The Hindu Business Line : We are a bullock-cart economy, so what?

Story so far: After enduring a meeting that discussed pre-Budget expectations, I visit Veena, my batch-mate in college, and now a housewife. "What do you expect from the Budget?" I ask her. Rather than complain about prices and taxes, she surprises me by saying, "I am ready to pay more taxes if I can get in return stability and fairness... so that we can raise our families in peace." As with families, so with business too, I think. The Government can levy taxes on businesses but should give them stability, fairness and peace, because unpredictability can be vexing.

Episode 162

Taxes versus peace was the theme last week. While the Government expects people to pay taxes, it is also accountable for the utilisation of funds, says Sriram Kannan. Negative perception about taxes has reduced as a result of consistent public communication, he feels. "Accountability should be focused, definite and target oriented rather than be a paper-defined target. Achieving efficiency in utilising public money is a tough task but it is better to make a start towards an improved system rather than waiting for things to change on its own."

"Taxes, after all, are dues that we pay for the privileges of membership in an organised society," reads a quote of Franklin D. Roosevelt. Citing this, Ramalingam Ayappa says that it is the duty of the Government to ensure stability, peace and fairness, in return for the taxes collected. "Why should we pay more?" he asks. "We live in an era of coalition government. It is enough if we pay the taxes as required, let us not overact. Let us not be prepared to pay more taxes and expect in return from the Government stability, peace, harmony, fairness, and so on, which are not absolutely in the hands of the Government." Good you warned me!

"Majority of the Indians yearn for the much-touted peace and stability. Though we got Independence six decades back, we are yet to really learn the lessons from the past travails. The high talk of `India on the growth path' may be piercing your ears. But let us think for a moment, that if India had a peaceful and stable economy, without all the unnecessary wars with Pakistan and China as well as the ongoing subversive activities, where we could have headed," writes Krithivasan. "Myopic policies and politics do not give much comfort. The administration also seems to lack the courage to stand up to their political masters. Corruption is the bane of the Indian society. The current tax structure can hold for another 50 years without any increase, if only corruption levels are cut by 80-90 per cent. It is time that we moved to the two/three party system, which may help stem the divisive forces and add the much-needed stability." Tragic to realise that tax cross-subsidises corruption.

"I don't think I will accept the trio of stability, fairness and peace from taxes!" writes Tejbir Singh. "What will the FM with taxes, higher or otherwise, do if the Opposition and even the party in power are bent on not providing the businesses in the country a stable political and social set-up? How can higher taxes ensure that bureaucracy acts in all fairness, what with the babus not hesitating to demand their share in moving files?" read his questions.

"In my opinion, what we need to demand from higher taxes paid is improving the lot of our fellowmen — a lesser proportion of population below poverty line (BPL). I'd prefer the Government working on reducing the number qualifying as BPL rather than trying to use the money to give the better-off ones stability, fairness and peace. It hurts when a third of our population is below the poverty line, going to bed without enough food. I'd rather the taxes paid by me be spent on activities that uplift my fellow Indians." Elevating thought, Tejbir.

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Inflation impact

On how inflation affects the old, here is a mail from T. R. Anandan, Coimbatore. He is past 76, and he spends around 15 per cent of his pension on medicines every month. "Due to even rising longevity, the population of senior citizens is bound to swell and it is in the interest of the welfare of the community that the Government sets in motion a meaningful, practical and painless programme quite in time to provide relief to the aged both in the matter of medicare and meeting the daily essentials for a minimum comfort level. The Governments is think of crossing the bridge when it is reached, but in matters like this, advanced planning is very necessary," he cautions.

"Old people are prone to spend most of their income on medicines, hospitalisation. They should get necessary medical aid from government hospitals and essentials (not only sugar, rice and wheat but also dal, rava and oil) of standard quality in ration shops. Also required are subsidised ticket charges in buses, as in trains, and phone billing at reduced rates. The Government and NGOs together should provide social security net to the underprivileged. But the important thing is that children should help their parents financially," writes Maruthi Kumari from Salem. Empathetic.

"Except those pensioners who could not fulfil their responsibilities, like children's education and marriage, before their retirement, all others can happily lead their lives with the pension they get and interest income they earn," says P. V. Sudhakar Rao, Deputy Manager, SBI, Ongole. "Currently there is an upturn in bank interest rates. Moreover senior citizens are being offered better interest rates by banks. The Railways offer concessional fares to senior citizens. The Government is initiating measures to curb hoarding so that the prices of provisions are under control. Recently, the RBI increased CRR twice to check inflation. Happy days are here again for pensioners." Are you sure, Sudhakar?

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No small worries

"I am a 28-year-old small-scale industrialist based in Tamil Nadu. I would like to express here some of the problems being faced by small and tiny sector units, especially in rural areas," writes Vikram Balaraman. Small-scale industrial units have been the target of a lot of misguided and inconsistent policies over the last few years, he says. "Having been an SSI for over six years, I have enough orders for promoting my unit into a medium-scale unit (Rs 20 crore and above) but am unable to do it without indulging in some monkey tricks... " Catch up with his detailed mail on the blog.

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A shoulder to the `economy'

One afternoon, last week, I participated as a guest in an offsite session organised by an IT company in a resort about 30 km away from the city. One of the presentations was about how India is perceived as a bunch of three economies. The speaker referred to a page on www.strategicforesight.com that spoke of the business class constituting only 2 per cent of the population, but with `access to luxuries like cars, washing machines, computers, Internet, mobile phones, air travel' and so on. "The bike economy segment comprises 15 per cent of the population. Their consumption includes televisions, telephones, water and gas connections, radios, motorbikes." And last is the bullock-cart economy, encompassing 83 per cent of the country's population; "only half of them own pucca houses, televisions and radios". Reforms and policies target only the business class, and ignore the rest, rued the speaker.

Well, that evening, I was returning along with a group of IT staff, tossing in my head the three economies. Suddenly, someone in the car said, `Stop!' We were on a long bridge and ahead of us was a laden bullock-cart that was struggling to negotiate the climb. The car was now at the kerb, and I was wondering if we should stop to let the cart go up first. "We are a bullock-cart economy, so what?" asked one of the software engineers.

Even before I could comprehend the question, I found that the bunch of engineers had got down and were giving the cart a push. I too joined the gang, to the puzzlement of the cart driver and the onlookers. It was fun, what with lines from Lagaan being sung. What is needed is the involvement of the business class in the other components of the economy, I thought, long after reaching home, even while humming the `Chale chalo' lyric. Send in your thoughts by Friday.

SWATI_CA@HOTMAIL.COM

Blog at: http://Swati-CA.blogspot.com