Modi govt’s argument against GST waiver on essential COVID supplies exposes its pro-corporate tilt yet again

The people of India are being driven on a path between the devil and the deep sea. On one side is the Union Government and on the other, the profiteers. The Centre is taxing the people more and more while the profiteers are making money as much as they wish to.

This well-known fact has just been indirectly highlighted in a statement of the Union Finance Minister Nirmala Sitharaman emphasizing that certain goods would become costlier for people if GST on them would be reduced.

It is just beyond the comprehension of innocent people who just know that tax when added makes things costlier, and when it is reduced, things become cheaper. But then, they don’t know the mischief that is inbuilt in the GST.

It seems that even the Chief Minister of West Bengal Mamata Banerjee did not know about this. She too believed that the supplies for patients suffering from COVID-19 are not affordable for common people and if the Centre granted waiver of GST levied on them, they would become cheaper and it would be a great relief for patients and their families.

Perhaps precisely for this reason, she wrote a letter to Prime Minister Narendra Modi seeking GST exemption on COVID-19 vaccines and other related supplies. She had also demanded, apart from the GST waiver, a customs duty waiver on medical equipment, medicines, and oxygen required to fight COVID-19.

Prime Minister Narendra Modi, as a shrewd person that he is, used Union Finance Minister Nirmala Sitharaman to answer the letter, who turned down Mamata Banerjee’s demand for a GST waiver.

She said, “If full exemption from GST were given, domestic producers of these items would be unable to offset taxes paid on their inputs and input services and would pass these on to the end consumer by increasing their price.”

She responded thus in a series of tweets in response to Banerjee’s letter. She argued that the levy was needed to ensure that domestic producers get tax credit on inputs and services and prices remain low. She also used the same argument for vaccines, while underlining that the Centre was providing free vaccines to those above 45 years as well as frontline workers and also bearing the GST.

The whole episode is now in public domain, which compels us to think about the whole business of GST and possible nexus between the persons managing the affairs of the government and the companies which are primarily interested in profiteering.

It seems that the Centre is not willing to forego its revenue and the companies their exaggerated profit that we have just seen in the case of ‘liberalization of the vaccines for COVID-19’ under which SII and Bharat Biotech were given free hand to sell 50 per cent of their production to customers other than the Centre.

The cost of the vaccines for the Centre is just Rs150 per dose, but their prices for the states were set at Rs 300 and Rs 400 respectively, and for private hospitals and others Rs 600 and Rs 1200.

As per the government of India’s official vaccine site, various hospitals are charging Rs 700 to Rs 1200 per dose. One can see now the price anarchy in the country that has made our vaccines the costliest in the world, and that too with the Centre’s approval, which many people would like to call ‘connivance’.

Now our Union Finance Minister says that there is also a GST on the Centre’s supply of vaccines. Additionally, whatever she says means that if GST waver is granted, these vaccine would become costlier for the consumers. It clearly implies that the government is not willing to grant a waiver of GST on vaccines, medicines, oxygen or any other supplies, which increases the price for consumers, but the government says if it’s not taxed, the things would be costlier.

If we take the statement of the Finance Minister at its face value and believe that she is right, even then the government can give respite to the people from high prices by simply granting waiver of GST on all items in the chain of ‘credit input’ system that is presently being implemented. In that case, manufacturers would not need to shift the tax paid on raw and other material for the production, because there would not be any tax on them. But the government clearly does not want this.

There is also a larger question involved. Why should people be subjected to such a tax system that cannot give respite to them, first when taxed, and secondly, make things costlier when not taxed? Unless there is some mischief or nexus between the companies and the people at the helm of affairs, there should not be incomprehensible complexities that put both the companies and the government in an advantageous position and the people at the receiving end getting compelled to give more money either to government or the profiteering business, in any case, tax or no tax.

The Finance Minister’s reply is in fact no answer to the demand of making drugs, vaccines, oxygen and other things cheaper at a time when COVID-19 is on the rampage, infecting and killing people in such a large number that it has shaken the world, excepting perhaps our Finance Minister and the Prime Minister, who are bent upon implementing their pro-corporate policies at the cost of the lives and livelihoods of the people.

(IPA Service)

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