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The Daily Fix: Will the Centre’s hurry to roll out GST lead to a note ban-like mess?

Everything you need to know for the day (and a little more).

The Big Story: Ready or not

The list of people telling the government that the country is not ready for a rollout of the Goods and Services Tax is extensive. The Opposition has said Indians need more time to be prepared. The West Bengal government has said the Centre should put it off if the systems are not ready. Traders across the country have asked the government to give them more time. The Associated Chambers of Commerce of India, a major industry body, has asked the Centre to postpone it. Even the Centre’s own Civil Aviation Ministry has written to the Finance Ministry asking for the new tax regime to be deferred by two months.

And yet the government is adamant. GST, which fundamentally reshapes the way taxation operates in India by subsuming all local and Central indirect taxes into one rate for each item, is still slated to be rolled out in less than two weeks on July 1. “We don’t have the luxury of time to defer the implementation of GST,” said Finance Minister Arun Jaitley on Sunday. And so, come July 1, India can expect to see a loud launch event, as is customary of this government, that may for once be commensurate with the actual move, which could easily end up as Prime Minister Narendra Modi’s most significant legislative achievement.

What Jaitley did not explain when he said “we” do not have the luxury of time, is that the we here refers to the Bharatiya Janata Party as much as it does the country. It has been conventional wisdom for some time now that if the government is not able to implement the new tax regime this year, it would likely defer it to 2019. This is because many expect both the rollout of the new taxation scheme to be both messy and potentially lead to inflation, both of which could affect the prospects of the party with general elections due in May 2019.

There are other reasons for the hurry as well, but the electoral imperative is inescapable. It is in this light that the ASSOCHAM letter in particular is important to pay attention to. The organisation said that there were major glitches in a test run of the IT system last month, which led to major revisions, prompting the body to express doubts about the system’s readiness. This is doubly relevant because of concerns about the GST Network, a special purpose private firm that was supposed to build the IT backbone of the new regime. Questions have been asked about why a private firm is running a crucial government initiative, with the BJP’s own Subramanian Swamy being one of the biggest skeptics.

The hope of course is that the rollout on July 1 will go smoothly and the country will not face the kind of distress that was forced upon it because of the disastrous implementation of Modi’s demonetisation effort last November. So many people are convinced that the rollout will be chaotic that anything short of a complete mess might now look like a success, which is equally problematic. The GST is a huge effort, one that reshapes the Indian Union itself. If we go by the government’s promises, the launch – accompanied by a two-month relaxation in filing – should go well. But if it is less than smooth, it will be important to come back to representations like ASSOCHAM’s and question whether electoral imperatives overrode an actual evaluation of this massive project.

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  1. “It would appear that the GST Council has succesfully imported a technique from visual arts and introduced the “male gaze” into the taxation regime,” writes Tara Narula in the Indian Express.
  2. Usha Rai writes in the Hindustan Times on how Telangana’s new pension for single women is a welcome move even if the rub is in the implementation.
  3. “Data releases since late May have been suggesting that demonetisation may have had insidious second-order impacts which are yet to be fully understood,” says a leader in the Hindu Businessline.
  4. The Panama Papers scandal is not only an ideological concern for the Pakistan Tehreek-e-Insaaf, writes Umair Javed in Dawn. It is also the fuel that’s keeping the party in the race, even as the deck is stacked in favour of the ruling party.
  5. Kapil Sibal, the Congress leader and former union minister who oversaw and defended the passage of Section 66A of the IT Act, writes in the Hindu explaining how the new cattle trade rules constitute a muzzling of free speech.


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