Tag: globalisation

Human-Centric Globalisation: Taking G20 to the Last Mile, Leaving None Behind

 ‘Vasudhaiva Kutumbakam’ – these two words capture a deep philosophy. It means ‘the world is one family’. This is an all-embracing outlook that encourages us to progress as one universal family, transcending borders, languages, and ideologies. During India’s G20 Presidency, this has translated into a call for human-centric progress. As One Earth, we are coming together to nurture our planet. As One Family, we support each other in the pursuit of growth. And we move together towards a shared future – One Future – which is an undeniable truth in these interconnected times.

The post-pandemic world order is very different from the world before it. There are three important changes, among others.

First, there is a growing realisation that a shift away from a GDP-centric view of the world to a human-centric view is needed.

Second, the world is recognizing the importance of resilience and reliability in global supply chains.

Third, there is a collective call for boosting multilateralism through the reform of global institutions.

Our G20 Presidency has played the role of a catalyst in these shifts.

In December 2022, when we took over the Presidency from Indonesia, I had written that a mindset shift must be catalysed by the G20. This was especially needed in the context of mainstreaming the marginalized aspirations of developing countries, the Global South and Africa.

The Voice of Global South Summit, which witnessed participation from 125 countries, was one of the foremost initiatives under our Presidency. It was an important exercise to gather inputs and ideas from the Global South. Further, our Presidency has not only seen the largest-ever participation from African countries but has also pushed for the inclusion of the African Union as a permanent member of the G20.

An interconnected world means our challenges across domains are interlinked. This is the midway year of the 2030 Agenda and many are noting with great concern that the progress on SDGs is off-track. The G20 2023 Action Plan on Accelerating Progress on SDGs will spearhead the future direction of the G20 towards implementing SDGs.

In India, living in harmony with nature has been a norm since ancient times and we have been contributing our share towards climate action even in modern times.

Many countries of the Global South are at various stages of development and climate action must be a complementary pursuit. Ambitions for climate action must be matched with actions on climate finance and transfer of technology.

We believe there is a need to move away from a purely restrictive attitude of what should not be done, to a more constructive attitude focusing on what can be done to fight climate change.

The Chennai HLPs for a Sustainable and Resilient Blue Economy focus on keeping our oceans healthy.

A global ecosystem for clean and green hydrogen will emerge from our presidency, along with a Green Hydrogen Innovation Centre.

In 2015, we launched the International Solar Alliance. Now, through the Global Biofuels Alliance, we will support the world to enable energy transitions in tune with the benefits of a circular economy.

Democratising climate action is the best way to impart momentum to the movement. Just as individuals make daily decisions based on their long-term health, they can make lifestyle decisions based on the impact on the planet’s long-term health. Just like Yoga became a global mass movement for wellness, we have also nudged the world with Lifestyles for Sustainable Environment (LiFE).

Due to the impact of climate change, ensuring food and nutritional security will be crucial. Millets, or Shree Anna, can help with this while also boosting climate-smart agriculture. In the International Year of Millets, we have taken millets to global palates. The Deccan High Level Principles on Food Security and Nutrition is also helpful in this direction.

Technology is transformative but it also needs to be made inclusive. In the past, the benefits of technological advancements have not benefited all sections of society equally. India, over the last few years, has shown how technology can be leveraged to narrow inequalities, rather than widen them.

For instance, the billions across the world that remain unbanked, or lack digital identities, can be financially included through digital public infrastructure (DPI). The solutions we have built using our DPI have now been recognised globally. Now, through the G20, we will help developing countries adapt, build, and scale DPI to unlock the power of inclusive growth.

That India is the fastest-growing large economy is no accident. Our simple, scalable and sustainable solutions have empowered the vulnerable and the marginalised to lead our development story. From space to sports, economy to entrepreneurship, Indian women have taken the lead in various sectors. They have shifted the narrative from the development of women to women-led development. Our G20 Presidency is working on bridging the gender digital divide, reducing labour force participation gaps and enabling a larger role for women in leadership and decision-making.

