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LATEST NEWS UPDATES | In ‘act of god’, coercive not cooperative federalism -Rajeev Gowda and Manpreet Singh Badal

In ‘act of god’, coercive not cooperative federalism -Rajeev Gowda and Manpreet Singh Badal

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published Published on Aug 29, 2020   modified Modified on Aug 29, 2020

-The Hindu

In bridging the GST gap, the Centre ought to help States through the Consolidated Fund of India

It is beyond anyone’s imagination that the Government of India would invoke the “Force Majeure” clause against its own people. Unfortunately, this has become reality at a time when every Indian State is massively burdened by the COVID-19 crisis and governance has been severely affected.

Finance Minister Nirmala Sitharaman’s statement on Thursday that the financial crisis facing the States is a result of an “act of God” is symptomatic of the callousness with which the Narendra Modi government treats State governments. This abdication of responsibility strikes a cruel blow to the social contract that exists between the Government of India and State governments, who are equal representatives of the 1.3 billion citizens of India.

The basis

The Goods and Services Tax (GST) regime was built on the promise that if States faced revenue deficits after the GST’s introduction, the Centre would make good the loss in the first five years. It was on the basis of this commitment that States extended their support to GST. States sacrificed their constitutionally granted powers of taxation in the national interest. That allowed the Centre to announce the dawn of “one nation one tax” at the stroke of midnight in 2017!

When the GST compensation cess exceeded the amount that had to be paid to States, the Central government absorbed the surplus. Now, the economy has slowed down dramatically and the resources raised are insufficient. Instead of exploring other viable options, the Centre is orchestrating a charade and raising questions about whether it is legally accountable to pay compensation. A reading of the Goods and Services Tax (Compensation to States) Act 2017 and the Constitution 101st Amendment answer these questions affirmatively. Alas, the government’s objective is to obfuscate.

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The Hindu, 29 August, 2020, https://www.thehindu.com/opinion/op-ed/in-act-of-god-coercive-not-cooperative-federalism/article32469299.ece?homepage=true


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