Taxing Times

The launch of the Goods and Services Tax amidst great fanfare, but without adequate preparation, marks a continuum with demonetisation and threatens the viability of millions of small and medium enterprises. 

- V. Sridhar

THE Goods and Services Tax (GST), heralded by a media blitzkrieg that touted it as a “game changer”, was launched on the midnight of June 30. The Narendra Modi government, in keeping with its penchant for drama, decided on a midnight launch at a special session of Parliament, an obvious attempt to draw parallels with the “tryst with destiny” speech of India’s first Prime Minister Jawaharlal Nehru on the eve of Independence in 1947. At the launch, Modi described the GST as a “good and simple tax”, but there is widespread scepticism that the new tax regime would be anything but simple; as for whether it would turn out to be good, there is plenty of doubt about that too.

Missing from the event was the main opposition party, the Congress; M.P.s of the Communist Party of India (Marxist) also chose to stay away, although its former Finance Minister from West Bengal was in attendance. For the Congress, which had only last year allowed the passage of the enabling legislation in Parliament, this was a turnabout of sorts. What explains this? It is quickly becoming clear that there is a continuum in the policies of the Modi  government and its overall approach to policy-making that is targeting large sections of the people engaged in small- and medium-scale occupations. Seen from this perspective, the dramatic announcement of demonetisation and its ravaging impact on those engaged in small-scale and informal occupations, including the calamitous impact on agricultural product prices, has a connection to what is likely to happen in the name of the GST.