Implementing VAT

Sir, — The announcement of a new date for the introduction of value-added tax (VAT) and its postponement have become a regular feature now. In India, economic decisions are not based on economic rationale, but are influenced by political compulsion. Both VAT and the budget are the best reflectors of this.

There has always been inadequate preparedness for implementing VAT. Once we introduce it, the efficient institutional framework will automatically evolve. Capital market reform is the best example of this, where the market and institutions have gradually evolved overcoming various hurdles. We should not let political opportunists hijack VAT in the guise of feeble economic argument. VAT has huge potential for solving the revenue problems of States.

Akhilesh Kumar Jha,

Darbhanga, Bihar

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