NDA's Legislative Breakthroughs Include The Most Progressive

NDA’s Legislative Breakthroughs Include The Most Progressive 

As we approach our 70^th Independence Day, two bills, just passed first by the Rajya Sabha, and on their way to the Lok Sabha for debate and ratification; are notable for their sensitivity and progressiveness.

One decriminalises suicide attempts, holding in abeyance Section 309 of the Indian Penal Code, that can put a suicide-attempt survivor, despite the immense trauma already suffered, in jail for a year.

This was a statute unreformed from Victorian times, with a tendency to ignore the immense problem, or even stigmatise it with moral overtones. The bill not only treats attempted suicide as a mental health issue, it brings mental health into the mainstream medical discourse.

It also mandates the provision of medical insurance for the mentally ill also, for the very first time.

Of course, the infrastructure required to provide mental health treatment and options, as specified in the bill, down to the district and block levels, throughout the country, is not only woefully inadequate, but has a lot of missing links as of now.

Still, the matter has received due recognition by parliament, and this fact  alone is not only a milestone, but will undoubtedly strengthen the physical facilities and resources to support it, as the time goes on.

Another bill, just passed by the Rajya Sabha also, guarantees maternity leave of 26 weeks, or six-and-a-half months on full pay, up from the earlier 12 weeks, or 3 months.

This will be a great boon for working women, themselves recovering from child-birth, and also giving them the opportunity to take proper care of their infants, in increasingly unitary urban families.

It will also go some way towards promoting greater participation of women in the work force, and as a measure of gender equality, even in establishments that have just 10 employees.

Creches too are now being made mandatory, for businesses and offices, both in the public and private sectors, that employ 50 or more persons, and not just women.

Both of these bills have been passed by the upper house, where the ruling government is in a minority, and despite the fractious din of a vibrant democracy.

They behove the aspirations of a civilised country in the 21^st century, readying itself to take its place in the front rank of nations.

The Mental Health Care Bill 2013, will, after its passage by the Lok Sabha as well, replace the Mental Health Act of 1987.

It is the product of considerable work done in parliamentary standing committee,that generated as many as 124 amendments to the original bill, just passed by the Rajya Sabha, after several hours of debate.

In 2007, India ratified the provisos of the United Nations Convention on the Rights of Persons with Disabilities, and this law, has come about as a logical progression of that initiative.

It is decisively taking issues of mental health out of the closet, where, shame-faced, they have tended to reside from British times. Accurate statistics on mental health are however, and as yet, hard to come by, in India.

Still, an estimated 6-7% of the population suffers from mental health issues, with perhaps 1-2% with severe, but thoroughly treatable conditions, using advanced psychiatric medicines and professional help. These include spectrum conditions, such as mild to severe schizophrenia, and bipolar disorder.

At least another 5% of the people suffer from potentially self-harming clinical depression and anxiety disorders.

The World Health Organisation (WHO), opines that 25% of the world’s population has had at least one mental illness episode in a lifetime!

While the issue of rights and guardianship of people with mental disabilities has not been reformed by this 2013 bill, there is quite a lot on ‘guardianship’ in the existing 1987 Act. This will soon be subsumed by the Rights of Persons With Disabilities bill 2014, pending in parliament.

The Maternity Benefit Amendment Bill of 2016, specifies not only 26 weeks leave for mothers for their first two children, and 12 weeks for further children, but also mandates 12 weeks leave for those who adopt a child. The last provision has come about for the very first time to recognise the needs of adopting mothers as well.

This new bill too will supercede the Maternity Benefit Act of 1961, and go some way to increase the long term participation of women in the work force. So what was only on offer in the ‘best HRD practices’ companies, will now be implemented across the board.

Recently, The Modi government pointed out that, despite all the tumult, adjournments and obstruction in parliament, it has passed 97 bills (70 legislative and 27 finance and appropriation bills), already, in its 25 odd months in office.

The situation has improved substantially since the Budget Session and now the Monsoon Session, that has seen the historic GST constitutional amendment bill finally pass muster too.

The 16^th Lok Sabha has passed 109 bills, and the two houses together have seen 97 into the law books so far.

This, compared to UPA II’s 116 legislative and 63 finance and appropriation bills seen into law between 2009-2014.

