Union Finance Minister Nirmala Sitharaman on August 1, 2022 asserted that the Goods and Services Tax (GST) levies on food items such as curd, lassi and wheat would not burden poor households, and took on States and the Opposition parties for seeking to suggest that the taxes were driven by the Narendra Modi administration when it was a decision taken by the GST Council with all States on board.

Replying to the debate on price rise in the Lok Sabha, Ms. Sitharaman remarked that members’ discussion dwelled on the political angles of price rise rather than actual data-driven concerns so her response would also be slightly political.

Congress members walked out mid-way through the Minister’s reply saying it had no solutions to offer, with MPs from the DMK following suit later while Ms. Sitharaman had switched to Tamil to respond to the issues they had raised.

Stressing that the government had held inflation at 7% or lower despite multiple headwinds such as the COVID-19 pandemic and its multiple waves, the Ukraine-Russia conflict and supply chain disruptions that persist due to lockdowns in parts of China, the Finance Minister said the government was working to reduce price rise further.

“What the people’s expectations were, according to that, we are delivering and trying to reduce inflation. Even today, global trade hasn’t reached normalcy, yet we have managed to keep inflation at 7% or below… Now when we are at 7%, and trying to bring it down, yet, we are being told what are you doing for inflation,” Ms. Sitharaman noted.

The Minister contrasted this with retail inflation trends under the UPA regime, noting that the pace of price rise was over 9% in 22 out of 28 months and had crossed 10% nine times. “That should also be remembered when we are being asked why we are not bringing it below 7%,” she said.

“When questions are constantly based not on facts, facts will have to be reminded. Even now, an Opposition member said inflation existed before COVID also. Yes, inflation existed. Let’s not forget — for a small taper tantrum by the U.S. Fed in 2008 led to problems till 2013 that led to India becoming one of the fragile five economies,” the Minister said.

GST concerns

Taking on criticism that the GST levies on milk and other items were ‘anti-poor’, Ms. Sitharaman said the decision was taken by the GST Council with full consensus of all States.

Responding to NCP member Supriya Sule who said the erstwhile MVA government had written to the Centre against implementing these levies, the Minister said: “No one said anything against it and it was decided [by the Council] to curb leakages without adding a burden on the poor.”

“The levy is only on pre-packaged and pre-labelled goods, so there is no impact on poor people from this. Similarly, for packs of over 25 kg, we are not levying tax because wholesale traders can supply to kirana shops without tax. Keeping the poor in mind, anything sold loose is not being taxed. This must be remembered,” the Minister noted.

“They say are you taxing rice, curd, lassi, chiwda, and puffed rice. I am not taxing them if it is bought in loose form, it is only taxed if pre-packed and branded,” she said, pointing out that several States including Tamil Nadu, Telangana, Punjab, Maharashtra and Andhra Pradesh used to tax items like atta, dal, wheat, rice, besan and paneer before the GST regime.

“The GST Council decisions are not the Central government’s decisions… It has all States’ Ministers. But when it is to be criticised, that is imposed on the Centre and Modi

“To decide something inside and then go outside and blame it on the Centre is wrong. Inside, you agreed at three levels of discussions [at official committees, a ministerial group and the Council]. Today, you are turning it around in such a manner as if it was a decision of Mr. Modi,” she lamented.

Power sector dues

Citing Prime Minister Modi’s recent remarks about freebies, Ms. Sitharaman said States must clear their outstanding power sector dues to generation firms as well as discoms. “They are telling us we are not giving funds to States. Discoms’ and generation companies’ dues must be cleared else how will they produce power for the people?” she said, before reeling out dues of States like Tamil Nadu, Kerala, Rajasthan and Telangana.

“When we talk of India’s economy, despite the global troubles and the local troubles, we are the fastest growing economy. Those who talk of GST, I want to explain again GST Council is a constitutional body where Modi.