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On Record Union Budget: Looking beyond |
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Comments Unkempt Diversities — Delhi Letter
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Union Budget: Looking beyond The United Progressive Alliance Government is expected to set in motion a major tax reforms initiative in the Union Budget (2005-2006). These reforms are likely to be based on the report made by the task force headed by Dr Vijay Kelkar. The report (July 2004) contains many proposals on tax reforms, direct and indirect. Coming first to direct tax proposals relating to income-tax, from the existing three-tax rate schedule (10, 20 and 30 per cent), the task force recommends the two-rate schedule, i.e., 20 per cent for those with Rs 1-4 lakh taxable income and 30 per cent for those with more than Rs 4 lakh taxable income. On considerations of equity and productivity, it has recommended the abolition of both standard deduction for the salaried class and Section 88 of the Income-Tax Act, which grants tax incentives for savings. The two-tax rate schedule is not new. It was first mooted by Dr Raja J. Chelliah. On his advice, we moved from a complicated tax structure to a simplified one. The question of equity and tax incentives for savings has already been incorporated in our tax structure when in the post-reform period we moved from positive-linked saving incentives to negative-linked ones. Now the income-tax rate schedule gives 20 per cent tax incentive for savings to income-tax payers having taxable income up to Rs 1.5 lakh. It is 15 per cent for those having taxable income between Rs 1.5 lakh and Rs 5 lakh and zero thereafter. However, the task force’s recommendation to do away with all the tax incentives on savings would adversely affect the saving rate in the economy. We can achieve equity and productivity by giving tax incentives for savings @ 15 per cent, 10 per cent and zero per cent for income ranging Rs 1-2 lakh, Rs 2-4 lakh and above Rs 4 lakh respectively. Then, abolition of standard deductions would also be inequitable because already persons with income above Rs 5 lakh enjoy standard deduction @ Rs 25,000, while for persons with income up to Rs 5 lakh, it is Rs 35,000. What is the harm if poor salary earners save Rs 100 and freeze this amount for six years or more and earn an interest of 7-8 per cent simply to legally avoid (not evade) the payment of tax amounting to Rs 10 or Rs 15 only? Let such tax incentives be zero for persons earning beyond Rs 4 or Rs 5 lakh, who are accustomed to save. As for achieving equity, it has two aspects—vertical and horizontal. Vertical equity implies that persons with higher level of income should pay higher amount of tax and vice versa. Dr Kelkar’s task force perhaps has vertical equity in mind. It is silent about horizontal equity which means the same amount of tax burden for the same level of income, irrespective of the source of income. About indirect taxes, the task force wants a fully integrated goods and service tax to be known as the Indian Goods and Service Tax (IGST) due from April 1, 2005 by replacing the Central excise duty and service tax levied under the Finance Act 1994. The Centre should first have an integrated tax on goods and services within its own jurisdiction. Let the states continue with State-VAT from April 1 and evolve slowly and steadily, with the consent of all stakeholders, a move towards a full-fledged VAT in the country. However, it is a distant dream. As a “grand bargain”, the task force motivates the states to abolish taxes on transportation of goods and passenger, stamp duty for registration of property apart from general sales tax, octroi, entry fee, etc. In return, the states would get the right to tax services. Taxes on immovable property like stamp duty and registration fee stand as a class apart. Practically, these taxes resemble more with direct taxes than indirect taxes. Moreover, as these taxes are on the State List, these cannot form part of an integrated indirect tax structure. This would also create controversy in our federal financial relations. The suggestion for State-VAT on imports will adversely affect land-locked states like Punjab and Haryana. The task force’s suggestion for three ad valorem rates, in addition to zero rate on selected key commodities has been criticised on three accounts. First, the IGST and its enactment by the Centre and the states suggest that the states would give up their taxation powers in exchange of taxing services. Secondly, the enactment of different rates would affect domestic trade. Thirdly, our Constitution makers have deliberately avoided any tax item on the Concurrent List. It is only on this account that our federal set-up is considered unique in the world. Why then a higher tax rate structure for the Centre? Another recommendation to convert the ad valorem rates of Union excise duty on petrol into specific rates is also untenable for various reasons. In fact, most recommendations of the task force, which the Union Government might be seriously thinking to incorporate in the Budget, are based on Western economic policies, which are out of sync with ground realities. For