"If everything around seems dark, look again, you may be the light."
- Rumi
During Diwali week, the Prime Minister was a de-light-ful winner of the national Fancy Dress Contest cosplaying as a brave soldier. You might have seen the reels by now and the blanket coverage. You might have also spotted a mugshot of the same gent looking straight into the camera for all the self-congratulatory colourful communication created for the 'GST Bachat Utsav'. Yes, it has been exactly a month since the Union government revised the Goods and Services Tax (GST) rates. Happy Diwali to all of you. And since this column is called "Calling Attention", allow me to call your attention to the much hyped 'GST Bachat Utsav' that ends this week.
Amidst all the hoopla, it is the State governments that truly deserve recognition for coming together for the GST revision. Because the States are the ones bearing the brunt of massive revenue losses. In fact, more credit should be given to Opposition-ruled States as they not only face revenue loss but also unfavourable and partisan flow of funds under different schemes and heads.
Look At The Data
Data from the Reserve Bank of India's (RBI) study of private corporate investment intentions revealed that Gujarat and Maharashtra, both BJP bastions, topped the list, averaging over 79 and 45 projects respectively between 2014 and 2023. During this period, the Prime Minister's home State accounted for 88 additional projects. Among the top 10 States, which also included four Opposition-led States, an average of 343 projects were chalked up between 2014 and 2023. However, nine out of 10 projects went to BJP-ruled States. Gujarat itself accounted for nearly one-fourth of this share.
What do these numbers tell us. Either BJP-ruled States are the best governed States or investors and businesses are 'strongly encouraged' to invest in these States. Considering BJP-ruled States have the highest crimes against women, highest zero food children, lowest literacy rates in the country, the first reason cited is not convincing. The latter is closer to the truth. Chief Ministers of many Opposition-ruled States have often alleged that the Union government 'diverts investments'. Consider this. Investments worth Rs 6,000 crore for Tamil Nadu were moved to Gujarat. The Chief Minister of Telangana alleged that he had evidence to suggest that the PMO told more than one company to opt for Gujarat. The Information and Technology Minister of Karnataka has made similar allegations. Even investments going to Maharashtra, which itself is an NDA-ruled State, were diverted to Gujarat's GIFT (Gujarat International Finance Tec-City) city. Media reports suggest that 17 major projects have been shifted from Maharashtra to Gujarat.
Why States Wanted Assurances
The Union government has been boosting funding and investments to States run by the BJP by announcing various financial incentives. One such example is the GIFT city. Earlier, the UPA government had envisioned developing the Bandra-Kurla Complex (BKC) as a financial hub. In 2007, the government committee chaired by former World Bank official Percy Mistry recommended transforming Mumbai into a global financial centre. However, focus shifted to the GIFT city in Gujarat. Many concessions have been given and extended until 2030.
In this situation, it is not surprising that many States, particularly those ruled by non-BJP parties, demanded assurances on revenue loss when the revised GST policy was rolled out a month ago. That is why, critics suggest that the 'GST Bachav Utsav' was high on noise and low on purpose.
In February 2014, Narendra Modi had tweeted "Centre's preparation on GST is inadequate. They haven't addressed concerns of the States". On this Diwali, one could only wish that Prime Minister Narendra Modi took the advice of Chief Minister Narendra Modi.
P.S. Your columnist was a member of the Joint Parliamentary Committee constituted in 2015 to examine the GST Bill. Members from the Opposition had given two key suggestions to the Chairperson of the Committee: (i) keep GST below 18% (ii) avoid a multiplicity of rates. It has taken the Union government a decade to act on these suggestions.
Additional research: Dheemunt Jain
(Derek O'Brien, MP, leads the Trinamool Congress in the Rajya Sabha)
Disclaimer: These are the personal opinions of the author
