- 4 months ago
The big talking point of this episode of News Today is the government's GST reforms, which streamline the goods and services tax structure into two primary slabs of 5% and 18%, effective from September 22.
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00:00Good evening, hello and welcome. You're with the news today, your primetime destination news,
00:06newsmakers, talking points. Thursday night, this is where we'll bring you news without the noise.
00:11Our big talking point, GST 2.0, the goods and services tax reform. Will it offset the impact
00:19of Donald Trump's tariffs on India? Among my special guests will be the former Finance Minister
00:25P. Chidambaram. Also, we'll have the Prime Minister's advisory panel member Nilesh Shah joining us
00:31among others as we take a deep dive into different aspects of the GST reforms. But first, as always,
00:38it's time for the nine headlines at nine tonight. Next generation GST reforms for India ahead of
00:46the festive season spark of widespread approval. Taxes slashed on wide range of household-used
00:54products and insurance policies. Prime Minister says tax cuts will boost ease of living.
01:03The Congress party cautiously welcomes GST reforms. Former Finance Minister P. Chidambaram
01:10welcomes them but says the cuts are too late. Asked where were the reforms for the last eight years
01:16while millions suffered. In a big move for peace in Manipur, Kuki's agreed to reopen the National
01:24Highway 2. Kuki's own bodies pledges to work with security forces to ensure peace along this critical
01:30route. Slight relief for Delhiites as Yamuna River slowly starts to recede. But it is still flowing
01:39above the danger mark. Delhi government maintains round-the-clock vigil. Thousand shifted to relief
01:44camps. The debt toll rises to 43 now in Punjab's unprecedented floods. More than 1,900 villages
01:53still inundated. Over 3.8 lakh people severely impacted by the raging rivers.
01:58Showdown over the Prime Minister's abuse. Rao escalates in Bihar. India observes five-hour Bihar
02:08ban claiming insult to mothers. Opposition hits back. Scares where was the Prime Minister when his
02:15members were targeting opposition leaders and women in the opposition.
02:20High drama in the West Bengal Assembly. Chief Minister Mamata Banerjee calls BJP Bangla Virodi.
02:30BJP MLA stormed the wealth chanting Jai Shriram slogans. BJP Chief Whip reportedly incurred several
02:36MLAs are suspended. Enforcement directed now grills cricketer Shikhar Davan for over eight
02:45hours for allegedly promoting an illegal betting app. An Italian fashion mogul, Giorgio Armani dies
02:55at 91 due to age-related illness. He was known for his modern Italian style and elegance that made him
03:01a global brand name.
03:03But first let's start with tonight's top story. It's the day after the Modi government unveiled what is
03:17being described by the government as GST reforms 2.0. Reforms that have reduced the tax rates and
03:25simplified them just two tax rates of 5% and 18%. The government has hailed the reform saying
03:33that taxes will have a major impact on consumers and the ease of living. The Prime Minister who spoke
03:42on it today slammed taxes under the previous UPA government and lauded what he said was the NDA's
03:49double dhamaka of GST and income tax reforms before Diwali. The opposition claims that they are the ones
03:56who have been banging on for the last eight years especially Raul Gandhi for rationalization of taxes in this
04:03credit war. First let's listen in to Prime Minister Modi.
04:05Let's listen in to Prime Minister Modi.
04:15Part of discussion.
04:16First let's listen in to Prime Minister Modi. The Prime Minister from the United States and the
04:44साथ्योदारी और मजबूत होगी साथ्यों आजकल महंगाई की दर्भी बहुत नीचे रिस्तरपर है नियंत्रम में हैं और यही तो प्रो पीपल गवर्नन्स है जब जन ही तो राष्ट हीत में फैसले लिये जाते हैं तब देश आगे बढ़ता है मैंने देशवास्यों से भी
05:14लेकर हम चल रहें उसी भावना पर चलते हुए कल भारत सरकार ने राज्यों के साथ मिलकर के एक बहुत बड़ा निर्णे किया है और बहुत महतोपुन निर्णे हैं अब GST और भी जाता सिंपल हो गया है सरल हो गया है और बाइस सितंबर सुमवार जब नवरात्र का पहला
05:44और यह सारी चीजों का मात्रुशक्ती को सब समन तो भहती रहता है और इसलिए नवरात्री के प्रथम दिवस पर GST का जो एक
05:57रिफॉर्म बर्जन है नेक जनरेशन रिफॉर्म क्या हुआ वो लागू हो जाएगा
06:03So, Prime Minister hailing the reforms that have taken place in the tax rate structure.
