LOK SABHA ___

SYNOPSIS OF DEBATES (Proceedings other than Questions & Answers) ______

Wednesday, August 2, 2017/Shravana 11, 1939 (Saka) ______

SUBMISSION BY MEMBER

Re: Political vendetta unleashed by the Government through central

investigation agencies against the Opposition party leaders

particularly in Karnataka

THE MINISTR OF FINANCE, MINISTER OF CORPORATE

AFFAIRS AND MINISTER OF DEFENCE (SHRI ARUN JAITLEY) responding to the issue raised by an hon. Member, said: The matter raised by the hon. Member is serious, however, the facts told to him are perhaps not sufficient and substantive. The Tax Department has not carried out any search on any resort or against any MLA from Gujarat. However, income tax search has been carried out against a Minister of the Karnataka Government and his partners. Besides, a search is going on at 39 other places. Whenever a search is carried out and recoveries are made, the concerned person is confronted so as to take his statement.

However, in this case, the person against whom search was being carried out, was hiding in a resort. As such, in order to take his statement and get him to his residence, income tax officer went to the resort. When they reached over there, that person was tearing some papers. The torn papers and the documents which were being torn have been recovered in the 'panchnama'. He was taken to his home from there. At present, there is no income tax officer over there and this raid is going on at 39 other places. This should not be linked with any election in

Gujarat, this should be linked only with economic offence.

*MATTERS UNDER RULE 377

1. SHRIMATI RITI PATHAK laid a statement regarding need to ensure

the share of farmers in the profits on final food products.

2. SHRI BIRENDRA KUMAR CHOUDHARY laid a statement

regarding need to review the defence preparedness of our armed forces in

view of the border standoff with China at Doklam and also utilize

diplomatic channels on the issue.

3. SHRI HARISH MEENA laid a statement regarding need to provide

basic civic amenities in Rajaurgarh Gram Panchayat in Dausa

Parliamentary Constituency, Rajasthan.

4. SHRI OM BIRLA laid a statement regarding making available loans to

farmers at concessional rate.

* Laid on the Table as directed by the Chair. 5. SHRI SUBHASH CHANDRA BAHERIA laid a statement regarding

need to obtain consent of customers before conversion of Jan-Dhan bank

accounts into saving account.

6. SHRIMATI SANTOSH AHLAWAT laid a statement regarding need to

accord approval to the Kumbha Ram Lift Canal Project in Jhunjhunu

district of Rajasthan.

7. SHRI RAMDAS C. TADAS laid a statement regarding need to start

Lanco Vidarbha Thermal Power Station in Wardha Parliamentary

Constituency, Maharashtra.

8. SHRI RAVINDRA KUMAR RAY laid a statement regarding need to

include construction and renovation of small water bodies for irrigation

purposes under Pradhan Mantri Krishi Sinchayee Yojana.

9. SHRI MANSHUKHBHAI DHANJIBHAI VASAVA laid a statement

regarding need to repair and reconstruct the stretch of National Highway

No. 753B in Bharuch Parliamentary Constituency, Gujarat.

10. SHRI NISHIKANT DUBEY laid a statement regarding need to

expedite completion of pending railway projects in Jharkhand.

11. SHRIMATI ANJU BALA laid a statement regarding need for

simultaneous elections to Lok Sabha and State Assemblies.

12. SHRI VISHNU DAYAL RAM laid a statement regarding need to

expedite Kanhar Barrage Project in Garhwa district of Jharkhand. 13. SHRI SUSHIL KUMAR SINGH laid a statement regarding renovation

of historical temples and tourist places in Gaya and Aurangabad district

of Bihar.

14. SHRI PRAHLAD SINGH PATEL laid a statement regarding need to

reduce the minimum age-limit for physically challenged persons to avail

the benefits under Pradhan Mantri Awas Yojana.

15. SHRI HUKMDEO NARAYAN YADAV laid a statement regarding

need to confer Bharat Ratna Award on Dr. Ram Manohar Lohia,

Chaudhary Charan Singh and Karpoori Thakur.

16. SHRI BHAIRON PRASAD MISHRA laid a statement regarding need

to establish a Kendriya Vidyalaya in Banda district, Uttar Pradesh.

17. DR. SHASHI THAROOR laid a statement regarding outbreak of

vector-borne disease in Kerala.

18. SHRI B. N. CHANDRAPPA laid a statement regarding need to provide

financial assistance to Karnataka affected by drought.

19. SHRIMATI K. MARAGATHAM laid a statement regarding need to

withdraw GST imposed on textile products.

20. SHRI P. R. SUNDARAM laid a statement regarding need to protect the

interests of domestic poultry industry.

21. DR. RATNA DE (NAG) laid a statement regarding making river Ganga

pollution-free. 22. PROF. SAUGATA ROY laid a statement regarding reported changes

recommended in school textbooks.