instance, the Indian ethos that we should concentrate on the zero revenue deficit instead of worrying about fiscal deficit has stood the test of time. In fact, we have not reached the stage where we can blindly ape the economic policies of the West. India is confronted with the problems of absolute poverty, unemployment, illiteracy, basic health facilities and so on. To solve these problems and sustain 8-9 per cent growth, huge investible resources are required. The proposed removal of savings and other incentives, which are serving useful socio-economic objectives, will promote ostentatious consumption and lower the availability of investible funds in the economy. Union Finance Minister P. Chidambaram should go beyond the Kelkar task force recommendations and boldly reintroduce taxes like inheritance tax and give real meaning to taxes like the wealth tax which are highly equitable and do not have any adverse effect on ability and incentives to work, save and
invest. — The writer is former Professor of Economics, Punjabi University, Patiala |
Profile by Harihar Swarup Described by his bete noire Laloo Prasad Yadav as “Abhaga Paswan”, the Lok Janshakti Party leader, Ram Vilas Paswan may become “Bhagyawan Paswan” as he positions himself to play a crucial role in the post-poll scenario in Bihar. So wide the wedge has been between the two union ministers that Paswan has proclaimed that he would prefer President’s rule in the state than going along with Laloo’s party. If exit polls are any indication, Paswan may emerge as the king or the king-maker in Bihar’s murky politics. His style is so visibly different than Laloo who has mastered the art of projecting the image of the common man. The Railway Minister, who is known as Bihar’s “strongman” sarcastically, calls Paswan “Dalit Kumar”. Whatever nomenclature one may give to Paswan, the fact remains that he has truly emerged as a potential Dalit leader. Few know that Paswan, now 59, was influenced by the Naxalite movement in the early years of his political career. His confrontationist style led him to imprisonment for seven months in Bhagalpur jail. In the late sixties, he was attracted by the Socialist Party, which had split, united and named the Samyukta Socialist Party. He was elected first to the Bihar Assembly in 1969 on SSP ticket. Since then, there has been no looking back for him. The JP movement changed the course of Paswan’s aggressive political career. A believer in the creed of violence, he reposed full trust in non-violent means. By 1974, he became a trusted lieutenant of J., arrested within weeks of the imposition of Emergency. He remained in the jail till the 1977 general elections. Even though he changed his party label many times, he remained anti-Congress till he became a constituent of the ruling United Progressive Alliance. Besides JP, his icons were Charan Singh, Karpoori Thakur and V.P. Singh. Paswan had a tumultuous time as Union Labour and Welfare Minister in the V.P. Singh Government. He says the portfolio was dear to his heart because he could work for welfare both for Dalits and Backward Classes. His most controversial act was a relentless fight for implementation of the Mandal Commission report, tabled in Parliament in 1980 and lying since then in cold storage. The backlash it created among the upper castes was, subsequently, an important factor in the disintegration of the V.P. Singh Government. His other achievements included extension of reservation in employment to Scheduled Castes who had become Buddhists and placing the portrait of Dr B.R. Ambedker in the Central Hall of Parliament, a long-standing demand of the Backward Classes. Paswan’s objective, whether in the government or in the Opposition, has been to project himself as a Dalit leader as also a leader of the Backward Classes and Muslims. To boost his image as a Dalit leader, he formed Dalit Sena . On the walls of his official residence in Delhi, one can still see the portraits of Dr Ambedkar who became the key symbol in his effort to carve out an all-India Dalit constituency. Paswan’s strategy proved successful and he emerged on the national scene as a Dalit leader, second only to Kanshi Ram, and this became his asset in the ongoing elections in Bihar. As the Railway Minister too, Paswan strove hard to promote the interests of Dalits. He says with pride that he regularised thousands of temporary sweepers. When the Congress pulled down the H.D. Deve Gowda Government in March 1997, Paswan’s name was mentioned as a possible choice for the Prime Minister’s office. He has a knack for springing surprises. From his unexpected withdrawal of support to the NDA in 1998 to his return to the Vajpayee government in 1999, and again his disillusionment with the BJP after the 2002 Gujarat riots to his decision to join the Congress-led UPA government demonstrates his political foresight. A six-term member of the Lok Sabha, Paswan proved to be invincible in the electoral field. In each election, his margin of victory had been massive. He made his debut in Parliament in 1977 and his constituency has been Hajipur. Though a Dalit, he married an upper-caste Sikh girl and during the anti-Sikh riots in 1984, he rescued many from the mob fury. Paswan is a leader to be
