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Taxing Affairs

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This is going to be one of the toughest assignments to take on. Ushering in the goods and services tax (GST) regime — it will replace a complex system of indirect state and federal taxes with a single tax — is going to be a difficult task to accomplish.

Asim Dasgupta, outgoing chairman and West Bengal's erstwhile finance minister, would have seen it through; he played a key role in ushering in the controversial value-added tax  regime in 2005, which success got him the job of producing the same result with the GST.

His successor will probably have a torrid time. Many states (mainly those governed by the Bhartiya Janata Party) opposed the tax. The GST requires a constitutional amendment, so two-thirds of the states will have to ratify it.

Bihar's deputy chief minister Sushil Modi, deputy chairman of the group, is the frontrunner so far; he is with the BJP (the chairman is traditionally from one of the opposition parties in Parliament). He is likely to represent the concerns of the BJP-ruled states; given the BJP's ongoing battle with the UPA government, Congress-ruled states may make things hard for Modi. People are worried that no matter who takes over, it could delay GST's introduction.

Amit Mitra, Dasgupta's successor in West Bengal, is a former secretary general of the Federation of Indian Chambers of Commerce and Industry; he understands the GST's impact on the corporate sector, but may be less familiar with the political sensitivities.

Can Mitra and Modi work together? Both were active in the Akhil Bhartiya Vidyarthi Parishad in their college days. Ah, nostalgia.

(This story was published in Businessworld Issue Dated 06-06-2011)