23. SHRI ARVIND SAWANT laid a statement regarding assessment of

demonetized notes following demonetization.

24. SHRIMATI KOTHAPALLI GEETHA laid a statement regarding need

to provide telephone/digital connectivity in rural areas of Andhra

Pradesh.

25. SHRI P. KARUNAKARAN laid a statement regarding need to achieve

the objectives of demonetization of bank notes.

26. SHRI RADHESHYAM BISWAS laid a statement regarding flood

situation in Assam.

27. SHRI N.K. PREMACHANDRAN laid a statement regarding deep-sea

fishing by foreign vessels owned by Indian Companies.

STATUTORY RESOLUTIONS

Re: Disapproval of Central Goods and Services Tax (Extension to Jammu

and Kashmir) Ordinance, 2017 (Ordinance No. 3 of 2017)

CENTRAL GOODS AND SERVICES TAX (EXTENSION TO JAMMU

AND KASHMIR) BILL, 2017

Disapproval of Integrated Goods and Services Tax (Extension to Jammu and

Kashmir) Ordinance, 2017 (Ordinance No. 4 of 2017)

And

INTEGRATED GOODS AND SERVICES TAX (EXTENSION TO JAMMU

AND KASHMIR) BILL, 2017

SHRI ADHIR RANJAN CHOWDHURY moved that this House disapproves of the Central Goods and Services Tax (Extension to Jammu and

Kashmir), Ordinance, 2017 (Ordinance No. 3 of 2017) promulgated by the

President on 8th July, 2017.

And

Also moved that this House disapproves of the Integrated Goods and

Services Tax (Extension to Jammu and Kashmir), Ordinance 2017 (Ordinance No.

4 of 2017) promulgated by the President on 8th July, 2017.

THE MINISTER OF FINANCE, MINISTER OF CORPORATE

AFFAIRS AND MINISTER OF DEFENCE (SHRI ARUN JAITLEY) moving the motion for consideration of the Bills, said: The Goods and Services Tax was introduced by a legislative process by which we first amended the Constitution of

India. But then because of the provisions of Article 370, the Constitution

Amendment was applicable to the whole country except to the State of Jammu &

Kashmir. Therefore, Jammu & Kashmir, under their Constitution, had to separately undergo a legislative process. Jammu & Kashmir went through that legislative process and finally passed a Resolution in their State Assembly and then brought in a relevant legislation by virtue of which they passed their own State

GST Act. However, corresponding changes had to be made in the Central GST

Act and the Integrated GST Act. Wherever we have mentioned inapplicability to the State of Jammu & Kashmir, that is being deleted because now the CGST Act will also apply to the State of Jammu & Kashmir. Similarly, in the IGST Act, similar corresponding changes have been made which are necessary upon the integration of the State GST into the Central GST so that they can become a part of the IGST chain itself. These are formal amendments which are required to the

CGST Act and SGST Act recognizing the fact that the State of Jammu & Kashmir is integrated and therefore, in pursuant to that integration, the exemption that we have carved out for the State is intended to be taken away. It is a very fortunate development because it brings about the economic integration of the whole country. It is in larger interest because of one reason, if they did not integrate with the national GST, then for goods sold in the State which are manufactured outside the State, they would not get the benefit of input credit. That would mean that at the interim stage, some taxes have been paid on which they would not get credit and on the final product they will be paying their entire tax for a second time.

Inherently, that would have made every product in the State of Jammu & Kashmir costlier. The consumers would have had to pay more. Similarly, the traders would have felt that their trade will shrink because people would have preferred to buy outside the State rather than within the State because the products outside the State would have become cheaper itself. The State itself benefits because this will also impact on the revenue of the State itself. Therefore, in every sense, the people, the

Government, the Assembly needs to be complemented for having taken this decision for having integrated, in the larger interest of its people, the GST into the national process itself.

SHRI ADHIR RANJAN CHOWDHURY: Of course, there is provision in our Constitution that under Article 123 the Government may resort to Ordinance route. But when we are having access to Parliament, we should not frequently resort to Ordinance route. Here lies the problem. The Government has failed to impress upon the State Government of Jammu & Kashmir to get incorporated in the national tax regime which started rolling out from 1st July. The fact remains that nearly 50 per cent of our GDP still remains out of the ambit of the GST.

Given the sensitivity of the Jammu & Kashmir region, I think the Government should have better prepared before introducing this tax regime. There is an apprehension in the minds of the people of Kashmir Valley that whether GST and

SGST will harm the special status provided to Jammu and Kashmir under Article

370 of the Constitution. So, the Government should clear its position in this regard. In India, Jammu and Kashmir is the only State where both service tax and goods tax can be levied by the State Government itself. This facility is not available to other states of India. When this issue was raised in Jammu and Kashmir, there was a severe agitation. Therefore, the Government should strive hard to allay their apprehension and fears and see that the special status, the fiscal autonomy and other facilities enjoyed by the people of the Valley should never be compromised.

