REPORT-1-2

Who will be the next President?

Shivaji Sarkar

It is time we consider whIo can be President of India. The head of the state must be a person of integrity, inspirational, intellectual and visionary.  That should be the normal consideration.

But the reality is different. Except for these inherent qualities as also his capability to guide the nation in times of crisis, the system is once again looking for a pliable person who would kowtow the ruling party. It is not a very unenviable proposition.

The nation is considering names on consideration of religion, unimportance in political terms and certainly someone who would be as dumb as possible. Some of the names that are being considered defy any logic.

The first consideration in the present discussion led by the ruling party is of course the religion of the person. It starts with the premise that if someone is from the majority Hindu community, he has little place in this discussion.

In a democracy birth is not supposed to be an important issue. The debate, however, is being structured in a way that this becomes a must. It starts with the exclusionist view. The purpose is not to provide equal opportunity to the eligible persons but how an eligible could be declared unfit on extraneous consideration.

So howsoever big or suitable names may be there, they are not to be considered. It creates a class of political pariah. An entire community with the largest population unfortunately gets into that syndrome.

The ruling party’s compulsion is well understood. Its base is dwindling. It is sticking to every possible gimmick to boost its prospects even if it is at the cost of the spirit of nationalism and well being of its people. The lessons from UP has not been learnt. There its efforts at fragmenting the society only led to the consolidation of minorities against it. Now once again it is promoting that.

The basic premise for looking for the presidential candidate succumbs to the concept of minority-ism. Even among the minorities only one set of minority is more important. Does it not cut at the root of very concept of secular polity? Does secularism only mean that the nation would have to take care of the minority community who has been at the root of weakening the country by various means – partitioning it to create the ultra-terrorist nation, giving all kinds of support to terrorists, undermining the security of the nation, its economy and hitting its interests by producing more children than the nation can feed.

It is a serious issue. The nation must not succumb to cacophony of engineered campaigns to aimed at “undoing their poverty” by producing various committee reports. If similar committees are appointed for each of the caste or community groups, it would only replicate Sachar Committee report.

Over 55 to 60 per cent people live in abject poverty. They are from all communities and castes. In every caste, community, tribal or social group almost 60 per cent of their people live in abysmal conditions.

The unfortunate part is nobody ever appointed a committee to look at the conditions of individual groups.  If it is done the country would be replete with hundreds of Sachar type reports. All would point to one basic fact that poverty and unemployment is evenly spread. It does not discriminate.

But the powerful community could create a web around it to forcefully propagate the “discrimination” which is not there. The politically savvy community knows the methods of subtle arm twisting and get decisions in its favour.

Poverty remains the easiest stick to win the sympathy of all within the country and outside.  This is the greatest myth. The largest number of smugglers, mafia clan from Azamgarh to Mumbai and Dubai proudly hail from this community. The richest businessmen of Mumbai, Kerala, Gujarat, Tamil Nadu, UP, West Bengal and Bihar belong to this community.

The textile exporters of Bhiwandi, Bhagalpur, handicraft exporters of Moradabad, Aligarh and Meerut are from this community. Even some of the largest builders in Andhra, Tamil Nadu and software exporters are from this community.

They are there in key government positions, in ministries, assemblies and where not. They have strategically voted in UP to elect the largest number of 69 MLAs – irrespective of political affiliation, short of their target of 75 in a house of 402.

They are the most organised people to blackmail the nation to increase their shares. It must be countered now.

The national political parties must draw the strategies to choose a presidential nominee keeping this aspect in mind. They also need to bust the policy of appeasement of the ruling clan and tell the nation the reality.

It is necessary not only to elect a capable person as the President but also to correct the political course.

The process should look for a person who is above all this. The nation must look for an astute political personality so that if need be he can question his Prime Minister and his colleagues. The President has to be the standard bearer of the spirit of the Constitution and ethos for which this nation has stood for.

As polity is becoming unstable with weak personalities heading the government and administration, it is time the nation elects a person as President who not only can command respect but also can guide the nation.

The President as the Constitution envisaged is not supposed to be a rubber stamp. The President must have strength to give direction to the government, not just in theory but in reality. It has happened in the past.
It is time of crisis –political, economic, ethical and moral. The situation is aggravating. The institution of President is supposed to steer the nation in such emergencies – to help it select the right path.

So the nation needs a strong, ideologically-oriented benevolent person as the head of the state. Only such a person can keep the nation integrated and lead it to become the leader of the international community. The nation had too many bureaucrats at all levels. No person with such a tag should come to occupy the highest office. The leading national parties need to come together to elect such an astute political person. He should symbolise the change the country is pining for.

Some 40 years back the system was challenged to elect a labour leader, VV Giri,  as the President. The nation needs to emulate that to usher in the qualitative change in the fragmented political process. It is a great opportunity. Will some political organisation do that?

