Page 18 - EW July 2024

Editorial

GENERAL ELECTION 2024: WHY BJP LOST GROUND reaucrats. The consequential slow-
down of MSMEs is a major cause of
rising youth unemployment and in-
he surprise result of general Therefore, several important ini- flation, which badly hurt the BJP in
Election 2024 in which the rul- tiatives of the Modi administration General Election 2024.
Ting BJP which had set itself a — sudden demonetisation of 80 per- Likewise, the farm reforms legisla-
target of 400 seats of the total 543 in cent of the currency in circulation tion which was well-conceived and in
the 18th Lok Sabha won a mere 240 (2016); the Covid-19 lockdown of the the national interest, was enacted with
and for the first time since 2014 has economy, with four hours public no- unwarranted haste without debate
to rely on its NDA (National Demo- tice (2020); speedy implementation and inflicted big damage in rural In-
cratic Alliance) allies to form a gov- of GST (2017); enactment of the three dia, fuelling food inflation. Similarly,
ernment at the Centre, has attracted farm reform Bills (2020) and fast- construction of the Ram Temple was
widespread comment and analyses. track construction of the Ram Jan- completed without consideration of
Yet most political pundits who have mabhoomi temple in Ayodhya (2024) the property rights of farmers and
presented learned analyses have fo- — all S2 decisions that required delib- shopkeepers in Ayodhya.
cused on parts of the whole without eration, debate and consultation, were The prime minister also overplayed
quite being able to see the big picture. made with the speed and urgency of his hand by reverting to demonise the
In his seminal book Thinking Fast S1 decisions. country’s 230 million-strong Muslim
and Slow (2002), Nobel Prize winner Not a few media pundits tend to ap- minority. It’s time he became aware
behavioural economist Daniel Kahne- prove of bold, speedy decision making that in 21st century India, defined by
man stresses the importance of Sys- as a virtue contrasting it with ‘analy- large-scale internal migration, the
tem 1 and System 2 decision making. sis paralysis.’ But it’s now clear that electorate has become accustomed to
S1 decisions need to be made quick- peremptory demonetisation was a — and increasingly dependent upon —
ly, perhaps instinctively, as in antici- big mistake which severely damaged ethnic, linguistic and religious minori-
pation of a car driving accident. S2 MSMEs (micro, small and medium ties. The citizenry needs peace and
decisions that may have widespread enterprises) that employ 80 percent stability to get on with their lives and
consequences have to be made de- of the country’s industrial workforce. businesses. If the BJP has been voted
liberatively, after careful reflection, MSMEs were further damaged by back in New Delhi, it’s because of the
explains Dr. Kahneman. Evidently, hasty introduction of the complicated obsolescence of the Congress party,
neither the prime minister nor any of national GST (goods and services) tax whose leadership still believes in de-
his inner circle of advisors are aware which has also become a huge source stroying wealth creators and reinstat-
of this vital distinction. of illegal gratification for venal bu- ing moribund Nehruvian socialism.

INEQUALITY: HIGHER TAXES BAD SOLUTION because over-taxation is disincentiv-
izing, prompts tax evasion and capital
flight. In the circumstances, it might
ccording to paris-based econo- accrue by way of indirect taxes which be in the greater national interest to
mist Thomas Piketty, income are payable by all citizens. Of them, leave a larger share of income in the
Ainequality in India is so great the major taxes are excise and sales hands of businessmen and citizens for
that it warrants introduction of tax recently codified into GST (Goods saving and investment. It’s also perti-
wealth and inheritance taxes on the and Services Tax) payable in various nent to bear in mind that what gov-
top 10 percent of the country’s rich. ‘slabs’ ranging from 5-28 percent on ernments don’t spend on themselves
Evidently, Piketty is not sufficiently all goods and services bought and sold and on official pomp and grandeur,
informed about the profusion of taxes countrywide. In the latest Union Bud- they invest in white elephant public
already imposed upon every citizen of get 2024-25, the excise tax revenue of sector enterprises that seldom yield
India, starting with the middle class the Union government was Rs.3.18 returns, or in development projects
which is only relatively wealthy. The lakh crore and Rs.10.67 lakh crore by in which high salaries and perks of
threshold for payment of income tax is way of GST. These two indirect taxes officials leaves precious little for proj-
perhaps the lowest worldwide with ev- contribute 46 percent of the total rev- ect implementation. That’s why huge
ery citizen earning an annual income enue (Rs.30 lakh crore) of the Govern- cost over-runs are normative in gov-
exceeding Rs.3 lakh ($3,507) per ment of India, more than progressive ernment development projects.
year obliged to pay tax to the Central direct taxes (36 percent). Therefore, it makes much better
government under this head. Yet be- Moreover, there is a plethora of sense to leave more money in the
cause of hare-brained Soviet-inspired other indirect taxes payable by the cit- hands of businessmen and entrepre-
socialism adopted as national ideol- izenry on highways, airports, bridges, neurs to save, invest, prosper and
ogy in the immediate aftermath of state government levies on property, pay greater taxes even as marginal
independence, the annual incomes of petroleum, tobacco, and liquor. To tax rates remain stable. While Piketty
the general populace are so low that a all this, add the ‘tax’ that government & Co’s intent to reduce income and
mere 3 percent of the population pays officials levy on every citizen-official- wealth inequality is laudable, they
income tax. dom interaction. have not factored government inef-
Most of the revenue resources of Therefore, the solution isn’t to raise ficiency, inertia and corruption into
the Central and state governments tax rates for wealth and jobs creators their tax-and-spend model.

18 EDUCATIONWORLD JULY 2024