For India, the G20 Presidency is not merely a high-level diplomatic endeavour. As the Mother of Democracy and a model of diversity, we opened the doors of this experience to the world.

Today, accomplishing things at scale is a quality that is associated with India. The G20 Presidency is no exception. It has become a people-driven movement. Over 200 meetings will have been organised in 60 Indian cities across the length and breadth of our nation, hosting nearly 100,000 delegates from 125 countries by the end of our term. No Presidency has ever encompassed such a vast and diverse geographical expanse.

It is one thing to hear about India’s demography, democracy, diversity and development from someone else. It is totally different to experience them first-hand. I am sure our G20 delegates would vouch for this.

Our G20 Presidency strives to bridge divides, dismantle barriers, and sow seeds of collaboration that nourish a world where unity prevails over discord, where shared destiny eclipses isolation. As the G20 President, we had pledged to make the global table larger, ensuring that every voice is heard and every country contributes. I am positive that we have matched our pledge with actions and outcomes.

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Globalization and Rural Areas

Globalization is not a foreign concept to many – the term might be as we proceed to the interior. Its effects have been too much and many, touching every spectrum of life to be easily ignored. It can never be not given the time of the day when it has so successfully managed to touch every aspect of life. Its effect as we al know has been positive and negative, just like the two sides of a coin. Often cited to be double-edged sword, it has managed to flourish life for some while disrupt it for some. Bringing and making everything come out to be in open, liberalized, interlinked, interdependent, it has created chaos for beings who couldn’t grasp the complexities of apparently simple notion.

Rural areas with its close-knitted community, spatially located has too not been spared, not any of us expected. Rural development and sustenance have always been necessary for the sprouting and survival of urban areas. How would have urban areas survived if it not were for surplus of agriculture among many other reasons?! However, when we think of a backward area, rural areas would come to our mind if not immediately. It could not act keep up with the pace of development or it might have been neglected in some ways or others.

When Liberalization, Privatization and Globalization reforms were taken up in India, it did allow the country to let its fortunes grow but the negative impact cannot be ignored. The article takes up the case of rural areas and how it has been impacted on the negative side. It does not take up the analysis of data given the time crunch but throws a light on the subject. One of the many effects has been the draining of human resources – sort of every industrial model predicted. With industries coming up attracting the labor for the same. Abundance of labor with just minimum wage served as a profitable interest for the industrialist. However, it led to the rural areas filled with old age people capable of doing only minimum work. With technology coming up requiring more skilled laborers, unemployment is only rising. The lack of proper skills has also compelled the concentration of laborers in the field (disguise unemployment). A viscous cycle has been created, somehow and poverty could never actually leave. Although, development has taken place, reforms have been made in terms of basic needs, imparting training and education, a lot still need to be done. There has been a difference, a very bold line created because of the cultural difference. Though the interlinkages and interdependence has led the spread of ideas, it has also created some sort of animosity among the community towards urban dwellers. One of the reasons can be the exploitation – low wages, some unfair action taken up by the middleman, less profitable trades and the obvious, the viscous cycle of debts, they are unable to escape.

Steps have been taken on the part of government to bring in the development in rural areas. Focus should also be thrown in preserving the culture of the same, creation of jobs in the same heritage, promotion of cottage industries, more push to the handicrafts, encouraging the participation of communities in decision making among many.

Image Credit: Google

Globalisation

Introduction

Globalisation is the process of international integration arising from the interchange of world views, products, ideas and other aspects of life. The vital element of globalisation is ‘worldwide interconnectedness’ that is created and sustained as a consequence of these constant flows. Globalisation is a multi-dimensional concept. It has political, economic and cultural manifestations and these must be adequately distinguished. The impact of globalisation is vastly uneven- it affects some societies more than others and some parts of some societies more than others and it is important to avoid drawing general conclusions about the impact of globalisation without paying sufficient attention to specific contexts.

