After Farmers Suicides, Is India Entering The Era Of Traders Suicides Caused By GST Fiasco?

Raman Swamy

After farmers suicides, has a new phenomenon of traders suicides begun?  Or is it too soon to jump to such conclusions?

A few weeks ago in a village called Narayanpur in West Bengal’s Birbhum district there were reports that a wholesale trader of grocery items had consumed poison. 

The suicide note in Bengali was stark and scary – “Amar mrityur jonne keu dayi noy... kebalmatro GST dayi”.  It meant - “No one is responsible for my death... only GST is responsible”.

His relatives said he had been depressed because of heavy losses and had been unable to cope with tensions caused by complicated GST rate calculations and returns formalities. 

Last week, in Agra, another trader committed suicide by hanging himself from a tree.   Reports said that his kirana business has suffered plummeting sales since the GST was launched and he faced financial ruin. 

Merchants and shopkeepers in the Moti Ganj, Johri Bazar, Raja Mandi areas of the City of the Taj Mahal downed their shutters for the day in protest against GST.  They said retail and wholesale trade at the local level had taken a huge hit post-GST implementation.  

Similar reports are trickling in from across States, from big cities and small towns.  The common refrain seems to be – “Ever since note bandi, business has been down because people don't have money to buy.  Now under GST, business is paralyzed because nobody can understand the rates and the rules.  To make matters worse, traders a being harassed by officials who only issue warnings but do not help because even they find GST difficult to understand”.

The possibility of an all-India traders’ agitation cannot be ruled out.  On Monday, the Confederation of All India Traders (CAIT) began a two-day meeting in Surat to decide whether to plead or protest. 

While chalking out future course of action, a national agitation against GST is very on the agenda.  More than 100 prominent traders representing various States are participating in the brainstorming.  The Confederation claims to be the only apex body of the trading community representing 40,000 Trade Associations across the country with a membership of more than six crore small businesses.

GST is riddled with dozens of flaws, failings and fault-lines, they claim -- irrational classification of items under different tax slabs, introduction of complicated Reverse Charge mechanism, overlapping of other laws with GST law and absence of clarity pertaining to provisions of Act and procedure. This has led to a situation of utter chaos.  And small traders and businesses face utter ruin.    

The list of complaints is even longer -  failure of GST portal, absence of adequate knowledge even among tax advisors about compliance procedures, conflicting interpretations of levy rates on different items and contradictory inclusion of mass usage items under the 28  per cent tax slab.

A groundswell of frustration throughout the trading community has resulted in growing disillusionment.  A CAIT office-bearer said:  "75 days of GST has turned out to be a nightmare.  Fear factor is always there because it is mandatory for traders to strictly follow different compliance formalities under GST”.

Neither the Central Government nor State Governments nor even the GST Council is ready for direct dialogue and discussion Trade bodies like CAIT.  This has further aggravated the situation and created a feeling of helplessness and neglect.

The irony is that traders are not against GST as such. In fact, CAIT has been urging successive governments for comprehensive indirect tax reforms for the past five years.  But the hasty and crude manner in which the Modi government has foisted the so-called one-nation, one-tax regime is the reason for the trauma and confusion. 

Dr.  Manmohan Singh, the former Prime Minister, has once again put his finger on the heart of the problem.  Being a genuine economist,  he had correctly  predicted that the disastrous demonetization decision would cause a two per cent fall in GDP.  Now, on Monday, in an interview to a TV business channel, he has offered his diagnosis of the latest monumental blunder committed by the Prime Minister Modi.

The "hasty" implementation of GST, Dr. Singh said, would cause deep distress,  virtually destroy the informal sector, lead to colossal loss of existing livelihoods and again adversely impact GDP growth.

He said the Goods and Services Tax should have been introduced on a condusive time-scale and not imposed with a rigid deadline.  There should have been a transitional period of hand-holding. 

The present government was clearly obsessed with touting the new tax regime as a “historic achievement” and therefore lost sight of the fact that the informal and small scale sectors account of about 40 percent of GDP in India’s 2.5-trillion dollar economy. 

Also lost sight of is the hard reality that 90 per cent of India's employment is in the informal sector.  By causing such a gigantic disruption, the Modi government can be accused of willfully precipitating unprecedented and dangerous mass unemployment.  

The implications of what Dr. Manmohan Singh is saying are crystal clear. Mass unemployment and widespread financial ruin for small traders will only lead to economic devastation. And, more cases of suicides by traders. 

Sep 20, 2017

Raman Swamy [email protected]

Your Comment if any