Gujarat polls ahead have ended Centre’s arrogance on GST: Manpreet Badal
Decisions in BJP-dominated GST Council taken with ‘consensus’ but just a few Congress finance ministers have no say, says Punjab FMpunjab Updated: Oct 24, 2017 10:04 IST
As finance minister of a Congress-ruled state, Punjab’s Manpreet Badal was among the most vociferous votaries of the goods and services tax (GST) even as his party’s vice-president Rahul Gandhi and other central leaders opposed the “hasty” implementation from July 1 this year. Manpreet had hailed GST as a “game-changer” for a consumption-based state such as Punjab that was promised revenue growth of 14% for five years under the new indirect tax regime put in place by the BJP-led central government.
Less than four months later, Manpreet finds himself struggling to pay even salaries and pensions as the Centre has this month declared to send only quarterly remittance of state’s share in GST. “Finance ministers from several states had objected to the quarterly compensation, the high tax on restaurants, and problems being faced by small traders, at the GST Council meeting in Hyderabad in September,” Manpreet told HT, “But the Centre was not willing to listen to us. Now, owing to the upcoming Gujarat polls and the letter of senior BJP leader (and former Union FM) Yashwant Sinha against GST, there is a change in the Centre’s attitude. The arrogance has finally gone.”
Why not speak up earlier?
On why FMs from Congress states were not striking a dissenting note in the council meetings, he said the decisions are taken on the principle of unanimity. “Most of the states are ruled by the BJP. There are just a few finance ministers from the Congress. We have no say. We all said the situation on the ground was not good. The cycle and textile units — Punjab’s leading industry — has been hit badly with GST.”
Government officials say now the Centre is “bending backwards” to accommodate the concerns of traders. “Restaurants are ready for being in the 18% slab without input credit, but the central government is eager to bring restaurants in the 12% slab now. It shows the Narendra Modi government’s nervousness,” said a senior officer in the state government.
Captain was keen too, but...
Capt Amarinder Singh too had been hailing GST even when he was not the CM but deputy leader of the Congress in the Lok Sabha. When his party stalled the Parliament over GST, Amarinder had said, “Punjab will suffer the most by stalling of the bill.” But the Congress is now seeing its landslide win in the Gurdaspur Lok Sabha bypoll as a mandate against GST, and hopes it will hit the BJP’s fortunes in upcoming polls in Himachal Pradesh besides Gujarat.
Punjab’s disillusionment with the Union finance ministry helmed by Arun Jaitley is not just confined to GST. It also stems from not getting a nod to relaxation of the borrowing limit to roll out a debt waiver for farmers, despite both Manpreet and CM Amarinder meeting Prime Minister Modi and Jaitley to push for it. With BJP-ruled Uttar Pradesh too seeking such a relaxation to honour its loan waiver promise to farmers, the Centre feels nod to one state will open up the floodgates with similar demands from others.
Punjab is now hoping to fund the debt waiver from tax on foodgrains. The state cabinet had even hiked the rural development fee on crops, Punjab’s main source of revenue, by 1% in August. Later, the party rolled back the hike on crops that are not under the minimum support price (MSP) regime.
And desperate times call for desperate measures. Manpreet has asked all departments to launch one-time settlement schemes to end litigation, recover dues, and cut costs. Primary schools with fewer than 20 students are being merged with others nearby. And employees on unsanctioned posts are being shunted out or adjusted on posts. Manpreet will make a presentation to the CM on Tuesday. The challenge in the post-GST scenario for Punjab is to keep itself financially afloat.
SAD was wary
While in power, BJP ally Shiromani Akali Dal (SAD) was more wary of GST’s gains for Punjab than the Congress. The then state FM Parminder Singh Dhindsa had said GST’s success is based on assumptions of higher growth rate and lower tax leakages. “But to what extent it will be able to plug tax leakages has to be seen. The growth rate of country’s economy is expected to jump by 2% after its introduction and benefit trade and industry. Punjab may not need to worry about the revenue loss for the next five years as the Centre will compensate it. But, how will it make up for the loss after five years?” Dhindsa had said.