However, the continuity of governance and consensus, witnessed by the passage of these far-sighted bills, indicates perhaps a new maturity, surfacing in the upper house, after a period of partisan turmoil.

That laws aimed at the common weal, greater modernity, and social justice, are backed by all parliamentarians is a welcome sign of times changing for the better.  

For: NationalistOnline

(898 words)

August 12^th, 2016

Gautam Mukherjee

GST: Stage II Structural Economic Reform Gains Ground

GST: Stage II Structural Economic Reform Gains Ground

While subsidy abolition and trimming has been operative for nearly two years, starting with the various petroleum products; the GST juggernaut has begun to move at last, after more than a decade in the works.

And the Modi government will make every effort to see it into operation by April 1, 2017.

The rates suggested by the GST Council to come, is the crucial debating point now.

Lesser issues, such as the division of revenues, between centre and state, and the contours of the grievance redressal mechanism, notwithstanding.

But overall, it is clear that the tax base will grow, even as a plethora of indirect taxes are abolished, to be replaced by this one nation, one tax system.

This is because the entire monitoring of the process, and working of the tax collection and distribution system, will be online from the very start, and also be conducted in real-time capturing big data fit for major data analysis beyond the administration of this one new tax to replace a clutch of old ones.

It will soon be impossible to purchase a product or service, or indeed manufacture an item, without the matter coming onto the IT grid, constructed and purpose-built to suit.

Every value-addition will be recorded, but the reimbursements for them, for the originators/manufacturers of a product or service, will come from a final point of sale, when the general sales tax (GST), will be paid by the purchaser.

This is the true significance of this tax to come, and it is this single factor that will raise India’s indirect tax collections to unprecedented levels, as evasion is eliminated.

The tax rates applied may well come down from the present ones,  for many things, particularly of everyday usage; and this is expected to grow volumes, via additional consumption, and pump up the GDP rate by up to 2% gradually.

The jury is out on GST’s propensity to stoke inflation, though some commentators are concerned. On the contrary, lower prices, say, for up to 70% of goods and services used by the poor, may actually have the opposite effect!

This, even if the remaining 30% become more expensive, than they are today.

But all this will become clearer once the GST Council has worked through the whole issue with a fine tooth-comb.

For now, we might agree that most Indians, despite our million aspirations now, were brought up on socialist shibboleths and a povertarian mind-set.

So, when our fractious legislature, harmonised its views for once, we were naturally gob-smacked. Suddenly we can envisage efficiencies that seemed impossible even weeks ago.

The media has been gushing praise ever since and many sections of business and industry have been projecting robust growth as an outcome.

The final amendments, and other tweaks in the draft and language, reflect a clear national consensus now.

It will therefore be amalgamated with the version passed by the Lok Sabha in 2015, and voted on afresh. And this, as early as on the 8^th of August.

Thereafter, it will be ratified by 50% of the states, each via a two-thirds majority, meaning at least 16 out of the 29; followed by the President’s assent.

The ratification will not pose any difficulties, the NDA governs 13 states currently, and the entire house, except for the AIADMK, is in favour.

The final version, was, in any case, unanimously endorsed by all the finance ministers from the states, including the AIADMK, at a recent conclave in the capital.

Bearing in mind the challenging deadline, the GST Council that will frame the operational laws has to be formed, and mandated, very quickly.

This empowered council, mostly composed of finance ministers from various states and political parties, will then draft the central (CGST), and integrated (IGST), bills; inclusive of the actual rates to be charged for items and services.

The draft laws, being path-breaking and definitive, will, no doubt, be debated in council, and informally in both houses of parliament, plus the state assemblies.

But, when they are tabled in parliament thereafter, they will most probably be qualified, citing parliamentary and constitutional precedent, as ‘money bills’; and be swiftly voted into law by the Lok Sabha.

The real time consuming task anticipated, will be in the fixing of the rates to be charged.

Many goods and services may well be grouped together, to keep the rates  as low as possible for them.

The GST Council is also expected to lower the boom on goods and services presently taxed too high, in order to promote stymied growth and competitiveness. But, to remain ‘revenue neutral’ ideally, it might just keep a few cash cows handy.

Having said that, it is unlikely that the minimum GST will be, at, or below 18%, being demanded by the Congress and many others.

