00:00And joining me now is P. Chidhamram, former Union Finance Minister, Congress Senior MP.
00:07Appreciate you're joining us, Mr. Chidhamram.
00:11You've, in your initial remarks this morning, said this is a much-needed step, but it's come eight years too late.
00:18There will be those who will say better late than never, Mr. Chidhamram.
00:212016-17 was a very different time.
00:24GST had just been brought in eight years later.
00:26We're seeing what the government is calling the gen-next reforms of GST, GST 2.0.
00:32Do you agree?
00:34The headline of my tweet was, I welcome the reduction and rationalization of rates.
00:42The shoulder was, it's eight years too late.
00:47So please read both of them.
00:49I did not say only that it is eight years too late.
00:52I welcome the reduction.
00:54I welcome the rationalization.
00:56But I'm duty-bound to point out that we said it eight years ago, even when the GST law was being made and introduced in Parliament.
01:07But Mr. Chidhamram, with due regard, eight years ago it was very difficult even to achieve a consensus of the kind.
01:14To be fair, to the late Arun Jaitley, he was able to achieve.
01:17The NDA government then was able to achieve something that your government was not.
01:21So the first step was to build a basic consensus.
01:25Now that we've had eight years experience, the government could say we are in a better position to actually put together a more simplified rate structure.
01:34I disagree.
01:35I disagree.
01:37I disagree strongly.
01:38You don't know what happened or you've forgotten what happened.
01:42I'm a player of that age and era.
01:46And Arun Jaitley was a player.
01:49So was Mr. Yashwan Sinha.
01:51Mr. Yashwan Sinha constituted the group of finance ministers.
01:56I inherited it.
01:57And I worked with them.
02:00Every finance minister supported the GST.
02:04We were able to persuade them in three or four meetings.
02:08Only two opposed it.
02:11One was Gujarat and one was Madhya Pradesh.
02:14What the Gujarat representative and what the Madhya Pradesh finance minister told me will be recorded in history sometime rather.
02:23But they opposed it.
02:25They say we have no instructions to agree to a GST.
02:29And we wanted to pass the law.
02:31We wanted to pass the law.
02:33I approached both Mr. Jaitley and Ms. Swaraj, the two leaders of opposition.
02:40Mrs. Swaraj put it very clearly.
02:44We have no appetite to support any law on reform.
02:49That's where we left it.
02:51This government was able to bring, obviously, this government was able to bring Gujarat and Madhya Pradesh on board.
03:00And all other finance ministers remained on board.
03:04And they were able to introduce the law.
03:07But remember, Mr. Dr. Arvind Subramaniam, the chief economic advisor to the government of India, headed by Mr. Narendra Modi, published a report called Towards a Neutral Revenue Rate, in which he recommended one single rate.
03:28Departing from that recommendation, they introduced multiple rates.
03:33That's what I'm criticizing.
03:35He criticized it eight years ago.
03:37And we are saying you brought it down to two rates eight years later.
03:42But let's come to the present.
03:44From the time when Rahul Gandhi, your leader, kept saying Gumbar Singh taxed for GST to today, where you have said in that same statement, it's a good and simple tax.
03:54So, you seem to be agreeing that the government has got the drift completely right this time, that you need a much more simplified tax regime with just two tax slabs and, of course, 40% as a sin tax.
04:07But by and large, you seem to believe that this is the right step forward.
04:12This is a step that will bring down, presumably, prices and thereby, hopefully, stimulate demand, consumption and investment.
04:21Am I right?
04:21I said so in my tweet.
04:25You are repeating to me what I said.
04:27No, so you are agreeing with the...
04:28So, you and Nirmala Sitaraman for once are on the same page?
04:33Ms. Nirmala Sitaraman has agreed with the Congress that it should be a good and simple tax.
04:38We have been saying this for eight years.
04:41GST means a good and simple tax.
04:45She has come around to the view.
04:46I'm glad she agrees with us.
04:48No, no, but that is, you see, quite apart from the credit-taking that every party will say that, you know, we told you so.
04:55I'm not taking credit.
04:57I'm pointing out facts.
04:59But do you, Mr. Chidambaram, agree that as a result of the GST being brought at the time that it has,
05:05A, it could offset the impact of tariffs and the tariff war with Donald Trump, and could also stimulate a virtuous cycle of demand, consumption and investment?
05:16Not entirely.
05:18It will largely offset the low rate of consumption.
05:25It will partially offset Mr. Trump's tariffs.
05:29But there are several other things that have to be taken to boost consumption and to counteract Mr. Trump's tariffs.
05:37This is a good step.
05:39This is a first step.
05:41But this is not a sufficient step.
05:43This is a necessary step, but not a sufficient step.
