Comprehend the disappearance of serpentine queues of cargo-laden trucks at check posts, changes and interstate entry points, which, until lately, were ubiquitous? An empirical testimony of the benign effects accruing to the country’s vital logistics sector from GST is well-gleaned from a senior journalist’s narration of his 1,288-km, 42.5-hour recent journey from Sriperumbudur (near Chennai) to Bhiwandi (near Mumbai) on a truck laden with 174 air conditioners and 63 refrigerators. The erstwhile interstate border tax check posts having been dismantled, the truck took just half the time compared to the usual four-day travail in pre-GST days.
Article 301 of the Constitution aimed at India functioning as one single economic unit without barriers, promoting free flow of trade and commerce through the country’s territory. But for 70 long years post-Independence, India remained a fiscally ‘disunited union of states’. Like post-World War II European countries successfully forging a common market, tearing asunder inter-country customs barriers and other check posts, GST has ushered in a ‘united states of India’. It is GST that helped the country sign a free trade agreement with itself, integrating India into a single market. The Republic is now unified through the indirect tax law in a way analogous to the 1833 Zollverein, German Customs Union, forged as a coalition of German states to overcome hundreds of customs barriers where shipments were inspected.
Analysing the cost of not completing the European Community’s internal market integration, the Paolo Cecchini report, The European Challenge, 1992, concluded that the border and associated administrative procedures cost 1.8% of the value of goods traded within the Community, that the integration process could result in 4.5% increase in GDP over six years, in addition to consumer prices declining to the extent of 6%. With GST having belatedly become a reality, India too legitimately hopes to reap a similar harvest. India’s logistics sector, with four broad components transportation (60%), warehousing (25%), freight forwarding (10%), and value-added services (5%) is estimated to constitute 14-15% of the country’s GDP vis-à-vis some 8% in OECD economies. A joint survey in 2011-12 by the Transport Corporation of India and IIM Calcutta revealed an annual loss of about Rs 27,000 crore to the economy owing to detention to road vehicles at check posts and en route for documentation, physical checks of vehicles, drivers and cargo by RTO/police, and payment of highway toll and taxes, as well as harassment and corruption. The on-road stoppage expenses including illicit payments amounted, on average, to 15% of total trip expenses. Additional fuel consumption due to delays and slow speed of vehicles led to annual costs of Rs 60,000 crore.
Read More at: https://www.financialexpress.com/opinion/how-gst-helped-the-country-sign-a-free-trade-agreement-with-itself/1809031/