Monday, September 25, 2017

GST and its implications for Lokavidya Samaj



GST has been introduced in the country from July 1st 2017 and has more-or-less become effective all over the country. What are the stated aims and objectives of GST? This has been summarised as follows:
GST is one indirect tax for the whole nation, which will make India one unified common market. GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stage.”
As can be seen, the main aim is to make India one unified market with one set of tax rules governing all transactions within this unified market. All producers and consumers are to be included in this unified market (which includes the entire Lokavidya Samaj consituting about 85 crore people; who are both producers and consumers). A majority of goods produced and services provided by Lokavdiya Samaj, pertain to daily life and livelihood necessities. There are hardly any ‘luxury’ goods or services provided by Lokavidya Samaj. Most of the goods and services are locally produced and consumed. So what does a national or all-India market mean to Lokavidya Samaj ? Will GST have any effect on the activities/transactions of and within Lokavidya Samaj? Will Lokavidya Samaj or its livelihoods gain any benefit from GST?

The first response of Lokavidya Samaj to GST

In response to the imposition of GST on handmade products, the Graama Seva Sangha, Bengaluru announced a nationwide movement to Free Hand Made Products from GST by launching a Tax Denial Satyagraha on 27-Aug-2017 at Bangalore. The Satyagraha was inaugurated by Theater Director and Social Activist Prasanna Heggodu, well known for his efforts to build co-operatives such as Charaka and Desi that promote a sustainable livelihood for handloom workers. Following the clarion call given by the Graama Seva Sangha, “Don’t collect and don’t pay tax,” the rally witnessed a sale of handmade footwear, fabric, mats and pots without tax.

A second Satyagraha was observed in Hyderabad on September 9, spearheaded by the All-India Federation of Handloom Organizations and Dastkar Andhra, demanding the withdrawal of tax by the GST Council which had its meeting in the Telangana capital on the day. These organisations have appealed to likeminded organizations and movements across the country to come together to fight for the abolition of tax on handmade goods as well as  for the creation of policy initiatives that recognize handmade products as the foundation of true Swadeshi manufacture in the country. The Satyagraha will be observed in other parts of the country too, including Chennai, Kolkata and Jaipur from September 11 to 24. A padayatra will begin from Junjappana Gudde in Sira taluk in Tumkur district of Karnataka on September 24 and the march will reach Kasturba Gandhi Ashram at Arasikere on October 2, after covering 120 km by foot. A hunger Satyagraha will begin at Arasikere on October 2, on the occasion of Gandhi Jayanti.

The argument for Satyagraha

For the first time since independence, a tax has been imposed on all handmade products in India( which are sought to be sold in this all-India market i.e outside the local market area) As a result, Khadi, handloom, handicrafts and the like are taxed under the GST regime. Under GST, luxury products have become cheaper, while handmade products have become expensive. Cars and cigarettes cost less, while a Khadi saree, a handloom kurta, a mat, pot and plough will cost more. Across India, producers of handmade goods who are already in distress will face even more hardship as a consequence of the imposition of the tax.

With this tax the rural enterprise, already in distress, is going to be hit further. We had fought the British against an inhuman tax on salt nearly a century ago through a Tax Denial Satyagraha. It has become necessary to wage another Satyagraha, and that too against our own government, because GST has dealt a death blow to rural enterprise. “

The aims and objectives of the Satyagraha

The organisers believe that this Satyagraha will restore the moral leadership of India as well. For, “morality is made by toiling hands. Sant Sabhyata the saintly civilization of India is handmade. Sant Ravidas, Sant Kabir, Sant Kanakadasa and Vachanakara Sants were all handcrafting people. Handmade production, equitable society and spirituality of simple living formed the three tenets of that Sabhyata. Today the Sabhyata is in danger. This campaign, for making handmade products tax free is a major step towards the rejuvenation of that Sabhyata.”
The British enslaved India not so much through the gun as through capitalist industry; not so much through politics as through commerce. They came as merchants. Remained as merchants. Plundered natural resources, brought machine made products, and managed to sell the millmade. They did so through tax manipulations. Handmade was taxed heavily while the British machine was given concessions. The same policy is being used by our governments now. GST, created jointly by all state governments and the central government is wrong in many other ways. The machine made that is spreading death across the globe and destroying nature environment and society is made cheaper while the rural product, which is nearly carbon neutral, is made dearer by this regime.”
This struggle involves radical changes to the organization, ethos and economics of the society and cannot be undertaken without support from all sections of the society across India.”

The all-India market and GST

The idea of GST is to establish a single all-India market with a single set of ‘market taxes’. So every producer/service-provider, who wishes to participate in this single market, must register and then, hopefully, derive the ‘benefits’ of this single tax regime; while the consumer ( who does not need to register) can get the ‘benefit’ of this single tax regime at any place or time within this single market area.

Industrial (large scale) producers and service-providers will obviously benefit from this ‘no-boundaries’ market system; where buying and selling has been freed from the ‘limitations and vagaries of localities and geographies’. With the widespread decrease in margins/surpluses, small producers/service-providers have been forced to participate in this market system, most often on very adverse terms of trade. In order to avail of the ‘benefits’ of this GST regime , they find that, rather than proving to be a boon it is actually proving to be a bane and a curse on their lives and livelihoods; thus the Satyagraha! The demand for no-tax/zero-tax on handmade produce and services (which permits for inclusion in the all-India market system), arises from this situation. The legitimacy of this demand cannot be questioned on any economic or moral ground!

Challenging the market ‘dharma’

Market activity involves buying and selling, and the aim is to make (or increase) profits for the producer/service-provider. This is the sole aim of (modern) market activity the world over, that is, this is the globalised ‘dharma’ of the modern market system. Producers and service-providers of Lokavidya Samaj have for long been localised and served the needs and necessities of local producers and consumers through a sustained local-market system. This system seemed to have survived (through the ages) through a now-forgotten ‘dharma’ ; of meeting the needs and necessities of the local producers and service-providers through a relatively fair system of exchange rather than one based on ‘cut-throat’ , competitive, profit-oriented buying and selling activity; devoid of any humanity or environmental-friendliness.

How can the State (or local body) seek revenue, through taxation, on hand-made goods and services? The only capital involved, in such productive or service activity, is human labour and Lokavidya. What tax can one legitimately levy on produce based on such capital? What Economics and/or morality supports such taxation?

The Sant Sabhyata, that the current Satyagraha avers to, probably paraphrases this now-forgotten ‘dharma’. Can the Satyagraha rekindle this ‘dharma’ within the rank and file of Lokavidya Samaj hand-makers? The sustenance of the opposition to the tax, on hand-made goods and services in the current GST regime, will largely depend on this internal strength that the Satyagraha is able to infuse in the rank and file of Lokavidya Samaj .

Krishnarajulu, September 2017