Congress leader and former union finance minister P Chidambaram said that the GST compensation period must be extended to three years in the wake of the ‘precarious situation of the financial health of the states.’
UDAIPUR: The Congress party has demanded that the Goods and Services Tax (GST) compensation period be extended by another three years in the wake of the current economic situation and poor financial health of the states.
Addressing the media at the Congress’ chintan shivir in Udaipur, former union finance minister P Chidambaram, who heads the economy panel of the shivir, also pitched for a “reset of economic policies” to take liberalisation forward and address “inequalities and extreme poverty.”
The five-year period for compensating states of any loss of tax revenues after the implementation of the Goods and Services Tax will end in July.
“The compensation period must be extended to at least three more years given the precarious situation of the financial health of the states,” Chidambaram said.
Describing the current state of economy as “a matter of extreme concern”, Chidambaram said, “Inflation has risen to unacceptable level. the WPI is at 14.55% and the CPI is at 7.9%. There are high taxes on petrol and diesel and high GST tax rates. The job situation has never been so low with 40.38% job participation rate and unemployment rate at 7.83%.”
Rejecting the inflation rates as a result of the Russia-Ukraine war, the former minister quipped “It’s a lame excuse” and argued that “high inflationary trend was noticed in pre-Ukraine war. The Ukraine war has added to our problem.
Chidambaram blamed the Reserve Bank of India (RBI) for remaining behind the curve.
The former minister, who was one of the key players in the economic liberalisation in 1991 along with Manmohan Singh and PV Narsimha Rao, pushed for a policy reset, which would be part of the Congress’ economic vision for the 2024 elections.
“The Congress ushered in new liberalisation. Thirty years have passed and now we believe the time is right for recalibration of economic policies and comprehensive review of the Centre-state fiscal distribution. A reset of economic policies must address new challenges, social inequalities and extreme poverty,” he said.