Et tu, Modiji? In a recent speech at the Economic Times Global Summit, attended by top corporate bosses, the Prime Minister launched a tirade against us suited-booted types.
Here’s a recap of what he said: ‘The total revenue loss from incentives to corporate tax payers was over Rs 62,000 crores. Dividends and long term capital gains on shares traded in stock exchanges are totally exempt from income tax even though it is not the poor who earn them. Since it is exempt, it is not even counted in the Rs 62,000 crores. Double Taxation avoidance treaties have in some cases resulted in double non-taxation. This also is not counted in the Rs 62,000 crores. Yet these are rarely referred to by those who seek reduction of subsidies.’
Mr Modi asked the audience why when money is given by the government to help the poor it’s called a subsidy, but when it’s given to the corporate sector it’s called an incentive. As Mark Antony would doubtless have said, this was the ‘most unkindest cut of all’.
Sure, firms do get these concessions. They’re the reason why the effective tax rate for companies with profits above Rs 500 crore was a mere 20.68% in 2013-14, much below the average statutory tax rate of 33.2%. The budget documents say, ‘The aggregate revenue impact of incentives available in respect of direct and indirect taxes…..is projected to be Rs 5,89,285.2 crore for 2014-15.’ That’s the revenue lost from tax concessions, which Mr Modi says are nothing but subsidies.
Now where have we heard that tune before? Ah yes, Comrade Sitaram Yechury had written in an HT column in August 2013: ‘The tax concessions provided to the corporates and the rich amount, according to budget papers, to over Rs 5 lakh crore every year … If, instead, this legitimate tax had been collected and used for public investments to build our much-needed infrastructure, it would have generated large-scale employment.’ Has Modiji become Comrade Modi? Is this ‘Socialism with Hindutva characteristics’?
O Mr Modi, Mr Modi, why hast thou forsaken us? Less than two years ago, we were full of hope he would be India’s Margaret Thatcher or Ronald Reagan. But now all that’s fizzled out — corporate profits have fallen, the stock market is in the dumps and yet he talks of cutting back incentives. Sticking to the Mark Antony motif, ‘O, what a fall was there, my countrymen!’
There are other ominous signs. The Prime Minister has suddenly started praising the UPA’s employment guarantee programme for the rural poor. And at a speech last Tuesday, he said the Employees State Insurance Scheme was based on the Gandhian principle of ‘contributions as per the ability and benefits as per the requirement’. That sounds suspiciously like Karl Marx’s ‘From each according to his ability; to each according to his need.’ What next — Lal Salaam?
Hopefully these recent utterances of the Prime Minister come, not from him, but from his crypto-commie speech writer. If we’re wrong, we pray they are, in the immortal words of Amit Shah, a ‘jumla’ and Mr Jaitley will not let us down in the Budget.
Manas Chakravarty is Consulting Editor, Mint. The views expressed are personal.