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Modi kicks up a storm with no tax remark

Gujarat Chief Minister Narendra Modi has once again kicked up a political storm by daring the Centre to stop its funds to the state for a year and, in turn, not to collect any taxes from it.

india Updated: Jun 11, 2008 01:28 IST
Rathin Das

Gujarat Chief Minister Narendra Modi has once again kicked up a political storm by daring the Centre to stop its funds to the state for a year and, in turn, not to collect any taxes from it.

Speaking at a function in Vadodara on Sunday, Modi said that the Centre collects nearly Rs 40,000 crore by way of taxes from Gujarat but gives a measly 2.5 per cent of central funds to the state.

If the Centre so wishes, it need not pay anything to Gujarat for a year but then the Union government should also not collect any taxes from the state, Modi said in his inimitable style.

Though the chief minister keeps targeting the Centre, his latest utterance has kicked off a political storm. Social scientists and economists see it as an attack on the federal structure that binds the multi-lingual, multi-ethnic country together. The very idea of Gujarat not paying taxes the to Centre and not accepting any central funds is a direct attack on the federal structure of the nation, said political-economist Professor Ghanshyam Shah, formerly of the Jawaharlal Nehru University. “This is a naïve and politically dangerous stand. He is playing to the gallery irresponsibly,” said Shah, adding that Modi probably doesn’t know that central funds are distributed on the basis of the Gadgil Formula adopted by the Planning Commission decades back.

Social scientist and author Achyut Yagnik said such an attitude is an attack on the unity and integrity of the nation. Yagnik said Modi has been engaging in such “Gujarat asmita (pride)” talk for the last few years in order to arouse regional sentiments.

Congress MP from Sabarkantha Madhusudan Mistry rubbished Modi’s claim of Gujarat paying Rs 40,000 crore in taxes to the Centre annually. He told the Hindustan Times on Tuesday that the CM is ignorant of the fact that the states’ share in central funds is decided by the Finance Commission, and not the Centre. Gujarat ranks 8th in corporate tax collection (Rs 3,080 crore) and fourth in income tax collection (Rs 2,971 crores), he disclosed.

Quoting figures from a Lok Sabha reply, Mistry revealed that Gujarat contributed only Rs 6,187 crore to the Rs 1,62,989 crore of direct taxes collected by the Centre in 2005-06. “All this talk of Gujarat paying Rs 40,000 crore in taxes to the Centre is bogus and baseless,” he said.