Somesh Arora: Populism subsidy

Now this is the subsidy which is least talked about by the governments and even IMF does not attempt to tame it. In a democracy like India, typically an elected government spends the first year in thanksgiving mild tax budget, the second and third year are spent in obliging the big corporates, who contributed during the election time, at the cost of the people and fourth and fifth years are meant to indulge in populism so that the running government is re-elected and electorates with their short memory forget all the sins of corruption or hard hitting third/fourth year of the Government. The bigger the exposed scams of the government, bigger can be the doses of Populism subsidy. Ever wondered why petro prices in 2008, when crude in international market had hit US$140 was selling at Rs.55/- per litre and now in the year 2011 when crude is hovering around US$100, the same is selling at Rs 70-75. Going by justification now being doled out of prevailing dollar and crude prices, the petrol should have been selling at Rs. 100 per litre in 2008. Therefore, riding the wave of populist subsidy, we, the Indian consumers, Continued were enjoying a whopping subsidy of Rs 45 per litre. That, incidentally, was also the time when people of Nepal used to drive to India to fill up their tanks and drive back home. Since hard hitting inflation is leaving little leverage with our home managers (who incidentally prove to be  better than the most professionally qualified M.B.A managers during time of crisis), it may be prudent to avoid the avoidable expenses till the last years of the government to enjoy the full benefit of the populism budget. Therefore, families can cut down on avoidable travel expenses etc. to ride on subsidized travel later rather than allowing smugglers from neighbouring countries to enjoy it. Whom to vote finally is left to the memory of the people.

Indian Grand Prix: The tax or exempt:

The opinion remained divided between the state and the Centre, while Uttar Pradesh was granting all exemptions including entertainment tax, reservations were visible in Ministry of Finance and Ministry of Sports at the level of the Centre. Customs allowed the goods to come in and then go back on 98 per cent drawback. Sports Ministry did not treat the event as a sporting event eligible for exemption from Customs duty. Though it is another matter that Narain Karthikeyan was awarded Padma Shri for his contribution in sports i.e. Formula One by the same government. There were political voices to tax the event as entertainment as it belonged to the category of luxurious sports, while others felt that there was no point in subjecting it to heavy taxes just at the initial stage.

Considering that the event in future will only attract certain sections of society for whom spending a few extra bucks may only be a matter of pride, there may not exist a case for exemption from tax for Formula One and even the exemption from entertainment tax granted by the state government is also a matter of scrutiny of judiciary, for its rationale.

Speaking of the event and the infrastructure, the last day on 30th October, 2011, attracted 40 chartered flights at the Delhi Airport, besides 60,000 vehicles to the venues and 1,50,000 strong crowd, thus making it one of the best and most elaborately organised sporting events ever in India. The Taj Expressway was opened partially only from Noida up to the venue of the event and allowed the cars coming from Delhi and Noida to move smoothly.

The venue has a capacity to accommodate 1,00,000 cars in its parking lot and about 5,00,000 spectators in case the demand goes up with the passage of time. The Formula One users rated the track as one of the finest in the world. The cost involved is about Rs.1,000 core. This sure marks a big time arrival of private sporting infra and of organisation of world class events by private players in India. Surely, a matter of pride for any Indian. But what one wonders is, that if this was achievable when a private builder saw his benefit in making a world class city in the land possessed by him to eventually increase his own land prices and could achieve it in little time, why we had a failure when so called reputed builders were engaged to make Infra for Commonwealth games for the compromised politicians, even after spending huge sums of tax payers money. The cost of Beijing Asian games was much less compared to commonwealth games and this event organized in India has also not cost a fortune, therefore, one can only point out that though Indian builders have the capacity to achieve anything when it comes to their own advantage, they also exploit the compromised politicians to the hilt, when Government Public Infra is to be created.

Recently, a dictate has been given to Delhi Metro Rail Corporation(DMRC) not to blacklist too many builders, as there are not may reputed builders available in India to build metro infra. Indeed, a Catch 22 situation, no way as we can groom the new ones because they are not experienced or reputed and those in the game despite mistakes should not be thrown out because there are not many available. Indeed testing time for the new man (with E. Sreedharan retiring) at the helm of affairs, which will eventually decide whether he is a man of compromises or not. If he yields, even the DMRC may go the way of other public infra projects.

Seven Billionth  human being

It happened on October 31, 2011, or atleast it was so claimed with Nargis Yadav of U.P. My life span so far has been the journey from 2.5 billion to 7 billion and may be few more shall be added, if Providence allows me to live for some more years. Indeed a matter of some satisfaction, because Mother India during the time of my ancestors had only the privilege of having 35 crores in  more than 5,000 years of its recorded history. But in the last about 50 years I have seen the number swell to 120 crores. So, I am surely living in a much crowded India, which is like a Mela in every nook and corner of its land.

Our houses are becoming small, our schools, hospitals and even mortuaries are much more crowded that they were about 50 years ago. Parliament has somehow managed the problem of overcrowding by remaining at the same figure since 1971. Likewise, even CBEC and CBDT have managed to remain in the North Block for this decade by keeping its strength confined to six. Planning commission has also in the meanwhile devised new arguments and keeps on convincing us that more young population means more development and growth for India in the next 20 years. What will happen to the aged and after 20 years is chosen to be ignored. The Nation has no population policy worth its name. Nandan Nilekani is busy making UID cards, but the numbers to be covered and budget requirements are going up with every passing day. The earlier version of NSSN (National Social Security number) card for identity through EPFO had an untimely obituary after spending a few hundred crores. PAN continues to survive confined only to tax payers and lost tax payers. Either hunger, our enemies or education will help us in bringing our numbers down. We only hope it is the latter, for that will justify the existence of the Planning Commission.

Decision abhi baki hai mere dost

For all those dealing with exports of services and thinking that the much-awaited decision of CESTAT in the matter pertaining to M/s Paul Merchants Ltd. ('PML') and others  would clinch the issue, the wait seems to be getting longer with the split decision having been referred to third member.

The bunch involving 42 appeals  saw a split decision on almost all issues including on limitation. The services involved were remittances from persons abroad to persons located in India as well as remittances from persons located in India to persons located outside India through Western Union and its contracting party. While it may be premature to offer any comments till final verdict is out in the matter, it sure speaks volumes about the fact that provisions of service tax need to be simple for every one concerned to understand and interpret with ease. Even when actually the limitation period should be extended is not understood by any one exclusively out of whole of the Learned Biradari. Why cannot the government do away with the extended period clause and make it demand for two or three years flat for everyone. A discretionary penalty to only those who indulged in evasion deliberately can provide the punishment for malicious acts. This way the government will earn more, and law will also become simple for everyone to understand.