Column: Siding with growth

Apr 29 2014, 02:26 IST
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SummaryBills enjoying cross-party support are immediate opportunities for the next government to foster reforms

Parliament, in the last five years, has been criticised for not having transacted much business. However, on several fronts in the legislative domain, there has been considerable progress. The UPA government introduced Bills across sectors. Many of these have been examined by standing committees of Parliament. The committee reports suggest cross-party agreement on many Bills, including recommendations for some changes. This means that there is sufficient ground work for the new government to move forward quickly, if it chooses to do so. We discuss some key Bills where a broad political consensus has been built.

The issue of introducing a common goods and services tax (GST) has been talked about for over a decade. The proposal is to subsume most indirect taxes into a GST, which will be imposed on the basis of the value added at each stage of the manufacturing and supply chain. The benefits are that this eliminates the cascading effect of taxes while deterring tax evasion as each person in the chain has the incentive to ensure that the previous person has paid the tax. The GST is expected to simplify taxes and create a more uniform national system. Some experts have computed that there would be a boost to the GDP to the tune of 1% to 2%.

While some taxes that are proposed to be subsumed within the GST fall within the jurisdiction of the Centre (such as customs duties), others (such as sales tax) fall within the purview of the states. A unified system will require an amendment to the Constitution, and the government had introduced a Bill in Parliament for this purpose. The Standing Committee on Finance has recommended that Constitutional amendments be made with some changes. One of the main concerns seems to be from ‘producing states’ which feel that they will suffer a revenue loss. This concern can be addressed by the Centre by underwriting the tax revenue for the initial years based on current levels and adjusting for economic growth.

The importance of higher education reform cannot be overstated if India has to reap the demographic dividend. The

National Knowledge Commission and the Yashpal Committee have made recommendations on restructuring the regulatory architecture for higher education. The government introduced a set of Bills that seek to achieve the following objectives: unify various regulators across subject areas (UGC, AICTE, etc) to enable cross-subject education, separate the regulation of education and practice for professions

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