Sushil Kumar Modi: The architect of states’ consensus on GST

Prime Minister Narendra Modi on Monday recalled the “active role” of Bihar’s former deputy chief minister Sushil Kumar Modi in the implementation of India’s biggest indirect tax reform – the Goods and Services Tax (GST) – on July 1, 2017.

The Bharatiya Janata Party (BJP) leader from Bihar and a Member Parliament (Rajya Sabha) was deeply involved in the GST implementation and subsequent fine-tuning of the indirect tax. Heading the empowered committee of state finance ministers, the all-powerful federal body that existed before the GST Council, his role was crucial in building consensus among states so that a unified taxation system could be established.

Union finance minister Nirmala Sitharaman recalled his active role in not just establishing a uniform indirect tax regime across the country, but also resolving contentious issues by listening to divergent views in the Council and bringing consensus among member states.

“Former Dy. CM of Bihar and Member of Parliament (RS) @SushilModi ji is no more. As Finance Minister of Bihar, his participation in the @GST_Council was well informed and thoughtful. He took a keen interest in debates, particularly on fiscal matters. Condolences to his family on this hour of grief,” Sitharaman said in a post on social media platform X (formerly Twitter).

Sushil Kumar Modi had immense confidence in the GST reforms, and he believed that parties opposing GST in public forums were also supporting the system in the GST Council. In an interview with Mint (a sister publication of HT) on January 21, 2019, he had said, “I do not think politics will influence decision-making [on GST matters]. Even Congress party ministers are very reasonable. They may say something outside the meeting, and sometimes in the meeting too, but decision-making is by consensus.”

The GST was rolled out by the Narendra Modi government and the then finance minister Arun Jaitley was leading the reform. Sushil Modi was his trouble-shooter for building consensus among states on divergent matters and smooth implementation of the new tax regime. That was why, when Jaitley constituted a Group of Ministers (GoM) to monitor and resolve the IT challenges faced in the implementation of GST, Sushil Modi was appointed as its convener. As a result, a strong IT backbone of GST could be established with an exemplary compliance system.

Sushil Kumar Modi had been always optimistic about the success of the GST Regime and said the reform was irreversible. Speaking to Mint on May 30, 2023, he had said, “The six years of GST has been a successful journey. Some leaders of Congress said that GST was ‘Gabbar Singh Tax’. Some even said when they come to power, they will scrap GST. I do not think anybody can dare to scrap GST. The design and architecture are very different from other countries. We do not require drastic changes in architecture. Here and there, minor tweaks are required, primarily regarding tax slabs. From four slabs, we may bring it down to two or three slabs.”

In that interview, he summed up his experience of rolling out the GST regime. “The preliminary decision regarding GST started taking place in 2005 or 2006, but the implementation took a long time. It was the most difficult proposition, and I must thank Arun Jaitley. If Arun Jaitley was not there, it would have been impossible to bring all states under one platform,” he said.

“All the rules are similar, and even when the constitution amendment was introduced in the Parliament, there was no note of dissent. Each state and every political party supported the bill. It was only the convincing power of Arun Jaitley, and he was very flexible,” he added.

Apart from GST, Sushil Kumar Modi used his energy and expertise to resolve several diverse issues. He was a member of the Consultative Committee for the Ministry of Cooperation and was also associated with the National Khadi and Village Industries Board and the National Tiger Conservation Authority.

In Parliament, he was associated with the Committee on Finance, the Committee on Rules, the Committee on Transport, Tourism and Culture, and the Committee on Urban Development. He was also the chairman of the Committee on Personnel, Public Grievances, Law and Justice.

Expressing condolences on his demise, senior advocate and Rajya Sabha MP Mahesh Jethmalani said, “He was a prolific speaker in the House on wide ranging subjects and an inspiring Chairman of the Parliamentary Committee on Law and Justice of which I was a member.”