GST, desi industrialists, trading communities, Narendra Modi, & 2019

 

It was 2014 March and suddenly I noticed an anti-Modi FB post by a Marvari friend of mine. I fretted and fumed and called him up and gave him a mouthful. I told him that he was out of his mind that he could not see the dangers hovering over the nation and thus indulging in ‘baqwas’.

 

I was alarmed since I sensed something really serious was going on within this community under the surface. Marvaris had been the backbone of Jan Sangh and BJP. I rushed to another Marvari friend, my neighbor, to investigate the matter. And then I realized why and how our nation suffered the humiliating subjugation of more than 800 years.

 

Here again I was told the rubbish that Modi had achieved very little in Gujarat. And as we continued to talk I learnt to my utter shock that this neighbor of mine, who had nothing to do with politics, had become a member of AAP. It was clear. There was a network involved here and two Marvaris talking shit about Modi at the same time was not a co-incidence. I don’t know whom they finally voted for though I had tried hard using all my persuasive skills to convince them to vote for BJP.

 

As demonetization was announced, I suspected that retailers would not forgive Modi for it. And then came GST, which was a direct attack on the main source of black money.  It's the organized theft of indirect taxes creates and fuels what we term as the parallel economy.

 

I have worked with the Birlas and have a fairly good understanding of how they game the system. I knew how nearly half of what they produced went to the black market to steal on various indirect taxes including excise duty. It sustained the cash-based black economy. The stolen tax was the main cause of social, political, administrative, bureaucratic and moral corruption. This was not the money an entrepreneur or industrialist had earned through his managerial acumen, risk-taking enterprise, and hard work.

 

It was immoral and as bad as blood money made by mercenary killings. It was the money callously taken from commoners, of all ages, little kids and the old, the sick and healthy, the poorest of poor and the rich alike, collected in the name of government but never deposited in the treasury.

 

When people avoid direct tax on their income there is some justification for it. It’s their hard-earned money. Parting with 33% of it is not easy. (This used to be 90% at one point of time.) Not depositing indirect taxes collected from the end consumer into the public exchequer is brazen robbery and no argument can ever justify it.

 

Very few of you will be aware that nearly all desi (and even some of the videshi) industrialists function like a mafia organisation. Community loyalty and nepotism play a big role in making key appointments in their production-distribution-marketing-retail chain. This chain generates, circulates, and distributes black cash to various stakeholders and middlemen including tax collectors. It’s a parallel economy, as huge as the real economy. As I said earlier, half of the unaccounted industrial production is sold through this chain. One unconscionable and criminal act of stealing taxes leads to the creation of this humongous all pervasive and destructive racket. Have you ever wondered why builders ask for 50:50 cheque and cash payment ratio? It’s the ratio of black and white economy.     

 

Why do industrialists do it?

 

Only naked greed and a crook’s need to feel powerful can explain this phenomenon.

 

The famous adage, ‘money can buy everything’ is not actually true.

 

It’s the ‘black money’ that can buy everything and makes you really powerful. Try paying a bribe to a judge, bureaucrat, politician, and a police officer through cheque and they will scoff at you. Bring out the cash and see how they turn into your humble servants.

 

Who are the stakeholders in the black market economy?

 

The petty retailer is the smallest cog in the wheel and gets paid peanuts for all his efforts as his share out of this loot. Taxmen also get their share. The major chunk goes to industrialists who buy favors from bureaucrats, and politicians using this money. They influence economic and industrial policy to suit their objectives, buy and block industrial licenses, ensure that their monopoly is not challenged, competition is killed, and the economy continues to suffer from shortages. That’s how they can mint more money by charging high premium on their ‘unaccounted’ production sold in black markets.

 

That’s how industrial houses turn monolithic uncompetitive giants, the throttlers of the growth of the nation’s economy. All of our ‘desi’ industrialists, from the Birlas to the Bajajs and the Tatas to the Ambanis indulged in this nefarious criminal behavior without qualms.

 

They were encouraged by the Nehru-Gandhi dynasty, and nurtured by corrupt to the core bureaucracy. Their ‘behind the door’ argument and justification for stealing indirect taxes were that they needed the money to bribe the officials and politicians otherwise they would have preferred to play it straight. It was pure hogwash.

