The Telegraph
Since 1st March, 1999
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There are no firm figures on how many trucks there are in India — anything up to 2.8 million. With railways doing its best to drive freight away to roads, road transport is critical to the economy (70 per cent of freight is carried by road) and goods worth at least Rs 300 crore per day are carried by trucks. The per-day estimate of loss from the truckers’ strike is higher at Rs 1,500 crore per day. While there are some signs of support for the strike waning, eight days is too long and already prices of fruits and vegetables have begun to increase, manufacturers and retailers face problems of procuring raw materials or finished goods, and airlifting has led to increased input costs. Unfortunately, truckers have lost sympathy by mixing up legitimate demands with unworthy causes. First, there is no case for retaining vehicles more than 15 years old on India’s roads, although one can argue that consistency requires extension of the same logic to private transport as well as public transport. Even if the state were to yield on this, it is doubtful that courts will agree. Second, in an era of market-determined prices, there can be no case for administratively determined minimum freight rates.

Third, turnover for the industry is estimated at Rs 1,85,000 crore and there can be no general argument that trucks should be completely exempted from paying taxes. The strike is partly due to the proposal that value-added tax should be extended to transporters. In any case, VAT will apply above a threshold, and as the traders’ strike demonstrated, opposition is by those who evade, not by those who fear greater compliance costs. Where truckers do have a point is that VAT introduction should be accompanied by an abolition of local body taxes. As the report of the Constitution review commission documents, fiscal and other inter-state restrictions impose significant transaction costs on industry. There is a need for harmonizing motor vehicle and assorted rules, including on over-loading, national permits and driving licenses. Part of the problem with ensuring this is the unregulated and primarily small-scale nature of the industry, segmented into truck-owners, transporters and commission agents. Such lack of regulation does not further the cause of four million truck drivers either. Fifth, truckers complain about price fluctuations in diesel prices. While there can be arguments about periodicity of such price change announcements, there can be no case for reversion to administered price mechanisms. But thanks to apportioning blame and turf battles between Centre and states and between different ministries at the Centre, genuine reform issues remain unaddressed.

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