Agreement reached with all State Govt to create a single market Production base across India, through VAT, thereby permitting Industry to best locate their assets, based on need and performance rather than myopic tax incentive considerations is welcome.
UPA & in particular Congress has been pronouncing that the Inspector Raj of Octroi, State Tax Commissioners etc etc will end alongside. Will it? VAT's success depends solely on fast & successful implementation.
Never in the past, has bureaucracy taken anything lying down, particularly when it comes to Popular Govt or Opposition(tomorrow's Govt) laying hands on their'privileges'.
Govt must use its iron hand and genuine relocation and re-deployment of this babu clan, to ensure that they do not form a cartel & kill effective implementation of VAT. For e.g., under VAT, a manufacturer will ensure that his suppliers declare correct values in the Invoice(and pay VAT on that) for goods procured, since that would enable the manufacturer to get proper set-off credit on his VAT liability.
Good on paper;'powerful bureaucrat's cartel could ensure, by strangulating free movement of both supply and finished goods, that a measure of'under invoicing' is adopted by Supplier and accepted by Manufacturer, the fruit of which is equally contributed by the two to the benefit of the babu(thereby restoring lost personal'revenue' due abolished octroi et al)!
The manufacturer cannot afford to allow his capital investment to be idle & therefore will be more than willing to come to such terms, quickly worked out by babus. Incidentally the to-be-computerised VAT mechanism will be happy as the debit is equal to credit - voila. matched VAT liability from supplier and setoff claimed by the Industry; yet the over all cost is higher & hence the end customer does not get the benefit as promised by VAT-in-theory!
After all, that is how Inspectors of Inspector Raj are born! Ironically, the Govt will have to take, quickly now, additional efforts for effective implementation and adoption of VAT procedures. But the process to be designed by bureaucrats, to serve 'their' interests, evolves in our Country's proven history of prosperous existence of bureaucracy, amazingly quickly and gets implemented rather easily, often killing the original objective.
Incidentally they(Babus) dont bother about Computerisation, to infuse greater trust and compliance among their victims & hence no delays in implementation of procedures that serve'their' interest.
Take the case of Regional Transport Officers(RTOs); this is one area of successful universal National Integration. Despite language, local versus central parochialisms and such other barriers, 90+% of all transactions, pan-India, are done thru the touts, 'driving institutes' &'vehicle dealers' should you want anything done at all, timely, at the RTO, costing the end customer 6-12 times the official receipted fee.
Yet, not a single penny gratis is actually exchanged at the RTO office(CVC does not have a ghost of chance of catching them if and when they decide to act!). As my driving institute fellow said the other day, when I stopped by to enquire on procedure to get a learner's license for my son.
In this instance, the Driving Institute is situated right behind a no-parking signboard; so without getting off the car I called out the Institute in charge, 'Can you tell me list of documents I should bring along with my son, for LLR? I cant get out of the car courtesy no parking sign-board & I dont have time to park elsewhere and walk back for this less than a minute clarification'. I was astounded by his reply'Saar, dont bother, leave the vehicle & come; no body will touch my vehicle or my Customer's; after all should I not get this in return for the second salary I am paying every month to every one at the Station & RTO office?'.
Indeed, I could appreciate why the Driving Institute charges Rs 700, for what I discovered later to be costing only Rs 100, officially. Trust me, I am still trying to do this through the proper channel; the first question of the RTO inspector asks:'Which driving institute?', if you answer a name & their stamp is on the application paper, the job is done in less than half an hour after you pay official receipted fee of Rs 100. If not, like me, one goes after non existent officer in the 4th floor to first floor to no-where to get this or that endorsement across days!
One thing great about this Driving institute episode; once I reach the end of my patience at RTO, should I come back to the institute, for the six fold extra I am paying him, he does one hell of a lot of Value Addition & yet(P Chidambaram - PC to note), I am not charged VAT on that 600!
I believe that the rare-to-see honest & educated ministers like PC & Manmohan Singh genuinely want to bring about path-breaking legislative changes to erase the legacy & title of'bullock-cart economy' on India's forehead & help it realise its potential.
Yet, PC will do well with a bit of'reality acceptance' on Inspector Raj demolition theory, for the good of common-man & success of his own, no doubt, path-breaking initiatives; please watch out for the babudom's innovation to strike back and kill all good intent of VAT, before you know.'Reward' them and relocate them NOW, using the same State's good will, you have secured so far, in papering VAT(instead of post-facto lamenting that the implementation is a State subject/responsibility).
After all, the bureaucrats cant give up easily, the means they are used to, to procure binami properties using their sizeable'second salary'. More Legislation, papering disciplinary action, instituting additional departmental enquiry layers, giving teeth to Lok Adalats or CVCs, courts etc are all good steps, if you want results in not earlier than a decade. Instead, accept the existence & reality of'power cartel' & relocate babus to take care for e.g. Tsunami Graves or some such new harmless postings, with dislocation allowance to compensate part of what they'lost' to keep them quite in the short term & eventually make them redundant, which is the appropriate course as they anyway are NOT serving people's cause today!
Results on this front is needed NOW, in the immediate short-term, as the successful implementation or otherwise is going to be decided by the Industry, in the short-term, less than a year, based on their'total cost' incurred, before & after VAT!
