To abolish income -tax a rework of the constitutional doctrine is requisite: MR Venkatesh
We have seen MR Venkatesh as a fierce debator on various prime time English News Channels, often landing up criticising the BJP led NDA for it’s policies and the opposition even more. Ever since Modi government took control of governance, providing constructive criticism also has been a challenge often getting tagged as anti-national.
But MRV as with his sarcastic and witty nature, lands up earning praises from all sides. In conversation with me he spoke to me on a variety of issues in my debut Medium Blog interview series.
I hope someone in the Economic Advisory Council reads this! :)
According to this article https://bit.ly/3jnjIDO It says that Chinese companies have been making study in roads in the winning of contracts for our national smart grid systems in at least 46 city networks between August 2016 and March 2020.
I am talking about Supervisory Control and Data Acquisition i.e. SCADA contracts.
And just during the Galwan conflict we came to know that a 4.5 kilometre Tunnel Project was handed over to a Chinese infrastructure company by the concerned ministry.
Which was later cancelled due to strong protest on social media and was later handed over to Larsen and Toubro.
What is your opinion and how do you read the Modi government’s China appeasement policy?
Ans. I would not call it an appeasement policy but of course it has been a miscalculated step but one has to go and look for the answers back in 1991 when we liberalized our economy.
To start with we never had a FDI policy with respect to National security. What we needed right from the beginning is foreign investment integrity act which would override the FDI laws. This would have at least ensured that the money we received was clean money or atleast from friendly countries. This is what FIPB was supposed to do, but ended up as a failure.
In my understanding the 1991 liberalisation policy was undertaken in a mad rush and probably it did not take many things under consideration. At that time we did not have the luxury of $500 billion in our foreign exchange reserves.
Naturally we went a little overboard but in the last 30 years we should have corrected this situation.
For example if you refer to the hon’ble supreme court judgement on the case of Vodafone for which the section 9 of the Income Tax act was amended, I had pointed out to the ownership issues of Hutchison-Whampoa, which was operating in India as Hutch, along a joint venture with Essar. (Refer to my article here)
Now how many of us actually know that the owner of Hutch Li Ka-Shing was a Chinese PLA plant? We never discussed these things!
This also had any implication in 2004 when the NK Singh committee went into the issues of participatory notes. Despite all the promises made by RBI and SEBI I am not convinced that narco terror money is not routed through to the PN route.
Did the Modi govt fail to see China as a conniving neighbour? This government also severed all contacts with the Dalai Lama. All 18 meetings with Xi Jinping seem to have failed and we have Galwan now.
As a layman I see things very murky. What do you see?
Ans. In a way yes and in a way no. China is the karmabhoomi of our defence ministry which means that it will be put to test if only we have an issue with China.
If we look at China from the aspect of Civilization, both countries have benefited from each other from time to time but the present-day China ruled by the Chinese Communist party is a challenge.
Probably there was a feeling that we were dealing with China at a civilisational level with whom we would always like to extend warmth and then there is the state of China against whom we have to be guarded. This never works in a linear mathematical equation like moving two steps forward and one step backward.
That brings us back to the drawing board and chalk out a plan how to deal with Chinese State and differentiate it from Chinese People. It is currently a ruthless state. It is an enemy of sorts with most Western countries especially after the corona-virus disaster, it is definitely not friendly with Taiwan, Japan and Mongolia. It has a huge fault line in Tibet and also with minority Muslims.
In the 21st century without accommodating alternative thoughts and people if China wants to pursue expansionist policies without learning lessons from the past fallen empires like the British Empire which is the last known empire in modern history then China is bound to fall in its own contradictions.
The Indian government is aware of it but it’s just the question of time. You cannot wish away your neighbour but you have to deal with it.
“I can only compare this to the Chennai auto driver. He will use the right-turn signal while his left-hand will communicate he is turning left, but in fact he will go straight! He will leave everybody confused,”
As a supporter of the Modi government you obviously have the right to criticize policies which you think are not well-placed. You were pretty vocal about the government’s 20 lakh crore stimulus package.
Many in the media pegged this as some sort of great economic reforms which clearly it is not.
Two months after the package has been announced and rolled out also, do you find your grievances with the package finding any modification or resolution?
Ans- Since the last two to three years I have been consistently vocal criticising the government’s views and policies on economy. The sad part is after 60 days no one talks about 20 lakh crores anymore you are probably the first one I have heard because you remember the number (laughing).
