Dance of Democracy

I love this title, which appears on the election page for ToI. The alliteration while being hilarious also successfully potrays a true picture of democracy. From the times of war of ideologies, (Communist Vs Capitalist) Democracy emerged to be a truely sucessful form of governence. But lately it has become more of a belly dancer dancing to the tunes of the seperatists. These seperatists just need a silly whimsical reason to seperate out from the lot. The current sitution in India maked me wonder whether democracy is good or bad.
The basic premise on which democracy works is that of having individuals with strong individualistic principles. But what if your country fails to generate those men with ideals and passion. Or if the structure is such that such ideals are strifled before they can come to a platform where they can be tested and tried. What if you have a moron who is good at giving speeches that tends to divide the society and unleashing mindless passions and a sense of insecurty among men from their own bretherns? Surely he will succeed to get his point across. But in the meantime he will leave a big gaping hole in the social fabric of the country.
What needs to be done here is to make such great democratic structures to overcome high handed behaviour on which people can repose their faith. Swaminathan Aiyar, in one of his articles had mentioned about the importance of having strong democratic structure for the successful running of democracy. He talked about a British colony which had huge trade surplus at the time when it was part of the british commonwealth. But as soon as British left the country leaving it as a democracy it collapsed turning to a trade deficit nation. Mr.Aiyar blames this downfall to the absense of any strong democratic structure/institutions. Unless and untill the democratic structure is strong. Unless the institutions that uphold the democracy like police, judiciary etc. are fair and efficient one can't expect the democracy to run efficiently.
The same has been happening to India, lately. Here, rules are applied on people based on their faith and caste and position. A politician can never get into a jail. No sooner a verdict is pronounced against him he/she develops a chest pain and is sent to the ICU of the best hospitals (Supursinh Naik). Rich people can get away with broad day light murders(Jessica Lal case). Even the judiciary is no good. Eventhough we can say it is fair but the verdict comes after some natural death of the accused.
I often read in the news papers that the Comptoller and Auditor General rapped the government on poor dealings and hadling of fiscal, but have never heard of any response from the government side. Seems that after making the CAG office they turned a deaf ear towards it.
We talk of democracy and the right to free speech, but what should happen to it when every one wants to divide the country to get their won share. The case gets more complicated in this country where there are millions and billions of tribes and castes. What do you do? We have a super large list of political parties in India. If one observes the list barrind 1-2 ideology based parties all the other are based on communal lines, lines of caste, creed and language. Does'nt it simply means that the politicians are hell bent on dividing us? Instead of focusing on issues of growth and development these parties just play the blame game and divide and rule policy.
Where is all this leading us? Where are we going? With all those glitzy malls coming up does anyone even care about plight of the poor. Lets see, where is dance leads us to..till that time let the democracy dance :)

Taxing Times

Taxation policy is interesting. Taxation is not only a way of getting money for the government to run but is also a very useful tool to drive the direction of investment and capital. There are opportunities provided by the government for saving on taxes, if an individual or a corporation invests in a particular sector. The final benefits of those tax savings might go to

Location: The government might reduce tax for companies setting up shops in a particular state which might have few industries or natural resources to drive industrialization to itself. The low taxation regimes of uttaranchal and union territories are prominent examples of location based tax advantages.

Sector: The government might give tax holidays to certain sectors of industry so as to provide incentive for those sectors to grow up. IT and ITES are among the prominent examples, of sectors that enjoy tax holiday.


RBI: I am not sure whether Reserve bank of India or the Federal bank of any country would be the direct benefitiary. But government provides incentives for investements that are able to garner Foreign Exchange. The recent enactment of SEZ act is one of the prominent example of such kind of taxation benefits.

Social Cause: I am not aware of anything in India, but tax incentives are provided to companies in China which employ a certain percentage of disabled people. Recently talks have been doing rounds in India, for providing tax incentives to companies that employ a certain section of people(SC,ST,OBC)

In essence depending on the policy of the government, it can change the direction of investment by making a sector or location lucrative with respect to others. These were the broad ways in which govenment directs the spending/investment of companies. At the same time the government also works at a micro level to encourage people to spend/invest their money in particular activities.

Education: The government provides tax benefits to people who for their education purpose availed Education loans. This is indirectly an incentive for poor people to avail loans for higher education.

Housing: The government'c commitment towards providing housing for people is also reflected in its providing of tax benefits for home loans.

Women upliftment: There also singnificant benefits provided to women folk for their upliftment. Their taxation is lower than that of men. Also property held on their name is charged less (Have no idea wht that means).

While all these ways are used for bettering the lot of the deprived ones. These tools are often used by unscrupulos people to deprive the government of the tax it owes. So there can be several ways that the taxation policy can be made. In India people are charged on the basis of their income. It simply means that you show your income and are taxed on that amount. At the same time, people talk of taxation at the point of consumption. I had a long argument with one of my friend (Ashwin) over this issue. He was hell bent on the idea of implementing the the point-of-consumption idea. The idea sounds cool and is supposedly cool. But i had only one contention over the proposal. Do you tax the poor and the rich the same way? This is something that is more dependent on heart rather than logic. And there are stuations where you can't always resort to logic. I have always believed that "one of the important roles of the government is to remove the demarcations created by nature." The demarcations are primarily based on lines of being rich/poor or disability. The role of government in these circumstances is to give the same opportunities to everyone, regardless of his/her birth. Also I believe that in a democratic system the rich get much more benefit from the society than the poor. They have access to water, electricity, roads which one cannot find in the hamlets of our noth-east. Considering this line of argument, if the taxation policy gets changed to point-of-consumption then every individual regardless of being rich or poor will have to pay taxes. Therefore i definately do not confirm with this point-of-consumption taxation policy. However i am sure that the consumption habit of individual reveals a lot about his income level and therefore can be a useful check on black money. I can only imagine how complex issues might crop up, considering the level of diversity we have in India. But never the less, the formulation of the taxation policy would be interesting.