India / Politics
Is Arun Jaitley’s ineptitude the cause of PM Modi’s troubles?

One plans – the other implements. As far as economic reforms are considered, this is the understanding shared by Prime Minister Modi and his Finance Minister Arun Jaitley. Or at least that is what it used to be. Rumours abound that the relationship between Modi and Jaitley has soured, and this imbalance is affecting Modi’s charisma. Tough times seem to be looming ahead for the NDA!

 


That the demonetization programme in India was a grand failure is known to all. After the initial shock following PM Modi’s speech, the common citizens of India and the media lauded this bold move and commended the brave decision. Their expectation was that black money holders and the corrupt would be wiped out from the roots – which, to give credit to the government, was exactly the motive behind the move. However, by the third day of demonetization, the tune had changed. The government was woefully unprepared to deal with the aftermath of its own policy – sufficient new currency was not in circulation, the machinery for exchanging old currency broke down – the common man was put to a great deal of trouble. A few people even lost their lives due to this upheaval. The ease with which black money was converted into white left the Centre speechless. Even the RBI expressed helplessness and inability from time to time. It became apparent that the Finance Minister Arun Jaitley had messed up the implementation of this policy.

 

 


The introduction of the GST too has been disastrous. The GST regime was first proposed during the UPA rule. In a bid to take credit for introducing the GST, the Modi government took on this herculean task. It set up an autonomous GST council, with representatives from the states, the NITI Aayog and the Central Cabinet. It was proposed that GST would be introduced only after this council had reached consensus. However, the GST has been rolled out without this consensus. The result has been complete confusion and dissatisfaction on the part of the states. What had been a measure to simplify the existing tax regime turned out instead to be a complex exercise due to the immoderate haste with which Mr. Jaitley had rolled out the tax.
The Finance ministry has been facing criticism from the outset for introducing four slabs of taxation in a tax that promised ‘one nation – one tax’. In addition to this, the unpreparedness of small business, technical snags in the network, tax avoidance due to the complexity associated with GST – all these have placed an increased burden on the common man. With the phrase ‘28% GST’ looming from all sides, the citizens of the country have expressed strong displeasure. Questions are also being raised about why the education and healthcare sectors have not been exempted from GST. The government has completely failed in spreading awareness that the GST would replace existing tax regimes due to which MRP of goods and services would fall. As a point of fact, such a fall in MRP has not been reported yet.


The introduction of slabs in GST and 28% tax on everyday goods and services was a terrible miscalculation on the part of Finance Minister Arun Jaitley. Having realized this, he is now trying to rectify his mistake. The Centre recently announced that GST for 171 items including chocolates, cosmetics, detergent soaps and granite would be slashed. However, the damage has been done. PM Modi is now facing criticism from all quarters that while his intentions are correct, the intentions of his acolytes seem to be corrupt. People such as Subramanian Swamy and Yashwant Sinha are demanding the sacking of Arun Jaitley as Finance Minister, as his shoddy implementation has resulted in a tumultuous economy. Is it the beginning of the end for Mr. Arun Jaitley? Only time will tell.