The collection of octroi has been done away with across all seven municipal corporations of Gujarat from midnight on Wednesday, fulfilling a long pending demand of the state’s traders.
The move, seen widely as a sop before the forthcoming assembly election, will cost the state Rs 1800 crore annually.
Indeed, so badly is it expected to impact the state’s finances, that political observers believe the government deliberately delayed the step till a month before the polls, when the election commission’s model code of conduct has already come into effect.
Had the election commission objected, the Narendra Modi government could have both avoided implementing this financially injudicious step, as well as scored a political point over the Congress by imputing that it influenced the election commission.
Instead the commission has allowed the step, on the ground that the cabinet decision had been taken much earlier. While announcing the decision in June, chief minister Narendra Modi had assurred the civic bodies that their revenue loss would be compensated by the state exchequer.
“Civic amenities and services will not suffer immediately as our corporation has adequate funds,” said I.P.Gautam, Ahmedabad Municipal Commissioner.
“But a problem may arise next year if the State Government does not honour its promise of compensating the revenue loss.”
The BJP first promised to abolish octroi in its election manifesto for the 1998 assembly elections, but in spite of forming the government, failed to keep its word. The promise was repeated before the 2002 elections.Traders insisted that octroi was simply a tool, which enabled police and officials to harass them. But the reluctance of municipal corporation officials to give up the revenue earned from octroi initially stayed the government’s hand.
Soon traders’ agitations began and anti-Modi feelings ran high in the business community. Hence the decision to remove octroi from November 15, ‘Labh Pancham’ day, when the Gujarati new year begins.