The goods and services tax (GST) implemented today is not an ideal one, but it is the best that could be achieved to begin with. The NDA government led by prime minister Narendra Modi must be given the credit for implementing GST and by calling it a hasty move, former prime minister Manmohan Singh is only denting his pro-reform image.
Given the ease with which prime minister Narendra Modi-led NDA government has usurped the initiatives of the Congress-led UPA government by bringing in the required changes and implementing them successfully – Aadhaar and goods and services tax (GST) being among the prominent ones – it is not surprising that the Congress party is now opposing the current government on even these counts.
If the UPA could not implement Aadhaar-based direct benefit transfer scheme, even after projecting it as a game-changer model, and couldn’t capitalize on it in the 2014 Lok Sabha polls – it is the Congress party which should own the responsibility for this. Shouldn’t the party accept that the NDA government has succeeded in pursuing Aadhaar in a manner it should have done?
Ironically, the party appears to be opposing the same reform move, which it perceived as the one which will transform the country, and very rightly so, on some pretext or the other, including the privacy concerns.
Same is the case with the GST. The Congress party could not move forward in implementing the new indirect tax regime across the country, despite projecting it as a reform that will transform the country’s taxation structure. The BJP-led NDA government has succeeded in implementing it despite huge political opposition, including that from the Congress also. Here again, instead of supporting it, the party is now finding faults in the implementation.
Of course, the current GST structure is not an ideal one, but this is the best any government could have achieved with states so concerned about any possible loss to their revenue. The structure needs to be fine-tuned going ahead by reducing the number of tax rates from the current four – 5%,12%, 18% and 28% along with the cess on luxury and sin products – by including the petroleum products and other segments that are currently left out.
While political criticism of the GST structure because of the reality of being in the opposition is understandable, what looks inappropriate is even former prime minister Manmohan Singh calling it a hasty step that has led to an adverse impact on the GDP.
Being at the forefront of reforms in the country, he understands how difficult it is to persuade the states to agree to any measure that may impact their revenue. Isn’t it a better idea to start with a workable GST and then improve it rather than waiting endlessly to implement an ideal one?
In any case, any new tax structure will take time to adjust and hiccups are bound to be there. Who thought that the GST will add to the GDP growth from day one? Improvement in GST needs his support going ahead and it is not prudent on his part to undermine the reform, especially with the kind of economic reform credentials he has.
There may be different opinions about the requirement and efficacy of demonetisation in tackling black money and promoting digital transactions in India, but there is no doubt that reforms like Aadhaar and GST should not be dented in any way just for political gains.
Both are now a reality which every government will have to live with.