Centre just not inclined to postpone GST roll-out

Report by: 
Rabindra Nath Sinha
Kolkata
1 Jun 2017

All pointers from New Delhi suggest that it is in no mood to give credence to the apprehension of West Bengal’s finance minister Amit Mitra that  a hasty switch-over  to the Goods and Services Tax (GST) from the pre-determined date of July 1 next might well prove to be disruptive for the economy.

Therefore, it would be advisable to shift the introduction of GST to a later date; off course, within the time available. Mitra appears to be suggesting implementation from September 1 next as he feels the Centre and the states   would be much better placed to tie up all loose ends and ensure a hassle-free switch over to GST. The statements made in recent days by those who matter  -- finance minister Arun Jaitley, revenue secretary Hasmukh  Adhia, CEO of GST Network  Prakash Kumar – make it clear that they are going the whole hog to stick to the July 1 target date. It is worthwhile to take note of what Prakash Kumar said at a GST Readiness Session in New Delhi about a week back.  He said: “The date for GST is firmed up, and there should not be any confusion anywhere about that. There is no chance of it being extended past July 1. Out of a scale of 10, I would say our readiness right now is 8-9”.

Which means that the GST Network CEO is absolutely confident that the time of over a month (since he addressed the GST Readiness Session) would be sufficient to hit 10 on the readiness scale. He also said the pace of receipt of registration on the IT backbone was quite satisfactory. While conveying his apprehension about the adverse impact on the economy if GST was rolled out without total preparation Mitra had urged Jaitley to come out with a White Paper on the state of preparedness. This was about two weeks back and there is no indication so far that the finance ministry will issue a White Paper. In fact, the Centre is taking forward the process of review of progress toward GST roll-out from July 1 and has scheduled a review by Prime Minister Narendra Modi on June 6.

This review at the highest level is meant to convey the Union government’s seriousness in sticking to the July 1 roll-out date. In this connection it may be mentioned that  while  the Centre has already received from states several demands for lowering of  rates and, in fact, such demands continue to be made, there is yet no worth mentioning clamour for postponing the GST introduction date.  As for the rates, the Centre may not be averse to a review to accommodate the views of the states to the extent possible. Also deserving mention is the recent observation of Karnataka’s agriculture minister Krishna Byre Gowda regarding the role played by Jaitley and Adhia in the deliberations of the GST Council. Both of them had ensured that the process of resolving GST issues was democratic and inclusive of state views.

The discussions at the Council meetings had been of extremely high quality, nuanced, detail-oriented and analytical, Gowda said at the stage he shared recently with Adhia. Interestingly, while preparations and the launch date dominate the GST discourse, nothing is being heard about the appointment of a vice-chairman in the GST Council, for which already there is provision. It was widely believed that Mitra, who headed the erstwhile Empowered Committee of state finance ministers for a fairly long time and steered the course of deliberations, would be the natural choice for the first vice-chairman of the Council. But, that has not happened so far. Is it a simple case of delay?  Or, is the delay deliberate?

There appears to be more to it than meets the eye. Knowledgeable quarters wonder whether an early decision on Mitra’s appointment can be a step towards a hassle-free roll-out. As on date, 29 days are still left for sorting out issues.