Is Jharkhands preferential policy justified

Jharkhand | Updated: Nov 14 2005, 06:08am hrs
Industry associations in Jharkhand feel the state should come up with a mechanism to rake in a higher value for its only wealthminerals.

They justify this on the basis of Bihars neglect of the then south Bihar, contributing 60% of total revenues, and the fact that Jharkhand was formed mainly for the uplift of its backward Adivasis, who are yet to show any entrepreneurial skills.

Industry associations here see nothing wrong in chief minister Arjun Munda turning down passage of iron ore to West Bengal (where Jindal South West Steel had originally proposed to set up a steel plant) saying that value-addition to the ore had to be done in Jharkhand. (Jindal South West Steel signed an MoU with the state government for setting up a 10 mt steel plant on November 9.) Trade bodies emphasise theres nothing extra that Jharkhand is doing to protect its local industry (barely in existence) and say that the incentives announced in the states industrial policy are common to almost all states.

They also see nothing wrong in the states price preference for local manufacturers for government purchases.

Jharkhand is due to implement the value-added tax (Vat) from January 1, 2006, which, trade experts say, would even out the imbalances in its sales tax regime. Some traders, however, express concern that the differing rates for similar goods across states beat the very purpose of Vat.

Industry sources are critical about the delay in inter-state movement of goods by road, particularly to Bihar, West Bengal and Orissa. Though there is no revenue involved for states in issuance of road permits/way bills by the concerned commercial tax departments, delays, often by several days, in the name of checking of road permits, they say, hamper business and trade in a highly competitive market.

A clear instance of an actual barrier, ostensibly to check illegal entry of goods, is the 4 to 5% entry tax on finished goods coming in. This is adjustable for the trader against local sales tax paid. But it is only the big consumer who makes a bulk purchase from a different state, and has to pay both entry tax, as well as the local sales tax, who is at a loss, as he has no recourse for offsetting the levy.