FM's pro-people pitch helped bring all stateson board for GST cuts

NEW DELHI: The Centre's single-mindedness helped it get states sign off on the massive cuts in GST rates Wednesday, making it likely that the lower prices of a whole range of goods and services become a reality much before by Diwali.

While states such as Karnataka and Kerala were vocal inside when the GST Council met at Sushma Swaraj Bhawan, finance minister Nirmala Sitharaman pushed for finalising the rate cuts on Wednesday itself, though another full-day session was planned. NDA-led states were, obviously, in favour of the move that stood to benefit consumers across the country, but the finance minister managed to bring others around by framing the proposal as a pro-people move.


Sitharaman, who at the instance of PM Narendra Modi, was working on the measures from Feb itself, had done all the groundwork through a series of meetings with officials from the Central Board of Indirect Taxes and Customs, and the revenue department, identifying each item used by the 'aam aadmi' so that the burden was lowered.

All this came while the budget was being discussed in Parliament, and the new income tax law was being written under the direct supervision of Sitharaman.

Once the contours were ready, the finance ministry presented it before the PM.

After the GST Council meeting the finance minister confirmed that the PM had been urging her for the revamp for several months.

With the Prime Minister convinced about the plan and a detailed blueprint ready, he decided to announce it in his Independence Day speech, making it tough for opposition states to go against the move which was pro-consumer. After all, these same states, including West Bengal, Kerala, Karnataka, Jharkhand and Punjab, had been arguing for making the regime more taxpayer friendly.

Days after the PM's speech, the Centre shared its blueprint with states with the FM herself making a pitch before the group of ministers on rate rationalisation. It also gave the opposition states time to come up with other options.

Instead, all they did was raise the issue of loss to states - a stand that Sitharaman questioned Wednesday, arguing that the GST Council was a forum where the Centre and states sat together and all stood to gain and lose equally. Besides, she said that the GST kitty is split 50:50 with states getting 41% of the revenue that flows to the Centre.

While she complimented the state finance ministers during her press conference late Wednesday, it took considerable effort to get them on board as Karnataka and Kerala kept raising the issue of "revenue loss".

At the press conference, revenue secretary Arvind Shrivastava articulated how the tax cuts were meant to boost overall economic activity, improve compliance, boost demand and generate tax buoyancy, thus offsetting any fiscal impact.

Apart from lifting sentiments at a time when the tariffs imposed by the US had dampened the mood, the timing also coincides with elections in crucial states such as Bihar and West Bengal, giving BJP an opportunity to launch a massive outreach.