GST is about replacing one large mess by a small mess: P. Chidambaram

In an exclusive interview with ET Now’s Supriya Shrinate, P Chidambaram , Former FM says the anti-profiteering clause will lead to tax harassments and is likely to be repealed by the next government that comes to power

Edited excerpts :

You have said this is the dawn of new era, the turn of a century as far as tax payers are concerned. You can hate the GST. You can love it. You can ignore it. But by all accounts, this is a momentous occasion for the Indian economy. It is a big event. Do you regret not to be able to sign it off even though you served as finance minister for various terms?

I cannot rewrite history. Those who should regret are those who stalled it for seven years. I am happy that the idea that was conceived by the UPA is taking shape, however, imperfect it may be. I am happy that I was able to roll out that, I was able to move GST to a point where it could have been rolled out in about year or so. So overall, I am happy.

You are happy overall because eventually an idea that you believe is good for the Indian economy is going to roll out, but what is it that the present government could do or what is that the Finance Minister Jaitley could do to drum up consensus that perhaps the UPA or you could not.

Well firstly, they have an absolute majority in the Lok Sabha. We did not. Never did.
But there was a bargain between states and centre as well.

Let us start with that. You bargain from a position of strength that you are a government with an absolute majority in the Lok Sabha and therefore bills can be passed in the Lok Sabha, number one. Number two, the consensus was built over a period of time say under Mr Sushil Modi as chairman, then Mr Asim Dasgupta as chairman. State finance minister’s council was built from that consensus. In fact,has written that the Modi-Jaitley pair stands on the shoulders of previous PM-FM pairs. So over a period of time, it becomes easier to tie up. The initial consensus building was a difficult part and the UPA steered the GST process to a large extent. We just could not clinch it on the last mile.

What you are essentially saying is this is almost like a baton relay and this is the last lap that the BJP has been able to run.
I know you are critical of the Modi government’s policies. You have pulled them up. You have criticised them when warranted and you have also praised it when necessary. Where do you believe the credit for rolling out the GST lies? Who will you give credit to?

I cannot yet give full credit because the GST that will be rolled out from the 1st of Jully is an imperfect GST. They were in great hurry to roll it out on 1st July, ignoring well meaning advice to defer it by two or three months. I suggested we roll it out on October 1. And then too many compromises have been made which have added to the imperfections in the GST and travelling round the country I am absolutely convinced that businesses are not ready, businesses are uncertain. They are apprehensive and in course of time, these imperfections will become visible.

I agree with you that imperfections will become visible, but can we ever be fully prepared for a reform like the GST? When you say this is an imperfect GST with its flaws, to begin with will you refute me when I say that perfection cannot be the enemy of good and for all practical purposes, this is the beginning of the GST. We will perhaps improve along the way.

If they had put in harder work, if they had taken the opposition parties into confidence, if they had persuaded the opposition party leaders in Parliament to talk to the state governments run by those opposition parties, we could have had a much better GST day after tomorrow. They spoke to the state governments but they did not speak to the leaders of the political parties who are running those governments.

But do not the state governments have to be taken into confidence, after all, they are the ones who are giving up a lot of space?

Of course, they have to be taken into confidence. To make it a more perfect GST, it was necessary to take into confidence the leaders of the political parties who are running the state governments like Congress, CPI(M), SP at that time.

So you believe there was a crisis of confidence in the centre while they were reaching out to the states but these were congress. A lot of these governments were Congress run governments. So in some sense the congress party was on board?

BJP somehow shuns the idea of talking to the Congress.
But a lot of these governments and most decisions in the council have been taken by consensus. Very few things have ever been put to vote. In that sense, the Congress has been on board?

Consensus hides the fact that there are dissenting voices and you have now heard the most powerful dissenting voice from Bengal. Please remember Mr Amit Mitra shares the state finance minister’s council and his government is dissenting. His government is boycotting the inaugural function therefore consensus hides the fact that there is dissent.

While there is dissent and while the GST will be a reality, what took the GST so long? Was it political optics, political compulsions, economic fallacy – GST has been in the making for over a decade?

It gathered momentum only in about 2006-2007 or so. Then we had the international financial crisis in 2008 which was the main preoccupation of the central government for at least a year or so when Mr Mukherjee was the Finance Minister. It gathered steam again when Mr Mukherjeet introduced the Finance Minister. It gathered steam again when Mr Mukherjeet introduced the GST constitution amendment bill and I tried to take it forward but the BJP simply stalled it. Between August 2012 and May 2014, the BJP simply refused to let us move forward.

And so there was no GST.

We lost 18 months that way.


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