06:10Now, this rate rationalization is the one reform that seems to have got a broad consensus.
06:16What's happening, as I said at the outset, is a fight to take credit for it from between the government and the opposition.
06:23Listen in to the reactions.
06:33We've reduced the slabs, there shall be only two slabs.
06:38All this will be effective 22nd September 2025, which is the first day of Navaratri.
06:47A day after the GST Council decided to rationalize tax rates, keeping just two main slabs of 5% and 18% and 40% for sin goods,
06:58both government and opposition are claiming credit.
07:03The BGP is calling the tax cuts a gift from Prime Minister Narendra Modi ahead of the festive season.
07:09Congress's Month has made its rights for the GST.
07:17The GST of government in the Fulbright government has made its rights.
07:22And the GST has released its rights to defend the L.A.
07:24The GST of government in the Fulbright government has presented its rights to pay attention to Brahmulas.
07:28The Congress claims the rationalization was first suggested by Rahul Gandhi, who had described GST as Gabbar Singh tax.
07:58The industry has given a thumbs up.
08:28I believe that this reform and the cut on GST for small cars particularly, and to some extent for bigger cars, will result in the growth of the car industry, which has been stagnating, as you know, for the last two years.
08:58That growth will go back to the original seven to eight percent which we were experiencing in the past.
09:05The GST rationalization comes at a time when the industry is facing global trade headwinds and fresh tariff hikes by the U.S. have raised concerns about India's export prospects.
09:20Analysts expect the boost in domestic consumption to offset some of its impact.
09:26And joining me now is P. Chidamram, former union finance minister, Congress senior MP.
09:48We appreciate your joining us, Mr. Chidamram.
09:52You've, in your initial remarks this morning, said this is a much needed step, but it's come eight years too late.
09:59There will be those who will say better late than never, Mr. Chidamram.
10:022016-17 was a very different time.
10:05GST had just been brought in eight years later.
10:08We're seeing what the government is calling the gen-next reforms of GST, GST 2.0.
10:13Do you agree?
10:15The headline of my tweet was, I welcome the reduction and rationalization of rates.
10:22The shoulder was, it's eight years too late.
10:27So, please read both of them.
10:29I did not say only that it is eight years too late.
10:33I welcome the reduction.
10:35I welcome the rationalization.
10:37But I'm duty bound to point out that we said it eight years ago, even when the GST law was being made and introduced in parliament.
10:48But, Mr. Chidamram, with due regard, eight years ago, it was very difficult even to achieve a consensus of the kind.
10:54To be fair, to the late Arun Jaitley, he was able to achieve, the NDA government then was able to achieve something that your government was not.
11:02So, the first step was to build a basic consensus.
11:05Now that we've had eight years experience, the government could say we are in a better position to actually put together a more simplified rate structure.
11:15I disagree.
11:17I disagree.
11:18I disagree strongly.
11:19You don't know what happened, or you've forgotten what happened.
11:23I'm a player of that age and era, and Arun Jaitley was a player.
11:30So was Mr. Yashwan Sinha.
11:32Mr. Yashwan Sinha constituted the group of finance ministers.
11:37I inherited it.
11:38And I worked with them.
11:40Every finance minister supported the GST.
11:44We were able to persuade them in three or four meetings.
11:49Only two opposed it.
11:51One was Gujarat, and one was Madhya Pradesh.
11:54What the Gujarat representative and what the Madhya Pradesh finance minister told me will be recorded in history sometime, rather.
