The Hindu Business Line : An idea sans vision

The Group of Ministers would be well advised to shun any proposal to levy a tax on television sets to fund the deficit in Prasar Bharati’s operations as that would be against accepted principles of public finance. TV sets already suffer a high dose of taxation — import duties on components, excise on manufacture and value-added tax on sale — adding anything up to 40 per cent of the cost. Any further hike in imposts would only offer an incentive for evasio n besides creating a policy bias in favour of the grey market. That apart, with TV sets becoming an article of popular use — so much so that political parties think they can woo the voter with the promise of their free distribution — more tax would mean burdening the common man to fund the public broadcaster’s programmes when competing private offerings have already gained wide acceptance. The proposed levy also ignores the emerging trend of convergence of technology where programme content is increasingly delivered through personal computers or mobile handsets.

The question of cross subsidies in the provision of public goods does not lend itself to an easy resolution as the choice of the target audience on whom the burden is to be placed is often compromised due to practical difficulties in administration. For instance, targeting owners of luxury cars to bear the burden of subsidising kerosene often ends up as a policy that taxes petrol heavily. This affects a swathe of users including the humble auto-rickshaw drivers who have to settle for sub-optimal earnings: high fares that reflect fully the cost of petrol would turn away many of their middle- and low-income customers. Generating resources from income-based taxation to fund public programmes is the best approach. Indirect taxes such as excise duty and VAT, while somewhat iniquitous, are nevertheless accepted as inevitable in the scheme of public finances. But a system of taxation built around cross-subsidies only distorts the tax structure further given its opacity.

But even general budgetary support might become unnecessary if Prasar Bharati can be made to manage its affairs more efficiently. This is an act where the corporation has been found wanting. The Narayana Murthy Committee, which went into its functioning, had commented adversely that clerks and peons made up nearly three-fourths of Prasar Bharti’s staff and their contribution to the programmes broadcast can at best be only tertiary. Prasar Bharati must undertake expenditure reforms before it can dip into the public purse. Norms of good governance demand nothing less.

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