Union finance minister Nirmala Sitharaman in Lok Sabha
NEW DELHI: Govt does not wish for India to ever face UPA-era shortages of weapons, ammunition and equipment again, and wants a steady flow of revenue to keep its defence capabilities ready to meet the needs of modern warfare, finance minister Nirmala Sitharaman said Friday as Lok Sabha passed a bill to levy a cess on pan masala manufacturing units to augment national security and public health.In her reply to the debate on the ‘Health Security se National Security Cess Bill’, Sitharaman spoke at length on the govt’s defence priorities and touched on Operation Sindoor to emphasise that modern conflicts are becoming capital-intensive due to the domination of precision weapons, autonomous system, space assets and cyber operations, making it imperative to constantly update technology.
She said, “We need resources and we need to understand that it does not come cheap. Therefore, more resources towards the specific objective of strengthening defence will have to be made.”Highlighting PM Modi’s Independence Day announcement of Mission Sudarshan Chakra to protect infrastructure and key installations, she said, “Enemy should not be given a chance to penetrate. If an enemy dares, our ‘sudarshan chakra’ will destroy them. That is the capability we want to bring in.” The new cess on pan masala was needed as the effective tax incidence on it will fall from 88% to 40%, the maximum GST slab for demerit goods, once GST compensation cess ends, making it cheaper. It will be detrimental for public health, she told the House.Opposition members offered a variety of criticisms of the bill, including a swipe on whether pan masala consumers are going to finance national defence, and if govt has become so desperate it is raising revenue through such a cess.Addressing the criticism, she said it is her duty as finance minister to raise revenue to meet various demands. No govt, since 1947, has given so much relief in direct and indirect taxation within a year, she said in reference to the big relief in income tax and GST rationalisation that made everyday items cheaper. The purpose of the bill is to create a “dedicated and predictable resource stream” for two domains of national importance — health and national security, she said, terming the pan masala industry as highly evasion prone. Turning to CAG reports and statements of govt functionaries from the UPA era, she said soldiers were left in the Himalayan cold without boots, woollens and, at times, food for want for resources. Artillery guns were not procured for decades after the Bofors episode and a then minister said the country does not have enough money for procurement, she added.As health is a state subject, the govt will be sharing a part of the cess with states, she said. Centre has provided more than what it collected from the cess between 2014-15 to 2025-26.Reeling out data of transfer of funds to states, she said Rs 6.4 lakh crore in cess was transferred, while the govt collected Rs 6 lakh crore from health and education from 2014–15 to 2025–26.