SHRI JUGAL KISHORE initiating said: We will not only be stronger from economic point of view through 'one country, one tax' concept but we will also be able to create a sense of unity of the country. The traders who used to pay a number of taxes will get rid of them. This Bill has been introduced here with a view to ensure that the benefit in this regard may accrue to Jammu-Kashmir also along with the rest of the country. All the people of the State appreciate the positive and constructive role of the BJP on the issue of GST in the State. In fact, this is a victory of peoples' voice. The new GST regime has opened up avenues of progress for the State and the doors for stabilizing the State Exchequer. I feel that the State Cabinet has done a great national service by concurring to the adoption of the 101st Constitutional Amendment. I believe that the people will benefit from more money accruing to the State. The people of Jammu-Kashmir are happy due to it. A handful of people are there who are anti-national, separatist and supporting the stone pelters. Perhaps, they do not want us to join the mainstream through

GST. With the passage of this Bill, Jammu-Kashmir will progress and will be stronger economically, it will not remain dependent upon any other and will endeavour to be self-reliant. I support this Bill. DR. SHASHI THAROOR: We disapprove of this Bill as our problem is with the way in which this Government has implemented it. Jammu & Kashmir

Legislature has passed the GST when the Opposition was not present in the

Assembly. The Opposition claimed that this was a violation of Jammu & Kashmir

Constitution and of Article 370 because it eroded the State's special status in terms of its own financial autonomy and its legislative powers which are reserved for the

Jammu & Kashmir Assembly. By impinging upon the power of the State to impose taxes, the Government is violating the fundamental power of that

Government. By extending GST to Jammu and Kashmir, the Centre gains effective control of the taxation in the State. That was, of course, something which was reserved by the Constitution for the State Government. The State has been dealing with conflict for a long time and we must absolutely not do anything that might harm its stability. GST tax rates are far more complicated than it needs to be. This is the Minister who told us that he was opposed to tax terrorism, instead what we are seeing is tax form terrorism. We are seeing something which obviously is going to cause a whole amount of problems, increasing works for everybody involved in business. There is a particular problem when it relates to

Jammu and Kashmir. Its principle revenue generation is tourism which has been affected by terrorism. The 28 per cent GST now is going to affect all of the tourism in Jammu and Kashmir. If this is not rolled back, it is likely to make

Kashmir uncompetitive in tourism. My State, Kerala has become uncompetitive in tourism because the tax rate is driving up the cost beyond any of our neighbouring

States. GST has been applied at the rate of 12 per cent on highway construction which is going to come to a halt. I do want to stress finally that there is also a great threat of litigation coming up about which tax brackets, which companies fall into and how their goods should be categorised. The Government has raised the cost of many goods for GST. The current Government version of GST, I am sorry, would have a negative effect on GDP instead of a positive one and it would actually fulfil the warning of the National Institute of Public Policy. The Parliament today must contemplate the impact of GST on the Centre's relation with J&K before we make the major mistake of passing this Bill without adequate consultation with the stakeholders.

SHRI KALYAN BANERJEE: We are in agreement with GST. We have also agreed to the GST Council. But a problem has occurred now. A very pertinent question has arisen. The GST Council is fixing the rate of taxes. It is neither routed through the Parliament and the State Assemblies, nor is liable to judicial review. Around 60 per cent of goods and services are in the higher tax brackets under the GST regime. People planning to purchase white goods will have to shell out more money as most appliances and durable makers have increased their prices in the new regime under GST. Services to higher education institutes and utility bills will also be taxed higher. Prices of majority of essential drugs have increased up to 2.29 per cent. Prices of essential services have also increased. In essence, the tax rate of a large number of goods and services has increased under GST. I would also like the Minister of Finance to clarify today whether advocates and senior advocates have to pay GST or not? I am not against the GST and I have said so. I will request the hon. Finance Minister to kindly reconsider the fixation of rates made by the GST Council itself. This needs reconsideration because common people are affected due to this.

DR. J. JAYAVARDHAN: It is a matter of price that a landmark tax reform in the form of Goods and Services Tax has been successfully rolled out across the country, including Tamil Nadu, with effect from 1st July 2017. Check post and various declaration forms will now be a thing of the past. It is a matter of pride that the decision in all the 19 meetings of the GST Council under the chairmanship of the hon. Finance Minister has so far been only through consensus. Fireworks industry, which is largely located in Tamil Nadu, is a labour intensive industry, employing more than eight lakh people. The present rate of GST is at 28 per cent, and it will cost irreparable harm to this sector and the cottage industry. Hence, there should be a reduction in the rate of GST on fireworks. As regards the textile sector, it is requested that the handloom, the powerloom and all job works relating to them may be exempted from tax. I would also urge the hon. Finance Minister to look into the grievances of manufacturers and traders who carry out their business in the rural areas. The arrears receivable from the Government of India as of

August, 2017 in respect of CST compensation of Tamil Nadu is to the tune of Rs.4,988.67 crore. I expect a positive reply from the hon. Finance Minister in this regard.