05:47What, according to you, would constitute a sufficient step to build on what the government has done with GST?
05:53Yes, I'll tell you.
05:55First, they must review the GST laws.
05:59It's a very complicated law.
06:03It's cumbersome to administer.
06:06It's very difficult to comply with the law.
06:10They must simplify the law.
06:13They must simplify the forms.
06:15They must make it easy enough for a single shopkeeper or a trader to fill the form on his own.
06:24Today, nobody can fill the form without professional assistance.
06:30And professionals are mushroomed even in small towns.
06:33Every shopkeeper, every shopkeeper, every trader has to employ a professional, even if his turnover is about 10 lakhs or 20 lakhs.
06:42That is one.
06:43Secondly, the manner in which the GST law is administered is horrendous.
06:52Ask traders.
06:53I have appeared in several cases involving GST disputes.
06:59I mean, the manner in which the administration of GST is equal to the ED administering PMLA.
07:07You must make it a trader-seller-friendly law.
07:16You can't threaten people with imprisonment.
07:20You can't allow your officers to go berserk and arrest people.
07:26This is a civil law.
07:27It's a tax law.
07:28If there is a tax violation, inadvertently or wittingly, you must punish him by a civil penalty.
07:37Why do you throw him in jail?
07:39Therefore, there are many, many other things.
07:41Why don't you talk to a couple of GST specialist lawyers who will tell you the kind of complications that traders face?
07:52Mr. Jitabram, I have actually spoken to friends who are business persons in Mumbai.
07:57They have spoken about the Inspector Raj that has come into the GST.
08:01Nobody is denying that.
08:02I just want to ask you, therefore, so your concern is reduce the costs of compliance,
08:07ensure that the Inspector Raj ends, ensure that the discretionary powers that the inspectors have are reduced.
08:16But net-net, therefore, you are saying that this is a first step, an important step.
08:20But you are saying this cannot be the culmination of ensuring that we are truly a one nation, one tax structure.
08:28You want to see now compliance at the next level, the costs being reduced,
08:33and also the profiteering that goes on in the name of GST to also be reduced.
08:39Am I correct?
08:39Yes, yes, yes, yes, to every suggestion you have made.
08:45Well, it's not often that Mr. Jitabram agrees with suggestions that I make.
08:49So that's also a positive.
08:51This seems to be a new day, Mr. Jitabram.
08:53You have agreed to a large extent with what Ms. Sitaraman has done.
08:57You are also agreeing to some of the suggestions I have thrown on the show.
09:00But net-net, do you believe that this will, I come back to it one last time,
09:06trigger a virtuous cycle that the economy, which has already grown substantially in the last quarter,
09:11the numbers were 7.8%, do you believe that this will trigger that domestic demand
09:19as well as investment and business confidence?
09:23One swallow does not make a summer.
09:25You can't gauge a trend by one quarter's numbers.
09:32The one quarter number, the last quarter, has been severely criticized
09:36because they use a deflator of 0.9.
09:40I don't know if you understand the implications of using such a low deflator.
09:47Be that as it may, we will discuss it another time.
09:50The point is, this is a good step.
09:53This is a progressive step, although it's eight years later, I'll have to say that.
10:00But there are many other steps they are able to take.
10:03For example, lacks of MSMEs closed down following GST and following COVID.
10:11They are still closed.
10:14The COVID is behind us, but GST is still with us.
10:17And unless you compensate them or redress their grievances, they will not start again,
10:26which is why we lost so many thousands of jobs in the MSME sector.
10:32They have to be revived.
10:33They have to be reopened.
10:35They need working capital.
10:37They need capital assistance.
10:39That is one thing.
10:40Then you have to simplify the rules and the forms.
10:48The forms were not prescribed for several years after the GST law came into effect on 1-7-2007.
10:58They had ad hoc forms.
10:59Now they have replaced the ad hoc forms with regular forms.
11:051-7-2007, yes.
11:06Regular forms.
11:07But those forms have to be simplified.
11:09Okay.
11:11Therefore, several things have to be done.
11:13And non-GST measures have to be taken.
11:17For example, you have to reduce the household debt.
11:22You have to boost the household savings.
11:24You have to address the issue of stagnant wages in rural areas.
11:30They don't fall under the umbrella of GST.
11:33But they have to be done in parallel with the GST reform.
11:37I'm going to leave it there, Mr. Chidhamram.
11:40Because I think you've given us where you stand, to some extent, where the opposition stands.
11:46But also, hopefully, you've expressed what many would say, today at least, is a bipartisan view in the desire to kickstart the animal spirits of this economy.
11:58But I appreciate you joining me here on the show tonight.
12:01Thank you very much.
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