Tuesday, 8 August 2017

GST and KCR's outbursts

  • In November 2016, KCR was the first non-BJP/NDA chief minister to support Modi's demonetization move. Telangana was the first state to pass the GST legislation on Apr 16, 2017. TRS extended unconditional support to BJP's  Ramnath Kovind as NDA's Presidential nominee and Vice President candidate.
  • The dalliance between the ruling TRS and the BJP has practically ended with the completion of elections of the President and the vice-president. While the change in tone of KCR may appear at the outset to fight the GST, the battle between the Modi and TRS governments is about much more than what meets the eye. 
  • GST Council has already lowered GST rates on  public utility and infrastructure projects from 18% to 12% as requested by several states in its first meeting. The Telangana state government has been asking the Centre not to levy 12% GST on the public utility and infrastructure projects. Telangana wants these projects to be taxed at 5%. 
  • Under GST, the tax rate on cement, steel, and concrete — all key ingredients for the projects — has been reduced. This benefit will be pocketed by EPC contractors.
  • Due to GST @12% in place of VAT @5%, Telangana government will have to bear the additional burden of Rs.19,500 on all ongoing public utility and infrastructure projects which are worth Rs.2.30 lakh crores.
  • Telangana CM K Chandrasekhar Rao declared Goods & Services Tax (GST) is a failure in several Nations. He made it clear success of GST in India depends on how well Centre handles the concerns.
  • Now the CM KCR decided to write to Prime Minister Narendra Modi to reduce 12% GST on the ongoing projects. Rao held that since the project estimates have been prepared keeping in view 5%  VAT, it is not possible to change them. He had "threatened" that the state government would engage in a "legal battle" in Supreme Court against the union government over the issue.

KCR walking extra miles to please Modi, devoid of merit and for unknown reasons, in matters of demonetization, GST, President & Vice President elections and expecting all he wants from Modi is not only naive but also stupidity. Modi is only a taker but never a giver. Ask Naveen Patnaik how much he got extra for Odisha from Modi, during past 3 years. Literally zero. The impacts of GST and its rates were well known in advance. Going forward states will become like municipalities of centre with very less freedom to mobilize funds. Centre will become extremely powerful with no direct responsibility of people welfare where as states will become extremely powerless and saddled with total responsibility of people's welfare. This is in contradiction of federal polity of our constitution. Ambedkar's fears of abuse of constitution without amending it are coming true in Modi's India.

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