Chan Mahanta wrote:
Santanu:C-da:
I read some unflattering views about the program recently: That these industries were running front operations in Assam. That they were bringing in finished goods merely to package them with the excise tag, without creating the jobs the program was meant to. I have no difficulty believing the charges. So what else is new?
Do you think perhaps the abuses could have been plugged, instead of eliminating the incentives altogether?
I don't think the tax incentives were withdrawn because of the "abuses" you mention.
Such abuses can be found in each and every case where the government offers tax incentives for a specific kind of production (location-based or technology-based etc). For example, a significant share of the tax sops for small and cottage industries in India are often cornered by dubious outfits that supposedly re-sell their output to large firms - its rampant in industries such as shoes, cotton textile etc. The same is true for supposedly "100% export-oriented" units. However, at the same time, a lot of genuine firms have entered these sectors and their share is probably growing over time. One reason behind this is that instead of creating fictitious firms that "re-process" goods in the tax incentive sector, some of the outside firms have found it in their interest to actualy "outsource" part of their production to such units.
I have no doubt that the same would have happened in the north east if the tax incentives were continued.
Santanu.
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