By Dhurjati Mukherjee

Has Finance Minister P Chidambaram set the cat among pigeons? Many ‘super rich’ may think in the affirmative with his recent statement overseas. After assuring foreign investors that the tax rates would remain stable, in an interview to a TV channel in Singapore he stated: “there is an argument that when the Government requires more resources, the very rich should willingly pay a little more.” In the same breath, Chidambaram, however, added that it was “simply an argument” that he had heard and was merely repeating it!

Apparently, one doesn’t have to look far from where this “argument” is emanating. There is an ongoing debate that there is an imperative need to increase the country’s tax to GDP ratio and reduce the fiscal deficit in the coming Budget. And, keeping this in view, chairman of the Prime Minister’s Economic Advisory Council, Dr. C Rangarajan, recently proposed that the super rich should be made to pay higher taxes. He has suggested imposing a surcharge, if not creating a separate higher income tax slab, on the super rich.

There has been some controversy regarding the proposal as certain sections believe that in case of such a tax, the additional revenue generated would not be enough while this may also encourage the rich to further evade taxes. However, it is generally agreed that taxing someone who is earning at a much higher rate is quite justifiable in terms of equity and in accordance with the principles of progressive taxation. A person earning say Rs 25 lakhs and the other Rs 60 lakhs cannot be put in the same taxation bracket. It may also be mentioned that taxing the super rich will definitely send a positive signal about the intentions of the Government and increase revenue collection to some extent, if not the desired levels.

There have been suggestions that the Government can go further and introduce an inheritance tax which would shrink inherited wealth and may become an obstacle for corporate houses to work hard and expand their business. Some have argued that they may became lazy and do nothing much to improve the family business though these projections are unfounded.

To control the fiscal deficit and bring it down to 5.3 per cent, the emphasis has so far been on expenditure control. It is expected that in the forthcoming Budget – which happens to be the last one before the Parliamentary elections — instead of cutting subsidies the Finance Minister has been rightly advised to tax the rich and the super rich. Another one or two slabs — say from Rs 50-60 lakhs to Rs one crore and another above Rs one crore — may be imposed.

Delving into the past, the present Finance Minister, who will be presenting his first Budget in his third stint, has stated that he believed in stable tax rates and that those announced in 1997 have remained and have survived four governments and four finance ministers. At the same time, it is noted that he had lowered personal income tax rates from 15, 30 and 40 per cent to the current slabs of 10, 20 and 30 per cent respectively. Moreover, the Ministry slashed the corporate tax rate for domestic companies from 40 to 35 per cent and abolished the surcharge. Subsequently, the corporate tax was reduced further to 30 per cent. The last reduction was obviously not justified and a major section of society, including political leaders and analysts, protested against this.

According to reports, there are only around 1.8 million Indian households which have an annual income of Rs 45 lakhs a year but around 470 million Indians had incomes between Rs 5 and Rs 20 lakhs annually. Rich farmers, whose agricultural incomes are not taxed, form the biggest sub group here. There is need to seriously consider whether this group needs to pay some taxes.

There are also doctors who earn lakhs through practice/surgery etc. But do not even reveal 50 per cent of their actual income. Also professionals, including teachers and consultants, only reveal their salary while the other income is not shown.

Many of the rich, especially company promoters earn high sums as dividend incomes that are tax exempt at their hands. The dividend tax, levied at a basic rate of 15 per cent is only on the companies distributing them. One possibility is to consider dividends as part of ordinary income and tax it accordingly at the highest slab on those receiving it.

One may mention here that the current fad globally seems to be soaking the rich to get over deficits. In France, given serious consideration for increase in the coming Budgetce, Francis Hollande wants to tax the rich at 70 per cent rates and in the US, Barack Obama succeeded in his attempt to tax the rich at higher rate. There are several reasons for this, one of which is that India’s tax to GDP ratio is under 17 per cent. In Norway, it is 41 per cent, whereas Germany’s is around 37 per cent, the UK is at 34 per cent and the US at 24 per cent while that of China is 17.5 per cent.

But none of these developed countries (except China) have over 30-35 per cent of the people below the poverty line. A little adjustment that is, a little increase of the taxes of the rich and the super rich – say those whose incomes are above Rs 50/Rs 60 lakhs – may take the country’s effective tax rate to around 24-25 per cent or even higher.

