Context:As the country has witnessed one of the most acrimonious Goods and Services Tax (GST) Council meeting ever,the idea of 'One Nation, One Tax' is at risk.
Concerns
Forsaken trust and goodwill: It was the foundation of indirect tax reform. The economic reform, which first time economically unified the country is likely to fall.
Jeopardizing the idea of "cooperative federalism": At a time when the nation, under external (unwarranted military aggression by China) and internal threats (from the COVID-19 pandemic), needs to stick together.
Problems:
Rule book approach of bureaucrats: The principles of federalism outweigh the need to be right by the rules in such a once-in-a-century situation.
GST dues owed to states: computed based on the 14% annual growth that was guaranteed by the Union government
Covid-19 pandemic-induced lockdowns: Resulted in massive tax revenue shortfall, both for the central and state governments.
Union Government didn't generate enough funds for an economic stimulus
Video Negotiations precludes the personal touch:To defuse an inclement situation engaging in informal parleys will help. This tactic cannot be applied in a video conversation.
Way Forward: Task before the GST Council -
Fixing the flawed GST rate architecture: supporting myriads of rates.
Deal with economic meltdown: It has to address the monumental challenge posed by the covid-19 pandemic-induced economic meltdown on GST collections.
Amicable resolution with States: especially before the case reaches the judicial clutches.
Strong Political Leadership: is required to resolve the challenges before the GST.