SHRI TATHAGATA SATPATHY: We are happy that the J&K Assembly had taken such a positive stand and has agreed to make that State a part of the GST set up. Whether we may claim about GST, it is truly not a 'one nation one tax' as is being propounded. Let us take Gujarat as a model for GST. From the 1st of July, the traders have been on strike in most of the Mandis in Gujarat. So, new orders and outputs have also decreased in the past one month. What is happening is, unlike Malaysia and Singapore where GST has been a success, we are keeping so many levels of GST. GST network is virtually a private company. 51 per cent is held by private banks and 49 per cent by the Government. The GSTN will not only be operated by Fintex but, unfortunately, they will also be privy to each and every transaction that involves GST of companies exceeding 20 lakhs turnover. If they tabulate the data, they will be able to tell the history and the functioning of any company in this country. If a rival company comes in and says that they want to buy that data, these GSTN operators will be able to give industrial secrets which are so well-guarded by every other country. Apart from that, this network has been kept out of the purview of the C&AG. Similarly, they have also decided to keep it out of the purview of RBI. Efficiency is nowhere to be seen. Under GST regime we are again burdened with Inspector Raj from 0 to 28 per cent plus GST at various levels killing the small traders, killing the small people and killing the average businessmen. Those businessmen are Indians too. Do you not think that the Government has a responsibility for them also?

SHRI ANANDRAO ADSUL: It is a very straightforward and simple bill.

Hon. Prime Minister had a dream of 'one nation, one tax'. There were many efforts in this direction. Chief Ministers and Finance Ministers of all States were called.

All were made aware of the importance of GST. When it comes to Jammu and

Kashmir, we can understand why it was not implemented there at the same time. It was not possible because of Article 370 of the Constitution. BJP is a partner in

Jammu and Kashmir Government. Why is there delay even then? We spend lakhs and crores of rupees from the consolidated fund of India in protecting Jammu and

Kashmir. We provide special package. We faced a war with Pakistan in 1965. In reality, we were victorious but a part of Kashmir is still occupied by Pakistan.

Pak-occupied Kashmir means our land occupied by Pakistan and terrorist camps have come up there. Terrorism is affecting us for years. We are proud of the surgical strike by our forces. We were shown the video in the Home Ministry in which our Jawans crossed the border and destroyed more than 40 terrorist camps within 12 hours. On the other hand, there is China. This is a majority government hence, Article 370 of the Constitution should be abolished. It is important to roll out GST in Jammu and Kashmir as well, so we are supporting this Bill.

SHRI JAYADEV GALLA: GST has united the fragmented tax structure and created one tax throughout the nation and now it is being extended to Jammu and Kashmir. Now with this Bill, it is truly one tax for the entire nation. With

GST, India is now the single largest market in the world, not the USA or China.

This Bill has been brought to replace the ordinance issued by the President on 8th

July 2017 and it will extend the scope of GST to the State of Jammu and Kashmir.

Agriculture items are removed from the purview of GST. This is very welcome.

But, there are some commodities like chillies, turmeric and red gram which are of agriculture, but the GST Council is not considering them as agriculture commodities. I request the Finance Minister to look into these and remove GST on chillies, turmeric and other non-processed and naturally processed agriculture commodities including tobacco. The proposed five per cent GST on man-made yarn, fabric and readymade garments should be removed. Input credit should not be restricted to 12 months for the builders and credit should be given for all the invoices the stocks of which were held in stock on the appointed day. GST on sanitary napkins and branded vegetables should not be there. I am surprised to see that hybrid and electric cars are being taxed even higher than petrol and diesel cars.

It needs a relook. As many Members have already stated, I too feel that there are still too many rates. I would like you to consider maximum of three slabs instead of six and remove multiple slabs for same goods and services. There is still a need to bring about customer awareness on GST. Malaysia had enacted an Anti-

Profiteering legislation at the time of their introduction of GST. I think that would be something that we should consider as well. At the time of bifurcation, Andhra Pradesh was promised that we would be given industrial incentives in line with

Uttarakhand and Himachal Pradesh but now it is told to us that because of GST that is no longer going to be the case because excise duty exemption is no longer going to be possible. But now, the States are getting GST refund in lieu of those incentives. I would also like to demand, to keep up with the promises made to us and whatever is being given to hilly States like Uttarakhand and Himachal Pradesh the same benefits should be extended to Andhra Pradesh and Telangana.

