On July 1, 2017, India introduced the Goods and Services Tax to replace the patchwork of indirect taxes that existed at the time and to improve tax compliances. As the tax regime completes its first year, Scroll.in reporters interviewed people running a variety of businesses: handicraft-makers in Guwahati, textile manufacturers in Surat and Tirupur, paper-goods dealers in Mumbai, weavers in Banaras, large and small engineering units in Hosur. Most of them were people Scroll.in had spoken to a year ago to understand their hopes and apprehensions about the new tax. This time around, they were asked a different question: what were their experiences with GST like? The sum of their observations provides the answer to a larger pattern: how GST is reshaping India’s manufacturing economy.
Realised some days ago that a bunch of hyperlinks on frac/earth are not working. Correcting them now. My apologies for this. If there is any article you need access to, drop me a line. Things should be working fine in a week or so.
To begin with, there is its sheer unprecedented nature. In all the years since Independence, India has never seen something like it. “We have heard of coin shortages but never a cash shortage,” said MS Sriram, visiting faculty at the Indian Institute of Management-Bangalore’s Centre for Public Policy. “I certainly have not in my life. This is new.”
How the shortage played out is odd too. It is acute in some states but not in others. For instance, in Tura, the largest town in Meghalaya’s Garo Hills, an official at the main State Bank of India office, which disburses cash to the bank’s other branches in the region, told Scroll.in that cash reserves had dwindled to almost a fifth of the required amount. “There is pressure from other branches to release money, but we have not been able to give even half of what they have been demanding,” the official said.
The discrepancy is visible within states too. In Maharashtra, Mumbai is fine but Nashik is not. In Tamil Nadu, big banks in Hosur say they are getting all the money they need but their counterparts in surrounding villages say the situation is bad. “We contact our sister branches to see if any of them has surplus cash,” said the manager of a public-sector bank in Belathur, a village about 20 km west of Hosur.
There are other puzzles. The cash squeeze showed up not gradually but suddenly. Reports began coming in from several states from February. If the cash squeeze was only due to a growing mismatch between cash supply and the demands of the growing economy, it should have shown up gradually, experts say.
As a report in Scroll.in noted earlier this month, several theories emerged to explain the shortage, covering the gamut from obvious to plausible to off-the-wall. Shortly afterwards, several Scroll.in reporters fanned out across the country, speaking to people in both cities and villages, to try to identify the genesis of this shortage.
Out today, with my colleagues Abhishek Dey, Mridula Chari, Vinita Govindrajan and Arunabh Saikia, a more deeply reported piece (than the previous one) which seeks to trace this cash squeeze back to its (idiotic) origins. Do read.
atms are again running dry in india. and theories claiming to explain why are doubling every day. out today, a quick report with my colleague rohan which seeks to separate plausible theories from the disingenuous (or just plain stupid) ones.
The announcement came shortly after some board members of the union, including vice chairman Rajendrasinh Parmar, alleged a Rs 450-crore scam during Rathnam’s three-year stint running the cooperative.
For their part, Rathnam and Ramsinh Parmar, the long-standing chairman of the Kaira Union, said the resignation was a routine matter. Rathnam, 55, told The Indian Express, “I have given Amul 22 years of my life. Now, I wish to spend time with my family that is settled in Tamil Nadu and America.” Both said talk of corruption was politically motivated.
Two weeks later, as public attention has gradually moved away, the contradiction between these claims and counter claims has not been discussed much in the media. In the process, urgent questions about the functioning not just of the Kaira Union but also the Gujarat Cooperative Milk Marketing Federation, which coordinates the Amul cooperatives, are slipping under the radar.
Part two of the report, out tomorrow.
Earlier today, my friend Rafat sent over snaps of some of our earliest reportage. This is circa 1998, from our first job at now-shuttered A&M, India’s first magazine on advertising and marketing. Am pasting them below and noting – with much pride and approval – the pun in one of these headlines, for a report on a tieup between an ad agency and pr firm. 🙂