In conversation with The Wire, the Tamil Nadu finance minister who recently presented a revised budget for the state, for 2021-22, came out strongly against the lack of dialogue and debate between the Modi government and states.

Published Date: September 3, 2021

Palanivel Thiagarajan, the Tamil Nadu finance minister, has vehemently opposed the Union finance ministry’s decision to roll out the NMP or National Monetisation Pipeline. 


“We are against the privatisation of Chennai or Trichy airport. Of course we are going to take it up with the Central government. The fundamental problem today is that the Union government today is not interested in inclusive decision making or debate as the precursor to outcomes. The functioning of the parliament has been there for everybody to see – the proportion of bills that are sent to Committee, the extent of debate on a bill, the flexibility before anything has been made into a law, all this has suffered greatly over the last few years,” Thiagarajan said.


Tamil Nadu Chief Minister M.K. Stalin has also opposed the idea of an NMP and indicated that he would write to Prime Minister Narendra Modi to give up the plan. The Tamil Nadu finance minister has also, additionally, been vocal in his criticism of GST.


Speaking to The Wire, he pointed out that he saw the GST conflict between states and the Union government as a more fundamental issue.


“This notion that you can have one nation one tax is a contradiction in terms. If you think you can homogenise policy across the country, one nation one x – all of these are inherently a contradiction in terms because the extent of variability is so high across states, not just on their linguistic and cultural basis but because the development between them has separated so far. For example, the doctor patient ratio in Tamil Nadu is 7 times than that of the poorest states in the Hindi belt. So when you start looking at such great divergence, you realize how flawed this notion of ‘one law’ is,” he said.


The finance minister pointed to a recent instance: “In GST, at the 43rd Council, one issue that came up for consideration was for ease of doing business should it be considered that for small businesses ( below Rs 5 crore turnover) who right now have to file every quarter but pay dues every month, should that restriction be eased so that they can pay every and file every quarter for ease of business. It is the exact states who earlier said no we can’t be seen as small vs big stat.es, immediately protested. They said no, we can’t afford it. Most of our payers are below Rs 5 crore. If they pay every 3 months, our liquidity model would get damaged. In Tamil Nadu, my estimate is that less than 15% of my GST payers is below the Rs 5 crore level. So if it were in the national interest, though it would cause some constraints, I am okay with it. But that is precisely why it is so different for different states.” 


Thiagarajan added, “The rush to get GST done, not only left limitations in the design, it also left serious limitations in the implementation and it is still functioning, in my opinion, sub-optimally even for the design that exists. We have data why don’t we use it ? Doesn’t seem to ever come to the meeting.”

Source: The Wire

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