On the Income Tax Day this year,
Finance Minister singled out individual taxpayers for praise. She
lauded honest taxpayers for their contribution to nation building and said that
it needs to be recognized. Indeed, they have been the bulwark of
the direct tax system. Last fiscal year, when corporate tax collections
collapsed, the personal income tax collection level held firm. It exceeded
corporate tax collections for the first time in this century.
Honest taxpayers will be best rewarded if those evading taxes are caught and
made to pay their fair share. India has a personal income tax base
heavily dependent on the salaried class. Last year, more than 65 million income
tax returns were filed, which is less than 10 per120 cent of India’s adult population. Everyone
who files income tax return is not necessarily a tax-payer. Evidence suggests
that140 income tax data is not in sync
with the pattern of consumption. For example, in 2018-19, only five million
individuals160 declared an income of over Rs. 10
lakh. In the same year, 3.5 million new cars were sold. Other
consumption data tell the same tale. Salaried individuals bear a
disproportionate burden of nation building. Income Tax authorities make plenty
of noises about catching non-salaried individuals in the tax net. But results
have been disappointing. Under-declaration of income and over-declaration of
expenses are widespread and, somehow, Income Tax Department seems unable
to consistently track hidden personal income via consumption expenditure. 240 Now that large cash transactions
are supposedly considerably fewer than before, this seems even more surprising.
The bigger reform is to scrap an income tax code that is a patchwork of
incremental changes and lacks overall coherence. Almost two years ago, 280 a task force appointed by Government
of India submitted its report on a new code to replace the existing
law. That needs to be unveiled and acted upon soon.
A
touchy topic for the Centre and States320 has been the counting of the dead from COVID-19. In 2020, as the pandemic ravaged
Europe and the United States, Health Ministry officials would incessantly
argue that India had better managed the pandemic because its deaths per million of population were comparatively lower. 360 While factually true, it was
always apparent that the argument was specious given the size,
demographic difference and India’s per capita access to quality health
care. But the ferocious second wave in April and May, characterized by
the very visible scenario of hospitals being overrun, and the sick gasping for
a very basic necessity of medical oxygen, revealed a420 spike in excess deaths, compared
to the normal death rate in previous years. Even though independent databases
show large spikes in deaths, with no other explicable cause than
COVID-19, the Centre continues to be in denial of the mortal scale of the
pandemic. The statement given by Minister of State for Health and Family
Welfare in the Rajya Sabha, that there480 were no specific reports of deaths from States due to lack of oxygen, led Congress leaders to say
that the party will move a privilege motion against her. Indeed, it is
the absolute lack of empathy or acknowledgement of the lived experience of
many who have watched their near and dear ones suffer and die for want of medical oxygen that makes the Minister’s statement appalling. It
is technically true that while no death certificate or medical record
would560 note a COVID-19 patient’s demise
as due to lack of oxygen, the very fact that the Centre moved in April
and May to repurpose all its industrial oxygen capacity into producing
and transporting medical grade oxygen is itself evidence that the600 inability to access it must
be considered as a probable cause of death. In the early days of the
pandemic, a COVID-positive test was necessary to count as a COVID-19 death
until the Indian Council of Medical Research640 said it was not always required. It
is perplexing why
India sees value in denying casualties resulting from shortage of oxygen
despite having the third highest number of COVID-19 deaths globally, and its
oxygen crisis becoming international news. It diminishes public faith in the
health-care system. India’s leadership sought to convey the impression that
the country had conquered the pandemic and700 is now advising abundant
caution, with the public messaging focused on the possibility of a third wave,
and how nearly a720 third of the population continues
to be vulnerable as per the Indian Council of Medical Research’s fourth
serology survey. But diminishing the tragedy, especially in Parliament and in
its official records, only further erodes the Government’s credibility.
The Finance
Ministry has put to rest all speculation about the inflation targeting
framework that will guide the interest rate decisions of the Reserve Bank of
India’s Monetary Policy Committee over the five-year period. In a terse
notification, the
Department of800 Economic Affairs announced that
the inflation target for the five-year period ending on 31st March,
2026, will be 4 per cent, with an upper tolerance level of 6 per cent and a
lower tolerance level of 2 per cent. Economic Affairs Secretary840 said that the framework’s
parameters would remain unchanged from what had prevailed in the five years
that ended on March 31. The Government’s announcement is a welcome step
in reiterating that inflation targeting remains the centrepiece of the monetary
policy framework and signals that the fiscal and monetary
authorities are in lockstep in ensuring the primacy of price stability as the
bedrock for all macro-economic development. This is particularly befitting at a time when inflation pressures
are mounting in an economy that is still struggling to regain its footing from
the devastating contraction in the just-ended fiscal year, when the COVID-19
pandemic and the drastic measures to curb its spread resulted in widespread precarity.