Causes of Globalisation

  • There are many causes of it but technology affects it more than anything else. Invention of printing, integrated chip(IC), telephone, internet has revolutionized communication between people in different parts of the world.
  • Due to faster communication and transportation, ideas, commodities, capital move more easily to any part of the globe than ever. As people got the technology of better communication and transportation they recognise these mediums to connect rest of the world.
  • The Ebola virus is not confined to only African continent but it affects other nations too.
  • It has mainly 3 types of consequences:-
    1. Political : Globalisation results in discomfort in functionality and working of government. The increased role of MNC all over the world leads to reduction in the capacity of govt. to take decisions on their own. But at the same time globalisation does not always reduce state capacity. The importance of state continues to be unchallenged basis of political community. Indeed in some manner state capacity has recieved a boost as a consequence of globalisation. Due to advancement in technology available in state, it can collect information about its citizens. With this information, the state is better governed. State becomes powerful than earlier due to emergence of new technology.
    2. Economic : The economic globalisation involves greater economic flows or exchange of commodities among different countries of the world. The mention of economic globalisation draws our attention to the role of international institutions like IMF and WTO in determining economic policies across world. The restrictions imposed by different countries on capital across countries and allowing imports of other countries have been reduced. Capital across countries means that investors in prosperous countries can invest in other countries including developing countries where they might get good returns. There is less movement of people across the globe because developed countries have carefully guarded their borders with visa policies to ensure that citizens of other countries cannot take away the jobs of their own citizens.
    3. Cultural : It refers to impact of globalisation in what we eat, wear, drink, watch and think. The cultural effect of globalisation poses a threat to different cultures in the world other than western culture. There is a cultural homegenisation which means rise of uniform culture, as we notice the popularity of American things like McDonald’s, Pizza, KFC, GOOGLE, blue jeans and hollywood movies has spreaded across the globe. This is dangerous not only for the poor countries but for the whole of humanity because it leads to the shrinkage or extinction of the rich cultural heritage of the entire globe. But cultural consequences of globalisation is not always negative as sometimes external culture influences simply enlarge our choices and sometimes they modify our culture without overwhelming the tradition. The Maggi is no substitute for noodles, therefore, does not pose any real challenge. Globalisation leads to each culture becoming more distinctive and different. This phenomenon is called Cultural Hetergenisation. Those who are concerned about social justice are worried about the extent of state withdrawal caused by process of economic globalisation. They point out that it is likely to benefit only a small section of population while impovershing those who were dependent on govt. for jobs and welfare. They have emphasised the need to ensure institutional safeguards to minimise the negative effects of globalisation on those who are economically weak. Many movements all over the world feel that safety nets are insufficient or unworkable. They have called for a stopping to forced economic globalisation, for its results would lead to economic ruin for the weaker countries, especially for the poor within these countries. Some economists have described economic globalisation as re-colonisation of the world. Advocates of economic globalisation argue that it generates greater economic growth and well-being for larger sections of population when there is de-regulation. Greater trade among countries allows each economy to do what it does best. This would benefit the whole world. They also argue that economic globalisation is inevitable.

India and Globalisation

From the colonial period, India became an exporter of primary goods and raw materials and a consumer of finished goods. After independence, because of the experience with British, we decided to make things ourselves rather than depending on others. We also decided not to allow others to export to us so that our own producers could learn to make things. This step generated its own problem. India had a fairly sluggish rate of economic growth (due to ignoring other sectors such as health, housing, etc.). In 1991, responding to a financial crisis and to the desire for higher rates of economic growth, India began programme of economic reforms that opened doors for trade and FDI.

