GST: Cutting The Clutter

Source: Swarajya

Prime Minister Narendra Modi, in his monthly radio address on 30 July, a ‘Good and Simple Tax.’ He was referring to the Goods and Services Tax (GST), which had come into force on 1 July, dismantling inter-state barriers and turning India into a continent-size common market of 1.3 billion people.

Modi gushed, “And some day, pundits of economics, pundits of management and pundits of technology will certainly undertake researches and write about India’s GST experiment as a model for the world. It will become a case study for universities across the world.”

One example the Prime Minister cited of the positive effects of GST was the transport and logistics sector—the movement of trucks has accelerated as the number of check-posts on state borders came down.

“The time required to cover distances has come down drastically. Highways have become clutter-free,” Modi said.

Harnam Singh, a goods transporter, who has been driving to Mumbai, India’s commercial capital, for six years, can vouch for that.

When he drove to Mumbai from Gujarat in the first week of July, he found that the check-post at Mulund on the six-lane Eastern Express Highway, where he would usually spend up to 40 minutes to pay an entry tax and have his truck security-checked, had been dismantled.

Singh said he couldn’t remember a single occasion since 2011 when his truck had been allowed into Mumbai without checks. Before 5 July, he had visited Mumbai on 23 June and had waited the usual 40 minutes, he said.

Transportation companies say GST, which before it took effect was billed as the biggest tax reform in independent India and a potential game changer, has helped in lowering the travel time between states sharply, confirming the claim of the government of a time saving of 20 per cent for long-haul trucks carrying heavy cargo.

“GST is a boon and a growth trigger for the logistics industry, which is otherwise benefiting from certain positive developments. Roads are getting built faster than rail network and airports,” said Chander Agarwal, managing director, TCI Express, a logistics firm.