in The Hindu
14 November, 2017
Government of India cannot be run on the basis of rhetoric alone, it has to deliver, says the former union finance minister.
(Note:What did the former BJP union finance minister Yashwant Sinha say last on demonatization and GST? Reading the dramatic review of tax rates in the GST regime as an admission of failure from the government, former union finance minister Yashwant Sinha told Nistula Hebbar and Suhasini Haidar that an expert panel should be set up to resolve the confusion.This is to get updated and arrive at your own conclusion on who is right and why. Soon you have to decide whom to vote to hasten the arrival of ‘Acche Din'. Don’t you? Prophets of doom or deliverance abound. Make the right choice. jk)
On GST, what do you make of all the changes announced recently and do you concur with the opposition’s demand that there should be no 28% slab?
The first thing we have to remember is that the GST rate slabs and the items for placement in each slab was not done on a clean slate. There was a central VAT (value added tax) that I had introduced in 2002, and there was State VAT and all the items had already been fixed to one slab or the other. Now, the most important thing that the GST council had to take into account was a revenue neutral rate — the idea being that there should be no loss to the exchequer, either of the States or the Central government.
If GST was to be a “good and simple tax”, it should’ve had one rate. Most countries that have adopted the GST have one rate. If that was difficult, then they should have probably fixed two rates, one for State GST and one for Central GST, if even that was not possible then they should have gone by my formula of merit, demerit and mean rate. But I don’t know what came over the GST council and what kind of leadership was provided by the Finance Minister to the Council that they went for five rates plus cesses that made it very complex. On that very day, I said it would lead to lobbying, litigation, as here the logic is not clear.
The entire system that was constructed was full of anomalies. So, when you go through all these mistakes that were made, the only conclusion you can come to is that the Finance Minister did not apply his mind.
Every roll back is an admission of failure, and a massive roll back where you roll back 177 items in one go only proves the scale of the failure.
Is the GST regime now irretrievable from the confusion it has gotten into?
An excellent concept like the GST is now earning ill-repute because of the manner in which it is being implemented.
My suggestion is that it was the Vijay Kelkar committee that recommended the GST in its 2003 report — he is the most knowledgeable person on this. The government should now set up a small team under Vijay Kelkar’s leadership — just two or three people, they should work closely with the Council at the ministerial level and there should be close interaction between the two. This committee should closely examine the entire thing including the filing and they should come to a conclusion say within two months, so that by December-January the whole thing is finalised, changes incorporated in the Budget that is in February and by April, 2018, we really make it a “good and simple tax.”
Your son (Jayant Sinha) and you are now famous for your differences. How do you react to it all?
In the school of politics in which I was brought up — Chandrashekhar, Advani, Vajpayee, including my original source of inspiration Jayprakash Narayan — personal relationships are kept separate from political relationships. You can have serious political differences and be the best of friends on a personal level. By the same token, family relationships are also kept separate.
You say that you keep political and personal separate. What is you personal relationship with the Finance Minister (Arun Jaitley) whom you have criticised quite sharply now?
I had an excellent relationship with him, and even after he became Finance Minister we met a few times. We had professional differences even as ministers in the Vajpayee government. But yes, of late, there has been no conversation.
A month ago you said you will not demand his resignation but you seem to have changed your mind?
A month ago I had said I was not calling for his resignation, but given the kind of admission of the fact that the original scheme for GST was deeply flawed, then its quite obvious that this Finance Minister should not continue in his post.
Your article was entitled “I have to speak now”. Was there a sense that somebody was trying to silence you?
I have not been active politically, certainly not in the party (BJP). I am not in touch with party leadership or party people. I asked for time from the Prime Minister and haven’t got a response for nearly one year now. Then I realised when I travelled around that there was deep disquiet among the people with regard to various issues. And, the government was carrying with its own publicity of its achievements which was unconnected with the reality of what was happening on the ground, for instance the impact of demonetisation and GST. It appeared to me as if the massive mandate we received in 2014 was running aground somewhere. It was at that stage I felt I should flag these issues, and hopefully the government would take notice.
You are alluding to a change in political culture. What is the difference, in your view, from before?
The political culture I grew up in was characterised by separation of political and personal relationships and the second was of democratic consensus. All these leaders with whom I worked, operated on the basis of consensus. Nobody tried to impose his will over the rest of his colleagues or party. There was much greater bonhomie , people were not afraid of talking to each other; it was an entirely different thing than one notices now. Government of India cannot be run on the basis of rhetoric alone, it has to deliver. Chandrashekharji used to say famously, that a government cannot be run on the basis of “tikdum” (quick fixes), and I have added “tukbandi” (ad libbing) to that.
