So, a new irony is upon us--the speed of trucks has risen 40 to 60 percent with good four and six lane highways, but we remain mired in the old inefficiencies of bad governance. A transport system is at the heart of global competitiveness, and for a country with the second highest growth rate in the world, octroi nakas are a huge drag. They also prevent India from becoming a common market. Municipalities levy octroi in order to earn revenues, but it is an inefficient and obsolete tax that has been phased out in all modern nations. Vijay Kelkar had held out the hope of eliminating octroi. He proposed sensibly that all indirect taxes should be merged into a single, universal Goods and Service Tax (GST). From this tax, municipalities would be compensated for the loss from octroi. Mr Chidambaram followed up by announcing that the GST would come into force in 2010. The nation took the historic step towards GST by enacting state Value Added Tax last year. Since there are huge legislative changes and negotiations required if we are to meet the 2010 deadline, the government shouldn't lose time and it should set up an Empowered Committee on GST in the coming Budget.
Check nakas not only slow down the movement of goods across the nation, they destroy the moral character of our people. Transparency International reports that India's trucking industry pays Rs 22,200 crores in bribes each year. This is equal roughly to what India's truck drivers earn annually by way of salaries. If you are a truck driver, how do you explain this to your son? Is this the India in which he will grow up? Our governance failures are not only the failures of institutions--they also have a moral dimension.
“The Sanskrit Mahabharata came to be the continuing repository of crisis in the public discourse of classical India" writes the scholar, David Gitomer. Our contemporary world is also “in permanent crisis, a world whose karmic dominoes of human weakness reach into past and future horizons until bounded by creation and apocalypse”. Just as the Mahabharata had a problem with the self-destructive kshatriya social institutions of its time, we have a problem with all our governance institutions. The great insight of the science of economics is that people respond to incentives. Smart governments are able to reward the good and punish the bad behaviour of its employees. Britain, which gave us many of our institutions, has quietly transformed its governance institutions in the past 20 years. We must do the same. Reforming is never easy—it is like waging a war at Kurukshetra—but it must be done