Is Nirmala Sitharaman right about inflation and GST?

A video of Finance Minister Nirmala Sitharaman saying that the DMK government has imposed additional prices on dairy products along with GST during the debate on inflation in the Lok Sabha on August 1 is going viral on social media.

GST Council

Nirmala Sitharaman, responding to allegations raised by opposition parties that GST has been levied even on essential goods, and that the price of the products has gone up sharply, said, “This is not a decision taken by the central government or Prime Minister Modi. The decision was taken unanimously in the GST Council, which includes Ministers from all states including the DMK minister.”

As for the GST Council, there is a total of 33 members, Central Finance Minister and Deputy Finance Minister. Along with them are representatives of 31 states and union territories. A 75% vote is required for any decision to be taken in the council. Two members of the Central government have one-third (33%) of the total votes. Only 67% vote is available for all states combined.

BJP is in power in majority of states and union territories in India. There is a change in the regime in a few states like horse-trading. This being the case, the decisions taken by the Central Government in the GST Council will be easily accepted if they get the support of the BJP-ruled states, as well as the states that are in a pro-BJP position. With majority support for the ruling BJP government, the Council’s decision cannot be blocked even if a few states protest.

Commenting on Nirmala Sitharaman’s GST Council speech, Tamil Nadu Finance Minister PTR said, “The Pitman Committee will be formed as the first step to develop the GST tax reform. It features IAS officers from some states including Tamil Nadu. In the discussion, the Tamil Nadu official opposed the tax change. But the decision was taken based on the majority and the next step is taken to discuss it with ministers. I am (Tamil Nadu Minister) not on that committee. Even so, I have sent a written letter stating that Tamil Nadu opposes all this.

After this, all the 56 recommendations of the committee were placed on a single agenda in the full council meeting. All these 56 recommendations were given the option of a single yes or no vote overall. In that scenario, all the states have indeed taken all the 56 recommendations as a single decision. This is one of those 56. The Finance Minister, who clearly stated this outside the House, is saying that it was brought directly without any opposition in the Lok Sabha.”

Reduction in Petrol, Diesel Tax

The Finance Minister has said that the BJP government has reduced the tax on petrol and diesel twice, but the DMK government has not reduced it as promised in its election manifesto.

Read more: BJP spread rumours that Tamil Nadu government has increased the tax on petrol and diesel!

However, the previous year Tamil Nadu government had reduced the VAT on petrol by Rs 3. And, the previous AIADMK government had raised VAT on petrol and diesel twice. But the BJP members do not talk about it. They are talking about the Tamil Nadu government which reduced the VAT on petrol claiming that they did not reduce the tax.

Inflation

Talking about GST, Nirmala Sitharaman said, “GST tax of 5% has been levied only on packed branded products. This is not a decision taken by the central government or PM Modi. It was a unanimous decision in the GST Council which has your (DMK) Minister.

I am referring to the price of the items published in the newspaper today. The old price of one kg curd is Rs.100, and if 5% GST is imposed on it, it will be Rs.105. But, you sell it for Rs.120. Similarly, the old price of Lassi is Rs.27. If GST is levied at 5%, it should be sold at Rs 28.35, but you are selling at Rs 30. Next is buttermilk, if you put 5% tax on buttermilk which is sold at Rs 10, it will be Rs 10.50, but you sell it at Rs 12. You are selling at higher prices by blaming GST.”


When searching for the price listed by Nirmala Sitharaman, the old price of curd, lassi, buttermilk etc. was found on the Aavin company’s website. This old price is in line with what Nirmala Sitharaman said.

Similarly, after the imposition of GST 5%, in the revised price list of Aavin on July 21, it is mentioned that a kg of yogurt is sold at Rs 120, lassi at Rs 30 and buttermilk at Rs 12. This is in line with what Nirmala Sitharaman said.

Aavin products are priced with the 5% GST levied on branded packaged products. The new price inclusive of tax has been rounded off while arriving in paisas. But Aavin company is charging Rs 1 to Rs 15 in addition to the full price. This will add more burden to the people.

As Nirmala Sitharaman said, the Aavin company has charged a surcharge on milk products with 5% GST. However, it is not appropriate for the minister to justify the imposition of GST by keeping the price charged in one government company, as if this is happening all over Tamil Nadu. Also, the question asked by the opposition MP is for India as a whole. But the finance minister has portrayed herself against a party and a state.

Also, GST was levied not only on essential items such as dairy products but also on labelled packaged rice. The imposition of 5% GST on food products may result in an increase or decrease in the weight of the products not only by government companies but also by private companies.

Apart from this, the GST rate was increased from 12% to 18% even for pencil sharpeners used by school children.

The government is trying to raise taxes in the country and make it a political debate. But people are affected by all this!

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