Given that the states are currently raking in between 25-29%, the attempt will be to make the new provisions work to similar net yields at lower rates, via broader tax compliance. Though the centre has also promised to make up shortfalls for the first five years as the system gains momentum.

And all this, to be completed by November-December 2016!

Other daunting tasks, for which, happily, a lot of the spade-work has been already done, include the creation of an IT infrastructure and backbone, the goods and services tax network (GSTN).

Its systems for state, centre, and ‘intermediaries’, its forms and formats, its testing for glitches and the debugging, all have to be ready by December 2016.

A formula, for the division of the expected revenue, between the centre and the states, will be crucial to the nitty gritty and the percentages finally suggested.

The centre and all the states will indeed have to work together, without duplicating process, if the GST bus is to go anywhere at all, let alone run smoothly!

Nearly 100,000 people will have to be trained, an estimated 60,000 of them government employees from the states and centre.

Large exemptions could sink the enterprise. Profiteering on the benefits without passing them on, could subvert its intent. But threshold, and top limits, arrived at sensibly, will keep the GST regime healthy.

Of course, IT consultants, outsourced from the various, will be put in place, for an extended period, during the roll out.

However, since India is known as an IT powerhouse , there is no need to fear this long delayed flight into modernity.

The entire universe of commercial transaction, from manufacturers to sellers will now be registered online. Many businesses therefore, are likely to start this new journey on a fresh slate; jettisoning their old secret ledgers and stand-alone computing systems. Millions of traders and service organisations will have to be helped to upgrade.

In the end, complex as it may seem, this is a great reform, and India is on the threshold of double digit growth for a decade or more as a consequence.

A virtuous cycle will set in-the GST will catalyse growth in business, industry, agriculture, infrastructure, services, specialised manufacturing, and so on.

It is also expected to spur both FII, and FDI investment, as the world becomes convinced that the Indian economy will only grow stronger from this point on. 

For: Nationalist Online

(1,194 words)

August 5th, 2016

Gautam Mukherjee

India: Transforming Indirect Taxation For The 21st Century

India:  Transforming Indirect Taxation For The 21^st Century

Most Indians, despite our million aspirations now, were brought up on socialist shibboleths and a povertarian mind-set. So, when our fractious legislature, harmonises its views for once, we are naturally gob-smacked.

The media has been gushing praise ever since the GST constitutional amendment was passed. And many sections of business and industry have been projecting robust growth as an outcome.

But first, the final amendments, and other tweaks in the draft and language, reflect a clear national consensus now.

It will therefore be amalgamated with the version passed by the Lok Sabha in 2015, and voted on afresh. And this, as early as on the 8^th of August.

Thereafter, it will be ratified by 50% of the states, each via a two-thirds majority, meaning at least 16 out of the 29; followed by the President’s assent.

The ratification will not pose any difficulties, the NDA governs 13 states currently, and the entire house, except for the AIADMK, is in favour.

The final version, was, in any case, unanimously endorsed by all the finance ministers from the states, including the AIADMK, at a recent conclave in the capital.

Bearing in mind that the tentative deadline for the GST roll-out, is April 1^st, 2017; the GST Council that will frame the operational laws has to be formed, and mandated, very quickly.

This empowered council, mostly composed of finance ministers from various states and political parties, will then draft the central (CGST), and integrated (IGST), bills; inclusive of the actual rates to be charged for items and services.

The draft laws, being path-breaking and definitive, will, no doubt, be debated in council, and informally in both houses of parliament, plus the state assemblies.

But, when they are tabled in parliament thereafter, they will most probably be qualified, citing parliamentary and constitutional precedent, as ‘money bills’; and be swiftly voted into law by the Lok Sabha.

The real time consuming task anticipated therefore, will be in the fixing of the rates to be charged.

Many goods and services may well be grouped together, to keep the rates for 70% of them, used by the poor, as low as possible.

The GST Council is also expected to lower the boom on goods and services presently taxed too high, in order to promote stymied growth and competitiveness.

Having said that, it is unlikely that the minimum GST will be, at, or below 18%, being demanded by many.

Given that the states are currently raking in between 25-29%, the attempt will be to make the new provisions ‘revenue neutral’, though the centre has promised to make up shortfalls for the first five years.

