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Central Sales Tax issue : Government faces flak from TMC in Rajya Sabha
March, 29th 2012

The government came under attack from constituent parties, the Trinamool Congress and NCP, during the debate on the general budget in the Rajya Sabha on Wednesday.

The Trinamool Congress charged the government with taking unilateral decisions on crucial issues like Central Sales Tax. While NCP demanded a ban on commodity exchanges, arguing that these not only encourage speculation and stoke inflation but also hurt farmers.

Raising the banner of erosion of the federal structure, the Trinamool Congress said that the Central Sales Tax was resulting in loss of revenue for states and asked the finance minister to look at the budget through the 'prism of operative federalism'.

"You know what is happening on CST...the states are losing money, and a unilateral decision has been made not to give the states what is actually due to them," Trinamool member Derek O'Brien said while participating in the debate on general budget.

O'Brien said that in West Bengal, the loss amounts to Rs 1,200 crore. "If you look at some of the other states, it is between Rs 800-1,200 and Rs 1,500 crore...this has been done unilaterally," he said.

He rejected finance minister Pranab Mukherjee's contention that CST was reduced from 4%-2% on the recommendation of the Empowered Committee of Finance Ministers.

"Then, how come the service tax recommendation made by the same committee this year was not listened to?

So, the first question we need to ask ourselves, is this operative federalism denying the states of what really belongs to them by unilaterally taking these decisions," O'Brien said. He said he suspected some 'devious intention' even in the proposed General Sales Tax (GST) "and that is why we were not as gung-ho" about it.

The NCP asked the finance minister to ban commodity exchanges as they do not help farmers. "There is a need to ban commodity exchanges... Commodity exchanges should be banned since they do not help farmers.

Sans these, there would be no speculation and inflation will come down," NCP member Ishwarlal Shankarlal Jain said. The statement assumes significance since NCP chief and agriculture minister Sharad Pawar earlier held the portfolio of food and consumer affairs ministry which oversees the functioning of commodity exchanges.

According to commodity market regulator Forward Markets Commission, India has 21 commodity exchanges and their turnover rose 54% to Rs 173.69 lakh crore till March 15, compared to 112.86 lakh crore in the same period last year.

Agriculture commodities contributed to 20.33 lakh crore to the total turnover during the period, up by 49% from 13.63 lakh crore.

Meanwhile, the finance minister said he was accepting the suggestion of JD(U) MP NK Singh for constituting a committee of chief ministers from eastern India.

Replying to the debate in the Rajya Sabha, he said the measure was taken in the context of east India being an harbinger of the second Green Revolution, the progress likely to be achieved and the enhanced allocation made in the budget.

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