Srinagar: Jammu and Kashmir is unlikely to implement the GST regime as it will take away the state's authority of legislating on taxes, state Finance Minister Haseeb Drabu said today.
"Jammu and Kashmir is unlikely to implement GST regime as it compromises its special position.... J&K is the only state that has the authority to legislate on all taxes and this will go with the new GST regime, Drabu said.
The state finance minister was speaking at a function at Kashmir University on current fiscal's Economic Survey by Chief Economic Advisor Arvind Subramanian.
The Centre plans to roll out the new indirect tax regime Goods and Services Tax (GST) by April 1, 2016.
The Constitution Amendment Bill on GST was referred to a Rajya Sabha select Committee for scrutiny. The Bill was cleared in the Lok Sabha.
"Positive impact of the 14th Finance Commission award is being offset by various measures including, for instance, the new GST regime which will limit the scope of any intervention by the states because GST will uniform tariff structure," Drabu said.
He, however, added that GST is an outstanding and efficient system.
Drabu said while radical restructuring of economic policy that paved way for abolishing of Planning Commission has been a key intervention so far, there is no follow up.
"States are in chaos about whether they should have a plan or not. The 14th Finance Commission has changed fiscal federal system in India (but) there is no corresponding follow up about how this will work," he said.
Drabu said the Indian economy, though liberalised, is a fragmented one where the states have turned protectionist.
"Odisha prevents mining saying half of the investment must be spent in the state. Goa puts barriers on export of it. The protectionism has reached the level of such an absurdity that a refinery in Mathura gets charged by UP government for refining the oil," he said.
Calling for a move from revenue sharing to resource sharing, Drabu said the states also need to be listened to while framing the policies.
"Can we move from pure play revenue sharing to much larger resource sharing? If you go down this line, you will see there is not cooperative federalism but honestly coercive federalism," he said.
He said states are at different levels of development with different policy perspective. "That wisdom must be reflected in the Economic Survey."
Drabu said the coalition politics has changed a lot in the states and they need to be better engaged in economic policy making.
"It might be worthwhile what we could learn from states and engage with them. Some states have done exceptionally better on certain fronts," he said adding there are "lot many lessons" that can be learned from the states.