The merits and demerits of each item covered, or excluded, from GST therefore, will be gone into with deep scrutiny. And all this, to be hopefully completed by November-December 2016!

Other daunting tasks, for which, happily, a lot of the spade-work has been already done,  include the creation of an IT infrastructure and backbone, the goods and services tax network (GSTN). Its systems for state, centre, and ‘intermediaries’, its forms and formats, its testing for glitches and the debugging all have to be ready by December 2016.

A formula, for the division of the expected revenue, between the centre and the states, will be crucial to the percentages  finally suggested.

The centre and all the states will indeed have to work together, without putting in multiple sets of duplication, if the GST bus is to go anywhere at all, let alone run smoothly!

Nearly 100,000 people will have to be trained, an estimated 60,000 of them from the states and centre.

Large exemptions could sink the enterprise. Profiteering on the benefits without passing them on, could subvert its intent.

Threshold, and top limits, arrived at sensibly, will keep the GST regime healthy.

Of course, IT consultants, outsourced from the various, will no doubt be put in place, for an extended period of hand-holding, during the roll out.

However, since India is renowned as an IT powerhouse , there is no need to fear this long delayed flight into modernity.

The entire universe of commercial transaction from manufacturers to sellers will now also be registered online and operate in real-time.

Many businesses therefore, are likely to start this new journey on a fresh slate; jettisoning their old secret ledgers and stand-alone computing systems. 

Millions of traders and service organisations will have to be helped to upgrade.

In the end, complex as it may seem, this is a great reform, fit for the 21^st century, and India’s place therein.

For: ABP Live

(754 words)

August 5^th, 2016

Gautam Mukherjee

Good Sense Triumphs: GST Through At Last!

Good Sense Triumphs: GST Through At Last!

Finance Minister Arun Jaitley launched the seven hour long debate on GST in the Rajya Sabha by characterising it as the most significant tax reform ever in the history of India.

In saying this, Jaitley emphasised the simplicity and efficiency of this one nation, one indirect tax architecture, being ushered in now.

The breakthrough was prior- enabled by extensive discussions to arrive at an informal consensus. The Congress, as the originators of the earlier versions of the Bill, starting more than 10 years ago, were, as expected, centre-stage.

And while a huge number of uncertainties, unclear meanings, and teething problems are clearly expected in the GST implementation, its desirability, and its potential to be transformative, was recognised by all.

And now that the constitutional amendment with changes has been passed, it will be harmonised with the previous version in the Lok Sabha from earlier this year, and passed again there; before being ratified by at least 15 out of the 29 states.

Then, the specific tax rates applicable, and final inclusions and exclusions, will be legislated around November-December 2016, prior to implementation, perhaps as early as   the 1^st April 2017.   

The tone of this historic Rajya Sabha debate was cooperative, if apprehensive, with many speakers anticipating revenue losses at first. This is new territory, even though GST legislation has been adopted in a number of countries already.

Former Finance Minister P Chidambaram admitted that indirect tax collections overtook direct taxes in 2006 - natural when it addresses under 1% of the population!

And though indirect taxes are considered ‘regressive’ in theory, because they fall with the same strength on the rich and poor alike, it is today what the Indian government lives on, both at the centre and in the states.

But, based on our immense population, this tax is projected to increase the GDP by up to 2% p.a., via much better IT-based compliance.

Chidambaram and most others plumped for no more than 18% as GST. He cited developed countries which charge 16.8% , and developing/emerging countries that charge an average of 14.1%. This even though it wasn’t capped in the constitutional amendment, after much prior wrangling.

Jaitley clarified that the states were currently realising revenues at 25-29% in toto, and were not willing to be capped at 18% .

Several members also demanded an equitable, ‘revenue neutral rate’ - meaning that a state should keep on taking in the same amount of indirect taxes, that is does at present. Paradoxically, Chidambaram and others also felt that rates higher than 18% would stoke inflation, even though current rates, are in effect higher!

Most of the Opposition wanted an assurance from this majority government,  that the nitty-gritty of the GST- namely the dividing of the spoils between the centre, (CGST),  the integrated GST(IGST), should not be rammed through as money bills. Jaitley refused to foreclose on future options, but said he would  strictly conform to constitutional provisions and the suggestions of the empowered committee that would draft the legislation. After some toing and froing the Congress agreed.

