The West Bengal government on Thursday said that the roll-out of Goods and Services Tax should be deferred in view of the massive ‘destabilising’ move of demonetisation till the economy was back on track.
The GST roll-out in itself is destabilising but for a good cause. It is destabilising on the exchequer of all states, West Bengal finance minister Amit Mitra said.
He said that the GST Council had decided that compensation to states would not be provided from the Consolidated Fund of India but from a special fund corpus of Rs 50,000 crore.
Mitra, also the chairman of the empowered committee on GST, said that the onset of demonetisation by the Centre was a tsunami which hit the country.
“Demonetisation already hit the economy. Can the economy take two hits? Can the companies restructure themselves and can the governments restructure themselves? These are the big questions of the day,” he said.
“Should we rethink of stabilising the economy from this big hit resulting from demonetisation and then go for GST? This is an option,” the Bengal Finance Minister said.
He said all the decisions were taken before November 8 when Prime Minister Narendra Modi announced the ban on high-value currency notes.
“All the decisions were taken on the basis of a crisis situation that the country will face for a good cause. Nobody knew at that time the country will face an economic destabilisation resulting from demonetisation. A tsunami has hit the country’s economy,” he said.
The Bengal government felt that the implementation of the GST should be deferred and implemented till the economy was able to recover from the demonetisation shock.
Once implemented it will be good for the country as happened in Canada, New Zealand Australia and Canada, he said.
The next meeting of the GST Council is slated for December 11-12.
Mitra said that the council had decided that states would not take the compensation from the consolidated fund of India and a special fund would be created for the purpose.
The council had decided that the base year for calculating the revenue of a state would be 2015-16 and secular growth of 14 per cent would be taken for calculating the likely revenue of each state in the first five years.
The GST is likely to be implemented from 1 April, 2017. Mitra’s statement on Thursday has raised doubts over its implementation.