The latest Consumer Price Index shows960 retail inflation accelerated by
almost 100 basis points to a three-month high of 5 per cent in February, with
food980 and fuel costs continuing to
remain volatile. With the prices of multiple raw materials on an upward
trajectory, companies are planning to raise selling prices over the coming 12
months to cope with rising costs. The Reserve Bank of India’s officials have in
recent months maintained an unwavering focus on emphasising the need
to retain the flexible inflation targeting framework. In a working
paper released in December, the Deputy Governor overseeing monetary
policy, and a colleague underscored the importance of ensuring the
appropriateness of the inflation target. Observing that there had been a
steady decline in trend inflation to1080 around 4 per cent since 2014, they said a target far
lower than the trend ran the risk of imparting a deflationary bias
that would dampen economic momentum, while a goal much above the trend could
engender expansionary monetary conditions that1120 would likely lead to inflation
shocks. In February, the Reserve Bank of India’s researchers made it clear that
the framework had served the economy well, attested by a decline in inflation volatility
and more credible anchoring of inflation expectations. The fact that the Government’s
economic officials have heeded these calls will certainly reassure investors
and savers that inflation remains a central concern for all policymakers.
The Haryana Government’s strategy
to incentivise water conservation to address the alarmingly
critical fall in1200 the water table in the
agrarian State is showing a trend that is heartening. Under its
ambitious scheme that aims to promote the cultivation of less water-consuming
crops, the farmers who replace the water-consuming paddy with crops such as
pulses, sesame and sorghum would get Rs. 7,000 per acre. But,
with just five more days to go for the peasants1260 to register for the project, the
target of achieving two lakh acres seems far-fetched. Pulling the State out
of this1280 complicated and dangerous
situation necessitates a further push to ensuring that the plans
designed by experts are implemented. It calls for close monitoring on the
ground and ensuring that the promise made by the farmer to shun paddy is kept.
Registration for the scheme is just the first step. Until it is
translated into practice, success in sustainable water conservation efforts
would be elusive. Indeed, the State cannot afford to be lax anymore. There
is no scope for any leeway in the efforts under way to recharge the
parched land. The urban areas can help augment the reversal of the sharp
drop in water levels by adopting rainwater-harvesting methods in
right earnest. The onus of saving water is on each1400 of us. We have no choice
but to pay heed to the Central Ground Water Board’s ominous report. It
warns that the present over-extraction of water would leave seven
districts of Haryana with zero availability of groundwater.
The Assam-Mizoram border1440 has witnessed several skirmishes
since October last year, with both States accusing each other of encroachment
on their territories. It is all the more regrettable that the latest
clash took place just two days after Union Home Minister met the Chief Ministers
of the eight north-eastern States to discuss inter-State border disputes
and other issues. It seems that both Assam and Mizoram mishandled the
situation, with the Twitter face-off between the two Chief Ministers
only escalating hostilities. Going by the turn of events, it is unlikely
that the two States would be able to resolve the long-pending issue on
their own. Rather than confining itself to a facilitator’s role, the Centre
would have to actively intervene to ensure peace along the border in question.
At the heart of the dispute are two British-era notifications, issued in 1875
and 1933, that demarcated the inter-State boundary in different ways. For
decades, the Northeast has been a hotbed of insurgency. Conflicts
between the1600 States over encroachments and
other unlawful activities are a dangerous contribution to that volatile
area and the law-and-order situation there.
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GLOSSARY
Bulwark - A defensive wall
Appalling - Awful or horrible, causing dismay or
disgust
Empathy - The ability to imagine and understand
another person’s feeling
Terse - Said in few words and in a not very
friendly way
Bedrock - A strong base for something
Shun - To avoid somebody or something
Leeway - The amount of freedom to move or act
that is available
Skirmishes - Short fights between groups of people