The AIADMK was the sole outright dissenter, saying that GST was unconstitutional and unfair to the states.

Some felt the centre had a tacit veto power on the detailed provisos, though Jaitley rejected the contention, clarifying that it was incumbent for both centre and states to work together.

Sitaram Yechury, true to form, warned the implementation of the GST  should not end up blatantly favouring the ‘dollar billionaires’, instead of the  90% of households who  earn less than Rs. 10,000/- per month . He also wanted not just a ‘revenue neutral rate’, but a ‘fair revenue rate’.

Yechury’s formula, echoed by some others, would put pressure on the fiscal deficit, as the centre might have to borrow more, to pay for huge shortfalls, if the revenue collections are set too low.

Some demonstrated their ambivalence to this unified tax by wanting freedom for states to impose additional levies, particularly on tobacco.

However, the success of the GST going forward, rests not so much on the  haggling and the complexities of the coming fine-print; but the demand push of a dynamic country of over 1.2 billion people. India will have an ever growing appetite for more goods and services for decades to come.

In the medium term, GST revenues will rise substantially, compounded by an economy growing in double digits, from the 7.5% now.

This, spurred on by a consumption-led virtuous cycle, with better industrial production, services, infrastructure building, and agricultural performance.

For: ABP Live

(748 words)

August 3^rd, 2016

Gautam Mukherjee

Greatest Spur Towards Double Digit GDP: GST Passed At Last!

Greatest Spur Towards Double Digit GDP: GST Passed At Last!

Hovering at 7.5% in GDP today, the passage of the constitutional amendment bill for GST in the Rajya Sabha on 3^rd August, heralds the potential to add 2% to it, via the implementation of this legislation alone.

The leaky and cumbersome tax-on-tax regime will, by December 2016, be replaced by a single ‘common market’ tax, with great potential for broader compliance, via its IT based implementation architecture.

With better monsoons likely not just this year but for another two years going forward, another percentage point  in agricultural/rural income can safely be added to the tally.

With a projected acceleration in business, industry, manufacturing, services, infrastructure, and agriculture/related rural constructs, forming a virtuous cycle; it may well be possible for India to iron out its cyclical economic volatility as well.

With a double-digit growth, stabilising, in one of the largest economies in the world, with immense unrequited demand potential for decades going forward, India has the prospects of an unblemished run, similar to that experienced by China, with Deng Xiaoping at the helm. Except, that our growth will most likely be driven by domestic demand, instead of exports.

Finance Minister Arun Jaitley launched the seven hour long debate on GST in the Rajya Sabha by characterising it as the most significant tax reform since independence.

In saying this, Jaitley emphasised the simplicity and efficiency of this one nation, one indirect tax, being ushered in now.

The breakthrough was prior- enabled by extensive discussions to arrive at an informal consensus. The Congress, as the originators of the earlier versions of the Bill, starting more than 10 years ago, were, as expected, centre-stage.

And while a huge number of uncertainties, unclear meanings, and teething problems are clearly expected in the GST implementation, its desirability, and its potential to be transformative, was recognised by all.

And now that the constitutional amendment with changes has been passed, it will be harmonised with the previous version in the Lok Sabha from earlier this year, and passed again there; before being ratified by at least 15 out of the 29 states.

Then, the specific tax rates applicable, and final inclusions and exclusions, will be legislated around November-December 2016, prior to implementation, perhaps as early as   the 1^st April 2017.   

The tone of this historic Rajya Sabha debate was cooperative, if apprehensive, with many speakers anticipating revenue losses at first. This is new territory, even though GST legislation has been adopted in a number of countries already.

Former Finance Minister P Chidambaram admitted that indirect tax collections overtook direct taxes in 2006 - natural when it addresses under 1% of the population!

And though indirect taxes are considered ‘regressive’ in theory, because they fall with the same strength on the rich and poor alike, it is today what the Indian government lives on, both at the centre and in the states.

Chidambaram and most others plumped for no more than 18% as GST. He cited developed countries which charge 16.8% , and developing/emerging nations, that charge an average of 14.1%. This even though it wasn’t capped in the constitutional amendment, after much prior wrangling.

Jaitley clarified that the states were currently realising revenues at 25-29% in toto, and were not willing to be capped at 18% .

