JOIN US Narendra Modi has come a long way in becoming the man who implemented the Goods and Services Tax that languished for nearly two decades.
He may have slammed the tax overhaul as chief minister, but hammered out a consensus for its implementation after the BJP’s historic win in 2014.
It was a BJP prime minister, Atal Bihari Vajpayee, who first conceived GST in 2000. The government borrowed the services of the then West Bengal finance minister Asim Dasgupta –one of the finest economic brains- to put in place the backend technology and logistics.
After the NDA’s defeat in 2004, the UPA government, led by prime minister Manmohan Singh and finance minister P Chidambaram –who made a mark as commerce minister in implementing the country’s exim policy- began putting up a draft policy for the taxation overhaul. In his 2006 Budget speech, Chidambaram set 2010 as the deadline to rollout GST.
An empowered committee of finance ministers was constituted in 2008 that laid a roadmap for GST implementation.
However, when the UPA was voted back in 2009, Pranab Mukherjee, who replaced Chidambaram as finance minister, laid down the basic structure of GST prepared by Dasgupta, which essentially revisited Chidambaram’s draft. Around this time, the government faced maximum opposition from the BJP.
Following a breakdown of negotiations with the BJP-ruled states, the government reset the deadline for the rollout to 2011.
Despite the formal introduction of the 115th Constitutional Amendment Bill to bring GST in the Lok Sabha, it was referred to the Standing Committee on Finance headed by BJP’s Yashwant Sinha.
As the target date for GST implementation was put off for one more time, Dasgupta resigned as head of the empowered committee of ministers for GST following the Left party’s defeat in the West Bengal Assembly polls.
The then Kerala finance minister K M Mani took over as the head of the committee that saw the states taking a tougher stance on keeping petroleum and petroleum products, alcohol and entry tax out of the GST’s gambit as an assertion of their autonomy.
The UPA government did not agree to a compromise since GST was all about ‘one nation, one tax’. They instead offered compensation for the states’ revenue losses. The 2013-14 Budget set aside Rs 9,000 crore as compensation.
In August that year, the Yashwant Sinha-led committee made some improvements, but Modi, as Gujarat chief minister, opposed it saying the state would incur Rs 14,000 crore losses.