{"id":35711,"date":"2018-11-01T11:29:56","date_gmt":"2018-11-01T05:59:56","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=35711"},"modified":"2018-11-01T11:29:56","modified_gmt":"2018-11-01T05:59:56","slug":"gst-and-the-remapping-of-india","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/gst-and-the-remapping-of-india\/","title":{"rendered":"GST and the remapping of India:"},"content":{"rendered":"<p><a href=\"http:\/\/indianexpress.com\/article\/opinion\/columns\/4791229-gst-and-the-remapping-of-india-economic-market-state-border-goods-tax-gst-inter-state-trade-affect\/\"><span style=\"font-weight: 400;\">GST and the remapping of India<\/span><\/a><span style=\"font-weight: 400;\">:<\/span><\/p>\n<p><b>Context:<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The Goods and Services Tax (GST) will unify the nation into a common economic market, obviating the need for goods to be taxed each time they cross a state border.<\/span><\/p>\n<p><strong>New regime:<\/strong><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0<\/span><span style=\"font-weight: 400;\">New tax regime could bring a shift in production and storage centres<\/span><\/li>\n<li><span style=\"font-weight: 400;\">New tax regime could bring a shift in production and storage centres. It will require a nimble reading of where markets will grow, their logistical requirements<\/span><\/li>\n<\/ul>\n<p><strong>Pre GST regime:<\/strong><\/p>\n<p><span style=\"font-weight: 400;\"> Prior to GST, the internal movement of goods was subject to a number of barriers.<\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0<\/span><span style=\"font-weight: 400;\">There were taxes on the inter-state movement of goods and cross-state differences in VAT structures.<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> \u00a0\u00a0<\/span><span style=\"font-weight: 400;\">There were cumbersome inspections, especially at state borders.<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> \u00a0<\/span><span style=\"font-weight: 400;\">A recent World Bank-funded study, undertaken by the Ministry of Road Transport and Highways, used GPS-time-stamped data of freight trucks to suggest that roughly 20 per cent of the transit time is spent at the border on verification of documents.<\/span><\/li>\n<\/ul>\n<p><strong>GST regime:<\/strong><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">GST will eliminate taxes on inter-state movement and harmonise the VAT structure across states (except for exempted goods).<\/span><\/li>\n<li><span style=\"font-weight: 400;\">GST is expected to result in a significant increase in internal trade \u2014 by as much as 30 to 40 per cent, according to some estimates<\/span><\/li>\n<\/ul>\n<p><strong> Other factors:<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Beyond the increase in internal trade, other economic factors are at play that can significantly alter the economic map of the country.<\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Large transport costs, production benefits by locating itself near the largest market to minimise transportation costs.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">A reduction in transport barriers, as is the case with GST, can change the location of production within a country quite dramatically \u2014 away from the largest market to low production-cost locations, thus diluting the home-market effect.<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> \u00a0<\/span><span style=\"font-weight: 400;\">The relocation of production away from the United States to China in the last couple of decades was driven in significant part by the lowering of transport costs.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">With the removal of barriers within India, another related outcome is the geographic centralisation of production and warehousing.<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> \u00a0<\/span><span style=\"font-weight: 400;\">Another possibility is the agglomeration of economic activity in the more productive states.<\/span><\/li>\n<\/ul>\n<p><strong>Key points:<\/strong><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0\u00a0<\/span><span style=\"font-weight: 400;\">As economic corridors change, the demand for new investment in transport and logistics infrastructure will increase.<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> Supplying this demand will require a nimble reading of where markets will grow and where new investments will be necessary<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> \u00a0\u00a0\u00a0<\/span><span style=\"font-weight: 400;\">Logistical inefficiency in India amounts to around 4 per cent of the GDP \u2014 this could well increase as the GST intensifies logistical needs Infrastructure is often identified as a \u201cbinding constraint\u201d to growth.<\/span><\/li>\n<\/ul>\n<p><strong>Solutions:<\/strong><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\"> \u00a0\u00a0<\/span><span style=\"font-weight: 400;\">Much economic and political effort will be required to arrive at optimal investment choices \u2014 on the modal mix, the balance between road and rail, air and water, on the location of the vaunted multi-modal logistics \u201cparks\u201d, on technology adoption and on the setting of standards to support inter modal transport inter alia \u2014 and to achieve efficient funding.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">India\u2019s economic destiny will crucially rely on its ability to anticipate, support and leverage its evolving economic geography.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">China\u2019s economic trajectory could teach us, productivity and growth require intention and provisioning.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>GST and the remapping of India: Context: The Goods and Services Tax (GST) will unify the nation into a common economic market, obviating the need for goods to be taxed each time they cross a state border. New regime: \u00a0New tax regime could bring a shift in production and storage centres New tax regime could&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/gst-and-the-remapping-of-india\/\">Continue reading <span class=\"screen-reader-text\">GST and the remapping of India:<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-35711","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704943143},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/35711","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=35711"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/35711\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=35711"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=35711"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=35711"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}