Budget Morning

Image with Nightcafe AI

The whole class was summoned to the headmaster’s room. Theirs not to reason why. He barely acknowledged them; far be it from him to smile. He stood from his chair, rolled up the sleeves of his cassock, and prompted his assistant:

“Boys who failed in English”.

The assistant called one name at a time, the headmaster summoned them to his desk, asked them to bend over, and administered six of the finest with his Malacca cane.

“Boys who were caught smoking at the school gate”

Again the names; again six of the finest each. Maloo was an offender twice over, and by the second time he was summoned to the desk, he had shed all pretence of bravery, his teenage face a picture of misery.

“Boys who were caught passing notes in class”

Only three strokes each this time.

“Boys who got 10 out of 10 in their weekly essay.”

That would be me. Who else? I looked around. Ravi Dubey smiled back.

Would we be held up as paragons of scholastic achievement? Perhaps given a book, to further our interest in literature, as my 8th grade teacher had done? Lawrence Ayeko, whose gift of Three Men in a Boat I deeply treasured.

“Satyanand!” the principal bellowed. Confused, I stepped forward.

“Bend Over!”

This can’t be true. I hesitated.

“NOW!”

Four smarting strokes down, I began anticipating the relief. Only two to go. Now one. But it continued: seven, eight, nine, ten..

Just before the eleventh stroke descended on my smudgy white pants, I woke up in a sweat.

It’s over fifty years since I left school and the Irish brothers with their whippy canes. Why this weird nightmare?

Budget Day. An annual ritual of unpredictable, irrational behaviour. Will companies pay more taxes or less? Will our rulers find a way to tax dividend income three times, rather than just twice? First they taxed you if you made a profit on selling shares. Then they taxed you just for buying them. Will they now charge you for holding them? And will they change the import duty on gold for the ninth time in twelve years?

Budget watching is a spectator sport. With a difference: we watch our masters toy with us. In a fashion every bit as arbitrary as dictators, who - legend has it - decided on the lives of gladiators by turning a thumbs up, or down. Granted, our Finance Ministers don’t toy with our lives, ‘only’ with the product of our work. And while Roman emperors - we believe - nibbled at grapes as they reclined in the Colosseum, the perpetrators of our budgets partake of halwa at budget time.

The common motif is clear, though. Rulers have every incentive to accumulate power, and taxes, which are very comfortable walking together, hand-in-iron-hand.

Legions of economists - most recently Vijay Kelkar and Ajay Shah - have documented how government expenditure is much less productive than private expenditure. Yet, thanks to decades of brain-washing, most economic journalists will hold up increased tax collections as a marker of our progress. Little matter that it goes into schools that don’t teach, bridges that end in deathly plunges, and metro trains that have few passengers.

Writing in the Indian Express on January 24th, Surjit Bhalla, a consistent cheerleader for the purported economic savvy of Modi’s successive governments, finds it necessary to question why our economy has “surprisingly and inexplicably slowed down.” If you’ve been reading me, you know I’m hardly surprised - the writing was always on the wall, if not in the official data.

In Dr. Bhalla’s telling, our high tax-to-GDP ratio is a major culprit for our slow growth. Our tax collectors appropriate 19% of GDP, while the regimes of East Asia average 13.5%. If Surjit is batting for a reduction in tax rates, I’ll cheer from the stands. In fact, if he ensures that the expensive seats are not taxed as ‘Sin Goods’, I’ll rent a private box, and invite several car loads of friends. All in sub-4 meter cars, so as to optimise our tax outgo.