Don't Kill Mumbai

Is the Maharashtra government acting as an agent of Walmart and other big MNC retail chains to accelerate their entry into India? How else would you explain the proposed implementation of Local Body Tax (LBT) across all municipal areas of the state? Almost all trade associations of the state (including the different IT associations) are up in arms against LBT; even the national distributors are supporting the cause of the channel by proposing to indefinitely stop billing in Maharashtra.

Not just IT traders, obviously the implementation of LBT would impact the entire small trading fraternity. The state has a history of imposing excruciating taxes on small traders. In 2004, the fifty-year old Sales Tax was replaced by VAT (and even after a decade it is not uniform across all states) which invited increase in cost of goods every time it changes hands. Same is the strategy with LBT, with every cog in the chain being taxed at all stages, which will invite increase in cost of the goods every time it changes hand.

This means the end consumer would land up buying goods at much higher prices when he buys it from a small road side retailer of his locality, since this good would reach such retailer changing hands from manufacturer to distributor to whole seller to finally reach that particular retailer. After adding LBT at each stage, selling price of this good would at least increase 5% at every stage it changes hands. But the same goods when the consumer buys from a retail mall like Walmart, who would buy it directly from manufacturer, would be available to consumer at a much cheaper price. It is a no-brainer which way the consumer purchasing preference will eventually shift. So soon the entire chain of distributor, wholeseller and retailer would be out of business.

Many are smelling a conspiracy in this to shut down the mom-and-pop neighborhood kirana stores (despite their epitaphs being written when India saw the advent of large desi retailers), who have continued to flourish in spite of the Spencers and Hypermarkets. Some are drawing a parallel with the 70s mill strikes in Mumbai apparently masterminded to make Mumbai Shanghai. After this strike many mill workers became unemployed and could never return back to Mumbai rest of their life for work. This was fortunately or unfortunately a well planned strategy to create huge real estate land for future developments into malls and luxury housings and change lifestyle and working of many Mumbaikars and huge profits for the builder lobby.

Today this looks like the plan of some smart bureaucrat. LBT too seems to be a brainchild of another smart bureaucrat. It might sound the death knell for all small traders in Mumbai and other cities of Maharashtra if LBT comes into effect as they would have no business left in Mumbai the way mill workers had no work left in Mumbai.

The pertinent question being asked now is that when VAT was introduced, it was promised by the government that all other taxes will be removed, and there will be uniform taxation through out India . But as of date none of the additional taxes have been removed; instead prices of commodities are rising constantly and rapidly, thereby denying a common man the ability to survive in this country.

Mumbaikars and other urban Maharashtra citizens are already paying one of the highest taxes in any state in India making Maharashtra one of the costliest places to live. One might ask if the Mahashtra government cannot survive without octroi/ LBT (apparently LBT was brought in to offset the loss in exchequer following the abolition of octroi), how can the national capital Delhi do without them with essential items like food, petrol, diesel, gold being cheaper in Delhi than in Mumbai. (Having lived in both cities, this author can vouch safe for this discrepancy).

The financial capital of India, the ‘city that never sleeps', one whose indomitable attitude is eulogized shamelessly by these same politicians in the government after every terrorist strike, is brought down to its knees by the same government. The question that every trader is asking today is why this discrimination. Just as I am writing this, I came to know a South-based IT association plans a strike in solidarity with the Mumbai traders.

The DQ Week would urge everyone from the country (especially all trader associations) to stand in support of the Mumbai and Maharashtra traders. If for nothing else, but to keep alive the much abused spirit of Mumbai. After all Johnny Walker has immortalized Mumbai more than a half century back with the lines
"Hai dil hai mushkil jeena yahan, zara hatke, zara bachke, yehi hai Mumbai, meri jaan"

(rajneeshd@cybermedia.co.in)