Business Standard

GST MAZE ENGULFS GUJARAT ELECTIONS

Overtakes reservatio­n demand for Patidars in political discourse

- RADHIKA RAMASESHAN

For months, P M Shah and Hetal Mehta, president and vice-president of the Southern Gujarat Chamber of Commerce and Industry, have been darting from their base in Surat to both Gandhinaga­r and Delhi. The effort has been to process the goods and services tax (GST), its various amendments and to decode its “intricacie­s” for users.

They have frequently interacted with Union Finance Secretary Hasmukh Adhia, who as the revenue secretary, was in charge of the new levy's rollout, and with Subhash Garg, the economic affairs secretary. The chamber's objective, it says, was to handhold the Centre as it grappled with political pressures and waded through a procedural maze. Arising from a “conviction” that GST was a “far-reaching reform, beneficial to the whole country”, as Ketan Desai, the chamber’s treasurer, puts it.

Desai stresses that barring textile, no other industry in south Gujarat had opposed GST. “We did not endorse the textile strike. We told the protesters we can represent their issues before the Centre; their strike fizzled out,” he said.

The chamber believes the flap over GST was because the excise tax and value-added tax (VAT) that were earlier collected and refunded separately by the Centre and the states are now rolled into one. That "induced a psychologi­cal apprehensi­on in industry's mind". "The refunds came from two sources. If one delayed reimbursin­g, the other would pay on time; so, there was parity,” he explains.

Nearly 450 km to the east of Surat, at Rajkot, the commerce and industry chamber is markedly less sanguine about GST. Rajkot is the headquarte­rs of both Saurashtra and Kutch, the state's politicall­y significan­t region, accounting for 58 of the 182 Assembly seats as compared to the south’s 29. Ostensibly, Saurashtra’s importance propelled Union Finance Minister Arun Jaitley, Congress Vice-President Rahul Gandhi and P Chidambara­m, the former finance minister, to lately hear the chamber out. “The Centre's unprepared to accept the need to modify and streamline the procedural glitches," says Shivlal Patel, the chamber's president.

He maintains that with GST, units in Saurashtra that worked to 90 per cent capacity and "fed" at least 10 or more families each are down by 50 per cent and pruning their workforce. "There's no money, no demand in the retail sector. When the growth figure is computed, the job-generating informal sector is unaccounte­d for," said Patel.

The chamber was apparently so miffed with the Bharatiya Janata Party (BJP) government that it derived solace from interactin­g with Rahul and Chidambara­m. “They placed the Congress' version of GST with the BJP's but said nothing political, did not canvass for votes,” an office-bearer said.

GST dominates the political discourse through Gujarat because traders, farmers and consumers alike are impacted. It has overtaken the reservatio­n demand for the Patidars or Patels that loomed large over the political landscape fairly recently.

Unjha in north Gujarat, 110 km from Ahmedabad, is Asia’s largest spice market. The marketplac­e, controlled by the Patels and redolent with the aroma of coriander, fennel and cumin seeds, looked desolate. “Trade’s down by 60 per cent, thanks to GST,” says Jayantibha­i Patel, a trader, and office-bearer of the state government’s Agricultur­e Market Produce Committee (AMPC), Unjha.

The BJP never lost Unjha since 1995. In September, its area MLA, Narayan Lallubhai Patel and his son, Gaurang Patel, who heads the town’s AMPC, were chased out of a public meeting by women. “We don’t need (Narendra) Modi, Jaitley or (Amit) Shah because Rahul, Jyotiradit­ya Scindia and Sachin Pilot are backing us,” claimed Ganpat Patel, another trader and office-bearer of the state government’s AMPC, Unjha. For two decades, the Congress was anathema in Unjha. GST explains the conversion in the traders.

At the core of their problem is the 28 per cent GST on tobacco, Unjha's biggest export. Every trader spoken to said the Centre owed him a refund of ~1-1.5 crore on export, accumulate­d since GST kicked in. “We don’t have the cash to purchase the previous volume of raw materials,” complained Ganpat.

North Gujarat's farmers said they bore the brunt of GST because, first, traders were not taking their produce and, second, even if they did, they paid only half the dues, asking to wait for the rest till the export reimbursem­ents came. The farmers said they had little or no money to buy their inputs for the next sowing season.

For the farmers, GST exacerbate­d an earlier agrarian problem — crop loss due to flooding, non-payment of crop insurance despite the premium ranging from ~2,500 to 5,000 being cut directly from their bank accounts, and a low Minimum Support Price for cash crops.

Youths, some of whom have left farming to go into informal investment and stock and share management, felt that had the BJP communicat­ed better the immediate issues in operating GST, it might have contained agrarian anger. “Nobody came to us, no booklets were circulated,” said Jay Patel, a young stockbroke­r of Bhandu village in north Gujarat.

 ??  ?? Traders protest against the goods and services tax in Ahmedabad, Gujarat PHOTO: REUTERS
Traders protest against the goods and services tax in Ahmedabad, Gujarat PHOTO: REUTERS

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