12:04But they opposed it.
12:05They say, we have no instructions to agree to a GST.
12:09And we wanted to pass the law.
12:11We wanted to pass the law.
12:13I approached both Mr. Jaitley and Ms. Swaraj, the two leaders of opposition.
12:19Mrs. Swaraj put it very clearly.
12:24We have no appetite to support any law on reform.
12:29That's where we left it.
12:31This government was able to bring, obviously, this government was able to bring Gujarat and Madhya Pradesh on board.
12:40And all other finance ministers remained on board, and they were able to introduce the law.
12:49But remember, Mr. Dr. Arvind Subramanyam, the chief economic advisor to the government of India, headed by Mr. Narendra Modi, published a report called Towards a Neutral Revenue Rate, in which he recommended one single rate.
13:10So, departing from that recommendation, they introduced multiple rates.
13:14That's what I'm criticizing.
13:16He criticized it eight years ago.
13:18And we are saying, you brought it down to two rates eight years later.
13:23But let's come to the present.
13:25From the time when Rahul Gandhi, your leader, kept saying, Gabbar Singh taxed for GST, to today, where you have said in that same statement, it's a good and simple tax.
13:35You seem to be agreeing that the government has got the drift completely right this time, that you need a much more simplified tax regime with just two tax slabs and, of course, 40% as a sin tax.
13:48But by and large, you seem to believe that this is the right step forward.
13:53This is a step that will bring down, presumably, prices and thereby, hopefully, stimulate demand, consumption and investment. Am I right?
14:03I said so in my tweet. You are repeating to me what I said.
14:08No, so you are agreeing with the... So, you and Nirmala Sitaraman for once are on the same page.
14:13Ms. Nirmala Sitaraman has agreed with the Congress that it should be a good and simple tax.
14:19We have been saying this for eight years. GST means a good and simple tax.
14:25She has come around to the view. I'm glad she agrees with us.
14:29No, no, but that is, you see, quite apart from the credit-taking that every party will say that, you know, we told you so.
14:36I'm not taking credit. I'm pointing out facts.
14:39But do you, Mr. Chidambaram, agree that as a result of the GST being brought at the time that it has,
14:46A, it could offset the impact of tariffs and the tariff war with Donald Trump,
14:52And could also stimulate a virtuous cycle of demand, consumption and investment?
14:57Not entirely. It will largely offset the low rate of consumption.
15:06It will partially offset Mr. Trump's tariffs.
15:10But there are several other things that have to be taken to boost consumption and to counteract Mr. Trump's tariffs.
15:18This is a good step. This is a first step. But this is not a sufficient step.
15:24This is a necessary step, but not a sufficient step.
15:28What, according to you, would constitute a sufficient step to build on what the government has done with GST?
15:33Yes. I'll tell you. First, they must review the GST laws. It's a very complicated law.
15:44It's cumbersome to administer. It's very difficult to comply with the law.
15:50They must simplify the law. They must simplify the forms.
15:56They must make it easy enough for a single shopkeeper or a trader to fill the form on his own.
16:05Today, nobody can fill the form without professional assistance.
16:10And professionals are mushroomed even in small towns.
16:14Every shopkeeper, every trader has to employ a professional,
16:19even if his turnover is about 10 lakhs or 20 lakhs. That is one.
16:25Secondly, the manner in which the GST law is administered is horrendous.
16:32Ask traders. I have appeared in several cases involving GST disputes.
16:39I mean, the manner in which the administration of GST is equal to the ED administering PMLA.
16:49You must make it a trader-seller-friendly law.
16:57You can't threaten people with imprisonment. You can't allow your officers to go berserk and arrest people.
17:06This is a civil law. It's a tax law. If there is a tax violation, inadvertently or wittingly, you must punish him by a civil penalty.
17:17Why do you throw him in jail?
17:19Therefore, there are many, many other things.
17:22Why don't you talk to a couple of GST specialist lawyers who will tell you the kind of complications that traders face?
