GST Debates Witnessed a Much-Needed Reaffirmation of Federal Virtues

Perhaps Jaitley was not over-pitching when he argued that “the whole concept of the GST Council is Indian federalism at play in the best possible mode”.

Arun Jaitley speaking at the parliament session on GST on Wednesday. Credit: PTI

Arun Jaitley speaking at the parliament session on GST on Wednesday. Credit: PTI

It is perhaps no exaggeration to suggest that had the GST (Constitution Amendment) Bill been steered by any cabinet minister other than Arun Jaitley, the exercise would have floundered. Apart from sporting a certain technical competence in the art of taxation and law-making, the finance minister was able to convey a sense of sincerity and honesty that has so often eluded the Modi regime. Indeed, the finance minister was called upon to make up for his government’s confirmed weakness for duplicity.

But this is not about Jaitley. This is about celebrating the political process that made possible the Rajya Sabha vote on Wednesday. Just at a time when men and women of good will were getting exasperated at our politicians’ interminable squabbling, the divided and deadlocked parliament was able to cobble together a very substantive as well as consequential law. “This is far too important legislation which will last the next 100 years,” intoned a former union finance minister, P. Chidambaram.

And, this satisfactory denouement was possible only because the Centre had come down from its haughty pretensions to reaffirm its faith in the federal spirit and structure of our constitutional arrangement. Since May 2014, armed with an unprecedented — and, liberating — majority in the Lok Sabha, the Modi government has often spoken down — and, that too, arrogantly— to the states. The Lok Sabha majority was sought to be seen as a licence to roll back the federal assertions and propensities; since 1989 those ruling at the Centre had to depend upon numbers and partnership with “regional” parties, which somehow were deemed to be insufficiently mindful of “national” interest.

Admittedly even before May 2014 there has been a healthy but unrelenting contestation between the Centre and the states. Once the Congress lost its post-independence dominance and “regional” parties came to the fore in states, the tussle acquired a politically partisan hue. We only need to recall how N.T. Rama Rao sought to dismiss the Centre as a “myth”; we also need to keep in mind a document called the Anandpur Saheb Resolution; and, we are almost every week reminded of another relevant provision, Article 370. Surely, we do not have the luxury of concluding that the issue of the quantum of autonomy that the states would want to enjoy in the Union is a settled point.

The GST law had to be crafted in this context of the sense of entitlement that the states have come to claim vis-à-vis the Centre. And, now, the states are being asked to give up considerably their power of taxation. The power to tax is the most fundamental attribute of “sovereignty”. It was left to Jaitley to make the argument that “for some of those who felt that this was surrendering their sovereignty, this was, in fact, pooling in of sovereignty of the states at the Centre.” Neatly put.

The finance minister felt obliged to make his case for the GST in terms of deepening of the federal arrangement. He delineated the proposed GST Council, where the states would be able to commandeer two-third of the vote while the Centre will have to be content with one-third voting power. Any decision would have to have three-fourths of the votes. Perhaps Jaitley was not over-pitching when he argued that “the whole concept of the GST Council is Indian federalism at play in the best possible mode”.

This recourse to the “federal” argument is a welcome antidote to the ominously centralising overtone to the thoughtless slogan of “one nation, one tax”. There has always been a very passionate and very articulate opinion that has insisted that the Centre has to be both omnipresent and omnipotent; the operative assumption invariably was that those charged with the responsibility of presiding over “New Delhi” and operationalising the Indian state would be solely guided by enlightened national interest and would have a pan-Indian perspective. As a matter of fact, the constitution does charge the Centre with the responsibility of “protecting” the Union. And, since May 2014 the prime minister has behaved as if he was voted as a federal overlord.

It is in this context of prime ministerial overlordism and the BJP’s political dandagiri — as evident in Arunachal Pradesh and Uttarakhand — that the GST debate witnessed a much-needed reaffirmation of federal principles and invocation of federal virtues. The GST arrangement carries with it the risk, as Sitaram Yechury pointed out, of reducing the states to glorified municipalities who would be obliged to come “with a begging bowl” to the Centre for money. Yet with the exception of Tamil Nadu, all the states have boarded the GST bandwagon. This is an act of faith.

Given the caterwauling context of disputes and disagreement among political parties, the consensus behind the Wednesday vote should be a silver lining. At the very least, it can be argued that the Indian political system has not become totally dysfunctional. Perhaps equally significantly, it can also be suggested that the Indian political class has not become self-defeatingly self-centred. The parliamentary democracy stood redeemed, even if the GST may turn out to be not quite the magic wand it is being projected to be.

A long and uncertain journey has just begun. It is not a question of just one time act of good faith. Over the next two years the political parties would find themselves called upon to engage in rites of cooperation and collaboration to take the GST beyond its baby-steps. Deadly serious political adversaries may have to engage in sincere dialogue and discussion.

No economic arrangement can sustain itself without some kind of political concord. The present turmoil in the EU offers a lesson on the need for balance between economic benefits and political costs. The states cannot be expected to cooperate in matters of trade and taxation unless the polity is able to ensure a minimum political fairness. An important state, Tamil Nadu, and its political leadership insist that the GST Bill violates the basic structure of the constitution. Such dissent would still need to be addressed.

Success of the proposed GST architecture will ultimately depend upon the ability of the political class to carve out “no conflict zones” even if they continue — as they must —  their rivalry in the electoral arena. A genuine federal polity can only proceed and prosper on the principle of “live and let live”. No group, party or leader would be able to trample over the autonomy of the constituting states. The Union can flourish only when the states feel they have their space and a say in the nation’s collective affairs.

Harish Khare is Editor-in-Chief of The Tribune

Courtesy: The Tribune


    While the consensus among major political parties may be a positive step, a linger doubt still remains that why the same consensus was not arrived at when Congress was in power. There might be strategic shift in approving the passage of the bill by Congress as the BJP would face the brunt of criticism for the perils of the proposed bill, which are very much likely with states rising in protest for their share of tax revenue.