Modi questions Centre's preparedness on GST

Modi said he had told P Chidambaram that the Centre had not done its preparation for setting up IT infra for GST

Narendra Modi

The Bharatiya Janata Party (BJP)’s prime ministerial candidate, Narendra Modi, on Thursday questioned the UPA government’s preparedness for introducing the much-awaited goods and services tax (GST). The Gujarat chief minister said the BJP was not opposed to GST but the indirect tax reform cannot be rolled out before putting in place an information technology (IT) infrastructure and addressing states’ concerns.

“We are in favour of GST. But till online operations are not there, GST is impossible. IT infrastructure is the first requirement for GST. But the Centre is not prepared for it,” Modi said while addressing a gathering of chartered accounts and finance professionals organised by the Bhartiya Vitta Salahkar Samiti.

Modi said he had also told Finance Minister P Chidambaram the Centre had not prepared the groundwork for setting up the IT infrastructure for GST.

As the Centre was trying to get states on board for introducing GST, which will help plug leakages and widen the tax base, Gujarat and Madhya Pradesh, both ruled by the BJP, were the two key opponents of it.

“Secondly, in a federal structure, the Centre should emphatically look at the concerns of states,” said Modi.

GST, which would replace excise duty and service tax at the Centre’s end and value added tax (VAT) on the states’ front, was originally scheduled to come into effect from April 1, 2010. However, it is not slated to come into operation even in the current financial year.

In a different context, Modi said: “Our states are our strength; they are not our weakness. States are important. Federal structure is important in letter and spirit; it is our strength.”

100 DAYS AGENDA*

• Privatisation and disinvestment: Privatise Coal India Limited
• Recapitalise banks whose non-performing assets have increased to unsustainable levels
• Introduce the goods and services tax and the direct taxes code
• Reform the labour laws to make both hiring and exits easy
• Revamp the agriculture sector to usher in a second Green Revolution. Scrap the Agriculture Produce Marketing Committee laws
• Abolish the system of minimum support prices for farm goods, allow free trade of agricultural goods across the country and facilitate the adoption of genetically modified crops
• Allow foreign direct investment in major areas, including in retail, to create more jobs

*Action plan recommended for the new government in its first 100 days after its formation sometime in May 2014. The recommendations were made at the first panel discussion at the India Economic Convention 2014 on Thursday, February 27

DEEPAK PAREKH’S 10-POINT AGENDA*

• Create energy security by boosting domestic production of coal by unshackling the sector, allowing private producers in coal and privatising Coal India Limited
• Deepen the financial markets; let insurance and pension funds come in freely to meet the huge demand for funds for the infrastructure sector
• Ensure better and more smooth inter-ministerial coordination so that one arm of the government knows what the other arm is planning. A strong Prime Minister's Office is a must
• Revive focus on boosting urban infrastructure
• Corporatise Indian Railways to make it more modern and efficient
• Allow foreign direct investment in different sectors
• Strengthen and expand the scheme for direct transfer of benefits
• Work towards improving the ease of doing business in India.
• Make policies transparently and without any flip-flops
• Instil confidence in the bureaucracy, which is demoralised; politicians must back the bureaucracy for taking tough and complex decisions

*Suggestions made by Deepak Parekh, chairman of HDFC, at the India Economic Convention 2014

He also stressed the need to maintain the sanctity of bodies such as the Central Bureau of Investigation and Central Vigilance Commission.

Answering queries from the chartered accountants, Modi said urbanisation was not a problem, but people should be able to make a living in small towns and villages, too. He said there are a lot of opportunities in the agriculture sector but no one was focusing on technology in agriculture. He highlighted skill development, faster disposal of cases by setting up Lok Adalats, professionalism of public sector units and prevention of corruption as other factors that can contribute to growth.

“It is said PSUs (public sector undertakings) are born to die — either get closed or get sold. We thought differently and professionalised our institutions,” he said.

Attacking Prime Minister Manmohan Singh, Modi said the UPA government cannot blame coalition politics for its failures as former prime minister Atal Bihari Vajpayee successfully led a coalition government during the NDA regime.