Boost growth, not taxes

Boost growth, not taxes

By THE SUNDAY GUARDIAN | 27 January, 2018

Positivity has to be genuine and not of the other kind. False positivity is when ground reality fails to be factored in, and each event gets seen through rose-tinted glasses. Often such lenses magnify achievements and diminish the image of failures, thereby failing to provide the corrective needed for an improvement in the situation. Television channels are filled with the able and articulate representatives of the Bharatiya Janata Party led by Prime Minister Narendra Damodardas Modi, party president Amit Shah and Union Minister for Finance Arun Jaitley. Under the tested leadership of PM N.D. Modi, the team led by him has ensured that the cobwebs in the economy are getting cleared, such that within 2023 the administration of the country will be vastly more efficient than it has long been. The digitalisation of services is proceeding at a rate unprecedented in the history of the Republic, while ministries and ministers are working with a sense of purpose that was absent in the past. Not only in the administrative sphere, but in the societal as well, beneficial changes have been introduced. An example is the banning of the cruel practice of triple talaq, the evil consequences of which were ably warned against by Minister of State M.J. Akbar in the Rajya Sabha. The Prime Minister’s Office, under the leadership of the distinguished civil servants Nripendra Mishra and P.K. Mishra has been dealing with a volume of work unprecedented since the days of Indira Gandhi’s second term in office, working throughout the week and for much of each day to ensure that the delivery of services to the people of India be streamlined. In the Ministry of Defence, a history-setting precedent has been established by the appointment of the personable yet steely Nirmala Sitharaman as the Defence Minister, an appointment as important for gender equality and justice as was the earlier appointment of the dedicated Smriti Irani as the Minister for Human Resource Development (now Information & Broadcasting). Much has been done. But what is undeniable is that much more needs to get done, if the Modi government is to fulfil the hopes of the tens of millions of citizens who voted in 2014, not for the BJP but for Narendra Modi. They did in the hope of change on a scale and at a speed never before seen in Independent India, and this is the standard by which the government needs to judge itself, not by the sorry record of the second term of Prime Minister Manmohan Singh, a period that BJP spokespersons dwell upon in a context where the public has moved on from the past to the future. 

Both demonetisation and the introduction of the Goods & Services Tax are game changing measures. However, the quality of the repast is defined by the cooking, and it is here that lapses have been made. The formal economy depends on the informal for much of its vitality, and the latter relies heavily on cash. That being the case, the replacement of Rs 1,000 and Rs 500 notes with Rs 2,000 and new Rs 500 notes should have been carried out in such a way that no liquidity problem arose in the economy. Instead, the Reserve Bank of India became an object of global attention and some disquiet as a consequence of the blizzard of changes, amendments, changes and re-introductions of several provisions. Bank deposits were fenced from depositors, thereby leading to a loss in confidence in the banking system. The promise of the Governor of the Reserve Bank of India to “pay the bearer on demand” the value of each currency note held by him or her was dishonoured, with consequences for the trust and respect that people across the world have in the currency of the Republic of India, no matter what its shape or colour. While the Prime Minister announces the Big Picture, it is those working for him who need to work out the details, and this they did in a fashion that caused great hardship and slowdown. Similarly, there were too many items attracting high GST rates, and these had to be reduced subsequently, when they should not have been imposed in the first place. Modi should get from his team a commitment to the highest standards, and this can only be if they acknowledge errors, rather than pretend such do not exist. 

The 2018-19 Union Budget would be a good way of demonstrating that the lessons of 2017 have been learnt. The budget should focus on raising growth and not taxes. It was not for nothing that the 1997 Union Budget was called the Dream Budget, even though in his incarnation as the UPA’s Finance Minister, P. Chidambaram converted Dream into Nightmare. Union Finance Minister Arun Jaitley has the opportunity to ensure the low rates that will assure high compliance and collections. He must turn away from bureaucratic to pragmatic solutions the way Chidambaram did in the 20th but failed to do in the 21st century. The next budget may well seal the political fate of the Modi government, and it is hoped that it will be such as would unleash the animal spirits and exuberance needed for double digit growth. Over to Finance Minister Jaitley. 

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