Punjab appoints Arbind Modi, who simplified India’s tax law, chief advisor on fiscal affairs

Modi, a former member of the Central Board of Direct Taxes (CBDT), had helped then finance minister P Chidambaram draft a new direct tax code, but the Bill, which underwent many changes was not passed by Parliament. In 2017, Modi was asked by the Narnendra Modi-led government to head a task force to draft new direct tax law to replace the existing Income Tax Act, which has been in force since 1961.

Punjab is a debt ridden state, with its burden set to reach Rs 3.65 lakh crore by the end of this fiscal. The government has been borrowing money to pay off the debt and accruing interest. The government is now hoping to straighten the mess with the help of the top taxman.

A senior government official in the finance department said, “Modi can help us deal with the fiscal crisis. The government had reached out to him. He is willing to help Punjab without taking any money. Punjab needs an expert like him”.

As per the government notification, both Modi and James would be working on honorary basis. They will be entitled to TA, DA and reimbursement of expenses as per rules as admissible to a Cabinet Minister, Secretary rank official, respectivly.

“Since they will be giving their services to Government of Punjab on honorary basis, they would be free to pursue their professional career outside the Government of Punjab to the extent there is no conflict of interest. They would be provided necessary residential facility, secretarial staff, vehicle etc to discharge their duties assigned as per their entitlement,” read the notification.

Earlier, Punjab government had contacted top economist Arvind Subramanian to help the fiscally stressed state. Chief Minister Bhagwant mann had also held a meeting with him in Chandigarh in June last.

The state government had sought from Subramanian to help the state with solutions so that it is able to spend on capital expenditure and contribute to the development of the state. With freebies bleeding the state exchequer dry, the state was unable to spend much under the capital expenditure head.

The issue of freebies in the form of power subsidy to agriculture sector and domestic sector to the tune of Rs 20,000 crore was also discussed with him. Discussion were also held on how to increase collections from its own tax resources.

The economist, it was learnt, had asked the CM and the FM as to how they were planning to keep the state afloat financially with so much of burden of subsidies. A suggestion of rationalisation of freebies was also made. However, the suggestion did not find any response from the CM.