Several members also demanded an equitable, ‘revenue neutral rate’ - meaning that a state should keep on taking in the same amount of indirect taxes, that is does at present. Paradoxically, Chidambaram and others also felt that rates higher than 18% would stoke inflation, even though current cumulative revenues, are in effect higher!

Most of the Opposition wanted an assurance from this majority government,  that the nitty-gritty of the GST- namely the dividing of the spoils between the centre, (CGST),  the integrated GST(IGST), should not be rammed through as money bills.

Jaitley refused to foreclose on future options, but said he would strictly conform to constitutional provisions, and the suggestions of the empowered committee that would draft the legislation. After some toing and froing, the Congress agreed.

The AIADMK was the sole outright dissenter, saying that GST was unconstitutional and unfair to the states.

Some felt the centre had a tacit veto power on the detailed provisos, though Jaitley rejected the contention, clarifying that it was incumbent for both centre and states to work together.

Sitaram Yechury, true to form, warned the implementation of the GST  should not end up blatantly favouring the ‘dollar billionaires’, instead of the  90% of households who  earn less than Rs. 10,000/- per month . He also wanted not just a ‘revenue neutral rate’, but a ‘fair revenue rate’.

Yechury’s formula, echoed by some others, would put pressure on the fiscal deficit, as the centre might have to borrow more, to pay for huge shortfalls, if the revenue collections are set too low.

Some demonstrated their ambivalence to this unified tax by wanting freedom for states to impose additional levies, particularly on tobacco.

However, the success of the GST going forward, rests not so much on the  haggling and the complexities of the coming fine-print; but the demand push of a dynamic country of over 1.2 billion people. India will have an ever growing appetite for more goods and services for decades to come.

Anand Sharma, former Commerce Minister, and leading Congress interlocutor on GST, somewhat bitterly, reprised the years of political, rather than substantial opposition, this legislation has had to face from the present government when it was in Opposition. But, he also went into the exclusions from the purview of the GST in its present amended avatar, and questioned their logic.

Jaitley however said no state of the union was willing to countenance the GST Bill in its 2011 form, because it didn’t pay compensation for shortfalls, and the UPA government had not paid central sales tax (CST) amounts to the states as promised between  2010-12.

These had to be made good by the NDA since 2014, as a prior condition for the states, including the BJP ruled states, to come to the table.

In the medium term, GST revenues will rise substantially and its passage will be noted by foreign investors as a signal that India has embarked on its second stage of structural economic reforms.

The knock-on effect on the confidence in the Indian economy going forward, will have a beneficial effect on marquee government programmes such as Make in India, Skill India, Start-Up India and so on.

Our endeavour to manufacture a proportion of our $150 billion defence purchases, the largest such shopping list in the world, is likely to also receive a fillip.

It is a happy day, when an essentially bureaucratic polity like India takes a definitive leap of faith like this to meet its promising future square-on.

For: The Sunday Guardian

(1,119 words)

August 3^rd, 2016

Gautam Mukherjee

At Last, One Nation, One Indirect Tax Regime!

At Last, One Nation, One Indirect Tax Regime!

Finance Minister Arun Jaitley launched the seven hour long debate on the GST in the Rajya Sabha on August 3^rd, by characterising it as the most significant tax reform ever in the history of India.

In this, Jaitley went beyond the marker of 1991, the year of the last big sets of reform, to make his point.

The breakthrough towards the debate and successful two-thirds voting thereafter, was enabled by extensive discussions between the government and various other political parties, including the Congress, who were the original authors of the GST Bill.

Four amendments to the form of the bill earlier passed by the Lok Sabha were put on the table. And it came after unanimous support from the state finance ministers a few days ago.

While a huge number of teething problems are expected, the consensus on its desirability, and its likelihood to be transformative over decades to come, was clearly on every parliamentarian’s mind.

And now that the constitutional amendment has been passed by the Rajya Sabha, it will be harmonised with the earlier version in the Lok Sabha and passed afresh, before going to be ratified by at least 15 out of the 29 states of the Indian Union, and each with a two thirds vote in their respective assemblies too.

Then the specific tax rates applicable, the exclusions and exclusions, the grievance redressal procedure, etc. will be legislated, based on the draft  prepared by the empowered committee, which has Congress, BJP and members from other parties in it.

