Traders threaten hunger strike

Strike against VAT paralyses trade as most retailers take to the streets.

The nationwide bandh against the proposed value-added tax (VAT) paralysed trade and commerce in several parts of the country today, with traders threatening to go on an indefinite strike unless the new tax regime was made trade-friendly and essential commodities were taken out of its ambit.

The wholesale commodity markets in Delhi, Mumbai, Kolkata and Chennai remained closed and retail trade was hit as traders protested against the "harsh" clauses of VAT. They alleged that prices of essential items would go up under the new tax regime from April 1, 2005.

Trading came to a grinding halt in major states like Maharashtra, West Bengal, Assam, Andhra Pradesh, Rajasthan, Punjab and Uttaranchal as wholesalers and retailers chose to keep their shutters down in protest against VAT.

Although the trade bandh was "partial" in states like Delhi, Karnataka, Tamil Nadu, Kerala and Jammu & Kashmir, traders took to the streets and staged demonstrations against the imposition of VAT.

Stock markets and the financial sector were open today but the Bombay Stock Exchange Sensex shed 50 points to close at 6,534 points.

Traders' associations, led by the Confederation of All-India Traders (CAIT), threatened to go on a nationwide indefinite strike if their demands were not met.

The association's Secretary General Praveen Khandelwal told PTI that the traders' association had sought a meeting with the empowered committee of state finance ministers on VAT by February 27 to sort out the differences.

If the VAT panel failed to carry out necessary changes as sought by traders, Khandelwal said traders would go on a hunger strike on March 17. Traders ave said they would start an awareness drive through a "VAT rath yatra" in the first week of March. States like Uttar Pradesh, Madhya Pradesh, Gujarat and Rajasthan were not prepared for VAT, Khandelwal said.

"Five rath yatras will commence from different parts of the country. These will travel through all the states, including even small towns, and finally assemble at Delhi," said Khandelwal.

He said the details of the VAT Rath Yatra would be finalised in a meeting in Jhansi scheduled on February 27.

"The list of 550 items that will come under VAT has not been finalised yet. This reveals the contradiction among states in implementing VAT," he said. Traders fear that many items will be taxed at 12.5 per cent against 4-8 per cent now.

"VAT will lead to a rise in prices," khandelwal said.

The fear of traders is not unfounded as the Centre has decided to continue with the 4 per cent central sales tax (CST) in the first year along with VAT as some of the states feared loss in revenue in the absence of CST.

After getting an assurance from Finance Minister P Chidambaram on compensation for revenue losses, states had endorsed a VAT white paper, which laid down the structure of VAT, its legislative aspects and a rough sketch of the VAT rates.

Most of the states are prepared to implement VAT despite traders' agitation.

Traders in the Capital had put up an anti-VAT theme tableau.

The CAIT has sought a meeting with the empowered committee before February 27 to sort out differences on the new regime.

"In the best interest of trade and industry, an in-depth open discussion on VAT provisions is needed. The CAIT is prepared to participate in any open debate with government on the merits and demerits of its present form," said Khandelwal.