My admiration for Prime Minister Narendra Modi has increased exponentially over the past six months. Far from being tamed by the ‘system’ and the comforting environment of lutyens’ Delhi, Modi has not lost the fire in his belly.
First there was the ‘surgical strike’ on terror camps across the line of Control, an act of high-risk audacity that drew wild applause from the citizenry but invited tut-tutting from the punditry.
Then there was the demonetisation of November 8, another extremely high-risk strategy aimed at striking at the very core of the black money menace. Once again the pundits threw up their hands in horror. The outrage was fierce. But Modi stood his ground, not yielding on the fundamentals but always willing to fine tune his tactics.
The impact of demonetisation, as this year’s Economic Survey conceded, will take years to be fully gauged-and much will depend on how adroitly the Government follows through. However, one thing has become clear: Modi’s war against corruption isn’t a cosmetic exercise aimed at winning a State election but driven by a sense of mission.
To even suggest that a political leader is blessed with a missionary zeal that goes beyond immediate political calculations is calculated to invite sniggers. Cynicism has become so deeply ingrained in the national imagination that it has become nearly impossible for educated Indians to believe that something as basic and non-contentious, but at the same time noble, as the Swachchh Bharat campaign is motivated by a higher ideal.
In the case of demonetisation, many political buffs and even BJP supporters could not comprehend the logic of a move that hit small traders and small businessmen-traditionally the party’s most loyal supporters-the hardest. True, they were collateral victims in a move that sought to inject ethics and transparency in public life. But no Indian politician — not since Mahatma Gandhi injected the moral quotient into mass politics — has risked the immediate in pursuit of a loftier goal.
This Budget was in many ways a predictably dreary affair: A few generous outlays on crucial sectors that warranted a leg-up, a little tweaking of the tax rates and a quota of platitudes. But there was one thing that stood out, an attempt to codify political funding that took into account ground realities.
For as long as anyone can remember, it has been said that the underground economy has thrived on political patronage. People seeking advantage and wanting to cover-up some wrongdoing have traditionally been generous donors to political parties. Audited accounts suggested that between 65 and 75 per cent of the income of parties came from anonymous cash donations. This is not including the contributions to individual war chests which were entirely in cash.
Maybe the Congress crafted this system of political funding, however, as political competition, particularly in the States intensified; other political parties established funding networks that mirrored the one established by the Congress.
The net effect of this political practice was two-fold.
First, political activists have become accustomed to easy money, particularly during elections. The venality has spread to sections of the electorate that now both expect and demand to be paid for their support. Even the media has succumbed. The global outrage against ideologically-driven Fake News was preceded in India by Paid News, a phenomenon that is hard to detect and impossible to check.
Second, the growing cost of contesting elections effectively made political parties completely dependent on large donations. This in turn influenced the hierarchies inside the party. In the sphere of governance, decision-making was wilfully injected with a large discretionary element to cater to those who had the ability to either bankroll politics or enhance personal fortunes.
It is unlikely that the Modi Government’s initiatives will lead to total transparency and cleansing of political life. The rot is far too deep for change to take place by legislative fiat alone. Already there are those who are planning innovative ways by which the ceiling of Rs2,000 in individual cash donations can be circumvented. We may also find that the cash restrictions lead to many politicians discovering the virtues of smaller, regional parties. Ways will also be found to undermine the effectiveness of the election bonds. Indeed, those who complain that the reforms mooted in the Budget don’t go far enough also include those who don’t want to upset the status quo.
There will be a demand for the state funding of elections. In theory this seems a legitimate demand for a level playing field. In reality, given the proclivities of a spoilt political class, this will translate into getting money from multiple sources and enjoying the best of both worlds.
In his Budget speech, the Finance Minister released statistics that clearly suggest that tax compliance is, by and large, the prerogative of the salaried class. What is shocking is how few of those who are independent businesses or in the professions actually bother to declare their real incomes and pay taxes. Part of this stems from the lack of state penetration. But far more important are the habits inculcated during the bad days of Congress socialism when personal Income Tax levels crossed 90 per cent-an absurdity that naturally encouraged concealment of real incomes.
Bringing tax rates down to and making life difficult for the non-taxpayer are important steps in enlarging the tax net and, in time, reducing the overwhelming dependence on indirect taxes. However, there is a cultural problem. As a rule and maybe due to historical reasons, Indians appear to have mastered the art of short-circuiting rules and procedures.
We saw some of this during the demonetisation drive when fat cats entered into private deals with bank officials to exchange old notes for new, without the transactions being recorded.
Trust and a willingness to play by the rule book are very important in establishing the moral fabric of a country. The writings of late-19th century and early-20th century Indian stalwarts, particularly those who agonised over the reasons for India’s loss of sovereignty, indicate the premium attached to charitra (character) in nation building. It is a tragedy that this emphasis on character building was discarded after Independence as the focus shifted to identity and entitlements.
There are times, particularly during election rallies, when Prime Minister Modi projects himself as a combative politician in the traditional mould. However, there is a far more appealing Modi who comes across as something fundamentally different in his periodic Maan ka baat radio addresses when he focuses on issues that go above partisan politics. It is that Modi which is driving this bid to create an ethical India.
That no politician has tried to attempt something so audacious is no reason why it shouldn’t be tried at all.