Opposition likely to delay GST rollout

NEW DELHI: In a huge setback to the indirect tax reforms proposed by the government, key BJP-ruled states such as Madhya Pradesh, Chhattisgarh and Gujarat have expressed reservation against finance minister Pranab Mukherjee���s call for introduction of a unified goods and service tax (GST) from April 1, 2010.

Such opposition could delay the introduction of GST beyond April 2010, as one state finance minister went to the extent of saying it should not be made mandatory. However, empowered committee chairman and West Bengal finance minister Asim Dasgupta exuded confidence that the target date for GST implementation would be met.

Expressing reservation against the new regime, Chhattisgarh finance minister Amar Aggarwal said, ���I don���t think GST can be implemented by April 1. Till now, even the road map is not ready. There should be a consensus on implementation of GST, which should be rolled out with full preparation. It should not be made mandatory.���
Madhya Pradesh finance minister Raghavji had on Wednesday raised similar issues at the meeting of the empowered committee.

Mr Dasgupta, however, said though some time had been lost due to the elections, the committee was trying to work out the structure expeditiously. It has set August-end as the deadline for finalising the structure. Mr Mukherjee had asked state finance ministers to resolve the pending issues expeditiously as introduction of GST was critical for economic reforms.

States have also sought relaxation of the borrowing limits imposed on them under the Fiscal Responsibility and Budget Management (FRBM) Act even as Mr Mukherjee called for growth with fiscal prudence. He said the Centre���s stimulus measures had a cost in terms of deterioration of its fiscal health���fiscal deficit went up to 6.2% of GDP in 2008-09. ���High levels of fiscal deficit are not sustainable in the medium to long term, both for states and the Centre.

We have to deliberate on ways and means to bring back the economy to a higher growth trajectory without fiscal profligacy. We have to resume the process of fiscal consolidation at the earliest,��� he said.While the Centre has already allowed a relaxation of 0.5% as a part of the second stimulus package, states are now clamouring for a further relaxation of 1-2%. ���We have asked the finance minister for further relaxation under FRBM,��� Himachal Pradesh chief minister PK Dhumal said.

States also want the Centre to bear 50% of the additional expenditure incurred following an increase in salaries of their employees following the pay revisions.