Economic Slowdown: MP Transport Sector Claims 50% Demand Slump

(This is second part of our series on the impact of economic slowdown in Madhya Pradesh)

Bhopal: With the country’s transport sector going through one of its worst slowdowns in its history, the wheels of trucks in Madhya Pradesh have also come to a grinding halt.

According to state transport associations, in the last three-four months, demand has witnessed a slump of over 50-60% in the state. Evidently, the fare has drastically declined by 30-35%. This while petrol prices and toll taxes have seen a sharp jump in the past couple of years.

The Congress government in the state has levied around 6% extra value added tax (VAT) on diesel, making it costlier by Rs 7-8 in the state. As a result, the petrol pump sector has recorded a whopping 30% decline in sales of diesel in the state, claimed Indore Petrol Pump Association president Rajendra Singh Vasu.

In addition, the state government recently imposed a life-time road tax on old vehicles, which was earlier mandatory for new vehicles. The life-time tax on new vehicles was imposed by the previous Bharatiya Janata Party (BJP) regime. To top this, vehicle insurance premium has just doubled due to the Goods and Services Tax (GST). Not only that, GST is also imposed on third party. GST on tyres, motor parts and services are highest at 28%.

The repercussions of the above polices are dire. Truck owners say they have been forced to become defaulters as they are failing to pay EMIs to banks. Hundreds of small transport agencies have shut down, accompanied by a massive decline in fares.

Following the slowdown, transport associations in the state have gone on strike since October 5. They have been demanding rollback of the increased VAT on petrol and diesel, as well as the mandatory payment of lifetime road tax on both new and old vehicles, and alleged extortion at RTO check-posts.

Also read: #Economic Slowdown: 30-35% Demand Slump, Hundreds of Factories Shut Down in MP

“We are already facing a tough time due to the economic slowdown, high taxes on diesel, toll taxes, but the recent changes in the polices by the state transport department are forcing us to stop the wheels. Besides, the rate of petrol and diesel in the state is the highest in the country,” said the president of Indore Truck Operators and Transport Association, PL Mukati.

The massive truck strike has affected e-orders worth Rs 25 crore, as per a report by Times of India. A number of orders were lined up especially due to the festive season.

On the first day, delivery of goods worth over Rs 25 crore was affected in Bhopal, Indore, Ujjain, Jabalpur, Dewas, Mhow and Dhar. As online goods come under the bracket of 18% GST, the state may suffer losses, said sources.

The strike intensified on Sunday, October 6, as tanker operators also joined the agitation. This has led to a fuel crisis, said a senior government official. However, the supply of essential commodities, like vegetables and medicines, won’t be affected as these items have been kept out.

“Tanker and bus operators have joined the agitation in the evening,” said Rajendra Singh Trehan, vice-president of the association of the state transporters.

The state unit of the All India Motor Transport Association claimed that there are 15 lakh commercial medium and heavy trucks in Madhya Pradesh. Of which, 40% ply within the state, while 60% ply outside the state.

“A truck which travels 2,000 km, pays Rs 6,000-7,000 as toll tax. They also have to spend a huge amount on fuel. Their paper should be up-to-date due to stringent newly enacted Motor Vehicles Act. Drivers and conductors have their own maintenance charges. They pay 28% GST. Besides, they to pay a huge amount as bribery, but, the demand and fare has declined by 30-35%. All these factors have made it impossible for the transport industry to thrive,” said Kailash Gupta, member of All India Motor Transport Association, Madhya Pradesh.

A truck which charges Rs 25,000 for the Gwalior-Indore route is now charging only Rs 18,000, he added, while being forced to pay more for petrol and diesel in the country.

Effect of Slowdown

Three-four months ago, 500-600 heavy and medium trucks used to start from from Pithampura Industrial area every day, which has now reduced to less than 100. From Indore, which is the economic capital of state, 2,000 trucks used to ply every day, but, it has declined to 700-800 now. Only 60-70 trucks are plying from Mandideep Industrial area everyday currently, which was 250-300 earlier. The condition is almost similar in Malanpur-Banmore (Gwalior-Bhind) and in Cement Industries of Rewa-Satna, claimed truck and transport associations of the state.

Also read: What the Slowdown Means for Working People

Truck associations of major cities like Indore, Bhopal, Rewa-Satna, Bhind, Gwalior and Jabalpur unanimously agreed that both the demand and fare have declined by 40-50%. “We have not done any survey, but, during the recent meeting with various transport associations, they claimed that in some areas the demand has declined by 60%,” said PL Mukati.

Meanwhile, Rakesh Tiwari, the president of the Association of Parcel and Transport blames the demonetisation, GST, wrong transport policies of the state and Central governments, unexpected jump in petroleum product rates and toll taxes to have led to this condition.

“Both the government, Centre and state are only framing policies for big players. As a result, nearly 40% small transport companies have shut down in Indore, and Pithampura Industrial area,” said Tiwari.

The Parcel and Transport Association of Indore supplies daily needs products (FMCG products) in and out of the state. “Earlier, around 2,000 trucks used to leave everyday from Indore, but, it has declined to 700-800 every day now,” he said.

Change in State Transport Policies Irk Truckers

Even as the Union Finance Minister announced a hike of Rs 2.45 for diesel and Rs 2.36 for petrol on July 5, 2019, the Madhya Pradesh government hiked Rs 2 as state tax the same day. Last month, the state government again hiked the VAT on petroleum products, making the price of petrol Rs 82.05 per litre and diesel Rs 73.17 per litre in the state, the costliest in the country.

The imposition of a life-time tax on old vehicles is also questionable. Union Transport Minister Nitin Gadkari had issued the order to rid vehicles which are over 15 years old. However, the state government, has imposed a life-time tax on old vehicles too.

“If a truck owner has a 10-year-old vehicle and its market value is Rs 3.50 lakh, and, according to the Union minister, the truck will be off the road in the next five years, so, why should the owner pay Rs 80,000 as life- time tax?,” asked All India Motor and Transport Association member, Kailash Gupta.

Also read: PMO Asks NHAI to Discontinue Construction of Roads

The vice president of State Transport Association Rajendra Singh Trihan said, “Talks between the association and Transport Department minister are on. We will only call off the strike if the state government agrees to our demands.”

Despite several attempts, State Transport Minister Govind Singh Rajpoot could not be reached, but, the State Transport Commissioner V Madhu Kumar, who has joined the department days ago, said, “the talks between both the parties are on and we are likely reach a conclusion soon.”