With the 2024 General elections, a few months away, it is time to look back at the last decade of Prime Minister Narendra Modi’s leadership of our nation and the significant legislative actions taken by his administration. Many of these reforms are far-reaching in nature. The efforts to enact and implement the Goods and Services Tax are among such far-reaching reforms. It is difficult to legislate as it would diminish the massive reduction of powers of States to levy taxes, and it required the consent of State assemblies to pass the constitutional amendment. Due to the significant legislative difficulties, GST remained a pipedream since 1999 when Sri Atal Bihar Vajpayee was in power. Later, UPA also tried to bring it, but could not.

When the NDA swept into power in 2014, there was severe opposition to the GST from the many Chief Ministers. Even Narendra Modi, in his earlier role as the Chief Minister of Gujarat, was opposed to the GST in the form it was at that time. Obviously, the UPA did not put enough effort into heeding State governments and finding ways to take the matter forward. Arun Jaitley took the responsibility of negotiating with various states and obtaining their consent for the implementation of the GST. But for his negotiating skills and leadership, and far-reaching vision of different State chief ministers and the leadership of the Prime Minister the GST came into being. It would be a lie to say that the implementation of GST is very smooth. However, the government, both at the Centre and in various States, worked to solve multiple teething problems. It is both the fairness in negotiating with the State Government and the responsiveness of the Ministry of Finance of the Central Government coupled with the positive approach of State governments led by different political including those that seriously opposed to BJP and PM Modi that paved the rollout of the GST. The support and of State governments was the game-changer since it took away their powers. This stood out as a classic example of the collective unanimity of leaders both at the Centre and the State.

Firstly, every effort was made to secure consent from all the state governments. Both liquor and petroleum products were kept out of GST. This step alone ensured that the state government had minimal objections to the GST. Apart from that, the fact that the state's share of GST gets automatically distributed to states must have also created a more acceptable situation. Also, the votes on the Board were not vested completely with the Central government but were distributed, and all the states had a say in the Board.

Various states that lost revenue due to implementation were compensated for a limited period so that they do not oppose the GST. All this ensured that the GST became the law with 101 Constitutional Amendment to our constitution passing with the required majority in Parliament and also from the state assemblies. It is tough to remember such a collective effort by all political parties since independence. It is also a mark of the leadership of the Prime Minister, who has allowed the entire process to run smoothly without any political bickering. It was the crowning achievement of the Late Sri Arun Jaitley, who worked tirelessly to put the GST in place.

The GST is not merely a new taxation system but a move towards the creation of a more formal economy. It removed multiple avenues for tax evasion and corruption, removed numerous bottlenecks in the economy. It has created an extensive system that is fully automated and helped both the states with significant production and commercial activities and those who were mere consumers of products and services get a more equitable share of the tax. Care was also taken to fix the tax slabs to ensure that there was no sudden spike in prices by imposing GST at a higher rate on anything than those prevailing before GST. GST Board, also ensured that the rates were modified when there were demands from various stakeholders. This system continues to work without any major political issues from any quarter and is now stabilized. A fully automated system essentially removed the need for any active individual interventions by the tax officials. The fact is that the Prime Minister could pull this off when UPA, which flaunted being "democratic" and mindful of "the rights" of the various state governments failed to deliver it.

However, while all the parties accepted and participated in the creation of the GST, once the GST was made into law, they started opposing the implementation of the same from 1^st July 2017. They do not want the NDA and the Prime Minister to take any credit for such a significant reform. Rahul Gandhi even called it the Gabbar Singh Tax. He attempted to push the implementation of the GST very near to the Lok Sabha elections in 2019 so that any initial hardships and problems of this new tax system could be amplified. While there were, in fact, issues in the initial implementation of the GST, this may be due to Infosys' apparent failure to create a more robust automated system. But soon trained government employees took over and the transition was made smoothly.

Congress party also opposed multiple tax slabs and wanted a single slab. It seems that taxing essential medicines, food items at the same rate as luxury cars, and other luxury items at the same rate for Congress is a pro-poor thing. All over the world, indirect tax is not considered progressive. The single slab GST or VAT is in vogue all over the world, wherein a tax system similar to GST was already under implementation. However, those demanding a single slab are not considering a critical fact. In most other nations that have a single slab, direct taxes like Income Tax and Corporate taxes make most of the taxes collected. In Bharat, this is not the case. Most of the tax revenues in Bharat come from indirect taxes. In such a situation, implementation of a single slab will only result in hardship by actually increasing taxes and resulting in an increase in the prices of the goods on which ordinary people spend most of their income even today.

Interestingly, the Congress party no longer actively demands the single slab GST as it seems to have realized the possible unpopularity of such a demand. In a way, the multiple GST tax slabs are a unique thing in our country wherein progressive taxation is not just done in direct taxes like Income and Corporate Taxes but also in the indirect tax in the multiple GST slabs.

Now, the GST revenue is reaching new heights almost every month. The system is running smoothly. The Board is also responding to public demands in many ways. There was a demand for lowering of taxes on Food from Hotels and restaurants, and the same was immediately reduced. Rates are kept low for many essential items so that ordinary people are not burdened. Barring politically motivated allegations, there are no serious complaints from any state on the system as a whole. Factoring the concerns of all stakeholders, the GST Board has exempted small businesses from strict compliance and ensured that there was no severe hardship to them. As the system is fully automated, there is no major scope for inspection raj and corruption. However, one repeated complaint we have heard is the delay in refunds. This seems to be a systemic issue that needs to be addressed. Seeing the track record of the GST Board so far, one can be sure that they are working on it.

With the successful implementation of GST, late Finance Minister Arun Jaitley left a lasting mark on our national economic growth and reforms. He will be forever remembered for his path-breaking contribution.

Image source: Financial Express