17:33Mr. Jitabram, I've actually spoken to friends who are business persons in Mumbai.
17:37What do they tell you?
17:38Mr. Jitabram, they've spoken about the Inspector Raj that has come into the GST. Nobody is denying that.
17:43I just want to ask you, therefore, so your concern is reduce the costs of compliance, ensure that the Inspector Raj ends, ensure that the discretionary powers that the inspectors have are reduced.
17:56But net-net, therefore, you are saying that this is a first step, an important step, but you are saying this cannot be the culmination of ensuring that we are truly a one nation, one tax structure.
18:09You want to see now compliance at the next level, the costs being reduced, and also the profiteering that goes on in the name of GST to also be reduced. Am I correct?
18:21Yes, yes, yes, to every suggestion you've made.
18:26Well, it's not often that Mr. Jitabram agrees with suggestions that I make, so that's also a positive. This seems to be a new day, Mr. Jitabram.
18:34You've agreed to a large extent with what Ms. Sitaraman has done. You're also agreeing to some of the suggestions I've thrown on the show, but net-net, do you believe that this will, I come back to it one last time, trigger a virtuous cycle that the economy, which has already grown substantially in the last quarter, the numbers were 7.8%, do you believe that this will trigger that domestic demand as well as investment and business confidence?
19:03One swallow does not make a summa. You can't gauge a trend by one quarter's numbers. The one quarter number, the last quarter, has been severely criticized because they use a deflator of 0.9%. I don't know if you understand the implications of using such a low deflator. Be that as it may, we will discuss it another time.
19:30The point is, this is a good step. This is a progressive step, although it's eight years later, I'll have to say that. But there are many other steps they are to take. For example, lacks of MSMEs closed down following GST and following COVID.
19:51They are still closed. They are still closed. COVID is behind us, but GST is still with us. And unless you compensate them or redress their grievances, they will not start again, which is why we lost so many thousands of jobs in the MSME sector.
20:12They have to be revived. They have to be reopened. They need working capital. They need capital assistance. That is one thing.
20:21Then you have to simplify the rules of the forms. The forms were not prescribed for several years after the GST law came into effect on 17-2007. They had ad hoc forms. Now they have replaced the ad hoc forms with regular forms.
20:45In 2017, yes. Regular forms. But those forms have to be simplified.
20:50Okay.
20:50Therefore, several things have to be done. And non-GST measures have to be taken. For example, you have to reduce the household debt. You have to boost the household savings.
21:05You have to address the issue of stagnant wages in rural areas. They don't fall under the umbrella of GST. But they have to be done in parallel with the GST reform.
21:17I'm going to leave it there, Mr. Chidamram. Because I think you've given us where you stand, to some extent, where the opposition stands. But also, hopefully, you've expressed what many would say, today at least, is a bipartisan view in the desire to kickstart the animal spirits of this economy.
21:39But I appreciate you joining me here on the show tonight. Thank you very much.
21:44Thank you, Mr. Chidamram.
22:14Thank you, Mr. Chidamram.
22:44To respond to this major step. Government calling it a big Diwali bonus. Opposition saying eight years too late.
22:52Nilesh Shah, how do you see it? Do you believe it's too little too late? Or do you believe it's come at the right time, will offset Trump's tariffs in particular?
23:00So, it is a step in the right direction. It will partially offset the tariff impact of America. More importantly, if we can find other countries for exports combined, this can reduce significantly the adverse impact of U.S. tariff.
23:18This GST reduction and slab rationalization will target many things.
23:25Many things. One, it will boost consumption with about 48,000 crores put in the pockets of consumers.
23:32Second, the hope will be that it will revive private investment as capacity utilization bumps up.
23:41Inflation will come down, which will give boost to RBI to pursue more liquidity and rate cuts.
23:48Finally, these tariffs will partially offset U.S. adverse impact of tariff.
23:55And the fiscal slippage at about 7-8 basis point is something which is manageable.
24:02And if growth indeed recovers, then maybe we won't even have adverse impact on fiscal side.