SHRI MEKAPATI RAJA MOHAN REDDY: Jammu and Kashmir is the only State that missed the 1st July roll-out date of GST and joined the new indirect tax fold making GST one-tax, one-nation regime. By providing safeguards to the special status to the State, the country has sent out a message to the people of

Jammu and Kashmir that India cares for its sensitivity. The constitutional safeguards for the State as per Section 5 of the constitution of the State which empowers the State to levy tax-shall remain intact. After the roll out of the GST, textile sector in the country has been badly hit and needs to be exempted from the

GST net. Otherwise, the textile sector will be uncompetitive. Items relating to disabled/handicapped persons should also be exempted from the GST.

Unfortunately, the items of luxury are being prioritized instead of aids and appliances that are extremely essential for disabled persons in their routine life.

There has to be a proper coordination between the Centre and States for effective implementation of GST. With these words, I support the Bill. SHRI THUPSTAN CHHEWANG: GST was rolled out throughout the nation on July 1st 2017 except Jammu and Kashmir for Constitutional reasons.

Now, it is being made effective in Jammu and Kashmir as well through a

Constitutional process. A number of intellectuals in the country and some of our senior Members always talk about the interests of Jammu and Kashmir but they know nothing about Jammu and Kashmir's reality. Geographically area of

Kashmir valley is hardly 15 per cent of the entire Jammu and Kashmir. If we go by the population and add up the population of Jammu and Ladakh, it is many times more than that of the Kashmir valley. Whenever an issue related to Kashmir arises they talk of interests of Jammu and Kashmir. Are we concerned for only those who talk of breaking the country? I support my senior colleague from Shiv

Sena. He has said that Article 370 of Constitution should be abolished. Right from the beginning of the process of GST, every party including Congress, every

State has supported it. I fail to understand why Congress Party and National

Conference are towing a different line on Jammu and Kashmir. They are opposing

GST in Jammu and Kashmir just to serve their political purposes. It is also said that Opposition was not present at the time of passage of the Bill in Jammu and

Kashmir Assembly. Why were they not present there? They themselves knew that it is in the interest of the people of Jammu and Kashmir. It is in the interest of nation to roll out GST in Jammu and Kashmir. GST has many benefits but there may be certain sections in Jammu and Kashmir like tourism which may be expecting certain concessions. I would request the hon. Finance Minister to consider their demand. Ladakh is a tough terrain. Cost of living is very high there.

People of Ladakh are mainly engaged in tourism, hotel and small businesses.

Ladakh should be, therefore, exempted from GST for 5 years.

SHRI KONDA VISHWESHWAR REDDY: The State of Jammu and

Kashmir is a politically sensitive area and the economy of the State is fragile.

When GST first came in, the notion was that it is good and there will be better tax compliance and more tax collection which is good for the nation. But after implementation of the GST, we have seen the prices of items rising and it is hurting the tax payer. Because of non-tax compliance, product prices especially in

Tier II cities are much lower than in the cities. In the immediate effect, there is a dip in the Government collection. This can be very detrimental to Jammu and

Kashmir. There is also a barter system in Jammu and Kashmir especially in

Ladakh and other areas. Hence, special care has to be taken in this regard. Many anomalies still exist. One famous brand sells coconut hair oil with a vegetarian mark implying that it is actually edible vegetarian item. That complicates the matter. I hope that issue is resolved by the GST Sectoral Council. The GST

Council should be actually working in a war footing environment and these issues should be resolved within weeks.

SHRI ANURAG SINGH THAKUR: The fundamental principle of the

GST is one nation, one tax and one market and if it has to be achieved then it will be incomplete without integration of Jammu & Kashmir. Dr. Shyama Prasad

Mukherjee had said that there cannot be two Prime Ministers, two flags and two

Constitutions in one nation. Today we have reached the stage where we have one nation, one tax and one market. The whole country has accepted the GST. There have been more registration than the previous number of registration and if the system was not adequate then how it could have happened. It has been possible because there was adequate preparation for it. Representatives and officers of 29 states and 7 union territories took part in the GST Council meeting and determined the rates. The poor is getting the relief. Earlier, the inflation was 10-11 per cent which has come down to one and half per cent. Traders, industrialist, truck drivers and small shopkeepers came to thank me but I alone does not deserve the credit as all the state governments together with the central government passed the GST.

Now, trucks will not stand stationary and transport cost will also come down.

Besides, 17 taxes, 22 cesses and 1150 octrois will be removed. This will surely provide succor to the ordinary people. I am thankful to hon. Minister of Finance that despite implementation of the GST he has given relief to the hilly states like

Himachal Pradesh, Uttarakhand, Jammu Kashmir and North-Eastern states. This was also stated that the retailer would require 24 hours internet connection and he will have to file return 37 times. This is not true. The return has to be filed once in a month and it will get auto-generated twice. Therefore, please correct your facts.

