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When GST Council discussed Manipur’s dried fish for half an hour

LiveMint logoLiveMint 26-05-2017 Utpal Bhaskar

Srinagar: With the goods and services tax (GST) Council signing off on most of the game-changing reforms last week, the humble ‘dried fish’ has become a symbol of the emerging template of lateral or cooperative federalism.

On 18 May, during the discussion on the fitment of goods against specific tax rates, Manipur’s finance minister Y. Joykumar Singh raised the demand for including dried fish in the exempted list. Surprisingly, several other state FMs lobbied on behalf of Singh and the discussion went on for nearly half-an-hour.

Significant, given that the GST Council had to decide on the fitment of 1,210 other items—many of which had a far bigger consumption base compared to dried fish. FMs saw the discussion as an instance of the emerging bond among states as India explores new federal norms with GST implementation, wherein both states and the Union government have pooled their sovereignties by sacrificing taxation powers.

Dried fish is pungent delicacy in the north-eastern states and a ‘must’ accompaniment for any meal. It is generally mixed with Raja mircha or Naga chilli to make a paste and is extremely spicy.

Participating in a panel discussion hosted by Mint on the sidelines of the GST Council meeting in Srinagar, Himanta Biswa Sarma, Assam’s finance minister, said that in a first, the GST Council had evolved a new model of cooperation between the states.

“It (dried fish) was raised by the finance minister of Manipur. But on that issue we probably spent half-an-hour discussing whether dry fish should be exempted or not,” said Sarma, adding, “So that kind of cooperation, mutual trust, mutual confidence between the states has never been witnessed…I think this can be a foundation of the new India—that is what I feel as a student of political science.”

Arguing similarly, Haseeb Drabu, finance minister of Jammu and Kashmir, said, “A lot of time was spent discussing whether dried fish should be exempt or taxed at 5%. Now that is the granularity of discussion which happens and that also shows the involvement of the state governments in the national policy making.”

According to Drabu, the GST Council is India’s first federal institution. “I see the seeds of lateral federalism in India now. In a first you begin to look at states helping states, aligning policies perhaps…you are trying to move from what was a classical vertical federation to a horizontal federation.”

Eventually the spirit of compromise drove the fitment of dried fish in the tariff schedule. While it missed out being classified along with essential items of mass consumption, it was included in the lowest, 5% slab.

“We will gain a lot of learning from this new institution—the GST Council—on how relations between Union and state governments as well as relations among states themselves will develop. It is an evolving federal institution one needs to keep an eye on,” said N.R.Bhanumurthy, professor at the National Institute of Public Finance and Policy, New Delhi.

Gireesh Chandra Prasad contributed to the story.

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