Union Finance Minister Nirmala Sitharaman on Thursday tabled the White Paper in Parliament, highlighting the “failures” of the Congress-led UPA government and how BJP-led NDA turned things around. The White Paper showed how Prime Minister Narendra Modi-led NDA government addressed multiple issues, from tax reforms to ensuring public resources such as coal and telecom for betterment of the society.
As per the report, the introduction of the Goods and Service Tax (GST) was a much-needed structural reform to improve revenue collection and compliance. Comparing tax collection during the UPA government’s 10-year tenure, the report highlights that the average tax-GDP ratio for FY15 to FY24 RE is about 10.95%, higher than the ten-year average of 10.5% during 2005-14. “This is despite lower tax rates and widespread relief extended during the Covid-19 pandemic,” it adds.
The report claims that GST has helped households save nearly ₹45,000 crore per month from December 2017 until March 2023. At the same time, monthly average GST revenue has increased from ₹90,000 crore in FY18 to ₹1.7 lakh crore in FY24.
“Prior to the introduction of the GST, the mélange of state levies, more than 440 tax rates, excise duties and the compliance requirements of multiple agencies administering these rates meant that India’s internal trade was neither free nor united. The implementation of the reform entailed unifying 29 states and 7 union territories, which, due to their different tax structures, were economic territories on their own,” it notes.
The White Paper says that the Modi government accepted the recommendations of the 14th and 15th Finance Commission, which had acknowledged states as equal partners in economic development. The report says that around 41-42% of central taxes have been shared with the states every year over the last decade, a substantial jump from the earlier “devolution” share of 30-32%. Consequently, the quantum of resources devolved to states jumped to ₹84.3 lakh crore between FY15 to FY24 RE, up 3.8 times from ₹22.1 crore during FY05 to FY14 (UPA regime), which accounts for about 1% of GDP.
Read more at: Fortune India
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