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Comments Unkempt
Subhashini Ali of Kanpur was a formidable speaker when she was a CPI(M) member of the Lok Sabha. One afternoon in 1982 I heard her on the newly constituted National Commission for Women. “The National Commission”, I heard her say, is not a jhoom jhooma for women to play with but aimed at being a powerful body. Unfortunately, the Government of India has been treating it like a jhoom jhooma and the latest model is now chaired by a dyed-in-the wool member of the Congress party Ms Girija Vyas. Once again it is a return to the bad example of the government from when the NCW was first set up that year. “Set up” is of course the wrong word, for the membership of this so-called “autonomous” body is nominated from top (chairperson) to toe (Member-Secretary) by the Government of India. This is part of the series of “autonomous” bodies (the
Press Council of India is another) launched by the government which keeps all the significant powers in its own sweaty and grubby fist. Women’s empowerment, women’s movements and non-discrimination are among the most powerful aspects of the democratic government which the Government of India has quitely by-passed, uttering words like ‘autonomy’ and ‘democracy’ and not conceding either. In the meantime, it quotes figures of dowry deaths, rapes and molestations by the minute. The topdressing is also full of holes. Not only are all the members of the NCW nominated by the government; the powerful Member-Secretary is actually a government official. The annual reports usually appear late, are tabled even later and are debated superficially in Parliament. The indignation over causes like that of Poonam Baluja and Banwari Devi have faded. So have the anti-arrack movements. There are huge gender gaps in the country over literacy, education and health. Dowry deaths and female infanticide continue apace. Some steps have been taken to prevent the mechanical detection of whether a foetus is of a male or female but there are hole-and-corner institutions which ignore it and get by. Indian political history takes pride in the rise of the women’s movement but the number of women in the legislative bodies, Central or State, is still disappointingly small. The feminine interests of the NCW are too wide, stretching over civil rights, consumer action, corruption and the workplace. The field is too wide and the resources too little. Public supervision of women’s affairs has been turned on its head. Instead of strict inspection of what is being done about, say, trafficking and dowry by civil society it is the government which is sitting astride pseudo-autonomous institutions like the NCW. Criticism by bodies like the All India Democratic Women’s Association (AIDWA) have been forceful. The NCW is not a cross-party consultative body on women’s interests. Can Girija Vyas change the slow, confused, partisan record? Her very start as a party person does not augur well. She will have to work double-time to prove her own autonomy and that of the organisation she heads. So far the bureaucracy has been on top and NCW, given slender resources, has managed to not go very far ahead with counselling (without litigation). It has not got anywhere about advocating reservation for women in Parliament and the state assemblies. Everything is slow. The government’s path-braking committee on the status of women reported in 1974. It took 18 years to constitute the weak-toothed National Commission and that has been jogging along on an unbroken path for 13 years in undistinguished fashion. Some of the states also have women’s councils but they are unequal in size and functioning. We are all underwhelmed by the new nomination to the NCW’s chair and have no great expectations. What is worth examining, however, is the way in which the so-called autonomous bodies are being devalued. One fixed member of the National Human Rights Commission, for instance, is the chairperson of the National Commission for Women. At the moment a lot of debate is opening up about the human rights of women and so the NCW chairperson on the Board of the National Human Rights Commission has to be particularly sharp about women’s rights. It is doubtful, if attention is paid by the government to this critical detail. With a handful of half-baked commissions and committees (the Minorities Commission is another) whose reports are often late, unread and undebated the government is now thinking of setting up yet another, a Children’s Commission. The problem of women and children are far more important than to be left to a Commission and then ignored. The situation reminds me of another great political figure of U.P., Govind Ballabh Pant. As Home Minister, Pt. Pant had to find a chairman for the then Minorities Commission. After thought he fixed upon a distinguished judge who had retired as Chief Justice of the Allahabad High Court — Mr Bidhu Bhushan Mallik. Mr Mallik had later taken on the Vice-Chancellorship of Calcutta University and I had gone to see him to check on something to do with the university. In the course of conversation, he described to me Pandit Pant’s telephone call requesting him to take on the job. It went like this: “Mallik Saheb, kaam to kuch nahin hai aur apka pension bhi badh jaiga” (Mallik Saheb, there is no work and your pension will also go up!). I fancy that things probably haven’t changed very much since
