Randeep Surjewala said after a meeting of the party’s senior leaders on the weekend.

Rahul Gandhi also lost the Amethi constituency the party had held for 50 years in Uttar Pradesh state. In another humiliating blow for the Gandhi family, his sister Priyanka Gandhi Vadra, who was appointed in a senior post to revive the party, failed to make an impact. Rahul’s mother, Sonia Gandhi, won her party’s only seat in the state.

Rahul Gandhi’s victory in another constituency in South India means he will continue to be a lawmaker. Dynastic politics is not limited to the Congress Party: lawmakers from political families are a routine feature of Indian politics. But political commentators say in an era showing a preference for strong, populist leaders, Modi was the clear victor.

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here are questions about its future as the Nehru-Gandhi political dynasty at its helm is unable to counter the most powerful leader India has produced in decades: Prime Minister Narendra Modi. Wikimedia Commons

“There is a new sense of nationalism sweeping across many conventional democracies. There is a yearning for a strong leader that captures the public imagination,” according to political analyst Ajoy Bose. “I don’t really see the conventional Congress Party or the conventional leadership mounting a challenge to Modi. He has completely taken the country by storm.”

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Gandhi tried to give a positive message after the party’s rout. “We have a different vision of India [from Modi]”, said the head of the party that has long projected itself as a defender of India’s minorities, such as Muslims who worry about religious polarization and a rise in hate crimes since Modi came to power. “There is no need to be afraid. We will continue to work hard and we will eventually win.”

But it may be difficult to reinvent what analysts call a “fading party.” They say Modi’s BJP now occupies the dominant political space that the Congress party did for decades. “Congress is going to get reduced to, you know, like the Liberals did in Britain,” says Rasheed Kidwai. (VOA)