Bengal's FM says demonetisation may delay GST roll-out

Dated 1st December, 2016

Demonetisation of Rs 500 and Rs 1,000 currency notes, and the resulting turmoil, makes the April 1, 2017, target date for a national goods and services tax (GST) unlikely, said Amit Mitra, finance minister of West Bengal.

“The government needs to redo its arithmetic,” he told a news channel. And, that the Centre “should do GST at a time when it’s feasible...I don't see that at this time, as a student of economics.”

Mitra, who was chairman of the Empowered Committee of State Finance Ministers on GST, which saw the building of a consensus on the proposed tax, blamed the withdrawal of high denomination notes for his scepticism.  Slamming the government move as a “tectonic” hit, he said, “I'm deeply concerned about timing of the GST. People are talking about a recession. A two per cent fall in GDP (gross domestic product) is serious, (so) can GST happen?”  He said he'd contact state counterparts to collate concerns about how their revenue is being affected. “After demonetisation, GST has become a double whammy for states,” said Mitra.

His boss, Bengal chief minister Mamata Banerjee had earlier demanded rollback of the note ban. The Union finance ministry has placed the draft model GST and compensation Bill in the public domain. The government is planning to introduce Central GST, integrated GST and compensation Bills in Parliament in the current session, after getting approval from the GST Council, which would meet on Friday and Saturday. The Union finance minister, minister of state for finance, and state representatives, mostly finance ministers, are part of the Council. Introduction and passage of the Bills in the current session are necessary to ensure GST roll-out from April 1.

(This article is published in Business Standard on 1 December, 2016)