West Bengal Finance Minister Amit Mitra and J&K Finance Minister Haseeb Drabu got into a heated debate over GST while addressing annual general meeting of FICCI on Thursday. Raising concerns over the fall in tax collections, Amit Mitra said, “ September tax collection was Rs 95,131 crore. The October collection plummets by Rs 12,000 crore. Does the country know that? October collection was Rs 83, 346 crore. It’s a Rs 12,000 crore decline? So here’s the question on the table, what’ll happen next month, the following months?” Further, the minister pointed out that states are facing a revenue shortfall of Rs 39,111 crore in the first four months of the new regime.
“The next issue is there has been a revenue shortfall of Rs. 39,111 crore in the first four months of rollout of the goods and services tax. In the GST council, the government had budgeted a revenue shortfall of Rs 55,000 crore. At the current rate, even if we see improvement, we will end up at Rs 80-85,000 crore,” he said. Amit Mitra also pointed out that the small and medium enterprises have been most hurt. “Why has it (collection) fallen? SMEs have not been able to fill in. There has been a 40% decline in production for a few SMEs,” Amit Mitra said.
Responding to the questions raised by Amit Mitra, J&K Finance Minister Haseeb Drabu said, “Who’s GST is this? Every single decision taken in the GST was by consensus. I may have many differences with the decisions, but that’s what consensus is all about. J&K is the only state which did not have the obligation to go with GST. I would certainly own up every single decision of the GST council.” Haseeb Drabu said that since the tax reform is in a state of transition, there are bound to be challenges. “There is certainly lack of clarity and we are in transition,” the minister said.
In the same address Haseeb Drabu pointed out that there have been many gains from moving on to the new indirect tax regime. “The first gain from GST is that it’s India’s first truly federal institution. As a state finance minister, I feel hugely empowered. Previously, the planning commission would fix everything, we would have to fix our numbers to suit their requirements.
The revenues may not have increased, but it has given the sub-national level a freedom which is unheard of,” Haseeb Drabu pointed out. The minister said that the new regime has indeed empowered the states like never before. “For the first time, the union and the states have pooled their sovereignities. This can change the political economy of this nation. You had 29 different finance ministers contributing to it, and not for conceptual issues but even drafting it. I don’t think this would’ve happened anywhere in the world. Section by section, law by law. Many errors that we find today our our contributions to it,” he said.
Further, the minister observed that GST will change the business landscape in India. “What is the basis for all the resentment and the noise against GST, apart from operational difficulties? GST changes the business ethics of this country,” he observed.