The Empowered Committee of State Finance Ministers will meet on Monday to elect its new leader. This group is working on a mechanism to implement the Goods and Services Tax (GST).
The new Chairman would have to start afresh the process of building consensus on contentious issues among all States for early roll out of GST. The Centre has already clarified that implementation will be possible only after the new Government comes to power after the 2014 election.
The selection is taking place due to the split between Janata Dal (United) and BJP. This led to the resignation of Sushil Kumar Modi from the post of Deputy Chief Minister and Finance Minister of Bihar as well as from the Chairman of the Empowered Committee.
Modi replaced Asim Dasgupta as Chairman of the committee in 2011 when the latter had resigned following defeat of the Left Front Government in West Bengal.
Conventionally, the empowered committee chief belongs to an Opposition party. So now it is likely that the finance minister of a BJP ruled State or from Punjab or Odisha could chair the committee.
Saurabh Patel from Gujarat is considered to be the front runner. He represents Gujarat in the empowered committee, despite being the Energy and Petrochemicals Minister. He is also holds charge of Mines and Minerals, Labour and Employment, Cottage Industries, Salt Industries, Printing, Stationary, Planning, Tourism, Civil Aviation in Narendra Modi’s third term Government.
Earlier, he was the Finance Minister of Gujarat. He is one of the senior most members of the empowered committee.
However, it would be interesting to see if Patel gets selected considering Narendra Modi’s equation with the Union Government.
Secondly, he has some reservations on the implementation of GST. Although, the Centre maintains that it has no role in the selection and the Committee elects a candidate (from) amongst themselves, but it is a well known fact that the then Finance Minister Pranab Mukherjee played a key role in selection of Suhsil Modi in 2011.
Change in the empowered committee is taking place a time, when the Standing Committee on Finance has approved its report on the Constitutional Amendment Bill for GST.
The process ahead
The report is likely to be tabled in Parliament during the forthcoming monsoon session starting on August 5. After that, the States and the Centre would together finalise the draft and bring it back to Parliament for final approval. Then, this needs to be approved by at least 50 per cent of the State Assemblies.
The empowered committee has maintained that 80 per cent consensus has been built on the Bill. The proposed GST will bring in a common tax regime for goods and services by subsuming most indirect taxes, and is expected to help increase revenue collection.
Originally GST was to be introduced from April 1, 2010, but it has missed this and other deadlines on account of differences over contentious issues of Central Sales Tax compensation and design of the GST structure between the States and the Centre.