Are global trade experts right in thinking India’s reforms are more tokenism

Rohit Chandavakar
Monday, 10 July 2017

On the backdrop of the recently concluded G20 summit in Germany, some international trade specialists speaking about India’s economic reforms said that the process is more about tokenism than any actual change on the ground!

These comments may sound a bit harsh given the political will that the central government has started showing with changes in insurance sector, civil aviation sector and indirect taxation system, but criticism can also not be brushed aside because this is the perception international business community has about Modi and his government.

On the backdrop of the recently concluded G20 summit in Germany, some international trade specialists speaking about India’s economic reforms said that the process is more about tokenism than any actual change on the ground!

These comments may sound a bit harsh given the political will that the central government has started showing with changes in insurance sector, civil aviation sector and indirect taxation system, but criticism can also not be brushed aside because this is the perception international business community has about Modi and his government.

The intensions at Prime Minister’s level maybe sincere but when it comes to implementation at city level or district level and tehsil level in the rural areas it unfortunately does not reflect the kind of change that is intended. So a typical example of this is that the much hyped Goods and Services Tax or GST regime under which the main impact seen all over currently is prices just about every good and service rising!

Perhaps the intention of the government while planning at policy level was to make the tax structure simpler but the effect is all round inflation which is first hurting the consumer and in the long run will also hurt the investor or manufacturer as demand drops.  

Everything from restaurant food to cab hire to mobile bills and insurance premium, everything costs more than earlier in the GST regime. So what was the midnight celebration that the BJP led NDA government had on night of 30th June at parliament house in Delhi all about? Was it about the price rise across the board which is now being experienced across the board for all products and services such as transport too.

Wherever the GST regime is making things more expensive, the government is letting it happen and wherever it is making things cheaper the government is seen adding taxes to it. A big example of this is Maharashtra’s Transport Department putting additional 2% tax on vehicle purchase after overall tax cut because of GST regime. The investors find this to be unfair.

The big question is also over why petroleum products and products such as liquor are not brought under GST. If one nation one tax is the principle that the government is loudly talking about should that apply to very important a commodities like petrol and diesel? If that is not being done, investors are bound to draw the conclusion that this tax reform is more tokenism that actual change on ground for their benefit.   

Many questions about how authentic the reforms process really is, are being raised by international trade and investment experts on forum like BBC and CNN and at some point convincing answers must come.

Wherever the GST regime is making things more expensive, the government is letting it happen and wherever it is making things cheaper the government is seen adding taxes to it. A big example of this is Maharashtra’s Transport Department putting additional 2% tax on vehicle purchase after overall tax cut because of GST regime. The investors find this to be unfair.

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