India as a Single Market
India as a single market
Independent India’s focus on centralized power and control has been instrumental in shaping its markets.With the bulk of tax revenues going to the center, state governments resorted to taxing the entry of goods at their borders as well as indirect taxes for revenue. As each state used its taxation powers to tax different commodities at different rates, India created a patchwork quilt of taxes that came in the way of the smooth flow of goods between states. This was compounded by poor infrastructure that made it difficult to move goods from producer to consumer. But in recent years, the improvement of road infrastructure, the abolition of OCTROI, the dismantling of administered prices and the APMC, as well as the move towards VAT have led to the creation of a common, and more seamless market.
November 17th, 2008 at 1:48 pm
China was successful in its economic and financial progress only due to the fact that it saw India as a Single Market. However for India to truly be a single market it needs to remove obstacles and speed breakers that hamper its economic progress. The interference caused by politicians, ministers, lawyers and teachers must be minimsed and maximum scope must be given to the Indian Markets and Banks.
Only then will India be on par with China, Singapore, Korea, USA, England and Australia in terms of GDP, Employablility, Tecnhology and Human Resources.
Santosh S
MMS/MBA Final Year
Mumbai University. INDIA.
March 27th, 2009 at 6:58 pm
The issue here is not about interference caused by politicians,ministers,lawyers and teachers as Mr. Santosh says.
The issue here roots from the tax distribution system between the center and the states. The states fail to raise enough revenues from the taxation sources that they have. The major share of tax is collected by the center, which in turn, gives a part of it to the states as grants. The tax collected by center from a particular state might not equal the amount it gets back from center (as in case of Gujarat, which made the CM of that state to make some irresponsible comments about taxation system). This was a major reason why states came up with various types of taxes to augment their revenue.
The government is already in the process to move towards a common Goods and Services Tax (GST) system which will be common throughout India, thus making India a single market. It was originally proposed to be implemented by 2010 but now might slip into 2012 or further. The work is in progress.