24:09So, this is one teer kai nishan.
24:13One teer kai nishan, which is of course the slogan which the government is giving at the moment.
24:18But let's look at the practical aspect and get you in, Suman Sina.
24:23You head one of India's largest renewable energy companies.
24:26Do you believe that business confidence will return?
24:30I'm looking at the latest Business Today survey which says that business confidence is among its lowest for the last 11 quarters.
24:38So, will this now revive the business confidence that has seemingly been lacking for several quarters now?
24:46Yeah, look, Rajdeep, I think this is a pretty game-changing move on the part of the government.
24:50And you can quibble over whether it should have been done earlier or later.
24:54The good news is it's happened.
24:56And I think from this point on, there will be a number of positive impacts.
25:00Just for example, if you take the power sector, the cost of all renewable energy is going to come down
25:06because GST for our sector has been reduced from 12% to 5%, which means lower power costs to end consumers,
25:14which means lower input costs and therefore, hopefully, a reduction in the inflationary pressure, as Nilesh was saying as well.
25:21And so, all of those are things that are going to result in positive momentum in the economy
25:26by bringing the cost of doing business down a little bit.
25:29It will put more demand in the hands of consumers.
25:32And all of that is going to be a fiscal stimulus and a demand stimulus to revive the economy even further.
25:38I shouldn't have used the word revive.
25:40I think really to grow the economy even further.
25:437.8% in Q1 is already very good numbers.
25:46And I think that we should be fairly positive about the fact that this is now going to allow us to
25:52obviously deal with the impact of the Trump situation on the tariffs.
25:57But I think even leaving that aside, I think this is a phenomenal step forward to grow the economy faster and further.
26:04So, I think…
26:05I just want to ask you this.
26:07You know, a few years ago, the corporates got a corporate tax relief.
26:11That too, there was a presumption that they would then use the tax breaks to reinvest in the economy,
26:19to revive animal spirits.
26:20It never happened.
26:21Yes, COVID came a few months later.
26:23But the truth is that there has been a tepid demand.
26:26Are you telling me that all of that will change now?
26:29I'm not saying that all of that will change.
26:31But I think that there is certainly going to be a significant incremental boost to the economy,
26:36whether that results in half a percent growth or one percent growth or more or less.
26:40Hard to say.
26:41But keep in mind that without this, the economy would have been doing less well.
26:45And so, even to your point around tax reductions in the earlier sort of years,
26:50perhaps the economy would have done less well if those had not happened.
26:52So, it's great that the government is doing this.
26:55As I said, it's going to bring down a lot of the input costs, bring down inflation,
26:59allow the RBI to cut interest rates.
27:02So, there are multiple benefits that we as an economy are going to get from getting all of this done.
27:08And I think, you know, the overall reduction in prices is going to be very positive for us.
27:12You know, it allows us to pass on a lot of that benefit in the form of lower prices for, let's say, power in our case.
27:18So, I think…
27:19So, you're saying that the benefits will be passed on to the consumer.
27:22Subhash Garg, as someone who was involved with the finance ministry when GST 1.0, if I may call it, was being rolled out.
27:32You were smiling when you were hearing Suman Sinha.
27:34Why?
27:34Is there a sense of skepticism among some who are critics of this government's economic policies that,
27:40look, there is something more fundamentally wrong, which is why demand and business confidence is not picked up?
27:46See, I think the contradiction which I see, let me first welcome the simplification, the reform in the rate structure, which is overdue.
28:02It's a continuum carried on from 1998.
28:05We have had enormously long journey to come to this stage.
28:10And this is part of that.
28:11So, I welcome that.
28:13But what I…
28:13Could it have been done earlier?
28:14In your view, could it have been done earlier as someone who was involved?
28:17Of course, it could have been done earlier.
28:19The government had also taken some of the steps even earlier, bringing the digitalization and a lot of other things.
28:27But it could have been done earlier.
28:29No doubt about this.
28:31But whenever it happened, even now, I think it's a welcome step towards that.
