Congress waiting with open mind to government formulations on concerns it raised on GST, says the former Union Minister.
A day after senior Congress leaders led by party president Sonia Gandhi and former Prime Minister Manmohan Singh held deliberations on their strategy on the ‘National Herald’ case and the party’s stand on the Goods & Service Tax (GST), former Union Finance Minister P. Chidambaram said that there was no link between the two issues.
“This is a link made by the government… This is a link selectively placed in the media… There is no link,” Mr. Chidambaram told The Hindu in an exclusive interview on Thursday.
The GST issue stands where it stood at the meeting called by Prime Minister Narendra Modi as the government is yet to send its revised formulations to the Congress party based on the deliberations between the two sides, Mr. Chidambaram said.
It was discussed at the high-level Congress meeting held at 10 Janpath on Wednesday, said Mr. Chidambaram, that, if the government sends these, the party will examine them with an open mind.
“I can tell you based on my conversations with the Congress president and the vice pressident we are waiting for the government’s formulations….The government is strengthened now by the CEA’s [Chief Economic Advisor Arvind Subramanian] report. Let the government formulate its position on the three issues and send it to the Congress party.”
He further said that the government-appointed committee headed by the CEA seems to have broadly endorsed in its recommendations the concerns of the Congress, particularly on the 1% additional tax that is proposed and on the revenue neutral rate for the GST. This is indeed a step forward, he said.
In the report, he said, he did not find any clear recommendation on how to respond to the Congress party with formulations on those three issues. “It is quite possible that he has left that to the government… Therefore, while the CEA’s report is indeed a step forward, we would like to know the government’s formulations based on the report.”
Last Friday, a panel headed by Dr. Subramanian had submitted a report to the government in which it backed three of the main demands of the Congress on the GST. It has recommended that the government drop the proposed additional one per cent tax on inter-state sales over and above the GST rate – a key Congress demand.
It suggested a two-rate structure with the lower of these at 12 per cent and the standard rate, at which most products are likely to be taxed, at 17-18 per cent. The revenue neutral rate, it recommended, be pegged at 15-15.5 per cent. The rates recommended are within the 18-per cent ceiling the Congress is seeking on the GST.
“ We are very clear that there is great merit in capping the rates in the Constitution”
The panel, however, did not favour putting in the Constitutional Amendment Bill the rate of GST, which remains a potential spoiler over which the government will now have to negotiate with the Congress. Confirming this, in the interview to The Hindu, Mr. Chidambaram said: “We are very clear that there is great merit in capping the rates in the Constitution”.
When asked why the provision was not a part of the Congress version of the Constitution Amendment Bill, meant for the introduction of the GST, Mr. Chidambaram said that these were evolving positions and nothing is cast in stone. “Has the BJP’s position say two and half years ago not evolved,” he said.
Late last month, in a bid to ensure that the Bill gets cleared in the Parliament in the current session so as to meet the April 1, 2016 target deadline for roll out of the GST, Mr. Modi held talks with Ms. Gandhi and Mr. Singh. This was after, over a set of three broad demands, the Congress had not allow it to be taken up for passage during the monsoon session in the Rajya Sabha, where the government is dependent on its support for the two-thirds majority required to pass it.
Responding to a question on the possible isolation of the Congress in Parliament over the perceived links between its position on the ‘National Herald’ case and the GST, Mr. Chidambaram said that this was a speculative view. “What happens in Parliament on a given day depends on the dynamics of that day… I am sure there are a lot of people who sympathise with the Congress party that there is a deep suspicion that the government is motivated against the Gandhis.”
‘National Herald’ case
The former Finance Minister said that questions were being legitimately asked on the National Herald case but without adequate familiarity with the facts of it. These he said were as follows: A loan of Rs. 90 crore owed to the Congress party has been assigned to a non-profit company called Young Indian.
“Not one rupee has been received by Young Indian, not one rupee has been distributed by Young Indian to any one.”
Step one is, he said, Young Indian then became a lender to Associated Journals Private Ltd. Step two is: Young Indian converted that loan into equity. Step three: Young Indian became the 99% shareholder of Associated Journals Private Ltd. Step four: As a result, not one rupee from the property at Associated Journals Private Ltd or from the income of Associated Journals Private Ltd can be distributed to any one because a non-profit company owns Associated Journals Private Ltd today.
“In fact, we have secured the assets of Associated Journals Private Ltd and the properties of Associated Journals Private Ltd…What is unusual about it… Loans are converted into equity… And let me add, not one rupee has been received by Young Indian, not one rupee has been distributed by Young Indian to any one. All the properties and all the income of Associated Journals Private Ltd remain with Associated Journals Private Ltd.”
The only change, he said, is that it is a holding company today which is a non-profit company. “Underline a non-profit company… So where is the cheating? Where is the breach of trust? Somebody must read the provisions of the Indian Penal Code.”