July 1 a realistic timeline for GST rollout, says Assam FM

With just a few days to go, the build-up to Budget 2017 has hit fever pitch. With demonetisation causing considerable short-term disruption to the economy, question such as “Can the Budget provide the necessary stimulus to put India back on the high-growth path?” crop up. Here’s a low-down on what Karnataka Agriculture Minister Krishna Byre Gowda; AIADMK’s K Pandiarajan and Assam Finance Minister Himanta Biswa Sarma expect from the Budget.All these ministers are part of the GST Council which is leading the negotiations on the landmark tax reform. They share their views on whether it’s a goodbye to GST rollout in April and if July will likely see a rollout.Pandiarajan hinted that issues pertaining to GST can be resolved by the Council in next meeting, but firmly said that April 1 rollout is out of the question. He added that if July 1 rollout is not possible, the government should postpone GST rollout to April 2018.

Sarma, however, said July 1 is a realistic timeline for GST rollout and added that he expects the Council to resolve the cross empowerment issue in the next meeting.Below is the transcript of K Pandiarajan, Krishna Byre Gowda and Himanta Biswa Sarma’s interview to Shereen Bhan on CNBC-TV18.Q: The Finance Minister, when he addressed the media at the end of the meeting of the goods and services tax (GST) council quipped that the state of the economy differs on the perspective of which State Finance Minister you speak to. So, we thought it is best to get as many as possible on this show to really get a sense of what is going on with the economy. Let me start by asking you about the impact of demonetisation on the state’s revenues. What exactly has been the impact on revenues post November 8 because the Finance Minister suggests that in fact, state governments are seeing a pick up in revenue and not a decline?Gowda: As you rightly pointed out, there have been unexpected fluctuations in declarations filed by many businesses. So, we have seen unexplained surges in some of the declarations. So, once the December declarations come, which they will in the next 1-2 days, we will get a much better picture. But our state government offices have looked several sectors and their assessment is that there would be about Rs 3,000-5,000 crore deficit in revenue vis-à-vis the targets that have been set for this period, that is up until March.Q: So, you are saying that there is a fair degree of volatility in the data at this point in time, but you also believe that on the broad assessment conducted by your government, you are saying that there is expected to be a shortfall of Rs 3,000-5,000 crore just on the impact of demonetisation?Gowda: Yes, Karnataka, our current assessment is that there would be a revenue shortfall against the target somewhere in the range of Rs 3,000-5,000 crore.Q: So, where have you seen the most impact? You are talking about several sectors having been hit on account of demonetisation. Can you articulate for us which sectors have felt the maximum amount of pain and where are you seeing job losses if any today?Gowda:  Across most sectors, we have seen everybody reporting lower turnovers. The most prominent ones that perhaps, have a wider recognition would be even automobile sales have come down. Most of the activities in the real estate sector have come down. Even retail of garments and activities related to garments have come down. People in different parts of Karnataka who used to come to Bengaluru for jobs like in the garment sector, like in the construction sector, we have got anecdotal reports that they have been let go of their jobs. So, there are job losses in a lot of construction and service sectors. And transactions of automobiles, transactions of properties, all these, even retail sales have also come down. So, we noticed that there is a decline across most of the sectors.Q: You just heard Mr Gowda taking us through the sectors which have been severely impacted, construction, automobile, real estate, retail, garment manufacturing and so on and so forth. Mr Gowda also talking about a revenue deficit of between Rs 3,000-5,000 crore. Can you take us through what the state is in Tamil Nadu?Pandiarajan: Tamil Nadu also has reported a certain decline. Compared to October, November and December have been very weak. But somehow, compared to the past year, our dip is not as sharp as what my friend Mr Gowda is seeing from Karnataka. It has not been as sharp partly – we have been studying this whole process of revenue collections and all the logic that he was giving is also applicable to Tamil Nadu, the migration related aspects and the reduction in jobs, especially of the casuals and labourers of that kind, there has been a reduction, especially Tirupur for instance, which has seen a certain impact. But it is as yet, not getting reflected strongly in November-December revenue collections per se. One because of the structure of our revenue collection is very different from what Karnataka is.Q: Your saying that it is not yet showing up in November-December, if I may ask you, has there been an uptick in revenue collection in comparison to the previous year?Pandiarajan: I am given data of some little unbelievable numbers. It is a little higher compared to the previous year, but previous year, we had a particularly bad phase. As you know, that was the cyclone faced quarter. So it is not really very strictly comparable. So, it is actually 10 percent higher than the previous year, but compared to what we were doing in October, it is far less. That is the challenge we have here because that was the worst quarter that Tamil Nadu had, October, November and December of 2015. So, it is purely not comparable.Q: We were just having a conversation with the Ministers from Tamil Nadu and Karnataka on the impact of dogmatisation on the states’ revenues. Both seem to suggest that there is a potential dip of between 5 and 6 percent on their revenues. Can you take us through what the picture is like in Assam at this point in time in terms of what you anticipate with revenue collections?Sarma: In Assam, the month of November, we registered a growth of 11 percent in our revenue and in the month of December we registered a growth of 21 percent in our revenue. So, so far, we are not getting any negative impact of demonetisation as of now.Q: You are saying that this was up year-on-year, the figures for both November and December?Sarma: I am giving year-on-year. November, 2015 compared to November, 2016 we registered 11 percent growth. December, 2016 month-on-month basis, we registered a growth of 21 percent in our revenue.