Moral & Social Consequences of Growth & How Taxation Affects Them By Dr T.H. CHOWDARY Director: Center for Telecom Management and Studies Chairman: Pragna Bharati (intellect India ) Former: Chairman & Managing Director Videsh Sanchar Nigam Limited & Information Technology Advisor, Government of Andhra Pradesh T: +91(40) 6667-1191/ 2784-6137(O) 2784-3121® F: +91 (40) 6667-1111, 2789-6103 [email protected][email protected]Talk @ Staff College, Osmania University , Hyderabad : 4 July 2008
Transcript
Moral & Social Consequences of Growth
&
How Taxation Affects ThemBy
Dr T.H. CHOWDARY Director: Center for Telecom Management and Studies
Chairman: Pragna Bharati (intellect India )Former: Chairman & Managing Director
Videsh Sanchar Nigam Limited &Information Technology Advisor, Government of Andhra Pradesh
Talk @ Staff College, Osmania University , Hyderabad : 4 July 2008
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Growth & Development • Development includes growth; the reverse
need not be true.• Development –Economic Human• Humans can be happy w/o prosperity – a
condition of mind.• Prosperous can live in pain with comfort!
[Nurses, ICUs, Dialysis, transplants, steroids]
• Human Development Index Happiness Index
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0
50000
100000
150000
200000
250000
300000
350000
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Direct Tax Collections
A healthy 35% rise in tax collection in Fisc.2008
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Sector Budget Allocation in 2003-04
Budget allocation in 2008-09
Agriculture 3,262 10,075
Education 7,024 34,400
Health 6,983 16,534
Rural Development and Land resources
11,320 18,972
Road Transport and High Ways
7,236 14,066
Sarva Siksha Abhiyan 1,951 13,100
Midday Meal Scheme 1,175 8,000
Integrated Child Development Scheme
2,356 6,300
Rural Employment Scheme
4,986 16,000
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Development
• Economic:– Family Income– Old Age Pensions– Insurance
• Life, Health, Work
• Human:– Health– Longevity– Education– Quality of Life ( air, water, leisure, communion…)– Stable Family– Stress
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Objectives of any Humane Society
• Alleviation of poverty/Deprivation
• Reduction (or optimisation of inequality.
• Care of the aged and sick (family incomes; Regional Prosperity)
• Achieving the Objectives
• Without growth in wealth, poverty cannot be alleviated
• Equality can be achieved in poverty for all
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Ill fares the land to hastening ills a prey,Where wealth accumulates and men decay,Prices and lords may flourish or fade,A breath can make them as a breath has made,But a bold peasantry, their country’s prideWhen once destroyed can never be supplied
- Goldsmith in Deserted village.
‘I want an India where the peasants are not beguiled orintimidated into giving up their lands for Mr. Nehru to build castles in thin air through co-operative farming…”
--Rajaji
Wealth accumulates ….Men decay….
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With Growth of the economy (GDP)
• Country’s wealth increases• International trade increases• India imports outstrip exports [in 2007-08 they
were $239 bln & $ 155.5 bln respectively]• The gap [%89 bln =Rs.3,60,000 cr] is covered
by – Remittances– FDI
• Equity into new plants• Share market
– NRI deposits
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Unequal Benefits
• The entrepreneurial The educated
The skilled gain the most
• The illiterateInadequately educated
Rural pop dependent on agriculture will gain the least
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Inequality tends to increase
• Educated / Enterprising / Business / Trade / Industry i.e knowledge workers / people become millionaires
• Rest gain due to wage increases
• Coastal, urban, industrial areas prosper faster than the rest
• In India Urban PCI is 7 times the rural &
• Is increasing [like in China]
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Levels of GDP Per Capita (in 1990 PPP Dollars)
Asian Countries 1950-99*
1950 1960 1970 1980 1990 1999
Japan 1,926 3,988 9,715 13,429 18,789 20,431
Korea S 770 1,105 1,954 4,114 8,704 13,317
Thailand 817 1,078 1,694 2,554 4,645 6,398
China 439(4.39)
673(5.93)
783(12.40)
1,067(12.59)
1,858(10.11)
3,259(6.27)
India 619 753 878 938 1,309 1,818
Ratio of richest to poorest
4.1:1 5.9:1 12.4:1 14.3:1 14.4:1 11.2:1
Note: * Adopted from Basu, Kaushi, 2005, Globalisation, Poverty and inequality. What is the Relationship? What can Be Done, Wider, Pager No.2005/32
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Developing Countries Developed Countries
Country PCI Country PCI
Korea* 17,930 USA 37,500
Mauritius * 11,260 Ireland 30,450
Malaysia * 8,940 Japan 28,620
Brazil 7,480 Netherlands 28,600
Thailand 7,450 UK 27,650
China * 4,900 Germany 27,460
Sri Lanka * 3,730 France 27,460
Indonesia * 3,210 Singapore 24,180
India 2,880 Israel 19,200
Per Capita Income (PCI)
* Countries which achieved Independence after India)
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Poverty/Inequality (1/2)
* Growth/Development & Inequality
• Who profits/gains or losses
• There can be no alleviation of poverty without growth; but Growth can create inequalities;
• True; Inequality can grow with growth but…
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Poverty/Inequality (2/2)
• “Deng Tsiao Ping’s dictums - It is glorious to be rich• It matters little whether the cat is black or white as long
as it can catch the rats• Some people will have to become rich before the poor
can be helped to get out of poverty• Hu Jintao: Prez of China
“Harmonious Society” “From party-building to nation-building” “Socialism” with Chinese characteristics
• One Child norm since 1978; debate now for a second Child.
