The main source of income for any system of government is the tax levied on the people. The taxes that Indian democracy, directly and indirectly, collect from the people are huge. Despite the collection of additional taxes, the government does not have adequate financial resources for governance, infrastructure development, and social security systems. It receives grants from global financial institutions for financial mobilization. In addition, it also receives funds from local banks and citizens through bonds.
This kind of fundraising though is not enough and new types of taxes are being imposed on the people. With each such tax increase, the cost of living increases directly and indirectly. The prices of essential commodities are going up significantly. In effect, this is not an adornment of a declining democratic regime. In such times, it is advisable to reduce the tax burden as much as possible as well as improve governance efficiency, infrastructure development, and productivity. Why is this not possible in our democracy?
The people of India are generally reluctant to pay taxes. This is based on the general assumption that the tax money paid does not particularly benefit the country or the people, in the end. There is no visible infrastructure development or social security. The legal system and the system of governance provide many loopholes for people to escape without paying any taxes. Tax collection is not efficient because bureaucracy is inefficient, bureaucracy is indifferent and the bureaucracy is addicted to bribery. So, the expected revenue does not reach the government treasury. The treasury then gets emptied when higher salaries and other benefits are paid to the bureaucracy. Thus there is no money for development, in the end.
A democratic government must find new sources of finance to address the shortfalls in tax revenue. Public sector industries, science, and technology, water resources, mineral resources, etc. are all economic resources. For various reasons, our democratic government is unable to use all these effectively.
Public sector industries are said to losing money. These losses are due to poor governance, financial indiscipline and mismanagement. Hiring more workers than necessary puts public sector industries at a disadvantage.
In a democracy, the purpose of public sector enterprises is not productivity or profit, but to give high positions to the leaders of each faction under pressure from the various political parties.
‘Bribery and commission’ are unavoidable conditions that exist for the purchase of machinery, their upgradation, the purchase of raw materials for production, and the sale of products. As their industrial intentions are not for profit, they have to sustain the loss-making PSUs. This causes the tax burden to increase rather than decrease.
There is no significant difference in operational objectives when it comes to public sector service industries. It is ‘the allotment of positions to politicians and the strengthening of trade unions‘. The only difference here is service marketing instead of product marketing. The idea of democratic governance then implies that service is free. That is what bureaucratic arrogance means. The policy is to accept if necessary.
If you want to get a telephone connection, an electricity connection, a water supply connection, or even a ration card, you have to submit applications, walk into government offices and follow in the footsteps of the officials till you get it done. And pay other necessary bribes. It is a situation where even though these are achieved with great difficulty, they do not benefit much in the end.
This is also a situation where the public is not able to access the services they need. Non-transportable roads, breakdowns in power lines, shortage of medicines in hospitals, loss of transmission, loss of supply, and so on.
Minerals are the precious wealth of any country. Despite the scarcity of a few minerals such as petroleum and gold, India is rich in many other minerals.
Our country is rich in coal, granite, mosaic, iron ore, ilmenite, monocyte, and lignite.
Used effectively, it can boost the country’s economy. Tax breaks can be reduced. It has become acceptable for the ruling class to stop the mining of minerals and to oversee the mining by extorting money from private companies.
Black sand, red clay, granite, sand, and clay are common mining materials. Mining without clear regulations can cause environmental damage. These are sources of revenue for the local self-governing bodies if they control the mining of essential mining materials under the control and authority of the local self-governing bodies subject to legal provisions and with the guarantee that the environment is protected. In this way, the tax burden can be reduced.
If used effectively like mineral wealth, forest and water resources can also be an integral part of the country’s economy. This will also help reduce the tax burden on people. Ours is a country that gets a lot of rainwater and snow water compared to other countries. If utilized through projects like hydropower, irrigation, and water supply, all these will generate revenue for the government. Unfortunately, most of the excess water is drained into the sea. It should be noted that there are many areas in our country where there is a shortage of basic necessities and drinking water.
Plans are effective when they are formulated in order of priority and implemented in a timely manner. The economy that the government oversees is effective when it minimizes money laundering, wastage of money, and wastage of resources. For this, planning must be efficient. Neither of these exists in our democracy. Our democracy enjoins a general policy of formulating central and state-based plans and implementing them on a local basis with priority to local self-government institutions. No such projects are prioritized on a local basis. Even when finances are spent on development, no significant development activities are overseen on a priority basis.
Money is spent on the construction of essential buildings and culverts. Many of these become obsolete over time. Many of these constructions become unusable and a lot of money is spent on repairing them. Many of the buildings are unused and become hubs for anti-social activities. In the long run, there is no planning that goes into the plans and the construction is in a state of disrepair.
There is an additional financial burden of having to plan different projects at the same time and feel the financial strain of allocating funds for their implementation and not being able to complete the projects on time. In the meanwhile, the financial allocation and the misappropriation of funds are different.
If our democracy was efficient, if tax collection was effective, if public sector industries and services worked for the betterment of people, if mining, minerals, water, and forest resources were used effectively, and projects were planned with foresight, if the financial administration had been effective, there would not be such a heavy tax burden on the people.
This requires democratic palmistry. The decentralization of power must take place. Bureaucracy and regulations, regulations, and penalties need to be strengthened. Public sector industries and service industries should be regulated by officials with administrative skills in accordance with the appropriate rules and regulations. The lack of these in our democratic system imposes an additional tax burden on the people. This remains the curse of our democracy.
Institute for Sustainable Development and Governance