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20 March 2017 Editorial

 

20 MARCH 2017

Wag the dog

When the tail wags the dog, the dog risks losing control of it altogether. The national leadership of the BJP may or may not have been guided by the wishes of a vociferous section of its cadre base in nominating Hindutva firebrand Yogi Adityanath as Chief Minister of Uttar Pradesh. But in so doing it has ceded considerable power to a faction within its organisational structure that is both fiercely autonomous and frequently defiant. After politically exploiting his divisive rhetoric, and allowing him to share State-level campaign space with Prime Minister Narendra Modi, the BJP would have found it difficult to refuse Mr. Adityanath a prominent role in post-electionU.P. But to make him the Chief Minister is to risk the fringe taking hold of the centre. In doing so, the BJP has willy nilly shifted the discourse from development, which Mr. Modi often projected in the election campaign. Indeed, his choice is bound to signal in the public mind a front staging of issues such as cow protection, ‘love jihad', and forced religious conversion, all of which assume a character of aggressive minority baiting. As the head of the Hindu Yuva Vahini, an organisation implicated in several cases of rioting, the new Chief Minister does not exactly inspire confidence about law and order, an area of major failing for the Samajwadi Party government that was voted out. Indeed, his assuming office sends all the wrong signals to the law enforcement machinery of the State. When the BJP projected only Mr. Modi during the campaign and went into the election without a chief ministerial candidate, it was taking care not to upset the different streams within its support base. But the tact and sense that was evident at that stage seems to have been lost in the messy triumphalism after the victory.

By opting for two Deputy Chief Ministers, Keshav Prasad Maurya, the party's State president who is from the backward classes, and Dinesh Sharma, the Mayor of Lucknow who is a Brahmin, the BJP is perhaps hoping to not only get the caste representation right in the Cabinet but also rein in Mr. Adityanath. But going by experience, a person of Mr. Adityanath's standing and persuasion is unlikely to let himself be outflanked in government. Mr.Modi, and his alter ego, the party president Amit Shah, may believe they will be able to make Mr. Adityanath behave more responsibly now that he is no longer in opposition but at the helm. But they could well be mistaken. If anything, it is Mr. Adityanath who has so far bent the party to his will by protecting the identity and independence of the HYV and setting his own agenda. Despite his past association with the Akhil Bharatiya Vidyarthi Parishad, Mr. Adityanath is not beholden to the Sangh Parivar for his popularity and clout in eastern U.P. As it turned out, it was he who rode the Modi wave to serve his personal ambition and push his pet projects. To make the Hindutva hardliner mend his ways is about as easy as straightening a dog's tail.

 

Last gasp tasks

At its twelfth meeting last Friday, the Goods and Services Tax (GST) Council cleared all the requisite State and Central-level legislative measures to implement the indirect tax regime. The State and Union Territories' GST bills were approved along with necessary corrections to the three other GST Bills the Council had cleared previously - for Central GST, Integrated GST and compensation to States through a cess. This paves the way for State Assemblies and Parliament to ratify these laws quickly in order to meet the proposed July 1 rollout date for the system. Finance Minister Arun Jaitley has said the Union Cabinet will soon take up the four laws that the Centre has to steer through Parliament, while the respective State governments will take up the State GST law. Separately, officers from the States and the Centre are expected to finalise, by this weekend, drafts for four pending regulations out of a total of nine, that lay down the administrative procedures and processes to be followed by taxpayers under the GST regime. The Council will meet again on March 31 to consider those drafts. This will give the Centre enough buffer to make the transition to the new system.

Though industry has indicated that it needs at least three months to prepare for the GST once it sees the fine print, one major action will still be pending on April 1. That action - the fitment of thousands of commodities and services into the five GST rate slabs (zero, 5%, 12%, 18% and 28%) - could prove to be among the trickiest for the Council. The rate fitment process, unlike legislative nuances, is more susceptible to lobbying not just from different sections of industry, but also States that would like a favourable tax treatment for products and services they excel in. For instance, the GST Council has now approved a ceiling on the cess that could be imposed over and above the highest GST rate of 28% on pan masala, chewing tobacco and cigarettes, luxury cars and aerated drinks. For all such ‘sin goods', the cess ceiling has been set higher under the GST than the level necessary to maintain the present level of taxation. But beedis have been kept out of the cess net altogether in order to avoid friction with States that could delay the broader reform. Despite such pulls and pressures, in a best-case scenario the rate-setting process should take at least a fortnight and the Council could meet some time in April to approve the rates. Giving lakhs of enterprises just about two months to switch to the GST regime, with all its implications for supply chains, pricing strategies and accounting systems, could lead to a messy start. The Centre must keep its mind open on pushing forward the rollout by a month or so, while industry should rise above heckling over rates and invest more lobbying energy on bigger worries, such as the GST's penal anti-profiteering clauses.

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