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Period GDP POP PCI YRS
1951 to 2000
3.5 2.8 0.7 70
2004-07
9.0 1.8 7.2 10
Growth of GDP; Population;
Per Capita Income (PCI) &
Years for doubling PCI
•Lesson from China: Control population during period of growth [JRD’s advice to Nehru in 1950s dismissed.]
•BPL ratio is the index: in India it came down from 70% in the 1950s to
about 30% now [BPL ratio in A P is 85% according to white ration cards & increasing.]
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South & West India Vs North & East India
• Privatisation of Higher Education:
• Result: Difference in
a. Rate of population growth
b. Literacy/Education
c. Casteist parties in UP/Bihar
d. Empowerment before enlightenment
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Containing Inequality
• Education • Re-skilling [Agriculture & traditional professional labour]
• Population Stabilisation [No negatives; simply withdraw welfare/subsidies]
• Population Migration [Internal and overseas]
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Social consequences (1)
• Social cohesion undermined• Nation-hood in jeopardy• Increasing claims for extreme backwardness
into Europe• Han Chinese into Tibet, Xingjiang• Bangladeshis into Assam, Bengal, Bihar, and
Mumbai and Palamuru [A P]• “Bihari” workers into Assam, Mumbai, Punjab• Racial, religious linguistic, regional ( eg:
Telengana) conflicts
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Environment & Natural Resources
• Increasing energy consumption: Coal, oil, bio-fuels [food shortage] Measure: KWHrs/$ GDP
• Pollution; CO2, emissions; Ozone layer holes; Sea levels rising; rivers, Lakes and seas unhabitable for fish….
• Many species disappearing• Water shortage; shrinking ground water• Planet unlivable for humans
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Moral Questions (1)
• Can poverty be eliminated (like caste being annihilated); but both castes & poverty growing according to government figures (white rations cards, housing for the
• Can inequality be eliminated? (in N.Korea, Cuba, former USSR & pre 1978 China except the New Class, all were equal in poverty)
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Moral Questions (2) Conspicuous consumptions
• Shopping Malls • Marriage & birth-day bashes• Party Congresses (even CPM & CPI’s in Hindu
in 2008]• Mansions / Palaces for the rich ( Jubilee Hills,
Banjara Hills etc…)• Air-conditioned pre-;Py & High Schools, children
bussed in a/c vehicles• How can there be common “national, fraternal,
citizenship”
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Essentials for Prosperity
• Human Resource [education]• Entrepreneurship, not entitlement & Employment• Duties,not rights ( Every right is in a duty fulfilled)• Saving to form capital• Proper use of resources to generate surpluses/profit• Work Ethic First;• Welfare must be related to work
“He who does not work, neither shall he eat…”- V I Lenin
• Labour Productivity• Lower Trade Barrier• Private [domestic & foreign] capital, competition [eg.telecoms]• Flight of capital, talent, easy under globalisation
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Populism Destroys
• Degenerate democracy, Ignoble leadership. [No Prajaswamyam but Nayakaswamyam]
• State Funding (Buying) of Elections (Voters)• Give-aways
– NREG; Rs.60,000 cr, loan – Rs.2/Kg rice Vs Rs.5/cup of Tea– Loan waivers farmers: Rs.60,000cr SC & ST Rs.1,200 cr Moslems Rs.600 cr
* Indian concept of :• Right Education and Culture • Vasudhaiva Kutumbakam• Isavaasyamidam sarvam• Parasparam bhaavantah sreyo-
paramavaapsyatha• Aanoh bhadraah ritavo yaantu viswatah• Mutual, reciprocal, respect; value for pluralism• Harmonious Society
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• Om Sahanaavavatu, sahanu bhunaktu• Sahaveeryam Karavaavahaih
• Tejasvinaavadheetamastu• Maa Vidvishaavahaih,
• Om! Shantih, shantih, shantih!• May we protect ourselves together,
experience/ enjoy together, perform valorous deed together, not quarrel among ourselves, may our learning be brilliant.
• Peace, peace, peace !!! ( for all, everywhere, all the time))
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Abraham LincolnSaid:
• You cannot bring about prosperity by discouraging thrift • You cannot strengthen the weak by weakening the
strong• You cannot help the poor by destroying the rich• You cannot establish sound security on borrowed money• You cannot keep out trouble by spending more than you
earn• You cannot build character and courage • by taking away man’s initiative and Independence • you cannot help men permanently by doing for them• what they can do for themselves • -
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Socialism: Wise thoughts from Sri Nani Palkhiwala (1/4)
• Socialism as practised in India has been a fraud: Our brand of socialism did not result in transfer of wealth from the rich to the poor but only from the honest rich to the dishonest rich
• The sleeping sickness of socialism is now universally acknowledged – but not officially in India… The public sector enterprises are the black holes, the money guzzlers and they have been extracting and exorbitant price for India’s doctrinaire socialism.
