Srinagar:

On Thursday, finance ministers of 32 states and Union territories will converge in Srinagar, for what will be the final meeting of the goods and services tax (GST) council ahead of the rollout of India’s most ambitious indirect tax reform on 1 July. Mint spoke to Haseeb Drabu, the finance minister of Jammu and Kashmir, in his modest office in Srinagar. In the course of the interview, Drabu dwelt on the significance of Jammu and Kashmir playing host and the prospects of GST reordering India’s federal polity. Edited excerpts:

Why is this meeting of the GST council so significant?

One, purely in terms of the GST council itself, this is perhaps its last meeting and has huge implications for business—we are now reaching a stage where we will now decide on commodity rates, tax bands and all that. Bands, we have decided; but now we have to see which commodities fit into which band. So perhaps in this context this is the GST council (meeting) which has the highest public interest.

Second, it is also significant that this meeting is being held in Srinagar. And that is an important facet of this thing. Normally in public policy we don’t look beyond Delhi; at best to Mumbai. So we have this commercial capital looking at market regulations, rules. We have never stepped outside of these cities to decide on issues of such significance.

A lot of importance must be given to the choice of venue, quite apart from the fact that Srinagar is a much smaller city and doesn’t have that kind of national presence. Yet it has its own significance in a political way. To that extent it is a very important event for us to host.

Can you elaborate?

Because it makes us (Jammu and Kashmir) participate somewhere in the national policymaking. We are a part of the whole process and history will record it saying that the meeting was held in Srinagar, consensus was arrived at. So it makes us a part of the economic history of India, which is very important for us because I don’t think we have, or for that matter any other city in the country, had an opportunity. So we are treating it with a lot of significance.

Do you believe it is also an opportunity to reset the troubled narrative on Kashmir?

I don’t think this will change the narrative. But what it does (is), it also brings a different perspective to the city and state. There is obviously a huge amount of conflict here, there is no denying that. But there are other things as well. It is a much more layered reality; a much more complex reality. I would call it the Rashmonian reality of Kashmir—there are lots of layers to it, lots of angles to it. And somehow the media only focuses on one aspect.

Even if we are facing a huge amount of conflict and trouble, lives are being lived; may not be as normally as in the rest of the country. But we do have businesses, we live, we eat; we have a life within that space. Somehow that life never gets captured (in the media). In that sense, one phase of the whole existence is that we (Kashmir) have tried to participate in the intellectual leadership of economic policymaking—be it through advancing the (presentation) of the budget (much before the Union budget), seeing if we can do a Universal Basic Income.

These are efforts that go much beyond the usual policy set-up and suggest that even in J&K there are people who are interested in reforms, doing things that set the agenda for the country. Nothing would make us happier than if we are recognized that somewhere some spark is emerging out of J&K that is setting the agenda for the country. And that perhaps would have an impact on the whole narrative.

GST, you have argued, is the pooling of sovereignties. How do you see this playing out?

I think we are now moving with GST into a new federal structure. I don’t think enough is being thought about it. I see the GST council as India’s first federal institution. We have to define India’s fiscal federal architecture post-NITI Ayog and post-GST—these are two defining moments.

Suddenly, with the Planning Commission having gone and replaced by the NITI Ayog is a huge thing. Similarly, post-GST we have to focus on expenditure, setting some norms on spending—on how much we spend on education, health or replace subsidies with Universal Basic Income. This will have a huge impact on how the fiscal federal set-up changes. The minute that happens, it also changes the federal polity of the country.

We have gone through economic reforms since 1991 and not a single state was consulted. Now even for rates you are consulting states. Look at the transition that has happened and people don’t recognize that. So pooling of sovereignty will lead to a different federal structure; it creates the scope for a federal system which is new and alive to market realities. The earlier federal system was in a controlled regulatory environment.

I personally feel that we are in transition from a coercive federalism to a cooperative federalism en route to competitive federalism. That is where ultimately a lot of political issues will get resolved.

 17 May 2017, 01:12 PM