Raising GST rates would suppress demand further: PC

Former Union Finance Minister P Chidambaram on Monday warned the BJP Government against raising rates of Goods and Services Tax (GST) as being speculated, saying it would further suppress the demand.

He also blamed the government and Finance Minister Nirmala Sitharaman for not accepting the fact the economic slowdown was “structural problem” and not “cyclical” as it wants to believe. The senior Congress leader also said the fundamental problem of the government was that it lacks talent and doesn’t take any steps to recruit “non-political talent” to advise it on economic issues.

“Every decision of the government has an immediate consequence on the lives of millions of people. If you raise GST, I thought it was a no-brainer. If you reduce GST, will demand not to be further suppressed? In a situation like this, you cut regressive taxes and not progressive taxes. But they are doing the exact opposite,” Chidambaram said, responding to speculation that the minimum GST slab may witness an increase.

He was delivering a talk on “The Current National Situation: Where are we headed?” organized by the Chennai International Centre here, moderated by senior journalist N Ram.

Chidambaram also said GST should have been one rate and not eight rates and reminded the audience that the Congress had pleaded with the then Finance Minister Arun Jaitely to circulate the Bill before it was passed in Parliament.

“Every decision of the government has consequences and which is why all of us are worked up about the decisions that they are threatening to take. Hold discussions and get people to advise you on the right course of action. If your Chief Economic Advisor says it is cyclical, then what can we do?” he asked.

Chidambaram sought to know why didn’t Prime Minister Narendra Modi consult an economist of repute like Manmohan Singh, his immediate predecessor, on the country’s economy in the past six years. “Why didn’t Narendra Modi invite Manmohan Singh for discussions on the economy. He didn’t have to do it in public. He could have done it in private,” Chidambaram said, tearing into the government for not consulting experts on the economy.

Terming the economic condition as ”grave”, Chidambaram said it was very worrying that rural wages have come down and rural consumption by 24 percent. “And the credibility of our official data is in question. We have been doing the same about China. But when questions are raised about our data, where are we going?” he asked.

Chidambaram said the government should take steps to shore up the economy and anchor it at between 6 to 6.5 percent.