New Delhi: Bibek Debroy, the renowned economist who is presently the member of NITI Aayog, is of the opinion that Congress is avoiding a debate on GST Bill in parliament because the party lacks convincing intellectual arguments against the bill.
In an exclusive interview with indiatvnews.com, Bibek Debroy candidly articulated his views on a host of issues ranging from GST, parliamentary logjam, rift with Gandhi family, political motive behind intolerance debate, state of Indian economy, how NITI Aayog is different from Planning Commission to the single most worrisome challenge that the Modi govt is facing.
In what appeared to be candour at its best, Debroy conceded that both Modi government and NITI Aayog have failed to disseminate its achievements to the common man.
Blasting Congress and left-leaning intellectuals of practicing ‘intolerance' in academic circles since the time of independence, Bibek Debroy tried to drive home the point by giving three specific examples from past of ‘intolerance for ‘alternative ideology'.
The renowned economist exhorted the youths not to lose hope in life as most of the time the disappointment is actually triggered by something that is extremely temporary.
Here goes full text of the interview:
GST & Parliamentary logjam:
Q: According to some media reports, the Congress wants GST to be implemented in 2017 only because past experience suggests that inflation goes up in first 2 years after its implementation. So the Congress, according to these reports, is assuming that after two years i.e. in 2019, when the country goes to polls, the inflation would be higher and it will help Congress electorally. How true is that?
Bibek Debroy: Firstly, GST is not something that happens overnight. It's beginning of a process. In most countries that have implemented something like GST, it has taken more than 10-15 years to complete the process. The question is the rate because if it's revenue neutral rate then there should logically be no increase in prices. The difference between GST and the present form of taxation is that today the form of taxation is hidden. In fact, because the present form is inefficient, it leads to cost-cascading effects.
In the slightly longer run, the prices should actually come down if it's a revenue neutral rate. To the best of my understanding, the Congress opposition is more about 1% surcharge, the cap of 18% and the appellate process.
Q: But the Congress leaders have openly said that this is not only about the technicalities related to the GST Bill. Anand Sharma, while addressing FICCI AGM recently, said that the Prime Minister has realised after 18 long months that there is an opposition in the country. So there are obviously issues beyond these technicalities.
Bibek Debroy: If you are asking whether Congress is opposing GST because of issues that have nothing to do with GST then I am prepared to believe this otherwise if there is a serious issue about GST then why not debate it in Parliament?
Q: What, according to you, is stopping Congress from discussing all this in Parliament?
Bibek Debroy: You should ask this question to the Congress leaders. But my hunch is that the Congress feels that since it does not have the numbers, nor does it have the convincing intellectual arguments against GST because they themselves had talked about the GST earlier, they do not want to discuss it in Parliament.
Q: Congress accuses govt of misleading the country on GST because, they say, the Bill is actually not ready. They point out that even if this bill is passed in the parliament, it needs to be ratified by 50% of state legislatures and after that the parliament needs to amend three more laws before GST is actually rolled out. Their charge is that there is no clarity on all these amendments.
Bibek Debroy: That, indeed, is the point. But let's discuss the specific issues that have been pointed out.
Of course, this 1% surcharge is undesirable but who wanted this? That 1% was wanted by two major producing states namely Tamil Nadu and Maharashtra. I don't think Finance Ministry wanted that 1 %. And why these two states wanted 1% is because they were afraid of revenue losses because with transition to GST (and even VAT), the base shifts from ‘manufacture' to ‘consumption'.
Imagine a situation where you scrap that 1 %, when the GST goes to the state assemblies for ratification, it is perfectly possible that the state assemblies may say we'll not ratify it. They may say that we'll have GST but we'll not abolish entry tax. The ideal GST is one where all indirect taxes go.
Similarly, do you want that 18% cap to be mentioned in a constitution amendment bill? Then you are stuck with that and every time you want to change that 18%, you'll have to make an amendment to the constitution. Everyone wants the GST rate to be lower but what is the revenue neutral rate depends also on which items are included and excluded. The more items are included to the GST, the more will be the revenue neutral rate. And, it's the GST council that will decide the revenue neutral rate. The bottom-line is – I don't think it's an intellectual argument et al.
Q: How essential is this GST for economic growth of India? The Congress says Modi govt's desperation for GST makes them wonder if the govt could assure a GDP growth of 11% with its roll-out.
Bibek Debroy: As I said earlier, GST is the beginning of a process. Any country that has implemented GST or an equivalent of GST has seen that with a period of time, because the inefficiency gets weeded out, there is an increment of 1-1.5% to the GDP growth. But if anyone suggests that simply because the GST process starts on Aril 1, 2016, the GDP growth in 2016-17 will go up by 1% then, of course, that's nonsense. GST is desirable because it's desirable. It's not desirable because suddenly from next year, the GDP growth rate is going to go up.
Watch Video of Bibek Debroy Interview (Exclusive):
