Sandesh Prabhudesai
1 October 1999
Goan industries and trade unions, hand-in-hand, are up in arms against the state government, opposing the withdrawal of blanket sales tax exemption with retrospective effect.
While trade union bodies have decried the move as it would result into closure of several units and workers being thrown on roads, the small industries have threatened to come on streets, if necessary, demanding immediate withdrawal of the new policy.
In order to overcome the economic crisis the tourist state has been facing, the Congress government at a cabinet meeting on Wednesday had decided to impose 50 per cent sales tax on all the products manufactured in Goa with immediate effect.
It is in contravention of a policy adopted in 1971 to exempt sales tax for the first 12 years for the medium and large scale industries and 15 years for the small scale industries. The new policy of 50 per cent ST imposition now also applies to all those industries who were availing this facility.
"It is a breach of trust", cries out Parag Joshi, president of the Goa Small Industries Association. Fearing closure of several small units due to this, they have now chalked out action plan to build pressure on the government, beginning with stoppage of dispatches in the market.
The association, which represents around 4000 small units in the state, is also getting prepared for actions like dharna, demonstrations, morchas and even indefinite closure of their units. "The government action otherwise would compel us to pull down our shutters permanently", quips Joshi.
Reacting sharply at an emergency meeting, the Goa Chamber of Commerce and Industry has also stated that the move would erode the government's credibility while driving out even the existing units. The GCCI is presently contemplating ways and means to face the situation.
Sharing the concern expressed by the industry, the All India Trade Union Congress, Goa's leading trade union body, has also decried the decision, stating that it would result into unemployment while also affecting industrial relations in the state.
"It will not affect the common man", insists chief minister Luizinho Faleiro, while also claiming that industries would still have a competitive edge in the market as they are getting benefit of 50 per cent sales tax, compared to other states.
Claiming that he is empowered to take such an unilateral decision with retrospective effect to overcome the financial crunch as per the Supreme Court decision, Faleiro is bent upon implementing his decision despite protests from the industrial world.
"It is a wrong theory. Our operation costs are already 12 per cent up due to imported law material, costly labour and market availability only outside the state", points out Surendra Salgaonkar, a small scale industrialist.
Adopting a little divergent view, Manohar Parrikar, the state opposition leader, feels he had no problem with the policy decision if it was meant only for the new industries and not with retrospective effect.
He also believes that no medium or large scale industry would be affected with this policy as they have several other legal methods to avoid the tax cover. "It is however a total injustice meted out to the young Goan entrepreneurs who have set up small units", he adds.
The Goan industrial scene is already in bad shape due to the high court decision to ban power connections to any new unit. As a result, the industrial development has literally come to a grinding halt here in spite of Goa enjoying income tax holiday till March 2000, for the units beginning its operation till then.
Faleiro however still believes that his policy would not have any adverse impact on Goan economy and its plans of industrialisation. "Industries would keep coming to Goa due as we provide and water and electricity at concessional rates", he claims.
Goan industrialists however feel that the land cost itself is exorbitant in the state, compared to the neighbouring states of Karnataka and Maharashtra while power and water supply is the most erratic one. "We survive only because of the ST holiday", says Joshi.
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