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FM allays states' fear on GST veto power.

FINANCE minister Pranab Mukherjee on Thursday made an attempt to allay the fears of state governments over the Centre eroding their financial powers through a veto provision in the proposed Goods and Services Tax ( GST).

" I have no intention of becoming the super finance minister to interfere with the state GST," Mukherjee said in Parliament.

" The states will have their rights and I shall have my rights.

They have a responsibility to their states. That basic structure cannot be altered," he said replying to a debate in the Rajya Sabha on the price situation.

The state finance ministers had on Wednesday rejected the draft constitutional amendments bill that provided for veto powers to the Centre in the proposed GST system.

Responding to the opposition criticism that the Union finance minister wants to retain powers to decide the rates of state GST, Mukherjee informed the Lok Sabha that he has to take the states on board before implementing the GST as it was " not possible to stage Hamlet without the Prince of Denmark... States are the princes of Denmark". The Lok Sabha passed the supplementary demands for grants allowing the government to spend an additional ` 54,588 crore during 2010- 11. The government's expenditure in 2010- 11 is now expected to go up to ` 11,60,000 crore.

The finance minister said the Centre is waiting for the views of the Empowered Committee of State Finance Ministers on the proposed Constitutional Amendments, required to implement the GST. The new tax regime will replace Central excise, service tax and value- added tax ( VAT) levied by states.

" I am waiting for their reports and their comments on the draft constitutional Bill, which I have given to them and after that circulated it to the political parties for their comments. Tomorrow, the chairman of the Empowered Committee will brief me," he added.

Mukherjee also told the Rajya Sabha that the Centre had succeeded in bringing down food inflation from over 21 per cent in December to 9.53 per cent now.

However, states were not doing their bit to rein in inflation, he added.

Mukherjee also clarified later that he had not stated in Lok Sabha during Wednesday's debate that inflation was on account of high growth.

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Publication:Mail Today (New Delhi, India)
Date:Aug 6, 2010
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