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High ground, short cut

PM does well to highlight taxation as key to the citizen-government contract but leaves some questions unanswered

The main political message of Prime Minister Narendra Modi’s new year-eve address to the nation, also marking the end of 50 days of demonetisation, came somewhere in the middle: According to information with the government, he said, there are only 24 lakh people in India who accept that their annual income is more than Rs 10 lakh. Can we digest this, the PM asked, as anger or farce? There are legitimate questions about the manner of implementation of the PM’s demonetisation exercise, its shifting goalposts and unintended outcomes. But by framing it as a project that involves all citizens and emphasising the essential linkage between taxation and the citizen-government contract, PM Modi is making a political statement whose power draws from its very simplicity. In that aspect, demonetisation can be ranked alongside Swachh Bharat. And with his exhortation, in his first Independence Day speech, to parents to question and correct their sons instead of constantly putting the onus on their daughters, in the context of the growing public attention to incidents of sexual violence after the gangrape of a young woman in a Delhi bus in December 2012. But if the PM’s core message was far-reaching, the manner and context of its articulation was questionable.

To begin with, it verged on drawing a class divide — them versus us, rich versus poor, tax-evaders versus tax-payers. Of course, the tax net must be spread wider, but there are complex political and economic reasons behind its flimsiness and narrowness so far, and the solution does not lie in drawing simplistic oppositions and contrasts. Then, in his speech, the PM announced incentives and schemes for farmers, the poor, those running small and medium businesses, women and the elderly — in other words, all those who were affected the most due to the cash restrictions because of demonetisation. But be it the interest subventions for small home loans, or the hiking of credit limits to small industry, these seem too much like sops for the suffering, at a time when banks are already saddled with debt. In any case, announcements of this kind should be part of the government’s budget speech, not a prime ministerial declaration or promise. That’s the other problem with the PM’s announcements for different sections: Investing them with the PM’s own political imprimatur and authority sends a confusing signal on institutional process and procedure. When the budget is only a month away, the timing of the announcement links it to the demonetisation hardship which is neither good politics nor good economics.

The PM’s speech on November 8 launched an ambitious plan that in its unfolding has touched off many questions and challenges. His December 31 address fell short of answering and addressing them.

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First published on: 02-01-2017 at 02:01 IST
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