Fathoming Freebies: Cost not a waste

http://odishapostepaper.com/edition/4215/orissapost/page/6

William Shakespeare’s famous line ‘the devil can cite scripture for his purpose’ captures the spirit of the PIL  seeking action against political parties for promising freebies during election. Notwithstanding the intentions behind the PIL, we need to give the devil its due. The PIL unleashed a series of serious debates among people from different walks of life: judges, politicians, bureaucrats, academicians, and students.

Political parties are expected to promise but the governments are expected to deliver. So let us see the role of government in distributing freebies. Is the government responsible for giving freebies? Maybe we have to fall back on the Constitution to find answers for the same. The scheme for the social welfare is reflected in different provisions of the Indian Constitution.

To quote Justice Chandrachud, “we resolved to constitute ourselves into a Socialist State which carried with it the obligation to secure to our people justice: social, economic, and political”. As per the Preamble of our Constitution, social Justice is to remove social imbalance by law and economic-justice means the removing poverty by  an equitable distribution of economic resources  amongst all who contribute towards its production.

But the ground reality is different.  As per the World Inequality Report-2022,  the top 10% of the population holds 57% the total national income while the bottom 50% holds less than 13%.  The top 1% owns 33% of total wealth of the country.  It further stressed that the wealth of the ten richest is enough to fund school and higher education of children in the country for 25 years. No wonder that the report has rated India as one of the most unequal countries in the world.

Inequality is an invisible devil which affects both rich and poor. Even rich cannot ignore the poor anymore. COVID has very clearly demonstrated that we cannot survive with economic imbalances in the society with small islands of prosperity amid vast ocean of acute poverty. If India has to reduce the magnitude of inequality it has to continue to undertake various income and wealth redistribution activities by whatever name they may be called: freebies, handouts, giveaways, or welfare schemes.

However, it is important for every citizen to know about the sources of money for financing such schemes. Any person with some understanding of basic economics will know that taxes are one of the important sources for the government to finance its welfare activities. Government has to play the redistributive role more aggressively. It is time for India to generate resources by introducing the wealth tax, higher corporate tax, and other forms of direct taxes, as suggested by different economists including the well-known French economist Thomas Piketty, for undertaking welfare activities. It is surprising to see that the corporate tax as a percentage of GDP has reduced from 32%  to 25% during the last five years. While the percentage of income tax has increased  from 22% to 25% during that period.  Was it by choice or by chance?

Welfare may not be the right of an individual citizen, but welfare activities undertaken by the State are expected to benefit the nation as a whole. It is  age-old wisdom that a chain is no stronger than its weakest link.  A country cannot be called developed with highly skewed distribution of wealth.

Both individuals and corporate entities also have a role to play in creating a society with less inequality by fulfilling their legal responsibilities. It is necessary to ensure that people pay their taxes on time without looking for opportunities for tax evasion. It is sad that, as per the State  of Tax Justice Report (2021)  India lost more than  Rs.1 Lakh crore due to tax evasion by large multinational corporate houses and individual tax payers.  This has been the trend for several years. Efforts are needed to plug such leaks in the tax collection system.

Reducing inequalities is not just collecting money from the rich individuals and dole them out to the poor people. The government needs to ensure that the money collected is invested in such a way that it will contribute towards reducing the income inequality sooner than later.

It is our duty to see that the government, both union and state, fulfills its constitutional obligation of taking care of the needs of society, and ensure justice:  social, economic, and political.  Let the political parties make promises but ensure that the governments deliver such promises.

DV Ramana