Thus, while the taxes of the big fish may be considered for increase in the coming Budget, the tax base has to be broadened. One of the fallouts of the pervasive black money in circulation is that the RBI’s monetary policy of stemming liquidity in the economy has not had much impact and inflation continues to rise unabated.

As generation of revenue has become necessary at this juncture, raising the taxation structure – both direct and indirect taxes – need to be seriously considered by the Finance Minister. Simultaneously, better and stricter enforcement and strengthening the tax information network is the need of the hour to make higher rates deliver significantly more revenue that we very much need for subsidies and various schemes for the poor and the economically weaker sections of society. Will Finance Minister, who unfortunately has been labelled pro rich, bite the bullet? (INFA)

By Ashis Biswas

Sikkim will soon have air and railway links with the rest of the country, with flights from the state expected to begin from end of 2014 or 2015. The state will have its first operational airport at Pakyong, about 30 kms to the south of Gangtok. It is spread over 197 hectares and being built at a cost of Rs 310 crore. Official sources say that the construction of the airport at an altitude of 4700 feet posed several challenges, and because building work was possible only around 125 days in the year, it was running behind schedule. With deep valleys on both sides, the runway will be among some of the highest-placed landing strips in the world.

In recent years, the Indian government has taken several steps to increase connectivity between the mainland and the Northeastern areas bordering the Tibet region. In addition to setting up the air link, road connectivity, too, has not been neglected.

The Border Roads Organisation (BRO) had undertaken the doubling of the Gangtok-Nathu la Road at a cost of Rs 780 crore in recent times. BRO sources said earlier that this had been done keeping in mind similar steps taken by China on its side of the border in the region. The 40-odd km long road had been divided into several phases to aid construction.

In addition, work is underway on the long awaited Sevoke (West Bengal) to Rangpo (Sikkim) broad gauge railway link. Construction costs have been estimated at Rs 1339.48 crore, as over 100 bridges, and, at least 13 tunnels, are planned. The longest tunnel would be running for 1,814 metres. The project has been described as very challenging by the Railway authorities as the work is being carried out in totally hostile and rough kind of terrain and weather conditions.

Spokesmen of the Sikkim Chamber of Commerce and other local bodies have also been pressing for extending the broad gauge service from Rangpo near the West Bengal border to Gangtok, a distance of over 40 kms, again citing the impressive Chinese infrastructure in the region. In the hilly terrain, the cost of laying roughly one km of BG tracks was around Rs 25.42 crore.

With the Chinese authorities linking Nathu La with Lhasa, the former Tibetan capital, popular opinion in Sikkim also demands the linking of Gangtok with Yatung on the Tibetan side of the border, if necessary in co-operation with the Chinese. This construction would be mainly underground, with the track running through tunnels, reducing the distance between Gangtok and Yatung to only 20 kms, whereas by road it comes to 56 kms.

Sikkimese trade and business authorities have welcomed the Sevoke-Rangpo linkage, as they see a great future in accessing the great Indian market for their flowers and fruits grown in the region.(IPA)

By Angshukanta Chakraborty

Exactly when those of us who attended the just-concluded Jaipur Literature Festival were heaving a sigh of relief, and were, in fact, celebrating the point that deliverance from “tamasha” and re-immersion in the old-fashioned literary world had been, as it were, the foremost achievement of the Litfest, we were caught off guard in the dire straits of the Ashis Nandy controversy. Nandy’s words, when nipped from their bookending sentences and broadcasted on a continuous loop, reminded me of Marshal McLuhan’s best remembered saying, ‘the medium is the message’. However, adapted to our current times of telegenic public sphere, the idea coined by that revered Canadian prophet of communication theory can easily be repackaged as ‘the mayhem is the message.’ The medium, clearly, is pure mayhem.