India and Resistance to Globalisation

Resistance to globalisation in India has come from political parties as well as through forums like the Indian Social Forum. Trade Unions of industrial workforce as well as those representing farmers interests have organised protests against the entry of multinationals. The patenting of certain plants like Neem by American and European firms has also generated considerable opposition.

Letter of Credit

In the era of Globalisation, businesses all over the world rely on each other, be it for raw materials, consultation services, marketing or capital goods. This led to an increase in international payments, especially with increase in exports. Some of the most common methods of international payments include- International cheque, Wire transfer and the safest and the most convenient method preferred by most exporters- Letter of Credit.

Letter of Credit is a bank guarantee given by the buyer’s (importer) bank to seller’s (exporter) bank. It is the most secure instrument, also known as Documentary Credit. The main concern of most exporter is safety which is why they prefer Letter of Credit over other modes of payment. It is guaranteed by the bank and the verification of all necessary documents including the inspection certificate is also done by the bank.

Documents required by the bank includes Bill of Lading, Marine insurance, Custom attested Packing list and invoice, Pre-shipment Inspection certificate and Certificate of origin.

Merits of LC

  • Exporter is assured of payment as it is guaranteed by the buyer’s bank.
  • Exporter can get advance payment from bank if the LC is confirmed and irrevocable.
  • It eliminates commercial risk.
  • It enables the importer (seller) to expand their sources of supply as exporters are always willing to supply against Letter of Credit.
  • It prevents blockage of funds and bad debts.

Types of LC

There are 10 types of Letters of Credit. Different LCs have different terms of payment associated with them and hence, it is important for exporters and importers to assess and wisely decide which type suits them the most.

  1. Sight LC: In a sight LC, the exporter immediately receives payment after goods are received.
  2. Usance LC: With a Usance LC, the exporter grants a credit period for payment which is jointly accepted by both banks.
  3. Confirmed LC: Confirmed LC does not allow the Issuer bank (importer’s bank) to modify the terms of LC. Ideally, LC should be confirmed as it is safer.
  4. Unconfirmed LC: Unconfirmed LC allows Issuer bank to modify the terms of LC.
  5. Red clause LC: In a Red clause LC, the importer must make partial or full advance payment.
  6. Green clause LC: Green clause LC allows the importer to make the payment after dispatch of the shipment.
  7. Negotiable LC: Issuing bank (importer’s bank) authorises any bank to be the Nominated bank (exporter’s bank) to negotiate the terms of the LC and receive the payment on behalf of the exporter.
  8. Revolving LC: For regular transactions between the same two parties, one can get a Revolving LC. It allows the parties to set a limit and use the same LC for multiple payments till the limit is reached.
  9. Transferable LC: This type of LC allows the exporter to endorse the LC in favour of a third-party which simply implies that the amount owed to the exporter by the importer is paid to the third-party directly, on behalf of the exporter.
  10. Back-to-back LC: This LC involves 3 parties and two payments under one LC. For example, payment to vendor by manufacturer for raw material and payment to the manufacturer by the retailer under the same LC. It eliminates the need for applying for two LCs.

A guide to take your business international

As Globalisation takes over the world, more and more businesses are expanding and opening their manufacturing units, branches, outlets, offices all over the globe. While some grow exponentially and expand their market, sales and customer base, some fail to get any response and incur huge promotional, travel, administration and financial costs.

This is why it is extremely crucial to form an entry strategy that suits the organisation. It is also important to assess the financial position and capacity of the organisation and to understand that International business gives delayed returns as spreading awareness, competing with the competitor’s product and building an International customer base takes time and incurs promotional costs.

Once the business is ready to enter the international market, there are several factors to be considered.

  1. Firstly, the organisation needs to conduct market research and choose the country and the specific locations where there is demand for their product/service.
  2. Secondly, assessing the culture, language of the country and city is also very important. The organisation can make the necessary changes (if any) to its product/service and its packaging and labelling accordingly.
  3. The last step is to form an entry strategy that suits the organisation and the market and implement the stategy.