28:37But what I was a little skeptical is that if we believe that this 48,000 crore of the tax giveaway can create such a large consumption, investment, boost, then we are contradicting ourselves.
28:56Either the giveaway is much more than 48,000, or the impact would not be as we all are trying to make up.
29:07That is where I think we need to get the numbers right.
29:10In my judgment, the loss or the fiscal implication is about 2 lakh crore, not 48,000 crore.
29:21And that is what makes it a little more substantial as far as the economy is concerned in terms of consumption and all.
29:28Here, we are not, if we are looking at it from the point of view of sort of countering the Trump tariff effect or something.
29:41By the way, exports attract no GST and therefore exports effect is not there.
29:49The idea is perhaps that the exports which we will lose might be compensated by the domestic demand from this kind of reduction in the GST.
30:01That is where I think we need to do a little more careful calculations.
30:05Look at two items.
30:07Look at two items.
30:08The textile, which is being hit by the Trump tariffs, and the jams and jewelry, which is also being hit.
30:15We are a major exporter.
30:16Now, on the textile, actually the GST has been increased for 2,500 rupees and all.
30:26So, whatever was not exported, will it be consumed in the domestic demand because the GST is going up?
30:33So, that is where there is no change in the jams and jewelry sector as far as the GST rates are concerned.
30:39So, I think you make an interesting point there to see whether domestic demand will really get stimulated, which is the big challenge for the government and the hope, of course.
30:52But, Bukesh Bhutani, I want to bring you in because there is a lot of people who have had to deal with GST, Inspector Raj, have spoken to me about the cost of compliance.
31:02The real sheer volume of forms that had to be filled in for the longest time.
31:10The fact that there was almost punitive measures, even criminal measures against those who are seen not to follow GST, not treating it as a civil offense.
31:19Do you believe all of that will end with this simplification?
31:21Well, Rajdeep, the most important change in this GST Council meeting has been the operationalization of the GST Appellate Tribunal.
31:33This, I think, will go a long way, not just to be able to address the audits and demands and disputes for the last seven years, but also set out an element of precedence.
31:47One of the reasons the GST disputes had been high was the classification challenges.
31:54Now, classification challenges were there even in the erstwhile excise law and still continues to be there in the customs law as well.
32:02But that was largely because of the, that you have now state revenue officials and federal revenue officials coming together under a common forum.
32:12And also because of the multiplicity of the compliance requirement.
32:18So what this GST Council has done has also simplified the process for filing the returns.
32:26So you can expect that this so-called Inspector Raj that was prevalent will be tamed to some extent in the future as well.
32:35So I think GST tribunalization also is another move which ought to have come in at the time of the design stage way back in 2016.
32:45But unfortunately, it was delayed.
32:48And one of the reasons for delayed was also the constitutional aspect in relation to the appointment of members for the GST Tribunal.
32:56I want to bring in now K.E. Raghunathan, he's National Chairman, Association of Indian Entrepreneurs, deals with MSMEs primarily.
33:04Mr. Raghunathan, MSMEs are the ones who've had the maximum complaint, some believe, with GST.
33:10Again, costs of compliance.
33:12And thereby, they should be the ones presumably welcoming it.
33:16Do you welcome what the government has done or not?
33:20Rajdeep, there are two aspects of beneficiaries.
33:23One is the consumers.
33:24The other one is the corporates.
33:27MSMEs have been left out.
33:29It is very disappointing that a 98,000 crore loss of revenue to the government with an additional 45,000 crore coming in from the syntax,
33:41which is constituting 0.13% of the total GDP, will stimulate the consumer market.
33:50Let's understand this very clearly.
33:52There are beneficiaries, which are consumers.
33:55Those who are day-to-day buying materials will benefit.
34:00Those who are retired and taking policies, whether life or medical, will stand to gain.
34:06But they are not going to increase their consumption because of the gain.
34:10They will use the gain to repay their loans.
34:13The personal loans are very high today in the market.
34:16And people are not able to make their ends meet.
