Four pieces to wake you up on a Sunday morning

(1) In a hard-hitting piece – peppered with cushioning and placatory statements, Mohandas Pai and his co-author – blast the government for failure to tackle tax terrorism. The truth is that the NDA government had taken greater recourse to it.

(2) My batch-mate, N. Jayakumar of Prime Securities, had given an interview to ET. It is worth reading. I had shared it with a bureaucrat in Delhi whom I have come to know recently and whom I admire for his clarity of thought and plain-speaking. His reaction to the article was as disturbing as it was revealing.

My friend focused on this sentence in Jayakumar’s interview, in particular:

Is there something that the government can do? I go back to another comment that I have actually made which is that no favours, no hand me downs. Can the government merely instruct every single government agency that deals with a private sector party to make their payments on time? That means state electricity boards, the NHAI, the various tax refunds. Tax refunds by the way is a huge amount. Even if that amount came back without the kind of loops that one has to…

The reference to loops by Jayakumar is also consistent with Mohandas Pai has written. 

(3) Shankkar Aiyar’s two recent pieces – one as part of his regular columns for ‘New Indian Express’ and one, also part of his regular columns for Bloomberg Quint – are, as always, worth reading.

Two important points he makes in the piece on BJP’s Socialist Conservatism are these:

In 2014, the Modi government promised expenditure management, and in 2019 the debate is about extracting resources from the RBI’s contingency reserves. The Securities and Exchange Board of India is estimated to have reserves of about `3,800 crore. The finance Bill seeks transfer of 75 per cent of SEBI’s general reserves of `3,800 crore to the consolidated fund of India. The government also wants 15 per cent of the unspent CSR funds with companies.

The following line is consistent with what Mr. Pai and his co-author had written:

“Socialistic conservatism is also about taxation—an 18 per cent GST on small service providers flies in the face of the rhetoric on creating job providers, as does tax on start-up investors.

Note the following for it is an interesting revelation (for me):

During NDA I, BJP ministers ensured the burial of the most comprehensive expenditure management exercise.

(4) On raising dollar resources through issuance of sovereign dollar bonds, Shankkar suggests alternatives:

Yes, India must raise additional resources and in dollars to finance the aspiration for high growth. Why not raise dollar resources by listing LIC? Why not aggregate surplus land with government into a land bank and call for bids? Why not transfer government ownership of public sector banks and enterprises into an exchange-traded sovereign fund?  The yen to dollarise government debt with sovereign bonds instead of monetising assets is perplexing, to say the least. It is what Adam Smith would characterise as a case where imagination is baffled by facts.

Just wondering if it is possible for a democratically re-elected government with a better majority to become a lame-duck administration in less than two months? Searching for that imagination, innovation and boldness in governance that went into the re-election campaign.

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