Ways of entering an International Market

There are several ways to enter a market depending on the product/service reach preferred by the organisation and the financial capacity of the organisation.

  • Direct Exporting- In this method, the organisation directly sends its products, transfers its employees and workers to the location chosen. It involves huge setup, transportation and transfer costs. Therefore, this method is only used when the product that is being exported has a lot of demand in the new market and will definitely get a response from the target audience. For example, exporting machines to developing countries where there’s no manufacturing of such machines but a huge demand for the same.
  • Through a distributor- In this method, products are sold to distributors who are wholesale buyers. The distributor uses his own selling and pricing strategies to sell the product in the market.
  • Licensing- Through licensing, the organisation can share its technology, method and basic know how with local companies. However, through this method, the product is sold under the local companies’ name and brand so there is no scope of building an international brand and consumer base.
  • Contract Manufacturing– Through this method, the company pays a local manufacturing unit to manufacture their products by sharing their technology and design. It saves the cost of exporting or setting up a manufacturing unit abroad and is ideal for products that require large scale production.
  • Strategic Alliance- This method includes Mergers, Acquisitions and Joint Ventures. In Joint Ventures, two companies form another company to work as partners. For example, Hero Honda. In Mergers and Acquisitions, one company merges with or acquires another company. There is no formation of third company or new identity in this case. For example, Walmart acquired Flipkart.
  • Through an Overseas agent- Using this method, the company hires a local agent to make business relationships on behalf of the company. The agent acts as a sales representative who sells the products on behalf of the company and has no direct relationship with the customers. The agent gets commission on his sales. This is an effective method to save costs in case the organisation wants to test out the response of the foreign potential consumers or distribute their products on small scale without incurring huge costs.

Social Media Marketing

The up and coming trend of social media market has swept the entire market industry. From small businesses to national hotel chains, every enterprise aims and sometimes struggles to make their space in the large social platform. 

As the world undergoes rapid digitisation, social media becomes increasingly popular for professional and personal use. With half of the entire world’s population using Facebook, it has become a social media platform to popularise one’s business or to gain recognition. 

Easy connectivity plays a major role in this. Globalisation in recent years has resulted in international connectivity via mail, flights, et cetera. The world is now said to be a village, with people on the opposite side of the world just one click away. 

Apart from globalisation, the ongoing pandemic has also forced many businesses to switch from offline to online. People are using the internet more as there is no other option. After the novel COVID-19 outbreak, many businesses shut down, small businesses were started to meet the financial needs in these difficult times. Due to the lockdown, all jobs have been shifted to online work from home which leaves the companies with limited ways of advertising their products. To increase their reach, they use social media applications such as Facebook, Instagram, YouTube et cetera to increase their buyers. 

It is not just profit-minded enterprises that use social media marketing but we also see non-profit organisations (NGOs) attempting to gain recognition in order to popularise their cause and also to get funds to execute their plans. Social Media Marketing has become a major part of our world with online shopping applications projecting their ads as well as selling their products via these platforms. 

The increasing demand for graphic designers, social media marketing specialists, content writers, et cetera is also a consequence of social media becoming a large part of the marketing industry. From school to college students, every student is trying to find internships to gain experience and mostly it is these areas, graphic designing and social media marketing, in which internships are being offered. Students want certificates, Letter of Recommendations and work experiences to fill up their resume. 

Graphic Designing is now something everyone should know how to do. It is rapidly gaining importance. An increasing number of people sign up for graphic designing courses every day. Companies are working towards making inserting elements easier, providing more fluidity, a better experience for people using their graphic designing apps. Canva is an application which allows you to use pre-made templates, edit its elements, its colours, add various shapes, images, videos, animations, et cetera. Many other apps also provide the same but Canva is regarded as the most easy-to-use application. 

