The Telegraph
Thursday , May 29 , 2014
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Move to hasten GST

Jaitley: Task at hand

New Delhi, May 28: After opposing the goods & services tax (GST) for nearly a decade, the new BJP-led government has said it will work towards fast-tracking the implementation of the new tax regime, which seeks to replace multiple state and central levies.

Finance minister Arun Jaitley today asked ministry officials to give him a plan of action by tomorrow, giving details of the GST framework and the areas of disagreement with state governments such as compensation for the loss of revenue that has delayed the implementation of GST.

In the run-up to the elections, the BJP had changed its stance and Prime Minister Narendra Modi had said in February at a meeting with businessmen that “BJP is in favour of GST”, adding that “IT connectivity is a prerequisite for the implementation”.

For years states ruled by the BJP such as Gujarat, Uttarakhand, Chhattisgarh, Himachal Pradesh, Karnataka and Madhya Pradesh had thwarted the efforts of the previous finance ministers — Pranab Mukherjee and P. Chidambaram — to roll out nationwide GST.

Ironically, the proposal for GST had first come up during the tenure of the Atal Bihari Vajpayee government, which had set up an empowered committee headed by then Bengal finance minister Asim Dasgupta. Chidambaram had taken it forward by announcing a timeline for introducing it by 2010 in his budget of 2007-08.

Some years back, Mukherjee had tried to break the deadlock during a trip to Ahmedabad by holding talks with Modi. The talks had failed as Modi did not reject the tax reform but brought up procedural objections. Subsequently, meetings of Chidambaram with Opposition leaders ahead of Parliament sessions met with similar objections.

The Congress seems to be willing to co-operate with the new government on GST. Congress leader Jairam Ramesh had earlier said his party would “not do what Modi did to us on GST...He single-handedly derailed the most important economic initiative”.

A consensus is essential as the measure has to be passed by a two-thirds majority in both the houses of Parliament.

At today’s meeting, Jaitley is believed to have indicated he would like to call a meeting of state finance ministers soon to hammer out a deal.

According to D.K.Joshi, chief economist with rating agency Crisil, “The biggest gainers will be states such as Gujarat, Tamil Nadu, Maharashtra, Karnataka and Bengal, who are big producer states. Its criticism will die out once the measure comes in.”