Name-calling – Dirty Politics


 (Brig (retd) GB Reddi)

Name-calling or censure by rival political leaders during election campaigning is most heinous from national unity and integrity points of view.  Unfortunately, political leaders without exception are indulging in denunciation of each other’s policies and strategies.

For example, Rahul Ghandy (RG) first drubbed Goods and Services Tax (GST) as “Gabbar Singh Tax”.  Mamata Banerjee, not to be left behind in politicizing the issue gave it yet another twist – “Great Selfish Tax”.

Even Modi too has been hitting the Congress Party hard: corruption is the only identity of the Congress Party; corruption, dynasty politics and casteism (Bhrashtachaar, pariwaarwaad, jaatiwaad); five monsters in Himachal Pradesh need to rid off — mining mafia, forest mafia, drug mafia, tender mafia and transfer mafia; and so on.

Now, Manmohan Singh has come out blazing all guns: Modi must accept demonetization as the most catastrophic blunder and apologies to the nation; bullet train – an exercise in vanity; and, demonetization – an organized loot. Doctor Sab has forgotten his rule track record of scams which are squarely responsible for the dismal state of economy.

Ironic Modi is drubbed as “Feku”; RG as “Pappu”; and Manmohan Singh as “Maunmohan”.  Surely, such titles reflect lack of credibility of highest rung of leaders.

Most bizarre it is that RG finds fault with Modi led BJP for its failure to create jobs by drawing comparison of China that is creating jobs to 50,000 people every 24 hours.

What was the record of the UPA 2 during the 5-year rule: in 2009 – 12.56 lakhs; 2010 -8.65 lakhs; 2011 – 9.30 lakhs; 2012 – 3.22 lakhs; and 2013 – 4.10 lakhs.

From 1983 till 2016, Unemployment rates in India averaged 9 % reaching an all-time high of 9.4 % in 2010 and a record low of 3.46 % in 2016. In contrast, it is 3.95 % in June 2017.

(In India, the unemployment rate measures the number of people actively looking for a job as a percentage of the labor force. Such statistics do not represent the truth with China also being no exception).

If China’s data is to be taken on its face value (7.35 million jobs created in 2017 alone), there should be NIL unemployment in China. Yet, China has a higher rate of unemployment than India.

Was RG sleeping then!  Drawing a parallel with China is most quixotic.  For China is a single party rule and Xi Jinping has put most of his rivals behind bars on charges of corruption.

Furthermore, modernization of China started with Deng Xiaoping in 1978 which has been ruthlessly  implemented by his successors – Jiang Jamien and Hu Jintao prior to Xi Jinping.

RG is making an attempt to exploit demonetization and the GST issues to reclaim loyalty of small businesses, farm labor, youth and women.

All in all, RG must first get his basics correct before pouring political venom in ruthless pursuit of power to fool gullible people of India.

Political leaders without exception must always remember that “We the People may be fooled for sometime; but not all can be fooled all the time” – be it Modi or RG or Maun Mohan Singh” and others like them.

Let me also highlight few salient features of GST, an indirect tax reform, which aims to replace multiple cascading taxes (subsumed over dozen taxes) levied by the central and state governments tax  to create a single market was first mooted by Rajiv Ghandy in 1986 as the economic reform process with the introduction of the Modified Value Added Tax (MODVAT).

Subsequently, Manmohan Singh, the then Finance Minister under P V Narasimha Rao, initiated early discussions on a Value Added Tax at the state level.

In 1999, a single common “Goods and Services Tax (GST)” was proposed and given a go-ahead during a meeting between A Bi Vajpayee, the then PM and his economic advisory panel, which included three former RBI governors IG Patel, Bimal Jalan and C Rangarajan. Vajpayee set up a committee headed by the then finance minister of West Bengal, Asim Dasgupta to design a GST model.

The Ravi Dasgupta committee was also tasked with putting in place the back-end technology and logistics (later came to be known as the GST Network, or GSTN, in 2017) for rolling out a uniform taxation regime in the country. In 2002, the Vajpayee government formed a task force under Vijay Kelkar to recommend tax reforms. In 2005, the Kelkar committee recommended rolling out GST as suggested by the 12th Finance Commission.

After the fall of the BJP-led NDA government in 2004, and the election of a Congress-led UPA government, the new Finance Minister P Chidambaram in February 2006 continued work on the same and proposed a GST rollout by 1 April 2010. However in 2010, with the Trinamool Congress routing CPI (M) out of power in West Bengal, Asim Dasgupta resigned as the head of the GST committee.

With the consequential dissolution of the 15th Lok Sabha, the GST Bill – approved by the standing committee for reintroduction – lapsed. Seven months after the formation of the Modi government, the new Finance Minister Arun Jaitley introduced the GST Bill in the Lok Sabha. In May 2016, the Lok Sabha passed the Constitution Amendment Bill, paving way for GST. Over the next 15 to 20 days, 18 states ratified the GST Bill and the President Pranab Mukherjee gave his assent to it.

Members of the Congress Party joined by TMC, Left Parties and the DMK boycotted the GST launch altogether. The parties reported that they found virtually no difference between the GST and the existing taxation system, claiming that the government was trying to merely rebrand the current taxation system. They also argued that the GST would increase existing rates on common daily goods while reducing rates on luxury items, and affect many Indians adversely, especially the middle, lower middle and poorer classes.

In sum, economic reform, breakaway from Nehruvian “License Raj”, remained on the backburner for over three decades.  A fine example of woeful failure of seizing opportunities. And the root cause for the “Elephantine Economic Growth” rate.

RG and the Congress Party stalwarts like Maunmohan Singh and P Chidambaram among many others cannot find fault with the state of implementation of GST. Of course, none can deny that the shift to the new GST system would involve teething troubles.

As the GST Council continues to carryout monthly reviews, many of its shortcomings would be addressed. The Council has been meeting every month since the launch of the GST regime. The Council has approved an Approach Paper to be followed by the fitment committee while deciding on future rate revisions. The GST Council has already rationalized tax rates for over 100 items.

As per experts, GST advantages include: transparency, simplification and reduction of number of indirect taxes; no hidden taxes and  the cost of doing business will be lower; lowering prices; taxation burden to be split equitably between manufacturing and services; and levy only at the final destination of consumption; corruption free tax administration.

As per the government website on GST, “Goods and Services Tax” Network (GSTN) is a  nonprofit organization proposed to be formed for creating a website / platform for all the concerned parties related to the GST, namely stakeholders, government and taxpayers to collaborate on a single portal.

Most important, GST is largely technology driven. So, it will reduce the human interface to a great extent and this would lead to speedy decisions. As per experts, the GST is a win-win situation for the entire country. It brings benefits to all the stakeholders of industry, government and the consumer. It will lower the cost of goods and services, give a boost to the economy and make the products and services globally competitive d pave the way for an integrated economy at the national level.

Furthermore, GST will make goods and services produced in India competitive in the National as well as International market. Also all imported goods will be charged integrated tax (IGST) which is equivalent to Central GST + State GST. This will bring equality with taxation on local products.

Finally, the GST is expected to bring buoyancy to the Government Revenue by widening the tax base and improving the taxpayer compliance. GST is likely improving India’s ranking in the Ease of Doing Business Index and is estimated to increase the GDP growth by 1.5 to 2%.

Viewed in above holistic framework of GST conceptualization and formulation pioneered by the Congress Party that included C. Rangarajan and Manmohan Singh, the ongoing political tirade and name calling is totally unjustified.

Wake up people of India! Do not get carried away by politics of denunciation of economic reforms. Do remember that economic reforms have a gestation period to yield returns.