The operating part of the 20 lakh crore is 3 lakh crore. From this 3 lakh crore the government itself says that 1.2 lakh crore has been sanctioned and the disbursed amount is 50000 crores.
I don’t think that the 2.5% of the actual amount which transpires to 50,000 crores can revive the economy.
Those who were trying to get certain benefits from this 50,000 crore had to show documents that they have drawing rights, stocks etc to the Bank. This is pushing everyone to the state of disbelief and I know it from hands on experience I get to deal with the banking system.
What the government should do I clearly don’t know I can only be a watcher like Sanjay from the Mahabharata who used to give feedback to Dhritarashtra.
There is a growing dissent even among most erstwhile Modi supporters or you can call them right wingers that Modi has been overly dependent on the bureaucrats who thrive on stalling productive activities and red tape.
What is your take on this?
Ans: This can be analysed in two particular ways. If you discount the previous Morarji and Vajpayee government this is the first genuine right wing government in full majority.
So he is allowing talent to blossom within his own party. But this is taking extraordinary time and people like me are finding it difficult to accept the time taken in this process.
On the other hand, at an factual level u r right that more often it looks like it is a government for bureaucracy of bureaucracy and by bureaucracy. Now nothing would exemplify the fact that Mr Modi talked about tax terrorism in the run up to the 2014 elections and he also talked about jayanti tax.
Jayanti tax was a pun on MS jayanti Natarajan who was then environment minister and tax terrorism was referred to the use of too much of coercive action by the bureaucracy on the revenue side.
Now what has happened after he has come to power is that tax terrorism has migrated and evolved to tax jihadism. In my view this tax jihadism have contributed to the overall sluggishness of the economy.
Especially the MSME sector is finding it immensely difficult to cater to the demands of the bureaucracy of the tax department. Tax judicial system is dead, buried and forgotten. On top of that you have the GST which makes it compulsory for you to pay the money to the government whether you have it or not.
The problem in our country is the bureaucracy is distanced from the common man.
Subramanian Swamy has long been advocating the abolition of income tax. Whereas the current government seems to be in no mood to even consult him on matters which are macroeconomic in nature.
On top of that there has been a rising case of terrorism as you call it. What is your opinion on abolition of income tax because recently the government has decided to go for full auction of coal blocks.
Which essentially means that what Subramanian Swamy has been advocating for decades now the government is working on that same path but without giving him any credit.
First of all it is completely the prime minister’s prerogative who he wants to have in the cabinet.
The issue of abolition of income tax is not that simple as you may think. I have mentioned this in my book “Retaining Balance, the Eternal Way” in chapter 6,7& 8, more particularly in chapter 7.
For long we have created a constitution based on fundamental rights but as a civilization we are rooted to fundamental duties. It is the land that believes in the right of duty and not the fruits of one’s own labour.
People may not understand the full shloka in the Gita but they understand what is karm and what is Dharm. When we deal with each other we talk about Dharm and Karm but when we deal with the state we talk about rights. That is the dichotomy here.
Unfortunately this script is the irreconcilable portion of our Constitution. Ideally we are a group of people that takes care of ourselves like parents, children etc. There is very little that the state does. The drift in the macroeconomic policy happened when the Americans tried to do something for the black people which became an example of a modern welfare socialist state.
Somewhere down the line we have developed a feeling that the state can do anything and everything. As a result we have nanny state which will sing lullabies if you are not going to sleep.
This is imposing a cost on our civilization and for the growth of our country. I for one would like to have the prime minister to say from the ramparts of red fort on August 15, that our’s will be a residuary state and not a nanny state.
We have to go back to redefine the role of the state via the role of the individual. In fact if you go back to the constituent assembly debates the right to tax was debated between 17th November to 5th December 1947 by a three-member committee headed by Nandini Sarkar.
For 20 days they debated and came back with the report which was in turn based on the 1935 Government of India Act which is what the British wanted to tax us. The methods of text calculation and collection that we are using today are the ones that the British used against us.
And the committee headed by Nandini Sarkar discussed how that tax was to be distributed among the state and centre in the concurrent list and since then from Nandini Sarkar to Modi Sarkar we have been following the British Sarkar.
So the point I am making is unless you really work the role of the state. Macroeconomics is a study of cause and effect of everything you do. So what Dr. Subramanian Swamy is suggesting is more from the civilizational perspective which is what many right wingers would say that the state should be residuary in nature.
So we have to go back and rework the basic doctrine of the constitution and add basic duties. Unless you do that income tax cannot be abolished.