Congress demands extension of GST compensation, reset of economic policies

Thirty one years after he accompanied Dr. Manmohan Singh, then finance minister, in ushering liberalisation through economic reforms, P Chidambaram pitched for another “reset” in economic policies.
Congress interim president Sonia Gandhi, party leader Rahul Gandhi and others during a meeting on Day 2 of the party's ‘Nav Sankalp Shivir’, in Udaipur on Saturday. (PTI PHOTO.)
Congress interim president Sonia Gandhi, party leader Rahul Gandhi and others during a meeting on Day 2 of the party's ‘Nav Sankalp Shivir’, in Udaipur on Saturday. (PTI PHOTO.)
Published on May 14, 2022 05:50 PM IST
Copy Link

Udaipur: The Congress party on Saturday demanded that the GST compensation period be extended by another three years amidst the current economic situation and poor financial health of states. The party also sought that current economic policies, 31 years after its government ushered in economic reforms, must be “reset” to take into account “global and domestic developments” as well as “social inequalities” and tweaked “for the next 10-20-30 years.” The Congress will also push the policy changes as a part of its 2024 manifesto.

Addressing the media at the Congress’ Chintan Shivir, former finance minister P Chidambaram demanded an extension of the compensation period and announced that the party would “strongly disapprove” any attempt of the government to prevent the GST Council from seeking such extension.

“The compensation period must be extended. It must be extended by at least another three years. We will strongly disapprove if any attempt is made by the Central Government or the Union Finance Minister to rail road the GST council and prevent it from recommending an extension of the GST compensation period by another three years,” he said.

The GST law allowed a five-year period for compensating states of any loss in tax revenues after the implementation of the Goods and Services Tax. The compensation window will end in June this year.

Thirty one years after he accompanied Dr. Manmohan Singh, then finance minister, in ushering liberalisation through economic reforms, P Chidambaram pitched for another “reset” in economic policies.

“We believe that we must prepare the Indian economy and the Indian workforce to adapt to the ways in which industry, business and trade will be conducted in the 21st century with the greater use of automation, robotics, machine learning and artificial intelligence. We believe that important changes in economic policies will be required in the light of climate change and the need for mitigation and adaptation,” the former finance minister explained.

Recalling his first experience in policy making in 1991, Chidambaram said, “We are now 30 years down the road. The world is changed, India is changed. A reset means- taking into account global and domestic development and fine-tuning the policies that have obviously given us benefits, but, clearly a time for reset has come. While we acknowledge that we have reaped enormous benefits as a result of liberalisation we take into account global and domestic developments and reset our policies for the next 10-20-30 years.”

He described the current state of economy as “a matter of extreme concern”, slammed the Reserve Bank of India for falling “behind the curve” in tackling inflation and said, “Inflation has risen to unacceptable level. The WPI is at 14.55% and the CPI is at 7.9%. There are high taxes on petrol and diesel and high GST tax rates. The job situation has never been so low with 40.38% job participation rate and unemployment rate at 7.83%.”

The Congress leader suggested the time is ripe for a comprehensive review of Centre-States fiscal relations. “The consequences of the poorly-drafted and unfairly-implemented GST laws brought in by the Modi government in 2017 are there for everyone to see. The States’ fiscal position is fragile as never before and needs urgent remedial measures,” Chidambaram said.

He rejected the government’s plea that high inflation rates are a result of the Russia-Ukraine war as “lame excuse” and argued that “high inflationary trend was noticed in pre-Ukraine war time. The Ukraine war has added to our problem.”

While unpaid GST compensation has remained a tricky issue between the states and the Centre, Chidambaram claimed there is a “complete break-down of trust” between the Central Government and the states including some BJP-ruled states.

SHARE THIS ARTICLE ON
Close Story
SHARE
Story Saved
×
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Wednesday, May 18, 2022