There is an arrangement in the Parliament library for Members to learn about it. This has also been stated that the ID is essential but this was clarified earlier also that the provisional ID will be final GST number. One particular political party and some other parties are deliberately trying to create confusion. GST will benefit Jammu & Kashmir and my sisters and brothers of the state will get more employment opportunities. This is a huge step for economic integration of Jammu

& Kashmir. In fact, this is a fight between the consumers and the separatists and we have to decide whether we are with separatists or with the consumers. I conclude my speech supporting this Bill and congratulating hon. Finance Minister and hon. Prime Minister for it.

SHRI MOHAMMAD SALIM: Several people carry out a negative campaign about the Article 370. The laws-CGST and IGST, we are enacting for the whole country, should also be extended to Jammu & Kashmir. Jammu &

Kashmir assembly will decide about the state GST. 18 per cent GST rate has been levied on the synthetic yarn, majority quantity of which comes from Surat. The rich and superrich people do not use synthetic sarees. They are used by Bengali people and there is 18 per cent tax on it. Similarly, the tax rate levied on essential medicines and pharmaceuticals is not proper. There is a company which after due research had substituted the import of indigenous string. Now the string imported from China will be used in our traditional Indian instruments. Imposition of 18 per cent tax on it will eventually lead to closure of the factory. Bidi industry, transport, fireworks industry of Tamil Nadu and match-box industry also face the similar situation. The small traders with turnover above Rs. 20 lakh per annum have to file their returns online and get their input tax paid by them which make it very difficult. Small, medium and tiny enterprises are also faced with similar difficulties.

SHRI ARUN JAITLEY replying to the combined debate, said: Integration of Jammu & Kashmir with GST has materialized the dream of economic integration of the whole country in terms of tax. One or two hon. Members especially the Members of the Congress Party have raised the issue that this infringes upon the special status of Jammu & Kashmir. I don't think that a national level political party should indulge itself in such issues. As I have already stated that in the state of J & K, this was an augment conventionally given by the separatists that this will lead to a greater integration with India. So, do not go for

GST. It was the PDP and the BJP government which was strongly advocating it. I had also expected the Congress and the National Conference to support this. I will only say that the special status was never intended to create the economic impediments for the state and that the state must economically progress in the larger interest of its people. If J & K had not integrated with GST then, the consumers and the traders of the state would not have got the input credit and the price of the products would have been higher there. Some people have been canvassing on GSTN. I explained yesterday that the GSTN has the massive job to perform. It is correct structure because about 24-25 per cent shares belong to the Central Government and the equal amount belongs to the state governments collectively. So, the company is technically not a government company. 51 per cent share have been given to HDFC, National Stock Exchange and LIC which are credible organization with a condition that the government can take over those shares and increase its own shareholdings to 51 per cent, if necessary. The Board will have a government majority. The executive will be appointed by the government and for any decision to be taken, a government's positive vote is required. I also added one more thing that GSTN will also be subjected to CAG audit. There are glitches in every system but they are always corrected. Therefore, making an issue out of GSTN is not fair. Everyone is saying that there are many slabs. If the government levies the same rate on all commodities then both the rich and the poor will pay the same amount of tax which is not proper. It was thought that there would be multiple slabs in the beginning for the sake of smooth GST.

The slabs of zero per cent and five per cent would always remain there. Thirdly, there are several items which we think are not used by the common man. But now, they are being used by the middle and lower-middle class too. Hence, these should be brought below 28 per cent. I do concede that as it moves forward, there will be scope for rationalizing the rates. But if you had done it immediately and had a single slab or lesser slab, its inflationary effect would have been much higher.

Maharashtra can give a refund to a Marathi film. Gujarat can give it to a Gujarati film. Tamil Nadu can give it to a Tamil film. The all-India weighted average rate of granite was twelve-and-a-half plus fourteen-and-a-half plus two plus cascading effect, 31.6. That 31.6 rate became 28. So, what is the grievance? A disability aid at zero per cent tax will be costlier but at five per cent will be the cheapest. One of the objectives of GST is that you must aid and assist domestic products. If basic

Customs Duty is, let us say, 10 per cent, and the IGST is 12 per cent, then a

Chinese product coming into India will have to be levied at 22 per cent. So, it will be at 22 per cent disadvantage. That disadvantage will help the growth of Make in

India product. If you say that this 12 per cent should be reduced to zero, then the

Chinese product will get a 12 per cent advantage. Regarding sanitary napkin, when it was fixed at 12 per cent, they said please remove it. What will happen to village self-help groups? They are all below 20 lakhs. So, they are all exempted.

