The Tribune, Chandigarh, India

Friday, January 19, 2001,
Chandigarh, India

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Move on octroi faces rough weather
By A.S.Prashar
Tribune News Service

CHANDIGARH, Jan 18 — A move by the Punjab Government to scrap the privatisation of octroi collection in the state in a bid to satisfy certain votebanks in view of the approaching state assembly elections has run into rough weather.

Economists here point out that Punjab is not exactly in the pink of economic health. Till not very long ago, it had difficulty even in paying salaries to its staff and pensions to its former employees. The Finance Minister, Capt Kanwaljit Singh, was hard put to it trying to balance the Budget and raise additional resources to fund development activities. The privatisation of the octroi collection system has turned out to be the golden goose. For the first time in the history of octroi collection, the government hopes to raise nearly Rs 1,000 crore during the current financial year. When the Badal government assumed office, the revenue collection from local bodies was just Rs 389 crore. After the privatisation of octroi collection, it rose to Rs 890 crore last year and is expected to cross the Rs 1000-crore mark during 2000-2001.

Gone are the days when the staff of the fund-starved municipal committees had to stage dharnas and organise gheraoes of visiting ministers to press for the release of funds so that they could get their salaries. Now, not only are municipalities flush with funds, they have also turned into engines of growth and development in the cities (see table). As a matter of fact, some officials assert that development activities are confined only to the towns and cities because the state government does not have adequate funds to undertake large-scale development activities in the countryside.

The privatisation of the octroi collection system has been provided for in the Punjab Municipal Act, 1911, but had never been attempted. A small beginning was made during the Congress regime but it was when the Badal government assumed office in February, 1997, that the state went in for it in a big way. The results have been spectacular.

However, privatisation has been facing stiff opposition from vested interests in both the SAD and the BJP in the ruling alliance who have been demanding that it should be scrapped. The main argument being advanced in support of their demand is that it is causing “unneccesary harassment” to traders. Certain councillors are also alleged to have taken “benami” contracts for the collection of octroi, and thus “unduly enriched” themselves.

Although the state assembly elections are still a year away, the Badal government has already gone into election mode. And, going by its present expansive mood in which it has already regularised the services of thousands of ad hoc/work-charged employees and “legalised” encroachments on public land, it is only a matter of time before it scraps the “unpopular” measure of the privatisation of the octroi collection which has been opposed tooth and nail by trade and commerce in the state. Trade and commerce have been getting away with large-scale evasion of octroi all these years and do not like the new measure. Since it is also one of the main sources of political and election funds for the parties, there is rethinking in the government on the privatisation of octroi.

There is little doubt that when the system was introduced, there was a spate of complaints about contractors hiring armed goons to check each and every vehicle entering or leaving every city or town in the state. This sometimes led to unsavoury incidents in which even women and their belongings were subjected to the indignity of being checked by the contractors’ men. But since then, the situation has improved vastly and the private octroi collection system has settled down to more or less trouble-free functioning.

Under the circumstances, it makes no economic sense to scrap the contract system for octroi collection. At a recent meeting of local bodies held here under the chairmanship of the Minister for Local Bodies, Mr Balramji Dass Tandon, their presidents were largely of the view that the present system of octroi collection through contract should continue.

Position showing figures of collection of octroi before and after privatisation:

Name of
the Municipality

Before
privatisation

After latest
amount

Increase

Jandiala

29.27

52.28

79%

Majitha

10.50

21.65

106%

Ajnala

20.08

95.85

377%

Rayya

25.40

48.20

90%

Gurdaspur

84.67

253.64

200%

Quadian

22.18

45.04

103%

Pathankot

181.41

494.30

172%

Dinanagar

36.46

115.45

217%

Dhariwal

17.48

75.10

330%

Machhiwara

34.96

81.25

132%

Kharar

54.51

121.10

122%

Raikot

44.32

88.15

99%

Sahnehwal

27.47

142.90

420%

Kurali

54.88

135.00

146%

Doraha

58.65

148.00

152%

Mullanpur

21.57

56.05

160%

Morinda

35.28

108.75

208%

Samrala

30.32

63.05

108%

Ropar

59.18

171.50

190%

Maloud

9.38

28.02

199%

Gobindgarh

737.00

1315.00

78%

Khanna

315.86

736.37

133%

Hoshiarpur

381.00

736.76

93%

Kartarpur

32.30

50.71

57%

Nakodar

76.02

152.00

100%

Shahpur

37.50

76.00

103%

Nawanshahr

84.91

183.08

116%

Jagraon

110.00

218.00

98%

Nurmahal

25.82

54.59

114%

Batala

177.86

356.14

100%

All amounts in lakhs of rupees