Last
week of February is considered a week of expectations in India: the time when
the people expect the Government to deliver. This year this expectation is
still higher- the Government will be unfolding its vision for the
transformations of India through the budget- an exercise which raises ray of
hopes for everyone. The debate in the chartered bus and the metro also veered
around the forthcoming budget and expectations of the salaried class from it.
Invariably people expect relaxation in income tax slabs. These are small gift
which gives a sigh of relief to salaried class. Every year India Today,
the premier national news-magazine, feature opinion of noted economists and
experts aimed at improving the Indian economy. Some of these suggestions this
year include, reducing fiscal deficit, reducing regulations to boost
investment, reducing Government expenditures, reducing Government intervention
in areas where these can be avoided i.e. “minimum government, maximum
governance”, devise ways to improve consumption, savings, create
opportunities for more jobs and above all herald in a regime of simplified tax
structure. I am reminded of commentaries
on budget by noted lawyer Mr. Nani A. Palkiwala whose terse analysis of
the union budget in eighties and nineties is still remembered. What intrigues
me is that some of the suggestions that he made in the nineties still holds
good. Eg. In 1984-85 he had advised the Government to inject the “S” factor in
the fiscal and tax laws: Sane, Simple and Stable. 30 years later we are still
struggling to simplify our tax structure with ideas such as the Goods and
Services Tax (GST) and Direct Tax System (DTS) in discussion. In 1985-86 Mr.
Palkiwala had advised reduction in government controls, quoting Dr. Gunner
Myrdal that, excessive control only leads people to become tax dodgers. It
holds true even today. Mr. Nani A. Palkiwala was opposed to allocation of token
amount for welfare schemes which he termed as “token gestures”. He quoted
noted economist Raj Krishna who had lamented “that only a small
portion of funds trickle down to the target groups”. 30 years later we
are still struggling to control such leakages- the latest being the ambitious ‘jan-dhan
yojana’ for direct benefit transfer (DBT). In 1990 Mr. Palkiwala opposed government’s
decision to abolish investment allowance which he felt would affect fresh
investment in India. Even today economists are devising ways and means to
improve foreign investment. For the rising fiscal deficit Mr. Palkiwala had a
piece of advice from Thomas Jefferson who had warned that “the
question whether one generation has the right to bind another by the deficit it
imposes is a question of such consequences as to place it among the fundamental
principles of Government. We should consider ourselves unauthorized to saddle
posterity without debts, and morally bound to pay them ourselves.” The
same is also true for the parallel economy which has come to challenge the main
economy.
It appears the wheels of progress have not moved as
fast as it ought to have. We must realize that fashion in ideas change, as do
fashions in clothes. India, it appears, is much less quick to follow new
fashions in ideas than other nations; leading to a situation where its growth
models are outmaneuvered by other nations leaving India a developing economy. The newly
constituted NITI Aayog has an important role to play in order to make the
transformation really happening.
Lastly, Mr. Nani A. Palkiwala had a sound advice for
the opposition also, which, like his other suggestions, has stood the test of
time: political parties should prefer to confront the problems faced by the
nation together instead of confronting each other. He had lamented criticism of
the opposition parties of the 1992-93 budget presented by Dr. Manmohan Singh.
He felt that “one of the great failings of democracy is the mistaken
belief that it is the duty of the opposition to oppose”. How prophetic!
Even today the proceedings of Parliament were disrupted, and this saddens me since
the nation suffers in the long run.
Let’s
see what new this budget has to offer to the nation that Mr. Nani A Palkiwala
had not predicted 30 years back.
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