With the new generation, everything is evolving. Unimaginable things are becoming a daily part of our life. The priorities of the companies and the industry as a whole are changing and only those will survive who will keep up with it. The rest will be left backwards if they do not push themselves to develop and adapt with the rest of the world. 

Position of interstate trade in india

Introduction

“Democracy is the art and science of mobilising the entire physical, economic and spiritual resources of various sections of the people in the service of the common good of all.” To an extent the Article 301 of the Indian Constitution could be said to the derived or influenced from such a philosophy with the objective to protect the National integrity and unity with the help of hassle free flow of trade throughout the country. An intention to unify different fields and different regions with the help of this freedom guaranteed in Art. 301 Even then for all practical purposes this freedom could not have remained absolute in order to ensure that a privatized market Grab economy does not further exploit the already starving population of India. Therefore this freedom was made subject to the other provisions of this Part (Part XIII). But as the researcher proceeds with the analysis of the position of inter-state trade it becomes clear that these provision which act as restrictions on this freedom bestowed by Article 301 is been severely hinders it . And therefore the Concept of Free Trade as envisaged by the constitution makers has remained a concept only with the amount of barriers and complications involved in interstate trade today. The free flow of trade and commerce are sine qua for the economic enhancement domestically as well as internationally has not given to the Indian Markets. The European Union is an amazing example of such a trade union which has opened up trade barriers among the countries of the union and has shown dramatic advancement in the field of trade and commerce. It is time for India to overhaul its current taxing system and central as well as state policy towards free trade.

Thus in this project the researcher will analyse the case laws which are responsible for the current position of the interstate trade and also the effect of Part XIII on them to determine how effective the provisions have been to strike a balance between the economic development and advancement of the country on one hand and the protection of the majority who were likely to the exploited and starved if the free market was allowed to thrive at the whims of capitalists.

An Analysis Of The Provisions And The Case Laws

The Constitution Makers have borrowed the concept of freedom of trade from the Australian constitution (Section 92) but the Indian version has a couple of changes in the scope of its application, and they are

  1. that the freedom guaranteed is not limited to among the states but ‘throughout the territory of India’ and,
  2. the privilege of trade being free is not qualified by the adverb ‘absolutely’ as in the Australian constitution.

And the reasons for these changes in the adaptation of this Article, from the Australian constitution, lies in the rest of the Articles of the Part XIII starting from Article 302 till 307. The Freedom is not absolute as the rest of the provisions impose several restrictions and exceptions to this freedom. Another very important aspect of the Part XIII of the Constitution is that it is not subject to any other part or provision of this constitution. In the simplest sense any kind of tax that is levied on any particular activity which involves interstate transaction can be taken to be a restriction on the freedom of trade. But as taxes are also necessary for the functioning of the Centre and the State all of them cannot be treated as restrictions violating the Article 301. This question was first brought up in the Atiabari case in which the Apex court held that tax laws are not outside the scope of ‘the Freedom’. And therefore the Assam State Legislature had to amend the provision as to meet the requirements of the exception in Article 304(b) so that the tax that it imposed did not amount to a direct and immediate impact of the movement of the goods. This case has also gone into the historical background of the Making of this constitution in which it discusses that the makers of the Constitution were fully aware of the fact that economic unity was an absolute prerequisite for the stability and progress of the federal polity. Considering the possibility that there might be several political parties in the future, unlike the only congress majority then, with different ideologies and following different ‘isms’ for pursuing socio-economic goals is likely to give rise to a mechanism wherein the regional pull (by regions with higher influence) will affect the economic policy which in turn will have negative impact on the overall development of the economy of the nation as a whole. Thus the object of Part XIII to avoid such a possibility and to ensure that the political freedom won and political unity which had been accomplished by the Constitution, had to be sustained and strengthened by the bond of economic unity. But this harsh approach towards the taxing power of the state was later review by a larger bench in the Automobiles case. Therefore to ensure that this freedom of trade did not evolve to be an absolute one legitimate restrictions like compensatory taxes or regulatory measures will not be taken into account as restrictions hampering the trade and thus would stay out of the purview of the Article 301. The court also dilated further on the issue raised in Atiabari about the problem of economic integration due to diversity in several fields. The two questions however stood out:

