BJP’s Hammer on the Backbone of Middle Class

  • Prof. Gourav Vallabh

The Modi government's decisions over the last 8 years prove how a regime's cluelessness and incapability can single-handedly destroy a nation's economic potential. The GST, which was planned as a progressive tax structure, has been so badly mishandled that rationalizing it will be a long and painful process. Several improvements are needed in the current GST structure but instead of focusing on fixing them, the BJP government seems hell-bent on making the lives of the common people miserable. Finance Minister Nirmala Sitharaman has cruelly abandoned low- and middle-income groups in the name of tax rationalization. In the 47thGST Council meeting last week, a series of rate revisions was announced, most of which will adversely affect low- and middle-income groups.

  1. Exemptions have been withdrawn for pre-packed and pre-labelled food grains, fish, paneer, lassi*, honey, jaggery, wheat flour*, buttermilk, unfrozen meat/fish (not frozen), and puffed rice (muri). These will now be taxed at 5%, at par with branded items.
  2. Exemptions have also been withdrawn for hotel accommodation up to ₹1,000 per day. These will now be taxed at 12%.
  3. Tax rates have been increased from 12% to 18% on products such as printing, writing or drawing ink, knives with cutting blades, spoons, forks, paper knives, pencil sharpeners, and LED lamps.

On the other hand, the Group of Ministers had finalized a uniform tax 28% GST on casinos, horse racing, and lottery. This decision was asked to be reviewed, and the GoM has been given a 15-day period to review its decision.

These rate revisions are unwelcomed at a time when inflation is putting pressure on the pockets of the common person. The CPI inflation in May 2022 stood at 7.04%, and was as high as 7.79% in April 2022. These are way higher than the maximum limit of 6% set by the RBI. All the products for which GST rates have been revised upwards are items that are consumed daily by the lower and middle classes. According to Axis My India’s India Consumer Sentiment Index, household spending in June 2022 dipped sharply.

We have three (3) questions for the BJP government:

  1. Is the government willing to jeopardize the living standards of the low- and middle-income group at a time of high inflation just to increase its revenues?
  2. What is the government hiding from the nation concerning the economic situation that it is so desperate to raise revenues at the expense of people's welfare?
  3. What is more important for the government - Casinos or the common person? Why were taxes raised across the board with no review of the decision to remove tax exemptions?

Annexure 1

Pre- and Post-GST price Comparison of some essential items

Sr. No. Particulars Prices in March 2014 (Rs.) Prices in May/June 2017 (Pre GST prices in Rs.) Current price (Rs.) 1. Flour 20/kg 23/kg 28/kg 2. Dahi 22/400gm 24/400gm 40/400gm 3. Ghee 335/kg 505/kg 649/kg 4. Bathing soap 20/unit 16.5/unit 30/unit 5. Detergent soap 30/kg 60/kg 100/kg 6. Cotton shirt readymade 400/unit 550/unit 700/unit 7. Chappals 299/unit 399/unit 499/unit 8. Cooking oil (mustard) 102/kg 122/kg 181/kg 9. Cooking oil (sunflower) 106/kg 105/kg 216/kg 10. Movie ticket 130 128 200 - 1000 11. Dolo or Crocin (paracetamol) 14/strip of 15 20 per strip 12. Cancer medicine (bortezomib) 11,160 17,000

Sources: ● ● IndiaMART ● Bigbasket ● (for cancer medicine)

Based on the Press Briefing (for cancer medicine))