Why Nirmala’s first GST Council was lacklustre

The first GST Council meeting under new Finance Minister Nirmala Sitharaman was held last week. All the participants were agog with excitement and anticipation. The signal that went around was – ‘Stand by for some major decisions that would give a big boost to consumer demand and provide much-needed relief to trade and industry’.

This is a government that means business, they said, this is a new Finance Minister who knows how to get things done. This is what hitting the ground running really means. Forget the Jaitley era of constant chopping, changing and rollbacks. Welcome to the Nirmala way of ironing out contradictions and making GST acceptable to all – State governments and industry bodies alike.

High expectations were further fuelled when the date of the meeting was postponed from Thursday to Friday. The slight delay, it was hinted, was only to obtain last-minute clearances from the PMO and to give finishing touches to key tax rates and targeted exemptions.

In the end it was a damp squib. All the pre-meeting build-up of hope and anticipation turned out to be just hype. No major decisions were arrived at during the 35th meeting of the GST Council.

All the participants agree on that:  nothing much happened. It seemed as if the government was not quite ready with the homework. It looked as if the new Minister had not quite grasped the fundamental issues involved. It was too soon after the elections, the swearing-in and the portfolio allocation, for her to understand the basic problems that were hindering smooth implementation of the so-called One Nation, One Tax concept.

Moreover, with the Budget just a fortnight away, the Minister was in any case up to her neck in the flurry of pre-Budget meetings, briefings and consultations. She was racing against time to draft her own maiden Budget speech, an exercise that can move forward only when clear signals come from the PMO on whether the Budget should be pro-farmer or pro-business, pro-investment or anti-inflation, pro-labour or pro-capital,  pro-public expenditure or pro-private participation, Swadeshi or FDI-dependent.

Or whether the economic policy direction of Modi 2.0 should be all of these things all at the same time. ‘Sabka saath, sabka vikas’ is a good starting point.  But that is as far as it goes.

Does ‘sab’ mean everyone, the entire population? Including the rich and the poor and the middle class and the intermediate classes?

Should the Budget increase allocations for all-round ‘vikas’ at all levels of the agriculture sector, as well as the private corporate sector, and also the small, medium and micro-small sector,  plus the self-employed professionals, anganwadi workers and working women in general and the MGNREGA, Ayushman Bharat and other flagship schemes?

Having been the Defence Minister till recently,  Nirmala Sitharaman strongly feels she has an obligation to open the purse strings to the needs of the Army, Navy, Air Force and Coast Guards.

Especially at a time when national security is of paramount importance, the most patriotic thing a Finance Minister can do is to give the various intelligence agencies a virtual blank cheque so that they can equip themselves with whatever state-of-the-art electronic gadgets they feel they need to safeguard the country’s interests from external threats and to intensify domestic surveillance to catch the enemies within the country even before they come in contact with the tukde-tukde gang.

In the midst of all such preoccupations, and pending clear-cut instructions from the top, the new Finance Minister could hardly be expected to apply her mind to the minute details of a GST tax cut here or an exemption there or a demand for single-window clearance from the software exports sector or a plea for speedy refunds by importers of perishable goods.

Which is why, apart from some minor tweaking of existing procedures, the first meeting of the GST Council did not arrive at any major decisions.  If some complained it was a lack-lustre event, so be it.  If some had hoped for sweeping cuts in tax rates across the board, they would have to live with their disappointment for some more time.

If the token announcements that were made regarding tax evasion and GST filing, including making Aadhaar permissible to obtain GST registration, are considered by the various State Finance Ministers as too small an outcome for such an elaborate meeting,  well,  it cannot be helped if they fail to see the bigger picture.

The fact is that the people of the country have re-elected the Modi government with thumping majority. The Prime Minister has declared his intention to make India a five trillion dollar economy by the end of his current term, 2024. That is the bigger picture.   Delay in reducing GST on electric cars from 12 per cent to 5 per cent is too trivial a matter to worry about. So too are all the thousands of nit-picking demands made by the participants in the GST Council meeting. National interests come first. The priority is to create a five trillion dollar economy.  It is the duty of all patriotic citizens to make the Prime Minister’s dream come true.  Jai hind.