Without wasting even a day, Chief Minister of Punjab, Captain Amarinder Singh, has written to the Prime Minister Shri Narendra Modi has to the ball rolling on economic reforms by suggesting 101 GST reforms. In his letter, CM has written that, with such an overwhelming mandate for the new Government, and consistent support from Congress, there is no reason why India should not embrace a world-class GST that will drastically improve the competitiveness of Indian business, help in creating jobs, reduce the anguish and pain of avoidable compliances and raise the much awaited GDP.
Suggestions made include widening the GST net to include Electricity, Real Estate, Petroleum and Alcohol in a win-win situation for States as well as businesses. It has been particularly suggested that electricity constitutes up to 30% of the cost of production in many key sectors and its exclusion from GST results in huge cascading of up to 10%. The present structure prefers coal-based polluting captive power plants of big industries over stand-alone power plants (many using natural gas) from where MSMEs source their power. Naturally MSMEs are facing the pinch after GST. Exclusion of products like crude and natural gas from GST results in a situation where it is beneficial to export them and re-import rather than supply them directly within India. Many States like Punjab lose a big chunk of revenue as the embedded taxes on these products are retained at source rather than at the place of consumption.
The expected growth of up to 1.5% in GDP after GST has largely remained a pipe dream mainly because Indian businesses continue to suffer from considerable cascading. Tax credits are the real soul of a value added tax and its blockage acts like bad cholesterol in human body. CM has made many suggestions to remove embedded taxes in order to make Indian businesses competitive rather than benefitting imports over domestic production.