This is expected to happen by November-December this year  and the GST roll-out is targeted for the new financial year in April 2017.

The tone of the Rajya Sabha debate fortunately, was cooperative, on both sides of the aisle, if apprehensive. This is new territory for India, even though GST legislation has been adopted in a number of countries around the world.

Former Finance Minister P Chidambaram spoke of two things in particular .He  tellingly admitted that indirect tax collections overtook direct taxes in 2006, which targets under 1% of the population. And this, despite a propensity towards ‘creeping taxation’, for almost all previous governments .

Even though indirect taxes are considered ‘regressive’ in theory, for falling with the same strength on the rich and poor alike, it is today what the Indian government, at centre and state alike, lives and breathes on.

But, based on our immense population, it is this universal single tax, that has the greatest potential to increase the GDP, via much better IT- based compliance, by up to 2% in due course.

Chidambaram reiterated the Congress position, passionately plumping for no more than 18% ,  citing developed countries which charge 16.8% ,and developing/emerging countries that charge an average of 14.1%.The fact that it is not being capped in the constitutional amendment, notwithstanding, after much prior negotiation.  

However, Jaitley countered by telling the house that the states were taking in between 25-29% via the cascading taxes presently, and were not willing to be capped at 18%.

Chidambaram nevertheless spoke of arriving at an equitable ‘revenue neutral rate’, meaning that a state should keep on taking in the same amount of indirect taxes in toto, that is does at present, even after the implementation of GST.

He also wanted an assurance from Arun Jaitley, that the nitty gritty of the GST- namely the dividing of the spoils between the centre, (CGST), and the states(IGST), should not be rammed through as money bills with this government’s brute majority, but be debated and passed as regular financial legislation in both the houses of parliament.

Jaitley refused to pre-empt what the empowered committee would come up with, and only assured the house that he would adhere to constitutional provisions, and the advice of the committee, as applicable. After some back and forth, the Congress finally agreed when it was made clear that the draft legislation would be extensively discussed.

Many speakers agreed with  Chidambaram, except for the AIADMK member, who said that GST was unconstitutional and unfair to the states. He also said that Tamil Nadu stood to lose revenue to the tune of over Rs. 9,270 crores per annum, and this would have to be made up by the centre going forward, not just for five years as intended, but in perpetuity.

But all the speakers wanted the GST to be both sensitive in terms of its rate, favouring the interests of the poor. Some pointed out its propensity to stoke inflation, if rates were pegged too high, little realising perhaps that they were cumulatively much higher right now!

Many felt the centre had a veto power on the detailed provisos, given its  majority strength in this government, and wanted the centre to have 25% weightage, and the states to have 75%  and a passing vote to also need 75% and not a simple majority!

Jaitley countered this too, by saying there was no option but for the centre and states to compromise, as they had a mutual veto.

Sitaram Yechury, true to his Communist principles, averred that the implementation of the GST  should not end up blatantly favouring the ‘dollar billionaires’, instead of the  90% of the people who  earn less than Rs. 10,000/- per month per household,  according to the 2011 census. He also went beyond the prevalent wisdom of the house, to suggest not just a ‘revenue neutral rate’ of  GST but a ‘fair revenue rate’.

Of course, this implies shortfalls might have to be borne by the centre for much longer than the initial five years intended.

The NCP and the TMC pointed out that the political parties other than the Congress and the BJP, seem to have been taken for granted, with both holding up the bill, between them, for more than ten years.

 After all was said and done, there was a visible confusion between preserving state revenues, with calls for freedom for states to impose additional taxes to make up shortfalls, and a plea to keep taxes down for the poor.

However, both concerns are likely to be addressed, not so much by the fine print in the GST legislation to come, but the demands of a dynamic country of over 1.2 billion people, with an ever growing appetite for both goods and services.

In the short term it could put some pressure on the fiscal deficit as the centre borrows more to meet its obligations to the states. But this will be offset by an economy growing in double digits in the medium term, spurred on by broad-based improvement in industry, services, infrastructure, agriculture and employment.

For: The Pioneer

(1,097 words)

August 3^rd, 2016

Gautam Mukherjee

Ostensibly No Sanctuary For Persecuted Muslims

Ostensibly No  Sanctuary For Persecuted Muslims

The Modi government, keeping a campaign promise, has taken a liberal line with persecuted Hindu and other non-Muslim minorities from Bangladesh, Pakistan, Afghanistan; letting them stay on when their visas expire.