“ first that how to achieve a federal, economic and fiscal integration, so that economic policies affecting the interests of India as a whole could be carried out without putting an ever-increasing strain on the unity of India, particularly in the context of a developing economy. And 2nd that how to foster the development of areas which were under-developed without creating too many preferential or discriminative barriers”

“first, in the larger interests of India there must be free flow of trade, commerce and intercourse, both inter-State and inter-State; second, the regional interests must not be ignored altogether; and third, there must be a power of intervention by the Union in any case of crisis to deal with particular problems that may arise in any part of India.

Scope Of Articles 301, 302 & 304 Vis-A-Vis Compensatory Tax:

Considering the above doctrine dilated by court, it is clear that whenever a law is challenged on the ground of violation of Art. 301, the court has also to determine the effects of the operation of the impugned law on inter/intra state trade in addition to applying the doctrine of pith and substance to determine the basis of the Levy.The Vijayalakshmi Rice Mills Case is another recent case which deals with the ability of the state legislatures to the levy of cess without violating Art. 301. It was contended that the cess levied under the Act (Andhra Pradesh Rural Development Act, 1996) did not correspond to any of the entries in List II or III of the Seventh Schedule and this rendered the cess invalid andmoreover the there was no quid pro quo in the levy of cess, and hence could not be said to be a fee. On the argument of the respondent that it was in fact a fee and therefore it came under Entry 66 of List II. But the court on this ground made it clear that co-relationship between the totality of the fee and the totality of expenses of the services was indispensible even though mathematical precision wasn’t necessary between the service rendered and the fee realised. Thus a fee levied for rendering to the service of rural development was held viable and the validity of the act was upheld. Thus with this position of the case laws on the Freedom of trade and commerce, the following is the likely procedure to be followed while deciding a case. First is to check whether the law, be it taxation or non-taxation, violates the Freedom in Art. 301. And to do that first it is necessary to know the scope of operation of such law, whether the operation of the act of that law affects movement of trade, commerce or intercourse throughout the country.

If it is so then the next question is: What is the effect effect of operation of the law on the freedom guaranteed under Article 301? If the effect is to facilitate free flow of trade and commerce then it is regulation and if it is to impede or burden the activity, then the law is a restraint. After finding the law to be a restraint/restriction one has to see whether the impugned law is enacted by the Parliament or the State Legislature

GST: To Strengthen The Unified And Integrated Domestic Trade.

The Goods and Service Tax Bill which was supposed to be enacted by now is still pending as a bill due to various complications. The GST if enacted would have drastically impacted the inter-state trade and it is likely so that whenever in the future the GST will be enacted it will do its job. One of the several advantages of the GST is that it will not only replace the existing Sales tax by central and the state governments but also subsume most of the indirect taxes on the supply of goods and services. It includes central excise duties, additional custom duties, cesses levied by the union and surcharges in case of the Centre. And in case of the States it would replace purchase tax, state excise duty, luxury tax, octroi, entry tax in lieu of octroi. Under the GST regime the CST was to be reduced to zero by 1st April of this year! But the States have lobbied against it as after that the Centre alone would levy IGST and the exporting state will transfer to the centre the credit of SGST used in the payment of the IGST Purohit in his article says that the implementation of the IGST mechanism would prove to be a daunting task as all statewise exports and imports would have to be recorded. Moreover he says that “the importing state will have to give set-off as soon as the import takes place and will get it back only after a delay of a month or so. Given the fiscal scenario of the states today, the states exporting goods may not find it possible to fulfil their commitment to transfer the tax amount promptly to the central pool.”

Thus this model seems to be built on various assumptions which might require more time, efforts and planning than anticipated.