We talk about over 8 percent or even double digit growth rate in the country and there is no disagreement among policymakers about the importance of speedy socio-economic reforms to achieve this target. However, many importance Bills have been blocked in Parliament. For example, Goods and Service Tax (GST) Bill. The introduction of GST regime will open new vistas for rural people. It is not about free and smooth movement of goods across the country which will benefit the rural consumer but many new enterprises, units and businesses will come up in remote villages also and their products will fetch them better margins that are missing presently.
Our present regime is very cumbersome, from sales tax, excise duty, octrai, C-form there is a range of duties and taxes to be paid by traders and businessmen. Presently, a professional set up requires to pay multiple taxes and abide by large set of rules. Rural economy was badly affected with this current system. We can see this at Agriculture Produce Marketing Committee (APMC). Even model APMCs did not help our farmers. This is because, to a large extent, trading activities in the country are controlled by a few families whom I refer as ‘Consignment Agents’ and you can easily find them anywhere in C&F stockists or wholesale dealers and even at mandis. So it is an essentially middlemen regime and first of all the GST will break this system in a single stroke. Rural people will be great beneficiaries of this.
Just imagine, a farmer will easily be able to send his produce anywhere in the country, just showing the paper that he has paid the GST. No harassment by Transport or Police officials at any point. Likewise, an educated youth from a village can set up his own enterprise with ease. Presently, it was difficult for such educated youth to break the conventional Bureaucrats – ‘Consignment Agents’ nexus and enter into some business. In nutshell, the GST would provide more opportunities for self-employment and small enterprises for rural people.
Quality of production would also be increased. Good quality products will result in better margins in absence of middlemen who used to ruin handsome portion of margins for the producer and consumer as well. Overall, the GST appears to be pro consumer. I would pray that good sense prevails among our law makers and policymakers so that the GST regime is introduced as soon as possible. This would certainly bring in cheers in rural markets and among people residing in our hinterland. A boost of 2 percent is expected to our GDP with the GST regime in place.
(Sanjay Sabran, is a financial expert and head of Sanjay Sabran & Co)