Anyone who was present at the session, titled ‘Republic of Ideas’ and having fellow panelists such as Tarun Tejpal and Shoma Chaudhary of Tehelka, along with moderator Urvashi Butalia, Ashutosh of IBN7 and Nandy himself, could only be baffled at the turn of events that emanated from the rather heartening, and perhaps a trifle provocative, albeit intentionally so, discussion that took place. The thread of ‘corruption as a leveling force’ started when Tejpal, and not Nandy, first came up with the suggestion and commented that in a country like India, where entrenched systems of self-aggrandizement are well in place for those with the means, mostly along caste lines, corruption could also be seen as a method of subversion by the poor and the historically disenfranchised, so as to gain access to the very entitlements that are guaranteed by the Constitution. Nandy, who has throughout his long and illustrious academic career as a social psychologist championed the cause of the ‘others’ within India — whether religious minorities, SC/ST and OBCs, or the rural and urban poor — took up the idea and elaborated that corruption was indicative of a social churn and a republic at work, because corruption need not be the domain of the elites only.

Then came the bit that caused the entire furore. Nandy went on to declare, sounding the prior caveat that it might sound rather “vulgar” to the general ears that are more used to hearing unequivocal and uncomplicated paeans to the national ideals of secularism and anti-casteism, that most of the corrupt in India happen to be SCs, STs and the OBCs, but as long as that is the case, he still had hope in the republic. Thereafter, Nandy explained his admittedly gauchely formulated words to the fidgeting and fretting audience, by saying that the corruption of the SC/STs and the OBCs are visible because they have not yet developed the mechanisms of effective social camouflage, which the elites are adept at, of course. Such mechanisms of hiding and masking self-serving systems turn deep-rooted corruption into accepted techniques of socialization and social engineering. Because the Dalits, the OBCs and other historically disenfranchised lack the finesse, their corruption remains crude and visible to the general eye. Their bonds and affiliations still tend to be dynastic or familial, instead of global or transnational class patterns, which keep the status quo of contemporary capital flows intact. When the marginalized start subverting the system by using the very tools of the system, we call it corruption.

What does this say of the media, and the news anchors on the TV channels that kept playing that one line uttered by Nandy in a ceaseless circuit of imposed malice and malignity on one of the tireless champions of the disenfranchised in India? Did they even know where Ashis Nandy worked, leave alone what he taught? Had anyone bothered to even cast a casual glance at his oeuvre of scholarly and popular works, just the bibliography of course, available on Wikipedia? What kind of an irresponsible media pounces on the crumbs of a stimulating and fearless intellectual debate [taking place at a platform such as Jaipur Literature Festival, which, in any case, was attempting to return to its thinking roots after last year’s elaborate fiasco] and tosses it over, denuded of the context, to the boiling matrix of the Indian public sphere at large?

It can be equally said of Nandy that he, too, behaved irresponsibly by falling back on the banalities of empirical evidence. “Most of the SC/STs and OBCs are corrupt” sits extremely well with gems like the following, all backed up by enough statistical data and market surveys, of course — “most of the working women tend to drink and smoke”; “most of the college-going girls have premarital sex”; “most of the terrorists are Muslims”; “most of the AIDS patients in the 1980s were homosexuals”; “most of the musicians are drug addicts” — the list can go on.

That Nandy, in a charged moment of displaying his marvelous rhetorical flourish, and unable to resist yet another feat of showcasing some intellectual calisthenics, imagined the podium in Diggi Palace’s Char Bagh to be an extension of his office in Delhi’s Centre for the Study of Developing Societies (the hallowed CSDS), or, perchance, that of his own drawing room, or the seminar halls of India Habitat Centre, where this remark would have met with characteristic applause — is cause for concern too. This means that the venerated sociologist had momentarily forgotten the enormous consequences of a slip of tongue in a mass culture as volatile as ours, in an age of (mis)communication as instantaneous and as fabricated as ours.

But the real culprit is the TV media, which, as it is obvious now, was waiting breathlessly for its ‘breaking news’ from Jaipur Litfest. Without so much of a line out of place, the TRPs would not have been served. The perfunctory interview with Will Dalrymple, in which the author talked about the international literary critics and sociologists, and the battalion of writers, who had come to speak at the festival, was not titillating enough. Jeet Thayil looked subdued and without a straw of controversy this time, like reading from a banned book again, although his winning the DSC South Asian Literature Prize for Narcopolis went unreported in the only Indian English news channel that I happened to get on my hotel room television there. Thank goodness for Ashis Nandy then, that all the festival had to say and reflect upon could once again be transmogrified into pure cacophony and one more doctored controversy, much to the relief of our 24X7 media. (IPA Service)