34:19Now, coming to the MSME aspect of it, MSME, let's take only micro-industries, tiny industries, and small traders.
34:27All the three of them will now have much more aggressive survival after these setbacks.
34:34Let me explain to you why.
34:37Now, earlier, the small entrepreneurs made products were taxed at 5%.
34:43Now, the big players have also been equalized to the 5%.
34:48Most of the products will now compete with the small, localized makers' products.
34:53And thereby, corporates will get the benefit in totality in every aspect of it.
35:00No, Raghunathan, for the longest...
35:01No, no, one minute.
35:02One minute.
35:03You are saying that you will have to compete with the big players who will get the same benefits.
35:06But for the longest time, you wanted a rationalization of the tax structure.
35:11The government does it.
35:12And you are yet complaining.
35:13There are three aspects of the GST, Rajdeep.
35:17First is the tax structure.
35:19The second is the compliance aspects.
35:22And the third is, after the notice is served, how redressal of the problem is.
35:27I am limiting myself to the tiny industries and micro-enterprises.
35:31Now, the government should have done increase of the threshold limit from 40 lakhs for manufacturer,
35:3720 lakhs for service industries, to 1 crore and 50 lakhs, respectively.
35:41If they had done that, then most of the small players would have been away from the clutches
35:47of the GST, clamping in that aspect.
35:50You and I read the UPI went very high in Bangalore.
35:54Several traders were served with the GST notices.
35:58Even today in Khoi Mbathur, 23,000 GST notices have been served.
36:03The associations have taken out a separate position to the collectors and gave them the referendum.
36:08So you are saying you needed a greater cushion for the MSMEs so that they were given, they
36:19were not put through what you are calling a punitive compliance regime.
36:24Neelash Shah, you want to respond to what you are hearing.
36:26Ultimately, the aim will have to be also to revive MSMEs.
36:30They are the ones who perhaps need to really take the economy to the next level.
36:34That's been the challenge for this government in many ways.
36:37The big players are in any case, have already had their windfall corporate tax breaks a few
36:45years ago.
36:47So Rajdeep, we have to support competitive industries.
36:54We cannot support inefficient industries.
36:56Suppose, if our IT services was dominated by small and medium enterprises, do you think
37:04we would have got $200 billion of exports?
37:07Do you think we would have created 10% of GDP?
37:11If our pharma companies were dominated by small and medium enterprises, do you think we
37:15would have become supplier of 40% of generic medicine to US?
37:19On the other hand, you can go and see in Morby, how small tiles manufacturers have outperformed
37:26Chinese imports.
37:28They are exporting now against Chinese exports in Middle East.
37:32They are going to Europe.
37:34So we have to support all those MSMEs and large players who are competitive.
37:39People who want to take shadow under inefficiencies and uncompetitiveness, who wants to shortchange
37:47rules and regulation, we should not support at all.
37:51Now, the point raised in simplifying processes of GST is very important.
37:57We have put enormous compliance burden on our entrepreneurs.
38:02And there are so many regulations.
38:04Like you have to keep spittoons in your factory.
38:08We have a rule which says that if your canteen cook's health record is not maintained for three
38:16years, you will be put behind the bar.
38:18I mean, kenten cook's health record.
38:21What is the definition?
38:22Aapne ECG rakha to wo, you know, toodi eko maange ga, toodi eko rakha to ECG maange ga.
38:29So is there a need to simplify processes and empower entrepreneurs?
38:34Undoubtedly, yes.
38:35But we must support only those entrepreneurs who are competitive, not those entrepreneurs who
38:40are taking advantage of shortcurs.
38:41Now, take your point, Nilesh, but do you believe that this will lead to an ease of doing business?
38:46That's the question.
38:47There's one point that it will benefit consumers.
38:49It's a Diwali gift.
38:50It's a Diwali bonanza.
38:52But the truth of the matter is, how do you also ensure ease of doing business to really
38:56trigger, in a way, the animal spirits of the economy?
