Government’s transparency mission riles businessmen

PM faces a bigger challenge in reining in wayward Hindutva zealots.

Whether or not anyone has noticed, the Narendra Modi government has not been kind to its own core constituency. Regardless of how the Brahmin feels, things have not panned out well in the last three years for the Bania. There can be no denying that the Bania is mighty unhappy. He complains that no other government has made life difficult for him as has this BJP government. From the curbside, small businessman to the big corporate czar, everyone has a long list of grievances against the way their favourite party has treated them while in power.

Traditionally a loyal votebank, the entire business class is now smarting under the spectre of the GST. Even if micro and small businesses are outside its purview, the ever-present menace of extortionist taxman preys on their collective psyche. The feared tyranny of multiple forms to be filled and complicated deadlines to be met every few weeks has got them grousing about the extra, and highly avoidable, workload. And this at a time when business was still meandering in the slow lane. After the shock of demonetisation, compliance with the GST regime is adding to the woes of the business class.

Of course, this is not to suggest that the GST is not a way forward, a more transparent and equitable way to conduct business, which will eventually lead to better compliance and boost tax to GDP ratio. But the manner in which national consensus has been reached, with a plethora of exemptions and some half a dozen tax slabs, belies the claim of it being a “one-country, one-tax”. The tax bureaucracy is bound to thrive when confusion and disputes arise, as they must, given the complicated nature of GST. On the applicability of slabs—cloth, for instance, is classified in multiple ways, depending on the fibre, weave, texture, et al, opening floodgates for babu discretion, with all its attendant possibilities. Sorting out these niggling issues will impose additional time and financial costs on busi- nesses.

Despite untiring efforts by the Ministry of Finance to keep things simple, when the GST is finally rolled out on 1 July, there is bound to be trouble. Hopefully, with experience and understanding, the GST bureaucracy will stay true to the intended objectives of the supposedly revolutionary tax on a whole universe of goods and services. It should address the concerns of businesses and consumers alike in a spirit of cooperation, rather than resorting to usual armtwisting and threats of penalties which hitherto been its calling card.

But the looming spectre of GST is only the latest in a long list of grievances of the business community. Quite contrary to the Opposition canard that the Modi government is in bed with “Ambani and Adani”, the truth is that most consciously the Prime Minister has taken to woo the poor and the underprivileged frontally. Yes, Congress Prime Ministers too paid lip service to the poor from the pulpit, while actually coddling business and other moneyed classes. Even the first BJP government barely addressed itself to the masses, while being mindful of the concerns of the middle and upper classes—India Shining, remember?

But the Modi government has broken away from the past, putting in place stringent checks on the growth of black money and tightening screws on its keepers. It may be a coincidence but the fact is that some of the most rigor- ous reforms are being implemented by this government. The previous regimes talked about controlling the waywardness of the real estate sector and of dealing with the humongous problem of bad debts, after fully creating it, in the first place, or of enacting a benami property law. But the actual execution is done by the Modi government with due zeal.

All the above are aimed at stopping the rampant malpractices of business and industry. The very-same storied business empires which had thrived in the UPA years, enjoying free access to bank funds, are now being forced to sell assets at bargain-basement prices at the pain of long stints in jail. It underlines a serious endeavour to break the ugly nexus between politics and big business, which had prevailed for nearly 70 years up until the advent of this government in May 2014. This is probably the only government in free India which is not up for sale, full stop.

Remember, from the billionaire Sethji who raided banks, certain in the belief that he did not have to return the loan as a helpful minister would arrange a write-off of entire or a big chunk of it, to the neighbourhood fairprice shop owner, who stole the BPL rations to sell it in black, no businessman has remained unaffected by the gamut of measures meant to enforce transparency. The Sethji has not only been denied the privilege of evergreening of huge loans, while the ration shop owner has had to cope with the direct delivery of food and cooking gas subsidies to the targeted families through digital platforms.

The no-nonsense approach will eventually persuade businesses to go fully legit— post-demonetisation, there has been a huge spurt in taxpayers—to compete with the best on transparent terms and to contribute its share to the task of nation-building. In the interregnum, the fact that it is being forced to shed its corrupt ways, might prove painful. However, eventually it will be beneficial both for the government and business.

Now, the era of free lunches for the moneyed classes may be over. Laws have been put in place to attack kleptocracy. Tax-thieves now face imprisonment. Criminalising of tax theft has had the entire business class lamenting Modi’s audacity. But he remains unfazed, knowing that wooing the poor, directly delivering welfare subsidies, while simultaneously cleaning the Augean stables of business and industry also pays huge electoral dividends.

As for the hitherto core support-base of trading classes, well, their anger, especially when it stems from thoroughly selfish reasons, will stop short of them reneging against the party they have supported all along. Modi seems to have taken no risk, knowing as he does that while the base will eventually come round, there are huge electoral gains to be made by serving the far more preponderant constituency of the poor and the under- privileged. The outcome in UP fully endorses this shift in electoral strategy.

Meanwhile, a note of caution might be in order. All the good work on the economic front will stand jeopardised if the national narrative is dominated by the recklessness of the so-called Hindutva vigilantes. Reports about people being lynched in the name of cow or beef or love jihad bring a bad name to the country and act as a dampener against the flow of foreign investment.

Besides, while keeping a good part of the population under siege, no government can ensure general well-being of the rest of the population since the prevailing tensions and anxieties would necessarily take its toll on governance. Modi might be observing a policy of live-and-let-live with the RSS, but the latter needs to keep in view the demands of the 21st century, while seeming to implement its 18th century worldview. India has moved on. RSS too must march with the times. All politics is transactional now. The Shiv Sena was on board on the presidential poll the moment the RBI allowed the cooperative banks in Maharashtra to deposit some Rs 3,000-odd crore in junked notes. Notably, the cooperative banks in Maharashtra are mostly controlled by politicians. Even the fading Maratha chieftain, Sharad Pawar, has reason to be pleased, though the NCP is yet to break ranks with the Opposition to support Ram Nath Kovind for President.