GST: Better late than never

GST: Better late than never

By THE SUNDAY GUARDIAN | 6 August, 2016

Prime Minister Narendra Modi promised change, but nowhere did he mention a timeframe for such a transformation. Which is why those who expected a complete and immediate overhaul of government have been grumbling over what they consider to be the “slow” pace of reforms ever since voters in India gave a handsome majority to the BJP in the 2014 Lok Sabha polls. Such a view is being unfair to the Prime Minister, who has every month been quietly and increasingly clearing away the detritus of bad policy and defective implementation, so much so that the machinery of the Government of India functions in a much more efficient way nowadays than was the case during the period when Manmohan Singh was, at least formally, in charge. Of course, the entire country knows that this was a fiction, and that the actual levers of power rested with 10 Janpath. More than consulting the Prime Minister, key ministers such as P. Chidambaram (Finance), Sushilkumar Shinde (Home) and A.K. Antony (Defence) used to check with AICC president Sonia Gandhi or her key associates before finalising a policy. Those who know the former Prime Minister, say that Manmohan Singh was often unaware of what was taking place in “his” government, even on matters as crucial to growth as the Finance Bill. As the primary aim of any political party is to remain in power, and as politicians almost invariably draw a link between access to funds and the retention of power, it is clear that when politics gets into the driver’s seat, policy gets skewed in favour of the vested interests rather than promote solutions that would meet the needs of the people. Sadly, for the people of India, very often the wrong policies get pursued, simply because these generate the most bribes. The system has grown in such a manner as to multiply the collection points for “speed” money, thereby placing brakes on progress and on the individual initiative needed for fast growth.

Prime Minister Narendra Modi deserves praise for the way in which he ensured that the GST Bill would get passed by Parliament, with even the Congress falling in line. Had the measure got passed a decade back, by now the economy would have been in much better shape, and several tens of millions of new jobs would have been created. At that time it was BJP that was the spoiler, but since 2014, it has been the Congress. The measure will involve some pain for nearly three years before the benefits become patent, and hence the Congress has shown its political cunning by making certain the bill was passed only after 27 months of the BJP government. This means that by the time the 2019 elections take place, the benefits from the rollout of GST will still not be visible clearly, and hence the BJP will not be able to derive much political benefit from the measure. Had the bill gotten passed in 2014 or 2015, it would have resulted in major gains for the BJP in 2019. However, while its passage into law may not help the BJP, it will help the country. GST is a step towards a seamless common market comprising all the states and union territories in the Union of India, and is welcome on that account. Hopefully, this will be followed by still more reforms, so that Prime Minister Modi can show that he has initiated Liberalisation 2.0 after P.V. Narasimha Rao succeeded in putting through Liberalisation 1.0 in 1992. The nation has had to wait a quarter century for another big reform push. Hopefully, the wait for another such move will not take as long.


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