CHENNAI: “India lags behind almost all countries when it comes to devolution of fiscal powers,” said Finance Minister Palanivel Thiagarajan in his maiden speech at the 43rd GST Council meeting on Friday.
“From resolutely Communist China to avowedly Capitalist USA India lags almost all countries,” he said.
“The Council is becoming, in some, ways a mere ceremonial seal, a rubber-stamp authority, with the real power to create policy abrogated to (Constitutionally) ad-hoc agencies such as the TRU of the CBIC, a feeble GST Secretariat, and the quasi-Governmental GST Network.”
Making a strong pitch for fiscal federalism, he pointed out that with the advent of GST, there has been an “increasing concentration of powers with the Centre” at levels “never envisioned in our Constitution.” Quoting the report of the 15th Finance Commission, Thiagarajan said the promises made during the introduction of the new tax system gains in tax buoyancy, boost to GDP and formalization of the economy have failed to materialize.
“The gap between large organisations and MSMEs has widened due to unequal access to technology and dispute-resolution mechanisms,” he said, adding that States had agreed to it only as “an act of faith”. The great problem, he said, was the “deterioration of trust between States and the Centre, driven by a sizeable reduction in share of taxes, perceived lack of “Good Faith” and compassion in Centre’s approach to conciliation of differences, especially during Covid-19.”