Why in news?
The finance ministry considers converting the Goods and Services Tax Network (GSTN) into a government-owned company.
What is the GSTN at present?
- The GSTN is a not-for-profit organisation at present.
- It provides the technological support to the GST.
- The government holds a 49% stake, with Centre and states share of 24.5% each.
- The balance 51% is held by five non-government institutions.
- These are LIC Housing Finance, HDFC, HDFC Bank, ICICI Bank and NSE Strategic Investment Co Ltd.
What is rationale behind the recent proposal?
- The Goods and Services Tax Network handles massive amounts of data.
- It deals with crucial data sets such as indirect tax returns and refunds.
- By now, over 10 million businesses have already registered on the GSTN portal.
- GSTN is apparently a repository of sensitive data on business entities nationwide.
- It is of strategic importance to the country.
- The government is thus concerned about the safety and security of “sensitive” data.
- It thus considers limiting the ownership to the government.
Is the logic valid?
- The implicit assumption here is that data is safer with a government company than with private sector entity.
- This seems to be illogical as there is no evidence as yet that safety of data is in any way related to the ownership of the GSTN.
- The government and private entities do not function under different data security norms.
- Moreover, government’s own data security systems do not have an appreciable track record.
- Evidently, several government websites have been routinely hacked.
- The controversy over leaks in Aadhaar data further undermines the confidence in government’s ability to be a safe custodian of data.
- Moreover, changing the ownership will likely hurt the freedom and efficiency with which the GSTN needs to work.
- This is especially significant given the fast-paced demands of businesses.
What is the way forward?
- In any case, the government already enjoys strategic control over the GSTN due to its 49% stake.
- Also, as per rules, the quorum for a board meeting requires that at least half of the government-nominated directors be present.
- Notably, most large government information technology related projects have been given to private software firms in the past.
- Given all these and the fact that the GST regime is, at last, settling down, the government should only build on this stability, and not risk it.
Source: Business Standard