Gold import tax will help only smugglers

Poor people will pay more

The new four per cent tax on gold import and tax deducted at source (TDS) for purchasing over Rs 2 lakh worth of gold is likely to lead to its higher smuggling and cause more revenue loss than earnings anticipated.

In a regime where tax rates are required to be lowered and simplified such steps cause more adverse effect. The almost a month-long strike by bullion traders has led to a loss of Rs 18,000 crore of business – a supposed loss of Rs 720 crore calculated at four per cent tax levied in the budget.

The new tax may have more adverse effect than visible. The richer are likely to be hit less. The poorer and marginalised be it in cities or villages are likely to lose more.

In the absence of access to banking and less faith in paper currency, large section of the marginalised population still use gold as a saving instrument. They are deprived of financial inclusion.

The richer also do it because of the decision to tax interest earnings on bank deposits. An argument given for imposition of the tax is that black money is being turned into gold.

The demand for gold has increased almost in proportion to the lower savings rate. It may mean savings are being put in instruments where people could save on extortive demand for taxes.

It calls for immediate review of the decision to tax small interest earnings like Rs 5,000 till last year and Rs 10,000 as proposed in the 2011-12 budget. It is true the government is earning some taxes from interest earnings. But it is also true that many who were putting money in banks have decided to give it a go by in favour of gold. It is not appropriate to term all that money as black.

It calls for reform in the thinking process. Deposits are put in banks after someone usually is able to save some money after paying tax. Demanding tax on such deposits is a disincentive for keeping money in banks or any other savings instrument.

It would be prudent to do away with the tax on deposits to encourage flow of funds to legal instruments. It would increase fund flow and solve the problem of liquidity the banking sector is facing now. The government would save thousands of crores that it now has decided to put in recapitalisation of the banks.

Taxing deposit is an imprudent measure. It only diverts funds to instruments like gold, which is considered a safe investment option. Freeing the bank deposits would solve many problems, including a huge amount wasted not only by the government in calculating such taxes but also by individuals. Banks themselves have to spend a huge amount for such unnecessary accounting and paper work reducing liquidity.

All these savings would lead to higher earnings by the government. It only requires the government to have a more pragmatic approach.

It also calls for easing norms for opening new savings or other accounts with banks. The banking process should be open to all. Shutting doors on those who want to put money in banks would only lead to encouragement of illegal transaction methods like the ‘hawala’.

Let the nation think out of the box to attract money to legal channels. It would help the economy grow faster. Stringent restrictions are counter-productive. It leads to higher expenditure in monitoring and also leads to diversion of funds to other channels and consequent troublesome procedures.

The state has to realise that concept of tax in ancient times had started as voluntary contribution. All civilisations resented demand for high taxes or cumbersome procedures. Despite opting for market economy two decades back, India still has yet to come out of the mindset of socialistic controls of pre-liberalisation days.

More the controls more would be devious means of diversion. It does not help a healthy economy.

Not so long ago India used to spend a huge amount to tap smuggling of gold. When Manmohan Singh became the finance minister, the country moved away from the concept that imports of consumer and luxury goods was bad. Customs duties on gold were removed leading to the collapse of gold smuggling and related criminality. It itself saved the government of a huge unnecessary expenditure.

Now the country is once again slipping back to old policies. People forget history but those deciding policies should not.

Gold is easy to smuggle. Possibly by putting such taxes, once again funding for Bollywood movies would be made through smuggled gold from Pakistan or Dubai. It has its adverse impact on the sliding international value of rupee as well.

There is a gender aspect to gold as well. Women in poor and even rich families still feel marginalised within the family. They put their small savings into gold or buy gold on loan from the local jeweller. They repay it in small amounts, whenever they can save it. In the end, they own a liquid financial asset, which they can sell or use as collateral – pawn – for taking a loan.

The rural slightly rich families still put the savings in gold. They have less trust in banks more so as the interest rates are low, procedures to avoid even legal tax is cumbersome and deposits earn less than the loss one makes in terms of inflation. With gold they have hope that it would keep pace with inflation.

Besides, gold fetches loan easily without too much of paper work. The recent RBI step in raising interest rates on gold loans will reduce the size of value of gold to 60 per cent from the present value of 80 per cent. This may again divert small gold investors from non-banking financial institutions to the village money lenders.

The nation has to recognise that inflation is a problem. It cannot be wished away by increasing interest rates. Turkey in 2010 cut interest rates despite high inflation. It revived industry, earned more revenues for the government, and prices came down.
The higher imports of gold should not be seen as a problem. It can be solved through better financial inclusion and non-repressive simplified tax system. The gold will not lose its importance by making the taxman stepping in or making it difficult to obtain gold loan. A lower inflation and interest rate may do that. Else gold would be continued to be smuggled in.

(SS)