Sucheta Dalal :Nothing much to feel good about as yet (5 Jan 2003)
Sucheta Dalal

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Nothing much to feel good about as yet (5 Jan 2003)  

The ‘India Shining’ campaign is back with a bang. The finance ministry is dipping into taxpayers’ money to issue glitzy full-page advertisements to spread the good cheer. And the Deputy Prime Minister never fails to refer to the elusive ‘feel-good’ factor in all his speeches. Their claims seem to be borne out by the surging stock indices, burgeoning foreign exchange reserves, improved economic growth and the growing confidence of Indian industry. But as the country goes into election mode, the government would do well to remember that only a tiny portion of the population has really benefited from the bull run or the proliferation of mobile phones; and that the forex reserves are just another number to most ordinary people. The average person on the street does notice signs of a changing, shining India, but the images are tempered by a very different daily reality. Which is, petty corruption in almost every walk of life and the large-scale corruption that makes newspaper headlines.

These headlines are usually about political pay-offs for police postings, long queues for scarce jobs, the growing nexus between law enforcers’ and the under world, the gigantic fake stamp paper scam and the shameful Judeo-Jogi episodes. The other frightening reality is that of bankrupt governments at the State and the Centre, who cannot control corruption but do not hesitate to impose fresh taxes every day, squeezing every new business development to raise scarce revenue..

While industry tightened its belts, cut costs and trimmed flab during the long years of economic slump, government did almost nothing to help the process by way of making public utilities more efficient or lowering input costs such as freight rates, electricity and water tariffs and property taxes. This pertains to almost every sector of business. For instance, telephone tariffs — both cellular and fixed line would have been far lower, if the Trai’s (Telephone Regulatory Authority of India) benchmark for tariff-fixation had not been the inefficient former monopolies from the public sector. In a truly competitive market, the smaller companies would be taken over to build economies of scale. .

Even large projects such as the Prime Minister’s Rs 54,000 crore Golden Quadrilateral venture has been marred by corruption. The killing of Satyendra Dubey, a young engineer who tried to draw attention to massive leakage in project implementation has focussed national attention on the issue. After 53,867 people signed an online petition demanding justice for the whistle blower, the Prime Minister’s Office reacted by trying to blame the Bihar Government, and the Bihar Government retaliated with a public refutation. So far as we know, there has been no effort to investigate the specific charges made by Dubey or to implement simple suggestions made by him to block leakages. Here too, it is the people, and not the government, who are paying for the project by way of a cess on petrol and diesel. The government expects to collect a hefty Rs 9,000 crore annually through this tax, which has already been hiked once to meet cost over-runs. This means that any cost over-run due to leakages will be borne directly by us, the people, through higher taxes..

Interestingly, elimination of the Administered Price Mechanism for petroleum has only subjected ordinary people to frequent hikes in petrol and diesel charges without adequate explanation. Not only does the government make no attempt to counter the upward pressure by reducing taxes on petroleum, but it is making plans to pile on additional taxes. Apart from the Central Cess for the Golden Quadrilateral, States such as Maharashtra levy a similar tax on fuel to fund State infrastructure (such as the flyovers and the Mumbai-Pune Expressway). .

But that is not the end to the government loading indirect taxes on hapless citizens. The Centre even plans to meet its social security obligations, with yet another cess of 10 paise on petrol and diesel to create a social security fund for organised sector workers. By the time it is actually imposed, the cess is bound to be thrice as much. If the government showed some far-sightedness by cutting tax on aviation fuel and airport landing charges, it would give a fillip to domestic tourism and probably even make up for any initial revenue reduction. This has been recommended by the Naresh Chandra Committee, but will it be implemented to promote Shining Tourism? Only time will tell. If the Central government is not picking peoples’ pockets, it is often the bankrupt State governments and municipalities that are doing it. Look at Maharashtra, home to the fake stamp paper scam or the Telgi Scam. One would have thought that the crackdown on fake stamp paper and the boom in housing finance would have filled government coffers adequately. But a cash-strapped government could not wait to find out. It has gone ahead and hiked stamp duties and also introduced ridiculous concepts such as charging greater duty on the upper floors of high-rise apartments. It is almost like a tax for breathing less polluted air at higher levels. In effect, the public will continue to pay for sloth, inefficiency and corruption in the government even though one scam after another is unearthed. None of this would feature in the government’s propaganda campaign, which is all about a confident, twinkling and prospering India. And we are not even talking about the other half of the country and its people who are excluded from this India. .

Farmer leader Sharad Joshi would say that they are part of Bharat, the large tracts of poor, hungry, illiterate Indians who continue to live in slums, have no electricity or running water and are cut off from the growth initiative. This does not mean that one refuses to recognise real development that has also taken place in recent times, but premature drum beating is not really a part of Indian culture and could easily boomerang on the government. After all, promising bijli, sadak and paani is fine when you are trying to replace an incumbent government, but many Indian villages will be asking the same of the ruling party when it goes to canvass votes in the general election. .

-- Sucheta Dalal