Those up to 75 lakhs will have to pay only two per cent. When the Indian manufacturer gets input credit, the rate actually becomes much less. Large Indian producers will pay 12 per cent minus input credit. Since the input is taxed at a much higher rate, most of it will be absorbed. Some minor tax will be left. But if you make it zero, the impact will be that every Indian manufacturer will close down. The Chinese products will become 12 per cent cheaper. I may tell that for small cards, the duty was reduced. Did the company manufacturing the hybrid cars reduce the price? They increased the actual price. Sir with these few words, I commend these Bills for approval of the House.

The Statutory Resolutions were, by leave, withdrawn and the Bills were passed.

STATUTORY RESOLUTION

Re: Disapproval of Banking Regulation (Amendment) Ordinance, 2017

(No. 1 of 2017)

And

THE BANKING REGULATION (AMENDMENT) BILL, 2017

SHRI ADHIR RANJAN CHOWDHURY moved that this House disapproves of the banking Regulation (Amendment) Ordinance, 2017 promulgated by the President on 4th May, 2017.

THE MINISTER OF FINANCE, MINISTER OF CORPORATE

AFFAIRS AND MINISTER OF DEFENCE (SHRI ARUN JAITLEY) moved that Bill further to amend the Banking Regulation Act, 1949 be taken into consideration.

SHRI ADHIR RANJAN CHOWDHURY: The Government itself is not serious regarding the Banking Regulation Ordinance. I want to know from the

Minister of Finance whether the legislative powers available with the Government were inadequate to deal with the NPA issue. The credit growth of Banks are on the decline. There is no money for investment. The intention of the Government in this Act is that the Central Government may authorize the RBI to issue directions to banks for initiating proceedings in case of a default in loan repayment. Second, the RBI may issue directions to banks for resolution of stressed assets. NPA's proportion of total loan extended by banks have increased from 2.3 per cent in

2008 to 7.5 per cent in 2016. If the defaulter is unable to repay the loan despite restructuring, banks may also take legal action. According to RBI, loans extended by public sector banks account for 88 pe cent of the NPA in the country where the

Government is the majority shareholder. I will argue that the Government had the authority to initiate recovery of 88 per cent of NPAs without having the Centre to authorize the RBI under the Ordinance. Banks should have the independence to take business-related decisions. Banks are best placed to assess the likelihood of recovery. The larger the losses the higher the amount of capital that is needed by the banks to meet the Reserve Bank of India's guidelines on provision requirement.

While the Government has promulgated the Ordinance, it has not made any commitment to additional capital to support the Resolution. I would like to ask the government that why NPA is increasing days by day and why not the government is taking steps for recapitalization? Government has provided only 10,000 crore rupees in the budget whereas nearly 8 to 9 lakhs are needed for recapitalization.

So, this regulation is not going to benefit in any manner.

DR. UDIT RAJ initiating said: I would like to thank the government for bringing this Banking Regulation Amendment Bill and it was much needed. With this the banks will become fearless and they will be in a position to resolve the problem of NPA. Through this Bill, RBI has been accorded arbitrary powers because due to the fear of vigilance agencies and CBI, banks are not settling their debts. Secondly, this is fact that banks have shortage of experts and insolvency professionals because incumbent officers are trained for different things and not for liquidation, assessment, valuation and sales. Therefore, under the guidance of

RBI, a oversight committee will be formed consisting of insolvency professionals, eminent persons and experts. All of them will get together and they will be better equipped to redress this problem. As far as Insolvency and Bankruptcy Court is concerned, the court seeks to consolidate and amend laws relating to reorganization and insolvency resolution of corporates, persons and partnership firms. Besides, timeframe of 180 days have been prescribed for Debt Recovery

Tribunals which can be extended upto 270 days only. Now the economy is changing and in this scenario it is far more necessary to have such laws and such amendments.

SHRI B. SENGUTTUVAN: The Bill is intended to plug the glaring loopholes in the banking practices which undermine the banking system as a whole. The provisions of the Amendment Bill are intended to address the high level of NPAs faced by the banks. The stressed assets and the non-performing assets of the Indian banking companies have touched an all-time high of Rs. 6.46 lakh crore. This has brought about a situation where the very existence of many of the lending banks is threatened. The bulk of the stressed assets and the NPAs emanate from the corporate sector. It is understood that a handful of corporates account for nearly a third of the loan defaulters. The reasons for the high incidence of NPAs are not far to seek. Diversion of bank loans, mismanagement and sometimes, global developments and governmental policies also contribute to the rising NPAs. The Bill seeks to add two new provisions to the Banking Regulation

Act, 1949. It inserts after section 35A, sections 35AA and 35 AB respectively.

