One of Nehruvian socialism’s most unfortunate legacies is that it created an India in which making money legitimately was considered ‘‘profiteering’’ while living off the fat of the land in some official capacity was considered ‘‘serving the nation’’. The idea so captured the public mind that it went beyond politics into popular cinema, always an accurate gauge of middle class attitudes. Remember those Hindi movies with some villain or other playing the greedy, cruel sethji? Remember the hero, often Dharmendra or Manoj Kumar, as the impoverished, idealistic young government servant working selflessly for the poor and poverty-stricken Bharat Mata? How proud we were of our poverty, how we wallowed in it and how fooled we were by those who ‘‘served the nation’’. In recent years, as awareness of the corrupt core of the system has grown, this belief in the inherent goodness of our officials has lessened dramatically but not enough for our policymakers to recognise that babudom has a vested interest in making policies that preserve their ability to continue living off the fat of the land. Their salaries are pocket money. It is the perks that make serving the nation such an attractive career choice that qualified doctors and engineers give up their professions to join departments like excise and income tax. The recent row over excise duty on textiles is an example of how policies continue to be made that favour those who make money illegally over those who make it through hard work. If the government insists on excise duty on cloth produced in the power loom sector (90 percent of all Indian unfinished cloth) and on garment exporters registering with the excise department the only people who will benefit will be excise officials. But, when I tried to discuss this at the highest levels of North Block last week I heard comments like ‘‘have you seen how rich exporters have become, have you seen their Lexuses and BMWs’’. Yes, I have and agree that anybody who can afford a Lexus should be paying tax but registration with Excise Department will bring money not into government coffers but into the pockets of excise inspectors. And, while garment exporters earn through hard work, excise and tax inspectors make theirs through corruption. If you knew some of the tax inspectors I know, you would know that they could afford a fleet of BMWs and a Lexus or two to boot. These parasites make every year what the biggest power loom owner in Bhiwandi would be lucky if he could make in a life time of hard work. And, it’s money made from manufacturing nothing, investing nothing. It comes from doing no more than harassing businessmen with raids so that they pay to keep them away. The rich pay in lakhs and humblest exporters and manufacturers pay in thousands. Anyone who believes that the inspector raj has ended needs to tour the industrial township of NOIDA to find out how long a list of inspectors there is and how much money is paid out on a monthly basis just so that an export consignment can leave in time. On top of this will now come excise registration and yet another inspector and we dream of competing with China, with becoming world class. Forget it. The garment exporters will at least survive, the power loom sector for whom the tax is really meant will be destroyed. Last week I had the opportunity of seeing the new policy from the viewpoint of Delhi and as it translates on the ground. I interviewed a high official from the Central Board of Excise & Customs and two days later visited Bhiwandi, the largest power loom centre in Maharashtra. All its 500,000 power looms have been closed since March 29 because of an indefinite strike to protest against 11 per cent excise duty on what they call ‘‘grey’’ or unfinished cloth. The duty comes on top of excise duties that already exist on yarn and finished cloth. The official in Delhi tried to convince me that the duty was essential not just because they hoped it would help modernise textile industry but also as part of the VAT (value added tax) regime that the government hopes to bring in. When I mentioned this in Bhiwandi they pointed out that in countries that had implemented VAT there were no other taxes. They continue to pay sales tax and octroi. Besides, they said, the money would go into the pockets of inspectors, government would make more money if it collected an annual tax of even Rs 100 from each power loom. The simplicity of that suggestion appealed to me because it made so much more sense than the convoluted schemes North Block churns out. But, there is method in the madness of these schemes. The more complex they are the more opportunities they create for corrupt officials to make money since it is rarely possible for an ordinary person to understand exactly which rule he is breaking. When taxes are simple and fair and appear to be ‘‘buying civilization’’ there is no reason why people will not pay. As things stand the word tax is a synonym for harassment and the word tax inspector is a synonym for parasite and there is no sign that Finance Ministry has understood that something needs to be done to change this. Write to the author
