Unwelcome move

The Union government has hiked service tax for key services such as railways, airlines, banking, insurance and hotels. From the prism of economics and the government, the decision seems correct. The government can get considerable revenue since it taxes essential services for which the demand is inelastic. But the question remains: Does the move satisfy another canon of taxation, which is ‘Charge what the traffic can bear’? The answer is a big ‘No’.

The government’s argument is that the people have to bear the brunt of taxes for the country’s better future. This is balderdash. We were not happy in the past, nor are we happy in the present. Needless to say, we’ll not be happy in the future too. The governments here are not for the poor and the salaried class. That is for sure!

S Ramakrishnasayee

Ranipet, Tamil Nadu

Vagaries of nature

This refers to your edit, ‘Growing in confidence’. The new way in which we measure our output is puzzling to say the least. But with the given data it is very clear that we need to liberate agriculture from the vagaries of nature and do it quickly. We have a below normal monsoon forecast this time which, when it materialises, will affect rural demand for sure.

The government needs to be much more proactive on water management, creating irrigation infrastructure and educating farmers on fertiliser use and crop insurance based on technology. This will aid the ailing farm sector to come back to the growth path again. Because the reality is that around 60 per cent of the population is engaged in agriculture one way or the other and if we have a bad year for our agriculture then we need to transfer income to fend off rural distress. The gross fixed capital formation has increased but the decline continues when looked at as the percentage of gross domestic product and it stands around 30 per cent which has declined from 32 per cent in 2013. Reforms need to be fast-tracked both in our agriculture and infrastructure for a sustainable growth rate of 8 per cent.

CR Arun

Email

We’re too rigid

This is with reference to ‘Celebrating capitalism in China’ by Raghav Bahl (June 1). Economic growth in India has been obstructed by structural rigidity which was identified in 1991. Very few reforms have been carried through and these have given temporary benefits but the economy is again teetering. Agriculture and education are neglected and the social sector is overfed. Food inflation in India is 8 per cent; in China it is 3 per cent. The inflation and fiscal deficit are the result of over-consumption because the government wants the social sector to remain dependent on it.

The government allows the corporate to work fast and what comes out of it is spent on the social sector. The core sector which is manufacturing has been sidelined once again because it does not receive support on any front — not the education system, nor skills nor ease of doing business. This is not the case in China.

RK Arya

Faridabad, Haryana

Big hurdles

The main hurdles in the country’s economic progress are reservations of all kinds and toll tax — if both are abolished it will be a boon to the economy. The Supreme Court has said that reservations are not in the public interest. Reservations are, in fact, just a politically convenient way of taking care of the backward classes. Reservations have been leading to chaos more than delivering so-called benefits. For the weaker sections, more and better opportunities must be provided so that they can rise and prosper. Reservations remind people that they are weak and cannot come up in life without support.

According to a survey report, the collection of toll tax is far less than the wastage of cost on fuel at toll booths. In order to continue to get more revenue, one-time payment may be charged when a vehicle is sold to a buyer. The report suggests that this way even revenue will be more than what is collected now. Rightly some toll posts have been abolished. Toll gates are a bottleneck in fast traffic movement, that is, the economic development of the country.

Mahesh Kumar

New Delhi

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