GST architect Vijay Kelkar says it’s a win for India’s Federalism
“A great beginning for making an unified market,” was how Dr. Vijay Kelkar, former chairman of the 13th Finance Commission and architect of the Goods and Services Tax, sees the GST launch in his exclusive interview with Hindustan Timespune Updated: Jul 01, 2017 17:28 IST
“This is a win for India’s federalism and a great beginning for making an unified market,” Dr. Vijay Kelkar, former chairman of the 13th Finance Commission and architect of the Goods and Services tax, said while speaking to Hindustan Times on Friday.
The pre-eminent Pune-based economist who left for Delhi for the midnight ceremonious launch of GST said, the unified tax regime over the coming years, “will give a major fillip to industrialisation of our lagging regions and also to industrial exports.”
It will also lead to the proposed removal of tax distortions faced by our producers, he said.
According to him the historic introduction of the unified tax regime, “is just the beginning” of India’s growth story as scripted by GST.
It was in 2004 that a Task Force headed by Kelkar, then advisor to the Finance Ministry, had proposed a comprehensive GST to deal with the myriad problems and complications suffered by India’s taxation system.
Barely 10 days ago, Dr. Vijay Kelkar explained in Pune how GST was a ‘grand bargain” between the centre and the states, aimed at enlarging India’s tax base and working out a tax-sharing regime. He was speaking at a Pune International Centre (PIC) event on June 20 after a presentation on ‘GST Revolution: Challenges and Opportunities” by Dr. V. Bhaskar, former Special Chief Secretary, Finance, Government of Andhra Pradesh.
Describing it as a totally “home-grown tax reform,” Dr. Kelkar said GST was born out of a realisation that the states have a much larger responsibility and development commitments, without matching access to resources, as compared to the centre. The thought then struck that a “grand bargain” could be worked out between the Centre and the States “where the tax base is enlarged and they share the tax base”.
We realised how powerful this concept would be if we simplified the tax regime,” Dr. Kelkar said, calling GST a “momentous occasion” for the nation.
In his presentation, Dr.V. Bhaskar described GST as a “truly momentous change” taking place in the federal system of India for the first time in 70 years.
“GST can simplify your life; it can reduce the amount to be paid by the consumer in restaurants, hotels and many other places,” he said. There would be a lowering of cost even in the purchase of flats which the common man does just once in his lifetime, the financial expert said.
Dr. Bhaskar maintained that while India had many achievements to its credit, the nation was “desperately poor” and needed enormous resources to provide a decent life for its billion-strong citizenry.
“We need to grow fast. NITI Aayog says 7% growth is not good enough for India,” Dr. Bhaskar said, adding that while 10% growth was achievable, in fact, India needed to grow at a heady pace of 13.5%. “We need to push growth as fast as possible,” he stressed.
According to Dr. Bhaskar, the 13th Finance Commission which was headed by Dr. Kelkar, projected that the GDP would grow further by 1.7% after the implementation of GST.
“While GST has a number of warts, some GST is better than no GST. We need the GST however faulty it is,” he said.
Dr. Kelkar and Dr. Bhaskar described the unrolling of GST as an “intermediate step” leading to a final GST for the country.