Alternative GST Paradigm!

June 16, 2020

Goods and Services Tax (GST) has been one of the most important of several key decisions taken by the current government. However, the implementation of such a complex policy decision has been far from simpler and smoother. GST envisions creating one common-market similar on the lines of European Union (EU) and United States of America (USA), which we have already achieved by having same currency and rule of law.

This good idea has been struggling to win the confidence of the opposition in Indian Parliament, and has been a thorn in the foot for ruling party. This gap in confidence for GST among Indian Parliamentarians – both ruling and opposition parties – has a lot to do with Indian culture and its rich heritage that goes beyond 2000 years. GST has imposed administrative challenges like never seen before. Uniting a country on ‘economic values’ has cultural implications; this raises the question of what is essential and in-essential for each and every one in the country. People in south might prefer rice over wheat; gold over silver; diesel over petrol; while in a state like Gujarat nothing equals hard cash, etc.

It is not very clear if homogenization of ‘economic values’ for a culturally varied country is advantageous or not. There are cultures in India who still prefer the ethos of savings over consumption; and as a society we might kill age old value systems that have survived generations after generations. Also there is justice in rewarding states that take risk for their development.

Alternative Paradigm:

It might be interesting to consider cluster wise GST after careful consideration among the experts. Even UK has separate administrative units – Britain, Scotland, Wales and Ireland – which together become The United Kingdom (UK). This is primarily done to preserve the heritage of that great country. Repercussions of Brexit are still debatable and lot of people feel that was the right decision.

On the same lines GST can be organised into three clusters – North, South and East; given that there is lot of similarity among these clusters culturally. Central government can decide on essential items that can be taxed on same lines across each cluster.

Benefits of this paradigm:

1. Cultural unity among neighbouring states.

2. Opportunity for Economic Independence that promotes the federal structure of our democracy.

3. Promote Entrepreneurship among clusters and healthy competition among various clusters. Now states have opportunity think beyond their narrow interest and about the cluster they belong to and subsequently for the nation.

4. Clusters can co-exist rather than impose on each other.

Development Researchers have time and again stressed the importance of industrial development through clusters for local development and to reduce migration. May be this approach (Cluster) can prove useful in our efforts to create a market that promotes economies and preserve our age-old cultural roots.

Author:
Pratik Pillai, Assistant Professor, Unitedworld School of Liberal Arts and Mass Communication (USLM)

Disclaimer: The opinions / views expressed in this article are solely of the author in his / her individual capacity. They do not purport to reflect the opinions and/or views of the College and/or University or its members.