Sometimes it is about legacy

I should first put in the caveat that I am philosophically opposed to a GST. I object to the centralization inherent in it. When you create a common market, you take away the powers of states and municipalities to compete with each other for industry by offering various incentives. Competition makes things better. Anything that discourages competition is a bad idea.

That’s my opinion. I am very much a fan of the deep seated American style federal system. I would prefer empowered local governments, even putting police under the control of the city mayor rather than the state government.

That said, I understand that most developed countries with the exception of the United States have some form of GST or the other. And I can see the argument in the Indian context : a large amount of corruption happens at the local government level. Trucks lined up outside every city almost always have to pay a bribe. And local governments are often under the thumb of powerful local interests. When you take away the powers of local bodies, you cut off corruption at its source. A powerful builder whose writ runs in Hyderabad would not be able to force the hand of the Central Government in Delhi.

Not to mention that the local governments are often most chaotic and disorganized, making it impossible for people or businesses to understand their rules. Just ask my 71 year old father, who is currently running helter skelter around Kolkata Municipal Corporation. Apparently, some rules changed last year and we need to pay a small sum of money … but we can’t do it because the municipality employee in charge has gone to visit his distant uncle or something and nothing will get done until he decides to come back from his vacation 🙂

This is exactly the kind of experience that can be avoided if stuff can be done online, as with GST.

So, I am not rigid about the ideology. I see the benefits of the new rules and how it would make the informal sector move towards the formal.

All my life, I have heard that we are a poor country and so much of our economy, businesses and jobs are in the “informal”  sector.

Well, this had to change some day. This situation cannot last forever.

And that day might as well be today. In 2017. If not now, how much longer are we going to wait? The transition needs to be made.

And GST is that transition. The system has now been set up to reward the formal sector over the informal. If you register with GSTN, you can get the crucial “input tax credits”. The government will give you back all the tax you paid on the purchase of raw materials for your business. This allows you to lower your prices, making your business more competitive. Anyone deliberately trying to stay under the radar by not registering with GSTN will now have to set his prices higher.

Naturally this means that customers will move to the one who registers with the government and declares his business income honestly.

The system is finally rewarding legal behavior. Good.

It is quite funny that the Congress party seemed like a grumpy five year old yesterday. In case they have forgotten, it was the Congress that initially set April 1, 2010 as the deadline for the implementation of GST.

In 2006, the Congress predicted that  India would be ready 2010 🙂

If traders were ready back in 2010, how could India possibly not be ready now in 2017? How badly did Manmohan Singh run the country during UPA that there was such active backsliding in these years? LOL!

Not to mention that CPI(M)’s Asim Dasgupta was the head of the GST committee appointed by Atal Behari Vajpayee in 2000. He headed the committee for 11 years. What was CPI(M) doing all those years? Today we are not “ready”?

We understand of course the politics involved. If “honest” Manmohan had got the chance to unveil GST, it would have been known as the cherished dream of Rajiv Gandhi. Because Modi is doing it, GST is now a blot on the nation.

There is a flip side to this obviously. As Gujarat CM, Modi had been very proactive in opposing GST (along with Congress’ Prithviraj Chavan, then CM of Maharashtra). And now the same Modi throws a huge party to claim the credit for implementing GST.

Well, the answer to that is simple : Dear Congress, we won and you lost. 

The BJP successfully resisted GST because it had several powerful state governments and over 100 Lok Sabha MPs. If the Congress had today what BJP had in 2010, it would have similarly stalled Modi. But Modi-Shah team ground the Congress down to 44 and then squeezed it out of power in state after state.

Result, the failed Congress was browbeaten to surrender before Modi and hand him all the credit for GST.

It’s called politics. And realpolitik is harsh. It is not a carebears’ tea party. The BJP has seized the legacy of GST and the BJP will own it forever.


5 thoughts on “Sometimes it is about legacy

  1. After Modi’s idiotic comment on Gau Raukshaks, I am no longer willing to use the pronoun “we”. Just say that the BJP won and Congress lost.

    With so much computerisation going on, corruption is bound to come down; that is always a good thing. But have the various concerns raised by Dr. Swamy regarding the GSTN been addressed? I don’t know, which is why I am asking.

    BTW, after living in the USA in two phases (pre-1989 and again post-2009), I can CONFIDENTLY assert that at the highest their politicians are far more corrupt than ours. They have just “mainstreamed” corruption in various ways. Take for example Bill and Hillary Clinton. They have set up a “non-profit foundation” whose activities are a mystery. But the Saudis and others keep contributing handsomely (even getting a tax break in the process), and in return get “access.” All clean and above board, right?


    1. if he had to make that comment then he should’ve made it after the first incident on general principle of people can’t take law into their own hands and how can a gau rakshak kill a manav, but he made it just after the notinmyname hypocrisy and that too referenced to gandhi, that is dissappointing.


  2. It is true that the BJP has seized the legacy of GST, but only because the Congress allowed its pettiness to get the better of what would’ve been its right course of action. Beginning from actively participating in the process of getting the GST ready, and ending at the point of actually being present when it was being launched. If they had done that, it would’ve been difficult for BJP to claim sole credit for GST (the fact that Modi actually did not claim sole credit is another matter altogether).

    If there had been active participation of the opposition in getting the GST rolled out, especially when it was crystal clear from the beginning that this was going to happen anyway, it might’ve passed off much more uneventfully, as a number of other such milestones in the past. But now the BJP looks like the party that pulled of this great coup against severe opposition, and the opposition parties look like sore losers (witness Rahul Gandhi’s and Chidambaram’s most recent comments).

    The bottomline is this. Real politicians will show no hesitation in jumping ship and joining hands with the opponent if they knew they were beat – you don’t need to look further than a Nitish Kumar or a Karunanidhi. Real politicians only pick the battles that they have a chance of winning – the land reforms bill was a winnable battle for Congress in 2014, demonetisation and GST in 2017 were not. Real politicians will show no shame, if they can stop the opponent from running away with all the credit.

    On the other hand, for petty and vindictive “dynasty” politicians, there’s the not-so-small matter of their personal ego, and a lack of respect for the opponent’s political acumen. They find it hard to swallow their pride, and therefore end up paying the price.


  3. CW,i mostly agree with you.It’s real politik,plain and simple.

    But i would also like to say,especially to all the blind Jaitley haters,that this entire GST would not have been possible without Jaitley. Only he could have convinced all the various parties to join in the GST Train.only he could have convinced even hardcore opposition states like Kerala,Tamil Nadu,West Bengal to agree to the GST.

    So,Congress only has themeselves to blame that even though they were in power for 10 years,they were unable to evolve a consensus even among their own party or allies.

    If they they had worked with all the rest of the parties other than the BJP,they could have been successful


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