We welcome the initiative of the Finance Ministry in piloting this Bill. However, one cannot help thinking that the huge NPAs are due to the declining standards of morality in our life. So, I would strongly urge the Government to consider an enactment that would penalise the loan defaulters to the banking institutions by creating a statutory offence in the Banking Regulation Act.

SHRI GAURAV GOGOI: Non-performing Assets have become a biggest challenge for the economy of our country. During the last two years NPA has recorded an increase of 100 per cent. As per the RBI financial stability report, this problem may increase in coming years. Now 24 public sector banks are reeling under the biggest problem of NPAs in which government is the majority stakeholder. Moreover, responsibility to recover the bad loan lies with the public sector bank and not with the RBI because profile of the client is maintained by the bank itself. Similarly, it is the duty of the regulator to frame the guidelines in this regard whereas government is saying that RBI will directly intervene in the strategy making process for loan debt recovery. This will open up RBI to more litigation. Again, I would also like to ask the government to reveal the names of those big companies which have posed a big challenge for the economy of our country. With regard to insolvency and bankruptcy, I would like to say that it is wonderful document but there are great challenges in successfully implementing it.

So government should meticulously plan in this regard. These are the sectors which provide employment to the people. But the Government is not according importance to these sectors as we do not have a full time Finance Minister. The

Government needs to pay attention towards it. At last, I would like to say that the loan waiver of big companies are held to be as good policy by the advisors of Niti

Ayog but the similar step taken for the miserable farmers is called populist one by the same advisors. Such dual practice is tarnishing the image of the hon. Prime

Minister because the Niti Ayog is called to be the brain child of the hon. Prime

Minister. Besides, the problem of non-performing assets needs to be pondered over seriously.

PROF. SAUGATA ROY: I said that this was neither a necessary Bill, nor was there any hurry to issue an Ordinance. The Government could have taken steps against NPAs under existing laws. The total NPA in financial year, 2016, for public sector banks was 9.83 per cent of gross advances. So, measures need to have been taken but what was the Government doing for three years as the NPAs rose? The total NPA of just 12 companies namely Bhushan Steel, Lanco, Essar

Steel, Bhushan Power and Steel, Alok Industries, Amtec Auto, Monnet Ispat,

Electrosteel Steels, Era Infra, JP Infratech, ABG Shipyard and Jyoti Structures is

Rs.2,53,729 crore. It is these 12 companies against whom action has been taken under the Insolvency and Bankruptcy Code. But unfortunately, this is has the possibility of getting stuck in court because there is already a case in Ahmadabad

High Court. That is why, I was saying that the Government had several instruments in its hand for three years or even before this law was enacted. As a regulator, RBI is responsible for maintaining financial stability while banks have the flexibility to make business decisions. But the appropriateness of RBI directing banks on default, which is a business decision, needs to be examined.

The decision of going to the Insolvency and Bankruptcy Board should be left to banks themselves.

SHRI RABINDRA KUMAR JENA: This Bill is, in fact, very significant in the sense that in a country of our sixe which has a budget of about Rs.20 lakh crore. The stressed assets in the system is to the tune of Rs.10 lakh crore. So, we are virtually sitting on a volcano of liability in the country as on today. Before I go into the merit of the Bill, let me raise one question as to whether the Ordinance was necessary which was promulgated on 4th of May. Section 35 of the Banking

Regulation Act already empowers the Reserve Bank of India to direct banks. So there is no need to bring in Clause 35AA and Clause 35AB. Out of total NPAs, 88 per cent NPAs are the public sector banks, where the Central Government is the majority shareholder. The Bankruptcy Code provide a provision by which the banks alone can go and initiate proceedings against the defaulters. Is there any necessity for doing so and the banks are scared of taking action against the defaulters for fear of ED, CBI and CVC. This is the basic question I am trying to understand. Rs.10 lakh crore are in distress, it is important that we spend some quality time in discussing it and finding a way forward. I would like to suggest that this Bankruptcy Code Bill is not going to sort out your problem entirely. This may give you a limited success but it would not give you a full success. I would like to request you to please consider handling of MSME Sector, which is the backbone of the economy of our country.

SHRI ANANDRAO ADSUL: I rise to support the Banking Regulation Act,

1949. The only amendment is in the Section 35(a). The Board of Public Sector banks comprises even members nominated by the Government and moreover there is the control of the Reserve Bank of India on these banks. Despite the existence of all such provisions, the NPA goes up under the guidelines of RBI. Who is responsible for this? Whosoever is responsible for this has provided loans unscrupulously. Yet, no action is taken against them. The urban cooperative banks and multi-scheduled cooperative banks are either dissolved or merged for such unscrupulous acts. There is no public sector banks against which any legal action has been taken. A number of cooperative banks have been set up under the registration of Societies Act but they operate under 'Banking Regulation Act,

1949'. (Speech unfinished)

The discussion was not concluded.

ANOOP MISHRA Secretary General

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