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Diversities — Delhi Letter From February 15, Sahitya Akademi’s annual festival of letters began. With the inauguration of the Akademi 2004 Exhibition, other events followed — the award presentation ceremony, the writers’ meet and the important event of this festival, focus on the literary richness of South Asia, “One Sky, Many Worlds: Literatures of South Asia”. Three full days (Feb 18-20) have been slotted for prominent writers and poets of South Asia to talk and interact and speak out. With special afternoon sessions for the poets’ meet. Some of the prominent names are that of Gulzar, Shahryar, Padma Sachdev, Keki Daruwalla, Javed Akhtar, Sitakanta Mahapatra. Several who spoke on “My writing, my times”, were Amit Chaudhuri, Surendra Verma, Vasudevan Nair, Zaman Azurdah and Salam Bin Razak. Writers who read out their short stories were from India and neighbouring countries like Pakistan, Bangladesh, Nepal, Maldives, Tibet and Sri Lanka. Some of the prominent ones who read out their short stories were Indira Goswami, Intizar Hussain, Zaheda Hina…I could go on and on, with names and their literary outputs. In fact, each state of our country has such a force of the written word. I get exposed annually to the force from Orissa because writer-poet and former IAS officer J.P. Das makes it a point to host a dinner for all the Sahitya Akademi award winners from his home state so that one-to-one interaction can take place. Neil Wilson
stands out Amid all the names of writers and poets from our South Asian countries for this Sahitya Akademi meet, one name seemed rather amiss, in the geographical sense, to be precise. That of Canada’s Neil Wilson who was the guest speaker at one of the sessions on ‘Globalisation, culture, identity’. Wilson is one of those Canadians who holds an annual poetic meet for poets around the world at Ottawa. Last year, he focussed on Asian and African poetry. Sahitya Akademi President Gopi Chand Narang calls Wilson as one of the most dedicated and ardent persons, who is passionately involved with the written word. V-Day: Less hype
this year The week has been packed. This year, the hype on Valentine’s Day (Feb 14) seemed lesser than the last couple of years. I managed to attend one such bash at Bhaichand Patel’s home. Very well attended, a majority of the guests were middle-aged singles of the Capital. Gone are the days when singles didn’t mingle. They were on the dance floor and all over. Prominent singles spotted that evening were the well known television person Karan Thapar, Apeksha Kakar, who is psycho analyst, Sudhir Kakar’s first wife who teaches French and sings ghazals Rekha Surya, Odissi dancer Sharon Lowen, journalist Rahul Singh, socialite Kaamna Prasad, film critic Aruna Vasudev, Tarrot card reader and lawyer Meenakshi Rani… I could go on and on with more names and details, but it would be sounding like a roll call. Several of the guests to this bash had come from Hotel Taj Mansingh, the venue for Shobhaa De’s book launch on Valentine’s Day evening. No coincidence, for De seems to know the art of making her books get a good splash. Even formula laced ones. Otherwise, how could one explain the confidence with which she has come up with this latest, on how to manage a marriage and the spouse. If relationships were to be managed, it speaks volumes for the times we are living in. Strength of
red
colour Last week one of the well-known weeklies got re-launched here in a big bright way. Redesigned by the reputed designer and recipient of the Lifetime Achievement Award from the Society of News Design, Mario Garcia spoke on the strength of the colour red, along the strain that one cannot miss a person dressed in red or room painted or even a piece of paper painted in that colour. Don’t know whether it’s sheer coincidence but one invite after Here let me also add that the latest invite I received, which looked as though dipped in red, was for Paro Anand’s book, ‘No guns at my son’s funeral’ (Roli). This book rotates around the trouble-torn Kashmir Valley. It was released here on Feb
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The body is the temple of God. It should neither be looked down upon nor mortified nor used for sense gratification. We should regulate and control it and make it a suitable instrument of divine realisation. — Guru Nanak Even when one has everything that his heart may desire, one must continue to work. Not for greater gains since he already has everything. But to set a good example to those who look up him for guidance. — The Bhagavadgita A game of pleasure ought to be played for pleasure alone. If it is used as a serious challenge, it is the easiest way to lose one’s very hard wealth and kingdom. — The Mahabharata I think the world today is upside down. It is suffering so much because there is so little love in the home and in family life. We have no time for our children. We have no time for each other. — Mother Teresa |
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