Indian Economy’s ‘Tryst With Destiny’ Has Wreaked Financial Havoc

The government is more concerned about showing ‘immediate results’ than bolstering policies with adequate back-up.

Image used for representational purposes.

(Photo Courtesy: iStock / Altered by The Quint)

News reports stated that an eleven-year-old girl from Simdega district in Jharkhand died apparently because her family could not get their food grain entitlement, as their ration card was not Aadhaar-linked.

There is also the usual controversy over whether health or nutrition factors were primarily responsible for her mortality, with commentators blissfully unaware of the close linkages between the two.

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Over-Enthusiasm to Score Brownie Points

But knowing how things work in India, I am certain that the failure to link their Aadhaar numbers to their ration cards must have cost many families access to subsidised food grains. This view is bolstered by reports that seem to confirm that the ration card of the family in question was not linked to their Aadhaar card.

I am not going into the merits of Aadhaar linkage to beneficiary schemes, on which enough heat has been generated. What I am concerned about is the haste in rushing into implement policy measures without adequate backup systems.

This has a lot to do with the current obsession of the government to show immediate results. In the Jharkhand case, time could have been taken to ensure that most of the population had obtained Aadhaar cards, and efforts could have been made over some months to ensure Aadhaar linkage with ration cards.

But the childish enthusiasm of the political and administrative executive of Jharkhand to score brownie points with the higher-ups in Delhi probably led to their false claim that they had managed to link almost all ration cards with Aadhaar numbers.

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Wreaking Financial Havoc

The same issue bedevils MGNREGA payments in Jharkhand as well, with documented evidence that the system of online bank account transfers has resulted in inordinate delays in wage payments. If you think such poorly planned policies have troubled only the really poor, think again.

Major financial decisions taken over the past year have wreaked havoc upon society at large, not because of the lack of intrinsic merit, but because of the desire to impress the public that this is a ‘government that works’. Demonetisation was intended to be the sledgehammer that would eliminate black money, check counterfeit currency and improve tax compliance through reliance on digital transactions.

A year hence, even after all the travails of the suffering public, it is evident that the black money scourge refuses to die.

The introduction of more currency notes in different denominations will be a boon to counterfeiters and tax compliance will become a reality only when simplified tax structures are in place and sound legal systems exist to penalise defaulters quickly and effectively.

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Our Economy’s “Tryst With Destiny”

This begs the question of whether demonetisation could not have been handled in a more orderly fashion, with new currency notes going into circulation before the withdrawal of old currency notes. The same thought haunts one when observing the hasty implementation of the GST. Considering that it took thirteen years for this baby to be born, the infancy phase could have been handled better.

This “tryst with destiny” has certainly altered the destiny of small retailers and merchants, many of whom find the process of filing returns excessively cumbersome. In its fourth month of implementation, technical glitches still thwart the filing of returns: GSTR1 filing for July has just been completed, with filings for subsequent months pushed to November.

Despite the promises of the Union Finance Minister to process refunds expeditiously, Chartered Accountants (CAs) are of the view that refunds could take six months or more, affecting cash flows of businesses.

Gradual phasing in of GST online systems with continuation of the service tax regime for some more months would probably have ensured less transitional pain.

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Aadhaar Loopholes

Ramming Aadhaar compliance down the throats of income tax payers and bank account holders will, I suspect, unleash another Pandora’s Box in the months to come. Again, I am not questioning the rationale but the speed of expected compliance, consequences be damned.

Filing income tax returns for FY 2016-17 required all those not having Aadhaar cards as of April 2017 to get them by July 2017. Pensioners and the elderly were particularly inconvenienced.

Linking Aadhaar numbers to bank accounts has its own technical problems. Most banks have no robust online mechanism to enable the account holder to verify that his/her bank account is indeed Aadhaar-linked.

Come February 2018, citizens may well be faced with the nightmare of their accounts being frozen, leading them to beg on the streets. The insistence on linking mobile numbers to Aadhaar numbers, apparently mandated by the Supreme Court, is yet another nuisance.

“Make haste slowly” is a salutary motto for good governance.

Of ‘Crony Socialism’ & the Gravy Train

This tendency of the civil service is viewed unfavourably by politicians, obsessed with the five-year election itch: Why, even an ex-bureaucrat like Arvind Kejriwal has commented unfavourably on IAS officers sitting on files.

Many of us were roasted by ministers and chief ministers when we insisted on listing the pros and cons of any decision, probably a reason for at least some of us being overlooked for prize postings. Pointing out all the possible implications of a decision ensures at least that, if Plan A goes wrong, Plans B and C can be put into operation.

It is the current fashion to run down the 1991 economic reforms as being rather halting and piecemeal. As one who was in Delhi at that stage, I am happy that even those reforms that did take place at that time went through, given the attachment of established politicians to “crony socialism” and the hostility of an established elite to the whittling down of its gravy train. 

Invoking the Parable of Bhasmasura & Mohini

The rush to push through major decisions has, no doubt, been influenced by the relatively narrow window before the 2019 general elections. If favourable results take time to mature, the government may well have to reap the whirlwind of short-term resentment.

In the present climate of drawing attention to our glorious past, I take the liberty of recounting the myth of Bhasmasura. Blessed by Shiva with the boon of turning whatever he touched to ashes, Bhasmasura sought to test the boon on his benefactor. It took the wiles of the damsel Mohini to persuade Bhasmasura to place his hand on his own head and be turned to ashes.

Governments would do well to heed this parable. Chasing the electorate (Shiva) to test its powers, the government (Bhasmasura) is finally enticed by Mohini (the election process) to destroy its continuance in power through unwise, ill thought-out steps.

Yet again I resort, ad nauseam ad infinitum, to my favourite quote, “Those who do not remember the past are condemned to repeat it.” 

(The writer is a retired IAS officer. He can be reached @vramani10. The article originally appeared here and is being re-published with the author's permission. This is a personal blog and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)

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