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  1. GST loss of face will be a big blow to PM Narendra Modi

GST loss of face will be a big blow to PM Narendra Modi

Continued disruptions in Parliament have almost derailed the winter session completely and also the hope of meeting the proposed April 1, 2017, target for implementing the Goods and Services Tax (GST). While there is a view that delay in the GST may ultimately prove to be beneficial, the failure in implementing the tax structure by September 16 next year will dent prime minister Narendra Modi’s credibility in a big way.

By: | Published: December 13, 2016 5:26 PM
arun jaitley, gst, demonetisation, demonetisation india, narendra modi, pm narendra modi Union Finance Minister Arun Jaitley delivering his press statement at his office in North Block in New Delhi (PTI)

santosh-tiwari-sContinued disruptions in Parliament have almost derailed the winter session completely and also the hope of meeting the proposed April 1, 2017, target for implementing the Goods and Services Tax (GST). While there is a view that delay in the GST may ultimately prove to be beneficial, the failure in implementing the tax structure by September 16 next year will dent prime minister Narendra Modi’s credibility in a big way.

It is a fact that at one point of time even getting the Goods and Services Tax (GST) constitutional amendment Bill passed in Parliament looked a distant possibility and in the absence of a consensus on GST rates and structure, it was thought that it would be better to delay it rather than implementing a bad GST.

But, thanks to prime minister Narendra Modi’s efforts to bring the opposition on board, especially with the help of West Bengal chief minister Mamata Banerjee, the crucial constitutional amendment got passed finally, raising hopes of the GST getting implemented from April 1, 2017.

Then, with a consensus on rate structure and compensation formula, a possible agreement on the administrative structure and the supporting laws also didn’t look unachievable till the demonetisation bug attacked the GST post November 8 announcement by PM Modi.

As the situation stands today, the disruptions by the opposition ranks in Parliament in the ongoing winter session on demonetisation, has not only made the GST implementation difficult from April 1 next year, the country may even face a situation in which there could be no tax law if there is no fresh extension to the September 16 deadline outlined in the constitutional amendment.

That would be a big dent in PM Modi’s credibility and also his co-operative federalism plank—not being able to implement GST after making it reach this far, would be a big loss of face and demonetisation results may not be able to compensate for it.

In this backdrop, there is no point in getting into a situation that leads to a point of no return for both the sides.

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The retaliatory statements like the one made by finance minister Arun Jaitley today may serve no purpose and will only aggravate the situation. “The Congress party was in power for 10 years continuously from 2004-14. There were two striking features of that regime. The First that it did not take even a single step either against corruption or against black money. The Second, as far as corruption scandals were concerned, it peaked during that period. So, from 2G scandal to coal block, CWG, VVIP helicopter Agusta Westland deal, each of the scandals, which is even today discussed in public space, belongs to that period,” he said.

There is no doubt that the UPA regime witnessed unprecedented scams and corruption allegations, but it would not be correct to say that no steps were taken to deal with them, especially black money—a number of tax changes including General anti Avoidance Rules (GAAR) were introduced by the Congress-led government to tackle unaccounted income.

The best idea for the prime minister and the finance minister would be to rethink their strategy of political management on demonetisation. They need to find ways to diffuse the opposition unity on the issue by involving them in the efforts to move towards a cashless economy—there is no harm in accepting the mistakes in the implementation of the demonetisation of Rs 500 and Rs 1,000 notes.

The responsibility of taking opposition together on any issue is predominantly that of the ruling dispensation and PM Modi is erring by letting the earlier successes in Parliament in getting critical Bills passed go, due to the demonetisation.

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