Now, the draft amendments are ready, to formalise the move, by tweaking the Indian Citizenship Act 1955.

The Act has been amended twice already, once in 2003, to regularise many of the illegal immigrants, largely Muslims from Bangladesh.

And then again, in 2015, to accommodate some of the wishes of the influential and widespread Indian diaspora.

This latest changes, when, and if, enacted, will allow ethnic Hindus, Buddhists, Christians, Jains, Sikhs, Jews, from these neighbouring countries, to apply for Indian citizenship, in a structured manner.

This, in addition to those who have recently been given unofficial sanctuary, after coming in on tourist visas.

That is, all, except for Muslims claiming persecution, in China and Myanmar for example, where they are not in an overwhelming majority!

However, everyone can, and occasionally does, apply on a case-by–case basis, to obtain citizenship under the ‘naturalisation’ and other  clauses of the existing act. 

Some commentators, versed in the law and the constitution, have been questioning the exceptionalism of the proposed move, and wondering about the language the amendment would incorporate.

How will the tweak specifically exclude Muslim applicants, without falling afoul of the secular and equality-under-the-law clauses in the Indian Constitution? How will the tweaked law stand up in court, if and when challenged?

The logic for it however is compelling. Pakistan and its latter day offshoot Bangladesh, created from the rib of East Pakistan, chose to become ‘secular’ Muslim states in 1947, and later on, in 1971. 

That they have chosen to become sharply majoritarian since, riding rough–shod over their miniscule minorities, is most unfortunate. Afghanistan, friendly to India overall, has been plagued by extremist Taliban depredations.

That they  have, along with China and Myanmar, complications and factionalism between the more liberal and the orthodox  within the population - internecine conflict too, between the Shias, Sunnis, other ‘Islamic’ sects/organisations. These too, have certainly thrown up different sets of religiously persecuted Muslims.

With nearly 200 million Indian Muslims, consisting of Shias, Sunnis, Bohras, Ismailis, Sufis and so on, we do not have the same problem.  A majority Hindu country, India has not tried to drive out even one Indian Muslim for belonging to a religious minority!

It is good to remember that both Pakistan and Bangladesh had undertaken to protect their minorities too. Instead, some have seen fit to push out their miniscule minorities, and claim their worldly possessions and property, without the slightest compunction.

It is only India, amongst the sub-continental trio, that seems to have kept to its original commitment.

So now, as a secular Hindu majority country, with large and small minorities of different kinds, living in relative harmony, we want to officially take back those Hindus and other minorities who are persecuted and unwelcome in their countries of origin.

But to add all persecuted Muslims in our neighbouring countries to the list, via this amended citizenship act is considered inappropriate.

Exceptions to the commonsensical rule, such as Pakistani-British singer Adnan Sami, do apply from time to time, and are also accepted.

Bangladeshi-Swedish Writer Taslima Nasrin has been allowed to live in India indefinitely. Others will, no doubt, apply, and be accepted, but on a case-to-case basis.

India has traditionally, from ancient times, been a haven for the persecuted- Jews, Zoroastrians, Bahais, Sufis etc..  

Since 1947, the modern Indian government, at some cost to its own realpolitik, has taken in successive waves of people.

It incurred the seething wrath of the Chinese, by taking in the fleeing Dalai Lama in 1959, along with thousands of his followers. This played its part in the War of 1962, and continues to be an irritant in Indo-Chinese relations to this day.

India also took in a gush of more than 10 million Bangladeshi refugees in 1971, after the Indian supported liberation of East Pakistan, most of whom were Muslim. This figure has since swelled to more than 35 million by way of illegal immigration/infiltration.

Over the years of the LTTE agitation for Tamil Eelam in Sri Lanka, tens of thousands of ethnic Tamils, including dangerous insurgents, came into South India. And many of these ‘immigrants’ are still here, long after the demise of the LTTE and the quest for Eelam.

And so, there is hardly a worthy case left, for the would-be legal, or moral, challengers, to take up in practice.

For: The Quint  

(750 words)

July 29^th, 2016

Gautam Mukherjee