Are you worried about 2019?
I am worried. I am raising these issues because I am worried about the party’s future. I would like the party to improve on its 2014 mandate in 2019, and therefore, the issues I have raised must be taken care of.
What you are saying is that the Prime Minister is controlling the government, the Finance Minister should go, you see the policies the government is campaigning on the strength of: Demonetisation and GST as failures. Why are you even in the party?
The answer is simple. I have given my blood and sweat for this party, it is as much mine as it is anyone else’s. From 2004 when we lost, till 2014, who was struggling against the UPA, in Parliament and outside? I was one of them, certainly. So why should I leave?
You said the Prime Minister and Home Minister have not agreed to meet you. Yet when you went to Kashmir, it was generally believed that you had gone with their backing in some form. Was that untrue?
There was no truth in that. I had not asked the party nor had they given me instructions, and I made it clear when I landed in Srinagar that I was not there on behalf of the party or government. Almost two years since we first went, the government has done exactly what we told them to do: to appoint an interlocutor, start speaking to everyone including the Hurriyat, as they had promised in the alliance document. When we said it, television channels shouted “peaceniks”, “traitors” at us…Now with the interlocutor and government saying they will speak to the Hurriyat, who is the traitor today? Ultimately they have done the same thing they could have earlier, and so many lives wouldn’t have been lost.
The government claims they were waiting to defeat militancy, and then pursue peace through strength…
Militancy has been in Jammu and Kashmir since 1989, and risen and fallen many time since then. The last time was in 2010. Now this government wants to say stone-pelting has decreased because of demonetisation. Nothing could be more ridiculous. There was no demonetisation when stone-pelting went down in 2010, or in 1931, when the first case of stone pelting was heard of.
You met with some of the separatists. But they wouldn’t meet the Home Minister, the Finance Minister or the interlocutor Mr. Sharma. What else can the government do?
You cant just go and sit in the guest house in Srinagar and say I am prepared to meet anyone who comes to see me. No one will respond. They should have sent formal letters inviting everyone to the talks. This is not something small. This time it wasn’t just separatists who didn’t meet [Dineshwar Sharma]: several groups including businessmen, traders, boat owners etc, refused to meet [him].
How important is dialogue with Pakistan to solving the Kashmir problem, given that we have none at present?
We cannot resolve the Kashmir issue without involving Pakistan at some point. But over the years, the issues that have come up with the people of Kashmir and the government of India in Delhi… Those have to be tackled directly with talks.
People within your party have asked, why only deal with the Kashmir valley, and its Muslim majority? Why not deal with the whole state?
Of course, we must; we must also speak to the Kashmiri Pandits and to the Sikhs. Those who live in the Valley have terrible lives. And apart from the minorities, there are the regions. JP (Jaiprakash Narayan) had said way back, that when you speak of more autonomy for Jammu and Kashmir State, then that autonomy must also be transferred to Jammu and Ladakh.
Given your own history, as foreign minister in 2002 when the Kashmir talks began, what do you think is the final resolution? A division along the LoC?
The eventual solution lies in making the Line of Control the Line of Peace and Cooperation. Not only the LoC, but the international border in the Jammu region too must become peaceful. As (former PM) Manmohan Singh said, borders cannot be redrawn, and territories cannot be changed. So you must deal with this in the manner that will satisfy the people, and bring about a degree of..union between the two sides.
Do you think India’s growing ties with the U.S. may help India tackle Pakistan, or bring some pressure to bear on Pakistan?
With the U.S., we have depended on them to use their influence, to discipline Pakistan from time to time. But in my experience, the Americans have only been interested in Afghanistan when dealing with the issue [of Pakistan]. Also, we cannot divorce our expectations from the U.S., from what the U.S. expects from us as far as East Asia is concerned. As a result, we have seen this Quadrilateral meeting (U.S.-India-Australia-Japan). India has never been in an alliance against a third country, with anyone. That is our record of the last 70 years, and that is a record we must maintain. India is too great a country, and can deal with the biggest powers, whether they are U.S. or China with confidence, not as “Piddies” (small fry). (Laughs)
Is the idea of non-alignment, then a thing of the past?
Non-alignment as a concept is not merely equidistance from power blocs. The basic concept is autonomy of decision-making, especially in the strategic areas. Non-aligned countries will not be influenced by bigger powers. Now the Non-Aligned movement was diluted, as members became camp-followers. But the concept remains and should remain dear to India.