Skip to main content

When Gujarat under Modi, later under Anandiben Patel, called GST an "attack" on state financial autonomy

 
Even as the ruling NDA government has been charging the opposition, especially Congress, for seeking to roadblock implementation of the Goods and Services Tax (GST) across India, facts suggest, Narendra Modi as Gujarat chief minister, and later his successor, Anandiben Patel, have taken strong exception GST till December 2014.
The Gujarat government made a written submission as late as December 11, 2014, seven months after Modi became Prime Minister, before the empowered committee of finance ministers. It opposed the 122nd Constitutional Amendment Bill introduced by Finance Ministe Arun Jaitley on three grounds:
  • that GST Bill is an attack on fiscal autonomy of the state; 
  • that GST Bill will adverse impact state revenues, and the 122nd Constitutional Bill on GST brought by the Modi government does not address any of states’ concerns; and 
  • that the implementation of GST would cause severe loss to a manufacturing state like and affect the ‘Make-in-India programme’. 
The written submission said, “The states have time and again expressed their concerns … mainly about the fiscal autonomy and the adverse implications on the revenues of the state due to introduction of the GST regime.”
It stated, the new draft of the 122nd Constitutional Amendment Bill from the empowered committee failed to address “many of the concerns raised by the states have not been reflected in the draft”, adding, the states would “lose their fiscal autonomy”, in the same way as it happened after the introduction of the value added tax (VAT) in the place of sales tax.
Recalling that the Prime Minister had launched “the Make in India campaign”, the state government pointed towards how would Gujarat particularly lose: “In the GST regime, the abolition of central sales tax (CST) and the implementation of the destination principle would result in severe losses to manufacturing states that are also net exporting states.”
This was a continuation of what Narendra Modi as Gujarat chief minister had been saying between 2007 and 2014 to numerous empowered committee meetings of state finance ministers. In each of them, the state government opposed the constitutional amendment comprising GST Bill, describing it as against “the federal spirit of Constitution” as also the “rights of states to fiscal autonomy”.
On August 4, 2010, the state government said that the “constitutional amendment has come at a time when consensus is lacking even within the empowered committee”, as it “fundamentally alters powers of the states to levy and collect indirect taxes.”
It added, “The power to determine rate of taxes is a basic function of legislative body like Parliament or, as the case may be, State Legislature. Article 265 very clearly states that no tax shall be levied or collected except by authority of law. Thus, provisions of proposed Article 279A runs counter to the existing provisions of Constitution.”
Disagreeing with “wide-ranging powers given to GST council”, the Modi government asserted, “These powers shall remain within legislative and administrative purview of State and cannot be ceded to the council as it will take away entire financial autonomy of the State.”
On September 20, 2010, it said, the “Gujarat government does not support the proposed constitutional amendment in its present form”, as it would “destablise balance source of revenue and duties between Centre and States and would adversely affect the financial health of states and deprive them of a very important means of governance.”
On October 29, 2010, it said, “The constitutional amendment in the present format put forth by the Government of India is not acceptable to Gujarat.” On February 11, 2011, the it said that “the new constitutional amendment draft proposed by the Government of India is retrograde in nature and completely against the tenets of fiscal federalism.”

Comments

TRENDING

Trump’s research cuts 'may mean' advantage China: But will India leverage global brain drain to its advantage?

When I heard from a couple of NRI professionals—currently on work visas and engaged in research projects at American universities—that one of President Donald Trump's major policy thrusts was to cut federal funding to the country's top educational institutions, I was instantly reminded of what Prof. Kaushik Basu had said while delivering a lecture in Ahmedabad.

How the middle classes are returning to the BJP fold, be it Delhi or Gujarat: Mahakumbh, Sitharaman's budget

Whatever reasons may be offered for the Aam Aadmi Party's defeat in Delhi—whether it was the BJP's promises of more freebies than AAP, the shedding of ultra-nationalist slogans, or the successful demolition of Arvind Kejriwal's "Mr. Clean" image—my recent interaction with a group of middle-class individuals highlighted a notable trend. Those who had just begun to sit on the fence were now once again returning to the BJP fold.

Google powered AI refuses to correct grammar of a 'balanced' piece on Trump sending chained immigrants to India!

This is a continuation of my blog on how, while the start-up-developed AI app DeepSeek is being criticized for consistently rejecting content related to China or Maoism, there appears to be no mention in Western media about why another app, developed by the powerful Google, Gemini, remains silent on Indian political issues.  

World Hijab Day? Ex-Muslim women observe Feb 1 as No Hijab Day, insist: 'Put it on a Man'

I didn't know that there could ever be a thing as World Hijab Day until I received an email alert from Maryam Namazie of the Council of Ex-Muslims of Britain (CEMB), stating that several ex-Muslim women's groups had observed the same day—February 1—as No Hijab Day! According to Namazie, the day "was created on February 1 as a direct response to World Hijab Day" to "illuminate the coercive and oppressive realities of the hijab as a pillar of sex apartheid and a war on women."

How to turn India's e-waste problem, third largest, into opportunity? Simple: Offer industry incentives!

How should one interpret a major problem that may be bogging down a private consultant while preparing an industry-friendly report on a situation that adversely impacts society—especially when the consultant sees little possibility of progress in the supposed desired direction?

A Hindu alternative to Valentine's Day? 'Shiv-Parvati was first love marriage in Universe'

  The other day, I was searching on Google a quote on Maha Shivratri which I wanted to send to someone, a confirmed Shiv Bhakt, quite close to me -- with an underlying message to act positively instead of being negative. On top of the search, I chanced upon an article in, imagine!, a Nashik Corporation site which offered me something very unusual.  I don't know who owns this site, for there is nothing on it in the About Us link. It merely says, the Nashik Corporation  site   "is an educational and news website of the municipal corporation. Today, education and payment of tax are completely online." It goes on to add, "So we provide some of the latest information about Property Tax, Water Tax, Marriage Certificate, Caste Certificate, etc. So all taxpayer can get all information of their municipal in a single place.some facts about legal and financial issues that different city corporations face, but I was least interested in them."  Surely, this didn't intere...

Gujarat a police state? How top High Court advocate stunned a senior-most journalist

Rajdeep Sardesai, Anand Yagnik This is a continuation of my earlier blog on well-known journalist Rajdeep Sardesai's lecture in memory of the late Achyut Yagnik at the Ahmedabad Management Association (AMA). I was a little surprised when I received the intimation about the venue for the lecture.

5% poor in India? Union govt claim debunked, '26.4% of population below poverty line'

A recent paper, referring to the Household Consumption Expenditure Survey (HCES) 2022-23 of the Government of India (GoI), has debunked the official claim that poverty has substantially declined. Titled "Poverty in India: The Rangarajan Method and the 2022–23 Household Consumption Expenditure Survey", the paper —authored by scholars CA Sethu, LT Abhinav Surya, and CA Ruthu—states that "more than a quarter of India’s population falls below the poverty line."

Why burn Manusmriti? Why not preserve it to demonstrate, display historicity of casteism?

In a significant Facebook post, Rana Singh, former associate professor of English at Patna University, has revealed something that few seem to know. Titled "The Shudras in Manusmriti", Singh says,  because Manusmriti is discussed so often, he thought of reading it himself. “This book likely dates back to the 2nd or 3rd century BCE, and the presence of contradictory statements suggests that it is not the work of a single author,” he says in his Facebook post in Hindi, written in 2022 and recently reshared.