Face reality Political economics

In his column “Hanging by a sacred thread” (December 2), Shekhar Gupta’s prediction about the possible adverse outcome of Rahul Gandhi’s new policy of imitating Bharatiya Janata Party (BJP) in the practice of Hindutva in Gujarat assembly elections came true the same day — the results of civic polls in Uttar Pradesh saw the complete rout of the party. Gandhi’s turncoatism in switching his priority from minority welfare to majority-allurement shocked the Muslims, and his soft corner for the Dalits finding little echo in his poll talks in Gujarat dismayed the Dalits. These voters in UP municipal elections turned to Bahujan Samajwadi Party as a more reliable alternative in comparison to the opportunistic swings of the Congress. It brought surprise wins for the BSP at the cost of Congress party.

There is a large group of voters who are happy with the BJP’s economy-related steps, but are uncomfortable with its aggressive hyperactive leaders and their bullying tactics. Gandhi is criticising the BJP about demonetisation and the Goods and Services Tax but is now following it in practising the BJP brand of Hindutva (his silence on 2002 Gujarat riots is eloquent).

Y G Chouksey Pune Denmark, Israel, Japan, South Korea, Nepal, New Zealand, Taiwan, and many African countries. But we notice that these countries are not having so much disparate strata of people and are also not federation. Inequality of income is not so rife in these countries.

Now let me give you some countries with different rates. Belgium — 21,6,12. Brazil — 25,18,12,7. Canada — 7 as central GST but there are 7 different rates as sales tax in different states . China—17,13. France—19.6, 2.1, 5.5. Germany — 16,7. Italy 20,10,4. Russia — 18,7. Sweden— 25,12,6. Switzerland — 2.4 3.6. UK —17.5, 5. These are not the latest rates as the rates keep changing but the fact remains that they have got multiple rates and all countries have exemptions .Even those who have single rate have exemptions . Apart from that, there are exemptions for export which every country has got.

The conclusion is that one rate is a myth for India . It is the best . But best is often the enemy of the good, as Voltaire said. It is like the neutrality of tax which can be reached only in theory. Prime Minister Modi is right that we cannot have a flat rate now . In India, the situation of people is such that if we charge simple food and clothes at 18 per cent, there will be serious repercussions. So, the best rates would be 28. 16 (merging 12 and 18) and 5 per cent. 5 and 28 should be listed items only and all the rest will fall under 16. Then that big fat Central Excise Tariff book will be redundant. Litigation will be rare. Taxpayers will be happy . Revenue will boom as controversy, evasion and corruption will be minimum. Sukumar Mukhopadhyay, former member, CBEC, New Delhi This refers to TCA Srinivasa-Raghavan’s brilliant analysis “The economics of bottomless pits” (Marginal Utility, December 3). The concept of ‘mixed economy’ was a joke during the Nehru days. I still remember E X Joseph who worked in Bombay AG’s Office during those days (1963), comparing mixed economy to adulteration of chicken meat with meat from dead horses during war days in Britain. The proportion was 1:1, one horse for one chicken! He said in mixed economy capitalism and socialism was having that kind of ‘mixing’. The role of public sector in India continues to be viewed with derisive criticism.

The public sector in India is being criticised for no fault of the sector. The ownership of PSUs including banks is with the government which is owned and operated by back-seat driving by the rich and the powerful in the private sector. The private sector leadership, by manipulating government policy, ensures that the management of PSUs remains inferior to that of private sector organisations. The fall of Unit Trust of India and the present stress faced by PSBs with a banking business share of over 70 per cent are examples. Organisations like ISRO, Railways and LIC have survived such manipulations because of less HR interference from GOI.

M G Warrier Thiruvananthapuram