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Strategic climb down? PDF Print E-mail
Wednesday, 05 August 2015 00:48
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Not passing GST will expose Congress as spoiler

 

It is not clear if the government withdrew its changes to the UPA’s Land Act in the face of a united opposition or whether it was a strategic climb-down. Either way, it was a sensible move since it makes it easier for Parliament to function and, possibly, pave the way for the passage of the GST Bill. Though, it has to be said from the way theCongress party continues to disrupt Parliament even after it has got its way on the Land Bill as well as had its major demands accepted in the GST Bill is nothing short of shameful. Indeed, the government has to use this opportunity to portray the Congress party as the spoiler for what could be one of India’s biggest tax reform processes in recent times. Given how the likely revenue neutral rate of taxation under the GST is likely to be lower than the current tax rates paid by people to both the Centre and the states, it is a bit surprising that the government has not made much of this so far—it should be possible to show people that they will gain in the form of lower prices once the GST comes in; indeed, the greater the compliance under the GST, the lower the taxes, and therefore prices, for the common woman.

The larger point to keep in mind, and this is why it never made sense for the central government to adopt the hardline posture it did on the Land Bill, is that like labour, land is a state government subject as well. So, even if the Centre had been able to pass its version of the Land Act, there was absolutely no guarantee that all states would follow this law—in which case, the central Act pretty much became redundant, anyway. But now, with the central Act likely to largely mirror what the Congress party had passed, states that want to attract more investment—or to get land for development of roads and railways—are free to come up with laws that are more in consonance with what the Centre had initially proposed. Indeed, after the Niti Aayog’s Governing Council, which includes state chief ministers, met to discuss the issue, finance minister Arun Jaitley had indicated that this is exactly what several chief ministers had said—if the Centre was able to get the Act cleared, fine, else it should help the states get their Bills through. So, in order to not lose the momentum of reforms, the BJP must get BJP states like Rajasthan, Maharashtra and Gujarat to quickly push through their Land Acts and get the President to give his assent to them under Article 254(2). The Opposition can have its moment of glory, but if Opposition chief ministers do not change their land laws, it is unlikely they are going to be able to attract more investments.

 

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