GST rollout may face hiccups after Election results 2011
May, 14th 2011
The rout of the Communist Party of India (Marxist) in West Bengal could set back the progress of the proposed goods and services tax , as Asim Dasgupta , who played the lead role in finalising the GST structure, will not be there in the last leg of this crucial indirect tax reform.
"He (Asim Dasgupta) was the driving force in the empowered committee...A replacement will have to be found to build consensus among states on GST," said Madhya Pradesh finance minister Raghavji.
The GST seeks to replace a slew of indirect taxes levied by states and the centre with a single levy. Dasgupta, the finance minister in the Left government, which had ruled West Bengal for the past 34 years, heads the empowered committee of state FMs that negotiates with the centre on key financial issues.
The GST structure he helped finalise was acceptable to a majority of the states and industry. So now the choice of person who heads the empowered committee will be crucial considering that BJPruled states have not yet endorsed the reforms fully. The government has already moved a bill to make constitutional changes necessary to facilitate the rollout of this reform. It needs the support of the opposition to get the bill passed not only in the Lok Sabha but also in state assemblies.
The name of Bihar deputy chief minister and finance minister Sushil Modi, known for his reasonable and mild approach, is doing the rounds in the North Block, which houses the Union finance ministry. Modi is also seen as acceptable since the main opposition to the GST is coming from BJP. Of the seven BJP-ruled states, Gujarat had initially agreed to GST, but Narendra Modi was not so enthusiastic after federal investigators gunned for former minister Amit Shah over a fake encounter case.
Madhya Pradesh and Uttarakhand opposed GST on grounds that they may not gain from it as they are high-producing but lowconsuming states.
Amit Mitra, FICCI secretary general and now likely finance minister of West Bengal in the Trinamool Congress government, is another candidate, though.
A former senior government functionary who was associated with VAT and GST in the initial stages said the need of the hour was cohesion within the committee.
"Anyone who can bring this element to the empowered panel would be able to drive this reform successfully," the person said. Experts say now only some last bit of consensus building is needed.
"Under his (Asim Dasgupta's) leadership, the empowered committee has managed to take the GST initiative forward, to an extent that it only needs a final push,"said Pratik Jain, executive director, KPMG.
Dasgupta had headed the joint committee of state finance ministers on value added tax, which later took a formal shape in the empowered committee. He successfully demonstrated his ability in consensus building by getting the BJP to endorse VAT.
Asim Dasgupta, or Asim da as he is popularly known, was the natural choice to spearhead the initiative when the Centre decided on this crucial reform in 2006. New members from Tamil Nadu and Kerala will also determine the course of GST. UPA's ally DMK, which lost in Tamil Nadu, was opposed to GST.