Demonetisation gain A historic reform
When the news item, “Cash is still king as circulation nears pre-demonetisation level: Report” (July 3) informs that 86 per cent of cash is back in the Indian economy, it is the time to bring down the curtains on the negative discussions about the fate of demonetisation. The continental size of the country, the poor banking infrastructure especially in rural areas, resistance of traders/unorganised sector to be above board in their transactions, illiteracy, abysmal poverty especially in rural/ tribal areas, and short learning time given to switch to mobile banking — short circuiting the debit cards usage stage — and not taking Opposition parties on board, all appear to have connived to defeat the government’s sincere efforts to make India a cashless economy. Was the goal too high?
However, it is important to acknowledge that the demonetisation exercise has unleashed the forces — both on technological as well as strategic levels — which are constantly challenging the idea of need for huge cash in the economy and are focussing on deconstructing the pathways leading to the same generating new learnings in the process. It will be a double whammy if the regained high levels of cash in the economy discourage the central government from continuing its vigorous efforts in rightly curbing high cash usage. The government has correctly curtailed usage of cash in high-value transactions and must continue its efforts here.
What it may need is to make the entire issue bipartisan by creating a high-powered commission having multidisciplinary teams to make efforts to legitimately reduce cash in the economy. Inviting a political economy giant to head the commission will take the country forward in becoming a less cash economy in the medium term, which itself is no mean goal.
Y P Issar Karnal security environment. The appointment of a Chief of Defence Staff and integration of the military with the defence ministry was proposed post-Kargil, but it is yet to be implemented. Some ascribe the delay to politicians’ and bureaucrats’ fear of a coup. When General V K Singh was the army chief there was panic in the government when troops from Hissar moved for manoeuvres. Similarly, when small teams of army personnel were deployed on a logistics exercise around Kolkata, Mamata Banerjee saw a threat to her government. The integration of the military in the decision-making apparatus will allay these fears. The Indian military capability, though much improved, is constrained by poor infrastructure along the northern borders plus reported deficiencies in arms and equipment. The 5:1 ratio stands, but the “1” isn’t insubstantial. It’s time to up the game.
A K Ram Singh Indore The Business Standard edition of July 3 carries several stories and articles on the goods and services (GST). The central theme differs from eulogising GST for its simplicity to calling it a terrorist law. The reader is informed of the never-tiring revenue secretary taking to Twitter to bust the “myths” about the new tax regime. In the Q&A the soft-spoken Central Board of Excise and Customs chairman answers the most worrying questions on GST. Some eminent columnists lament upon the lost opportunity by focussing on the critical inadequacies in the GST structure that have robbed it from acquiring the status of an ideal tax reform.
Be that as it may, there is no denying that GST, in whatever form it has emerged, is a historic reform. True, the structure does not match with the precedents across nations which have benefitted from GST or VAT. However, one has to remember that any reform, particularly one of such a huge dimension, is mainly a political exercise and not solely an economic thesis. It is inevitable that the design of any tax structure is influenced by the perception of the political masters of the day. Otherwise, does it look convincing that biscuits are taxed at 28 per cent and mobile phones at 12 per cent? Nevertheless, this is only the beginning. In due course, compelled experience of implementation and the need of much greater efficiency (and benefitting from the wisdom of critics!), the GST structure would acquire the expected lustre.
T R Rustagi New Delhi