Political strategist Prashant Kishor has forecasted major changes in the third term of Prime Minister Narendra Modi, including potentially placing petroleum under the Goods and Services Tax (GST) and implementing vital restrictions to the financial freedom of states.
In an interview with India Today, Kishor shared his predictions of structural and operational changes in the Modi government's anti-corruption approach.
"I think the Modi 3.0 government will start with a bang. There will be more concentration of both power and resources with the Centre. There might also be a significant attempt to curtail the financial autonomy of the states," Kishor said.
Kishor, who managed Narendra Modi's 2014 campaign, stated that there is no widespread anger against the Prime Minister and predicted the BJP would win around 303 seats. He also mentioned that states currently have three major sources of revenue: petroleum, liquor, and land. "I wouldn't be surprised if petroleum was brought under GST's ambit," Prashant Kishor said.
Currently, petroleum products such as petrol, diesel, ATF, and natural gas are not covered by GST. Instead, they are subject to VAT, Central Sales Tax, and Central Excise Duty.
Although the industry has long requested that petroleum products be included under GST, states have opposed this idea because it would lead to a significant loss of revenue. If petrol is brought under GST, states would become more reliant on the central government to receive their share of tax revenue.
Currently, the highest GST tax slab is 28%, while petrol and diesel are taxed at over 100%.
He also predicted that the central government might delay transferring resources to states and tighten the Fiscal Responsibility and Budget Management (FRBM) norms. The FRBM Act, enacted in 2003, sets limits on the annual budget deficits of states.
"The centre may delay the devolution of resources and off budget borrowing of states will be made tighter," Kishor predicted.
Kishor also predicted that India will become more assertive in handling geopolitical issues.
"At the global level, India's assertiveness will increase while dealing with countries. There is chatter among diplomats of an aggressive Indian diplomacy bordering on being arrogant," he said.