• A law suite once started in India is the nearest thing to eternal life ever seen on this earth….
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Socialism: Wise thoughts from Sri Nani Palkhiwala (2/4)
• History will record that the greatest mistake of the India Republic in
the first 50 years of its existence was to make less investment in
human resources-education, family planning, nutrition and public
health-than in brick and motor dams and factories.
• Over taxation corrupted the national character overtly. The nation
survived only because the tax system continued to breathe through
loopholes and the economy used to breath through window of tax
evasion.
• We have too much Government and too little administration; too many
laws and too little justice; too many public servants and too little
public service, too many controls and too little welfare.
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Socialism: Wise thoughts from Sri Nani Palkhiwala (3/4)
• We keep on tackling 50-year problem with 5-year plans, staffed by 2-year officials, working with one year appropriations, fondly hoping that somehow the laws of economics will be suspended because we are Indians.
• India continues to remain the only significant country in the free world to hold aloft the tainted and tattered flag of socialism.
• “ We shut our eyes to the fact that socialism is to social justice, what ritual is to religion and dogma is to truth”.
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Socialism: Wise thoughts from Sri Nani Palkhiwala (4/4)
• Indian liberalisation encounters formidable opposition from three quarters. a) The top heavy bureaucracy reluctant to shed its enormous powers b) Influential politicians who prefer to let socialism remain the opium of the people and of whom it can be truly said that if ignorance is bliss, they should be the happiest men alive. c) Quite a few Indian businessmen men who are much interested in their own personal prosperity than in the future of the country and who preferred to flourish in the non competitive environment.
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Who is a true leader:
• Those who claim to lead the masses must resolutely refuse to be led by them, if we want to avoid mob law and desire ordered progress for the country. I believe that mere protestation of one’s opinion and surrender to the mass opinion is not only not enough, but in matters of vital importance, leaders must act contrary to the mass of opinions if it does not commend itself to their reason.
- M.K.Gandhi
• Leaders should lead as far as they can and vanish. Their ashes should not choke the fire they have lit. (As we have about a Dynasty in India)
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“If the people who are elected are capable and men of character and integrity they would be able to make the best even of defective Constitution. If they are lacking in theses, the Constitution cannot help the country. …there is fissiparous tendency arising out of various elements in our life. We have communal differences, caste differences, language differences, provincial difference. It runs them of strong character men of vision, men who will not sacrifice the interest of the country at large for the sake of smaller goods and areas and who will rise over the prejudices which are born of these differences. We can only put an account will prove out such men in abundance. “…
-Dr Rajendra Prasad - from the speech at the final adoption of the Constitution.
“People who are elected”
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“Here I could have ended. But my mind is so full of the future of our country that
I feel I ought to take this occasion to give expression to some of my
reflections thereon. On 26th January 1950, India will be an Independent
country. (Cheers) What would happen to her Independence? Will she
maintain her Independence or will she lose it again? This is the first thought
that comes to my mind. It is not that India was never an Independent
country. The point is that she once lost the Independence she had. Will she
lose it a second time> it is this thought which makes me most anxious for
the future. What perturbs me greatly is the fact that not only India has once
before lost her Independence, but she lost it by the infidelity and treachery
of some of her own pr. In the invasion of Sindh by Mahommed-Bin-Kasim,
the military commanders of King Dahar accepted bribes from the agents of
Mohammed-Bin-Kasim and refused to fight on the side of their King. -
“…..Our Independence maybe lost for ever…………!!!”
-Dr B R Ambedkar’s speech after writing the Constitution
(1/2)
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• It was Jaichand who invited Mahommed Ghori to invade India and fight against Prithvi Raj
and promised him the help of himself and the Solanki Kings.
• When Shivaji was fighting for the liberation of Hindus, the other Maratha noblemen and the
Rajput Kings were fighting the battle on the side of Mogul Emperors. When the British
were trying to destroy the Sikh Rulers, Gulab Singh, their principal commander, sat silent
and did not help to save the Sikh Kingdom. In 1857, when a large part of India had
declared a war of Independence against the British, the Sikhs stood and watched the event
as silent spectators.
• Will history repeat itself? It is this thought which fills me with anxiety. This anxiety is
deepened by the realization of the fact that in addition to our old enemies in the form of
castes and creeds we are going to have many political parties with diverse and opposing
political creeds. Will Indians place creed above country? I do not know. But this much is
certain that if the parties place creed above country, our Independence will be put in
jeopardy a second time and probably be lost forever…….”
• Source: The Makers of Indian Constitution – Myth and Reality by Sheshrao Chavan,
Bharatiya Vidya Bhavan publication -
“…..Our Independence maybe lost for ever…………!!!” -Dr B R Ambedkar’s speech after writing the Constitution
