May 09, 2012, 12.33 PM IST
Former finance minister and chairman of the Parilamentary Standing Committee on Finance, Yashwant Sinha says that there will be an inflationary impact with fuel price hike and adds that the committee proposes to take up the GST Bill after the Parliament session
He explains that nothing should stop the FM from calling a meeting on state levies. Sinha says that there will be an inflationary impact with fuel price hike and adds that the government is in a catch-22 situation with inflation and the subsidy bill.
He says that the committee was overburdened and proposes to take up the GST Bill right after this Parliament session.
Below is an edited transcript of the interview on CNBC-TV18. Also watch the accompanying video.
Q: The FM today spoke about this three-pronged strategy to tackle the burden of oil prices. Will the strategy work in the long run?
A: Well it certainly is an experiment which one could try. I think Goa has definitely showed a way that the state's levy could be tweaked, changed in order to lessen the burden on the consumers.
The finance minister should call a meeting of the state chief ministers and discuss the issue and find out how the levy could be modified, how the government of India could modify its levy and how the burden of taxation on petroleum products could be reduced across the board.
Then options such as the percentage of increase in petroleum product prices and the portion that is to be borne by the petroleum companies.
This three pronged formula is something which was brought into existence by the UPA-I government. They talked about government of India, the people and the oil companies.
Now the present finance minister is adding a fourth pillar to this, namely the state governments, so there is nothing wrong, let him go and try it.
Q: So therefore the fuel price hike is coming despite fears of inflationary impact and perhaps just after the current Parliament session ends if not earlier?
A: It is bound to have an inflationary impact especially if diesel is included. Diesel is used in transportation, agriculture and sectors of industrial production. So, it is bound to have an inflationary impact.
Unfortunately the inflationary situation is not very helpful for the government at this point of time. But it is a catch-22 situation and has to tackle the subsidy bill and the fiscal deficit. Therefore the government has to take a view on the percentage of price increase.
Q: What is the timeline on the GST amendment bill even as oil has been left out of the GST framework as of now?
A: The standing committee on finance is one of the many Parliamentary committees which are overburdened with work. In the last Budget, seven pieces of legislation were referred to the standing committee.
Some of the legislation were pending. These are not small pieces of legislation these are humongous tracts like the Companies Bill, DTC, Coal Bill and the GST amendment constitutional amendment bill.
In addition, the committee has to discuss other bills where the government of India has international deadlines to meet like the Prevention Of Money Laundering Bill or the Drugs and Narcotics Substances Bill. So, the committee has been working very hard, meeting week after week to clear some of these bills.
We propose to take up the GST Bill in right earnest immediately after the Budget session and though we have the responsibility of building a consensus across all stakeholders principally between the government of India and the state governments, the committee with try best to come out with a report which will satisfy all the stakeholders.
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