Saturday, November 8, 2014

Modi Radio Talk Misfires on Black Money

Prime Minister Narendra Modi’s “Mann-ki Baat” (Thinking Out Loud) on Black Money showed his unfamiliarity with the medium of radio.

He spoke as if all his usual visual aids were at work, the grizzled visage, the waving hands, the scornful lip and brow of cold command -- when, in fact, there was only his disembodied voice.

Radio is a medium that forces the listener to focus on meaning and significance, and in that it plays to a traditional Indian strength: we are a people whose genes bear the imprint of the countless generations who, over many millennia, kept alive by word of mouth the Vedas, the Upanishads and the teachings of the Buddha.

That ancestral feat has left Indians with an acute cultural sensitivity to the spoken word, a capacity to separate the wheat from chaff, especially among those who offer themselves up as our leaders.

It is the reason why British propagandists never had any success in India, why Gandhi’s reedy voice was no obstacle to the recognition of his great soul and why Rahul Gandhi today cannot rise in Indian esteem despite the most fervent wishes of his coterie.

Mr. Modi’s earnest third person reference to “this Pradhan Sevak” whose “article of faith” is “that every penny belonging to the poor of India should come back,” sounded tinny and insincere. Especially about the money belonging to the poor.

The problem with money has always been that it has not belonged to the poor. The rich have had exclusive ownership for as long as human memory serves, and no one has seriously contested that point except for Karl Marx and his acolytes, among whom our right-wing PM is an ill fit.

As a public speaker Mr. Modi has formidable prowess but always before in his political career he has been able to stoke communal feelings to appeal to crowds.

As Prime Minister he cannot now count on those supports, and based on the Black Money talk, I would say that he has yet to find a comfortable new metier.

Perhaps it would help if he did not underestimate the intelligence of his national audience.

He could have spoken seriously about the problems of black money, of how it is caused by people unwilling to pay heavy taxes, to see the country as their first priority.

He could have said, “I intend to ease the tax burden so that no one will have an incentive to send money abroad.”

He could have spoken of the national security aspects of having black money: anyone with a stash to protect abroad is at risk of blackmail by those who hold the money.

In that vein he might even have pointed to related realities such as the slavishly colonial attitudes in our “elite” mass media or the communal-provincial identity politics of some A-list “Bollywood” personalities. (Such light mentions can be extremely effective in raising the general level of political consciousness.)

A notable aspect of the talk was that it ignored completely the issue of domestic black money, the stuff that finances political campaigns and greases the wheels of official policies and programs.

By expert estimates it amounts to 90 per cent of wealth hidden from the tax man. Perhaps only economists and journalists have noted that gap now but awareness of it is sure to settle into the general populace, damaging the entire political infrastructure and Mr. Modi’s credibility in particular.

That prospect is unlikely to change if the government continues to deal with black money through police means. “Letters rogatory,” pleas to transnational bankers, and the browbeating of Indian suspects might make the headlines but they are likely to bring few returns.

As Press reports confirm, those efforts have so far resulted in nothing more than a shifting of wealth away from banks.

Where the money has gone is anyone’s guess. There are any number of other holdings out of reach of the taxman, ranging from pricey foreign real estate to diamonds, yachts and even foreign “participatory notes” that allow investors to fudge their real identities.

There is only one way to get every paisa of black money back to India and out of secret domestic coffers. That is by removing its root cause, income tax.

I have argued before in these columns that income tax, both personal and corporate, is an unnecessary burden on society that sits most heavily on the honest.

It is also a major source of corruption within the government bureaucracy, and as already mentioned, a particular weakness in our national security.

On top of all that it is completely unnecessary; the government could easily replace income tax with one on immovable property.

The cherry on top is surely that if India had no domestic income tax every investor in the world would suddenly develop an urgent desire to be here.

It is mystifying that instead of moving towards this win-win solution the Modi government is preparing for stronger and broader enforcement of tax laws.

Or perhaps it's not so mystifying.

Stronger tax enforcement will undoubtedly increase the arbitrary powers of government bureaucrats and bring on-stream new sources of bribery and political extortion.

But in taking that route the government must weigh in balance the further loss of economic freedom for all Indians, and inevitably, of the continued erosion of political liberty.

To sum up the matter as delicately as it has ever been put, I quote one of the few reportedly authentic sayings of Sun Tzu, the ancient Chinese philosopher: “Rule a great country as you would a small fish” (i.e. do not overdo it).

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