EDITORIAL : THE HINDU, INDIA

What it looks like in Assam

Assam's two-phase Assembly election, scheduled for April 4 and 11, is quite different from any contest that the State has witnessed in the post-Emergency period: this is the first time an incumbent party is seeking a mandate for a third consecutive term. For Chief Minister Tarun Gogoi, the contest presents an opportunity to make history — as the second Chief Minister in Assam after Bimala Prasad Chaliha to ascend the gadi thrice in succession. Assembly and Lok Sabha elections since 1991 have been overshadowed by insurgent violence and boycott calls but it is unlikely there will be any major disruption or sabotage this time. It augurs well for the democratic process that the United Liberation Front of Asom (ULFA) and the National Democratic Front of Boroland (NDFB) — weakened over time and more recently by the earnest crackdown on their bases in Bangladesh by the Sheikh Hasina government — have initiated talks with the government. The Paresh Barua-led faction of ULFA and the Ranjan Daimary faction of NDFB, which have kept out of the peace process, will be desperately looking for chinks in the security armour to carry out sporadic strikes to prove their presence on the ground and to win media attention. A recent bomb blast at Rajiv Bhawan in Guwahati by the ULFA faction and an ambush on Border Security Force (BSF) in Kokrajhar by the NDFB faction suggest there is no room for complacency.

Although the Congress and it fellow-traveller, the Bodoland People's Front (BPF), have not been able to come to an understanding on seat sharing, their post-poll alliance looks set to continue. There are also indications that in the event of falling short of the majority mark, the ruling party will fall back on the All India United Democratic Front (AIUDF), which caused an erosion in Congress vote banks among immigrant Muslim settlers in 2006. The Left parties were hoping that the Asom Gana Parishad (AGP) would take the lead in uniting all non-Congress, non-BJP parties to present a viable alternative to the Congress-BPF coalition. This followed the General House of the AGP adopting a resolution calling for the severance of poll ties with the Bharatiya Janata Party, which had made gains at the expense of the regional party in the 2009 Lok Sabha contest. Nevertheless, the vacillations of the AGP leadership continue. The regional party tried to push through its proposal of a ‘grand alliance' of all opposition parties, which was rejected by the Left and the AIUDF and by the BJP as well. The opposition parties claim there is strong anti-incumbency sentiment engendered by the scams and by alleged misrule in the State. However, in the absence of any pre-poll alliance based on an agreed minimum programme, it is the ruling combination that seems to have the advantage. 

Budget rollbacks and promise

The smooth passage of the Finance Bill by Parliament was facilitated by the slew of concessions extended by Finance Minister Pranab Mukherjee. As many as 47 amendments to the original bill were passed. The concessions aggregate Rs.1,500 crore, a large portion of this attributable to procedural changes in the method of levying and collecting taxes. For instance, the deferment by three months of a new procedure to collect service tax on an accrual basis instead of on actual receipts will mean less revenue than what was envisaged in the budget. Manufacturers of readymade garments, especially those in the small-scale segment, have got relief by way of higher excise duty abatement. By far the most anticipated announcement was the rollback of the 5 per cent service tax on certain grades of hospitals and diagnostic services in the private sector. This budget proposal drew a good deal of flak. Had it been implemented, it would have increased the already high health care costs. However, while the government will now forgo around Rs.300 crore, it was not just revenue considerations that were behind the proposal. The idea of bringing the various entities in the booming health care segment under the tax net has been around for quite a while. Besides, as the Finance Minister said, the move was meant to prepare the ground for the Goods and Services Tax (GST). It is unlikely that this sector will be exempted when the GST is finally in place. The principal idea behind the GST and the Direct Taxes Code (DTC) — the two key reform measures — is to have a tax structure with moderate taxes, minimum exemptions, and wide coverage.

Mr. Mukherjee has kept the promise he made in the budget speech by introducing a Constitution Amendment Bill to pave the way for the GST. Essentially, the Bill seeks to give powers to the States to tax services and to the Centre to levy duties beyond the factory gate. The Bill incorporates features that seek to resolve the sharp differences between the Centre and the States over the implementation of the far-going structural change. A GST Council, headed by the Union Finance Minister, and a GST Dispute Settlement Authority are proposed. In bringing the Bill before Parliament Mr. Mukherjee may have kept his word. But it will be over-optimistic to expect the GST to become a reality on April 1, 2012. The legislation, which will now go to a standing committee, requires two-thirds support in both houses of Parliament and to be ratified by at least half the number of State legislatures.