38:59Precisely for the reason you're saying, the kind of outdated laws and reduce the compliance
39:05burden, for example.
39:07Absolutely.
39:08I mean, all these laws, if a fund manager like me know, I'm sure industrialist would have
39:14presented to the government.
39:15Why is government not removing it?
39:19Okay.
39:20Subhash Ghar, is the problem still there for the resistance at different levels?
39:24You know, what I find amazing is that it's only now that the government has woken up, for
39:28example, on health and life insurance, which for the longest time, several people were saying,
39:33why do you need a GST on health and life insurance?
39:35Is the government, did it require the Trump tariffs in a way for the government to wake up
39:40to this?
39:41I don't really think that it is the Trump tariffs which is behind the GST reject.
39:47So, why was health and life insurance put in the first place at 18%?
39:53It should have been 0% right at the very outset.
39:55Obviously, this has been a mistake.
39:59This health insurance and life insurance is not required to be taxed at 18%.
40:05It should have been brought much earlier.
40:08But it has been done now because of Trump tariff is what I disagree.
40:13I think the biggest motivation for this reform-based kind of giveaway of a very large amount is
40:25actually the populist and probably the Bihar elections are there, which is guiding it.
40:34You see, what has happened…
40:35But that is being unusually cynical.
40:37The government says we've been holding 50-60 meetings for the last 6-8 months.
40:40You're saying it's only with an eye to Bihar election seems a little bit cynical, isn't
40:44it?
40:46You may say, so, why does the 1 lakh crore income tax benefit come few days before daily
40:55election?
40:57Why does the GST reform or GST giveaway or Diwali gift come couple of months before the
41:04Bihar election?
41:04Why is it that if racialization is to be done, let us say, of the rate, why is it that only
41:12the larger rates are getting towards the lower rates?
41:18Where is the revenue-neutral aspect of it?
41:22Reform should actually result into racialization, simplification, reform, but of a structure where
41:30you don't lose, if you are actually giving away tax revenue, in a situation where your
41:37tax revenues are actually at very, very big threat.
41:40I don't know whether you saw July number of the CGA suggest that income tax receipts
41:48were about 35% lower than the previous year.
41:52The total gross receipts of the government were 11% lower than the previous year.
41:58There is a very large giveaway which is already happening.
42:02And on top of that, if you further give away the GST revenue, it's not reform in that sense.
42:09Reform should also lead to higher fiscal revenues.
42:13Okay, I think, I, you know, Mr. Garg, I take your point that, but either way, the fact is,
42:20I think there is a general consensus here.
42:22Mr. Raghunathan, I'll give you 30 seconds.
42:24Quickly respond.
42:25You heard from Nilesh Shah, he says, uncompetitive businesses or businesses that cut corners will
42:30not get breaks.
42:32Nobody cuts corners.
42:33It's only the survival and nobody deliberately or wantedly cuts corners.
42:39But Rajdeep, what I wanted to insist upon is, the government should not think that having
42:45come out of the GST reform, they have touched the peak of it.
42:48And this, everything else will automatically go.
42:51The export setback from the U.S. tariff is entirely a different ballgame.
42:56It affects a sector which does not come under the purview of GST at all, unless otherwise
43:01they get their refund or their input tax credit.
43:04So therefore, a separate stimulus has to be announced.
43:07Already we are late.
43:09It has to be announced immediately for the thousands of crores of stocks which are lying
43:14in the suit.
43:15A packing credit needs to be extended to them.
43:18The EMIs have to be eased out to them.
43:21So you're asking for a separate package, separate package for MSMEs, which would make it a triple
43:28dhamaka in that sense around Diwali.
43:31We'll wait and see whether that happens.
43:32And that's also not really reforms.
43:34That's really, again, asking for benefits which will not really result in the kind of
43:40long-term reform we need.
43:41But I appreciate my guests joining me here on our talking point.
43:45It's a rare day when there is a broad consensus, even though there are concerns on specific issues
43:50that still remain.
43:51I thank you all very much for joining us on that GST debate.
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