It’s time for us to move beyond the misplaced emphasis on regulation being the sole harbinger of a clean economy
I can understand the dilemma of the Union Government. After all the hype on black money in the election campaign; after eminent lawyer Ram Jethmalani deciding to go noisy on it, (not to overlook the frontal assault by BJP leader Subramanian Swamy) the Union Government is under no obligation to appear active on the topic.
The really powerful are so powerful that the ruling dispensation cannot afford to risk their wrath. The poor are so poor that they can barely subsist. So, both are a ‘no-no’ option.
The hapless 70 per cent of the 223 million Pan Card holders then have to bear the cross by atoning for the sins of others. Hence, the bearers of the tax code (pan card) are the obvious targets of the campaign against black money.
It cannot be anybody’s case that those with black money should be spared, but it carries more credibility and conviction if the bigger advantage-taker is targeted first. Nowhere in the world, or at any point of history, hitting soft targets has really won a war.
There is a simple law of regulation, “Intelligently guarded freedom to anyone achieves objectives better than a closed regulatory regime.” Those who have dealt with teen-age children will easily understand this principle.
last few weeks have seen a spate of regulations. The Union Government has made pan card a mandatory input for any serious transaction. Of the 1.25 billion people in the country, 223 million are Pan Card holders. The number does not have the necessary critical mass to leverage the 1.25 billion out of the financial morass.
Incidentally, like many approaches in Indian governance, hitting gold as a soft target also knows no party divisions. India raised import tax on gold to 10 per cent in a series of hikes in August 2013. Reportedly, it only reinforced gold smuggling.
There is strong case for breaking through the shackles of conventional financial reckoning or indeed conventional economics. If consumption is to be boosted for manufacturing to flourish, first and foremost, the eco-system in creating a sense of pride in using things Indian has to be reinstated.
Status cannot be the handmaiden of use of foreign goods, foreign education and indeed foreign travel. Making a better India of the present India is going to be difficult, unless there is a sense of pride in being Indian and thinking Indian.
There is a real danger that what happened to many cases of land allocation to the so-called weaker segment of the society or the beneficiary of doles and subsidy will happen in the case of financial accounts also.
The segment of Jan Dhan Yojana is exempt from the rule of the Pan Card. A number of disinterested, uneducated, unaware lower segment individuals can become the unwitting pawn of the big and the powerful in creating distributed accounts and aiding concealment of income.
A distributed ecosystem of the holdings can emerge, where a tapestry of small holdings can replace the presence of visible large holdings. I am sure the system will catch with this too, but by the time system catches up, new methods of evasion get identified.
The top segment additionally has access to over 40 tax havens, the lower segment would be a part of the intelligent investor’s wide ecosystem. Victim of additional regulations (read harassment) is the well-meaning private citizen.
It would be so much simpler if an attempt was made to monitor more rigorously the spending pattern rather than the saving pattern.
Yes, the spending pattern is also under the lense, but it is no secret that exchanges without proper receipt cover vast portions of the economies.
Vegetable vending, in India, is alone a trade of several lakh crores of rupees. They are bought every day, often twice a day. The kind of ready cash involved in vegetable vending is not even adequately mapped.
Put simply, time has come to move beyond the much misplaced emphasis on regulation being the sole harbinger of the clean economy. The instruments of clean economy have to be smarter that they have been in the past. A harassed citizen can be confounded, but turning around the economy is another matter.