WIDENING GAP
THE WEEK|November 08, 2020
WIDENING GAP
Beyond the economy and the pandemic, the Centre-state tussle could continue to be vexing
K. SUNIL THOMAS
BIG BROTHER THROWING his weight around? Or ‘elder brother’ offering compassionate guidance? Be it either, the relationship between the Union government and states reached a new low two weeks ago over the Goods and Services Tax compensation issue. Despite the last-minute rapprochement salvaging the situation, there are many more cracks waiting to burst open. And not just in matters of economy.

“The BJP has been far more aggressive in its pursuit of centralisation in its second term,” argued Yamini Aiyar, president and chief executive of the think-tank Centre for Policy Research, in a recent essay. “The grammar of cooperative federalism has been eschewed in favour of ‘one nation’.”

What does this rift mean for a country struggling to deal with a pandemic? “Regaining the spirit of ‘Team India’ in the current downturn is an imperative. Otherwise people will continue to suffer,” said Pradeep S. Mehta, secretary general of Consumer Unity & Trust Society, an international consumer advocacy organisation.

There are, however, arguments that the current circumstance requires a different approach. “In a pandemic situation, some powers have to be ceded to the Centre for a standardised approach,” said Shashank Tiwari, government strategy & transformation leader, PricewaterhouseCoopers India.

The GST deadlock came about on the question of how to foot the amount due to the states. States had given up almost all their tax-generating powers (with the exception of petroleum products, alcohol and land) to the Centre for the sake of a uniform GST tax structure across the country, on the promise that the revenue will be shared equally and any shortfall in 14 per cent annual growth rate will be compensated. Since its inception in 2017, the GST Council, where the Union and finance ministers got together and decided on all matters amicably, was hailed as an example of the federal setup.

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November 08, 2020