Manufacturing Opinions

GST – How the Narrative Was Gamed from ‘Promising’ to ‘Complexity’

GST

What was the media narrative about GST (Goods & Service Tax) during UPA rule when GST was being discussed as a possibility and how is it now when NDA government at the Centre has achieved the historical milestone of its implementation? To know this, we did searches with key words like ‘GST India’, ‘GST Congress’, ‘GST BJP’, ‘GST slab’ and went through news and opinions between the period 2009 and June 2018.

Between 2009 and 2014, the dominant narrative that had prevailed in media was in these lines: GST for the whole nation is an important step which the Centre is ready to take, but the resistance from states – they had concerns and did not trust the UPA government to resolve them – is the main hurdle in GST implementation. The fact that the opposing states had no opposition to GST per se but had concerns that needed to be addressed was given very little headline space.

Contrasting this with NDA timeline, news and opinions explaining how GST implementation is hurting some particular sector kept appearing.

Headlines Then – From 2009 to 2014

This one from March 19th, 2013.

https://www.thehindubusinessline.com/economy/gst-will-reduce-cost-aberrations-in-ceramic-industry/article23089505.ece

https://www.business-standard.com/article/economy-policy/gst-will-help-increase-employment-kelkar-109101300103_1.html

Apart from this, the hurdle for GST at that time, reflected in media reports, was that the states wanted to keep petroleum and alcohol products out of the GST ambit.

Here is a smaller headline that indicates why states were wary of GST – they were angry that the Centre had not released compensation for phasing out the central sales tax. Remember that the cabinet decision to phase out central sales tax was taken during UPA-1 and even far into UPA-2’s tenure, states were angry about compensation not being released. No wonder then that states would oppose it.

Apart from these hurdles, some potentially positive fallouts were reflected in media reports of that time. For example:

https://www.business-standard.com/article/economy-policy/finance-commission-report-on-gst-flawless-109121800100_1.html

Headlines Now – 2014 to 2018

Once the NDA government was able to bring consensus among states and implement a historic tax reform, some negatives started appearing. It was made a big election issue in a few states. News about how certain sectors are going to be hit by GST regime began to flow.

See the following:

https://timesofindia.indiatimes.com/business/india-business/gst-may-raise-price-of-flats-nearing-completion/articleshow/59185844.cms

https://www.hindustantimes.com/india-news/has-gst-been-inflationary-for-india/story-UP3uP8FshPI2b2SvdBsnGO.html

https://www.thehindubusinessline.com/economy/biscuits-industry-baffled-by-uniform-18-gst-rate/article9720708.ece

https://www.thehindu.com/news/cities/mumbai/gst-makes-india-inhospitable-says-tourism-sector/article18511558.ece

https://www.businesstoday.in/opinion/columns/money-today/insurance-sector-to-face-initial-hiccups-post-gst-as-tax-regime-to-impact-insurers/story/255721.html

The Complexity Debate

Today, sections of the media seem to push a debate with the line that ‘GST would be good if it was not complex.’ Was the ‘complexity’ of GST absent in UPA’s proposal? Though, Congress President Rahul Gandhi now claims that his party is for single GST rate, which is impractical as Union Minister Arun Jaitley had pointed out, there were hardly any news reports at that period which shows the unwavering commitment of Congress to have single GST slab. There were all kinds of thinking floating around. See the below snapshot of a report from 2009 dateline where GST with four slabs indicated. This was the thinking of the Asim Dasgupta headed panel on GST that played an important role.

https://economictimes.indiatimes.com/news/economy/finance/gst-to-have-4-slabs-asim-dasgupta/articleshow/5333259.cms

Yet, in 2018, opinion makers latch onto ‘complexity’ to build negative narrative on GST.

A classic example in this regard may be seen in the instance of writer M K Venu. In 2010 writer had argued that GST implementation is the only way to expand tax base which is imperative to fund social welfare programmes. He argues that revenue growth is essential for the government.

Perhaps the writer wanted the revenue base of UPA government to grow but not that of the NDA government. Because, today, the revenue growth of GST is healthy but Venu has moved onto other problems. This is evident in the way he phrases the tone of his article in 2018 to run down GST.

At the time Venu wrote this article in November 2017, many goods and services were already brought under lower tax slab, which the writer credits to the opposition camp. The article itself mentions many changes brought in GST, which reflects that government constantly in consultation with GST council to improve.

As it turned out in March 2018, ‘widening the tax base’, something that Venu wanted, was actually achieved by GST.

https://www.thehindubusinessline.com/economy/50-increase-in-indirect-taxpayer-base-post-gst-economic-survey/article22552449.ece

Let’s now put the headlines of these two periods in a slide to get the perspective of media’s changing narrative.
GST & Federalism

Was there any prevalent narrative in media back in 2009-14 that fundamentally opposed GST as a concept, on the basis that it is detrimental to states’ interests? When we searched with the keyword ‘GST federalism’ we found Arvind P Datar’s argument that GST is a disastrous step as it violates principle of federalism. There were very few noteworthy arguments in the media that GST violated the spirit of federalism.

However, after May 2014, prominent media houses increasingly have published opinion pieces arguing that the GST may sound the death knell for Indian federalism. ‘The GST Bill will ring the death bell of federalism in India’, argued an opinion piece in The Indian Express, written by a for CPM MP.

A blow against federalism opined a Telegraph article by Prof Prabhat Patnaik while The Wire wrote The GST Could Sound the Death Knell for Federalism in India.

While The Hindu put a question mark through the article GST: Good for business, snag for federalism?, the Scroll found its questioning style with the article The Economic Survey argues that GST will actually be good for Indian federalism. Really?

One can only wonder why many such concerns were not prominently expressed when the UPA was working on bringing in the GST and why they seem to have appeared after the change in administration at Centre.

Conclusion
  1. In previous UPA era, the consensus on GST was not made possible because the state governments were not ready to trust the Centre. More than political differences, the UPA’s delaying tactics in releasing pending compensation caused the mistrust.
  2. NDA government was able to bring in consensus as it promised to bear the revenue loss of the states in the first five years of GST implementation. Also, it brought petroleum into the ambit of GST but left the issue of taxing the petroleum products to the GST Council, to be done only with the approval of states.
  3. For all concerns over federalism, the GST Council is a well-functioning, truly federal institution that has set the benchmark for cooperation between states and the Centre, where both have a say.
  4. The multiple slab approach was being discussed even in the UPA era, but it came to be hotly debated and opposed only during the NDA era. It was a pragmatic step that helped the country ease into GST without fears of very high inflation or chaos.
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