Subramanian Swamy rightly said replace private bank's shares in GSTN with PSBs

GST bill became law previous week after president signed it post ratification by the majority of states. GST brings most of the indirect taxes under one roof. As always, the banks will be playing a major role in collecting the taxes and providing the data of collected taxes to the concerned departments. This needs a huge infrastructure to maintain, process, analyse and to connect the government department with the banks network.

Goods and Services Tax Network, (GSTN) is a Section 25 (not for profit), non-Government, private limited company. It was incorporated during the previous UPA regime to provide IT infrastructure and services to the Central and State Governments, tax payers and other stakeholders for implementation of the Goods and Services Tax (GST). We can see the first two parties, state and central governments in the share holdings of GSTN. The important stake holders- Public Sector Banks which collects the taxes for the government are not in the scene. The government of India holds 24.5 per cent stake in GSTN while states together hold another 24.5 per cent. Balance 51% equity is with non-Government financial institutions like ICICI Bank, HDFC Bank, HDFC Ltd, LIC Housing Finance and NSE SIC.

GSTN has applied for loan of Rs 550 crores from IDFC. The central government is standing as guarantor for this loan though it is not a majority share holder. This is questioned by Mr Subramanian Swamy- why the majority stake holders are not the guarantors for this loan? In a way he right, but the government's interest in faster implementation of GST is not questionable. His comments on shareholding of GSTN makes the issue interesting.

Subramanian Swamy

As Mr Swamy's says partnering with private institutions to set up an institutions like GSTN to handle highly sensetive data is the matter of worry. I am not saying ICICI, HDFC or LICHF are unreliable, but when someone inside the house are capable of doing some job, calling an outsider to do the same job makes no sense. Firstly, public sector financial institutions holds the majority of share in banking industry and they are capable of partnering with government for implementation of such a high aimed mission like GST even during the period of high bad debts. Secondly, it is not ICICI or HDFC would be collecting the majority of the taxes, but it is definitely SBI, a public sector bank will be the indispensable tax collector for the government even in future. Third reason is by making public sector banks to hold stakes in GSTN, goverment would have had better control over it. Mandatory audit by CAG is always better than an offer to CAG audit. Mr Swamy's proposal to replace GSTN share holding of  private banks with public sector banks makes some sense because tax data is sensitive and also confidential. 

Modus operandi of MGNREGA at Grass Root Level

I don't think it is necessary to explain anything theoretical about one of the prestigious project of Government of India for fulfilling the right to work under MGNREGA- Mahatma Gandhi National Rural Employment Guarantee Act. You will get millions of pages over internet on the theoretical functioning of the project. But I felt it necessary to draw a sketch on how it actually functions at the grass root level.

The government seems to be relaxing by believing that at least 100 days of guaranteed wage is reaching the beneficiaries after making it mandat

ory to disburse the wage through the bank accounts. When the project was started, the wage was being given in the form of food grains like wheat, jowar and rice. The officials/sarpanchs/panchayat members/local contractors used to complete the works  using the the machines like earth movers or some times completion on on papers and make money by selling those grains. Later wage in the form of money was introduced, it was much easier than earlier. The MGNREGA card holder to put his thumb impression or sign in non vernacular language and get the commission for signing, not the complete wage as guaranteed. No need to say again where it reached?

Did the direct transfer of wages through bank accounts have solved the problem? Yes, off course! That of contractors!

What is the Modus operandi?

Mr B, a Panchayat Member approaches Shri/Smt A, who has MGNREGA card, to open an account in a Nationalised Bank. The bank opens Shri/Smt A's account who had just learned to move the pen to sign in non vernacular language and issues an ATM card. Mr B deposits the minimum amount in the account and pays one days wage to Shri/Smt A for taking trouble of opening a bank account. Mr B grabs ATM card along with its PIN and the bank passbook of newly opened account. Panchayat officials identifies some work say 'cleaning of sewage on both side of the village road' to be done under MGNREGA. Mr B pays the pre-decided standard bribe to those officials and give the list of the MGNREGA card holders along with their account numbers. He, being the owner of the JCB gets it done in the matter of an hour. Or if he is influential, he gets id done on papers. Few days later he visits the ATM and withdraws the wages of hundred of MGNREGA beneficiaries without much effort than entering the ATM PIN. And it repeats.

Rahul save MGNREGA!