 

The last mile operator, the petty trader, sworn to community loyalty, bore the big burden and sustained the mafia. In order to stay out of the tax net because of the fear of corrupt grass roots tax collectors of varying variety, he willingly became part of this gigantic criminal enterprise. The high rates of personal taxation also contributed to its spread and growth and kept a large population out of the tax base.

 

Demonetization and GST were a big blow to black economy and corruption. They struck at the root of it. It was also an opportunity for those who actually were willing to play it straight and suffered from conscience pangs whenever they transacted business with the black economy and desired their lives to be simple.

 

Those who argue that the process of GST is complex, should know that the process of stealing taxes is still more convoluted and calls for maintaining two sets of accounts one for black and other for white money transactions. Those who can do this and also deal with taxmen of all kinds, for them to follow a totally computerized GST process will be like floating on a velvety floor.

 

So, the problem is not of the complexity of GST process, it’s of the severe heartburn because the avenues of open loot have been blocked. It’s like what happens when illegitimate freebies are suddenly snatched away. It hurts quite a bit.

 

For honest industrialists and traders, GST is like a whiff of fresh air because they want to grow in business through hard work, entrepreneurial wisdom, and the strength of business acumen and ideas. A transparent taxation system saves a lot of their time and mental energy, and enhances the ease of doing business. For the dishonest and crooked businessmen and traders, the looters, it’s like a bitter medicine and painful surgery. When tax thievery and freeloading is mixed in your blood like poisonous brown sugar, getting off it is not easy. The ‘withdrawl symptoms’ of addicts can be very painful. This is what is happening now.

 

Business community in general and petty traders in particular must realize that in the digital age they must get rid of their addiction to black money and market and learn to play it straight. They must also realize that the stockpiles of cash they stash in secret hideouts have always put them in trouble. It mostly gets either stolen by relatives, and employees or else makes them targets of extortionists. It creates a lot of bad blood and destroys their peace of mind. And their external religiosity and charity is no cure for this self-induced malaise.

 

I also find it funny that the two Marvari friends of mine had joined Kejariwal’s Aap. It was certainly not because they wanted corruption to end. They know the real source of corruption, so does crooked Kejariwal as his father was part of the criminal enterprise of the Jindals. His peeve over demonetization and GST is understandable. It has hit the real source of his funding.

 

What should Modi government do to placate trading communities?

  1. It should have an openhearted conversation with the trading community and explain to them that GST is an irreversible reality. However, all their teething troubles will be sorted out and they shall be able to transition to ‘white alone economy’.
  2. They should be explained that it’s a profitable deal that will help them align with the new digital age trading mechanisms. It’s not a good idea to let cash rot at home or being lent as usurious ‘unsecure’ loans within the community. In this they finally lose money, friends, relatives, peace of mind, and their moral fiber. It’s an opportunity for them to get out of the immoral cesspool of black money and market.   
  3. It should ensure that the corruption of officials at the grass roots ends by introducing still greater transparency in the process and simplifying it further.
  4. Rates of personal tax and GST should be reduced drastically to encourage compliance and to expand the tax base.
  5. Irritants like LTCGT must be withdrawn.
  6. Tax filing should be further simplified to the extent people don’t need an accountant to file their returns.

My heartfelt request to the trading community

  1. Nation is facing a lot of dangers from within and without and continuation of Modi government is imperative to deal with them effectively. If the nation is not safe and secure, you will never be safe and secure. Moreover, black money has undermined Indian economy and stunted its growth for long. New age India cannot afford to ignore it any more.
  2. There can never be any doubt that Narendra Modi is serious about combating corruption, black money and markets. He has started an honest campaign. None knows it better that you.
  3. He has not been harsh with you either and has created plenty of room for you to go straight. He has paved your path with good intentions to reduce the pain of transition.  
  4. Elimination of corruption in public life is finally in your interest as well as of the nation.
  5. You have been the prime target of Islamist and Naxal terrorists and gangsters. Modi has shown his determination to eliminate them. It’s the truth that in Modi rule there has not been one single terror attack on the mainland.   
  6. Indian economy is on the upswing. We are a confident nation today. New opportunities have opened up. The Government has introduced transparent processes and procedures. It’s good for the business environment and thus good for you.
  7. If GST troubles you and you want Modi to go, be ready for paying ‘jijiya’ and live like second-rate citizens in ghettoized hells like the days of yore.
  8. If Modi goes, be ready to protect the honor of your women. They are the first targets of ‘Love Jihadis’. They know you neither have guts nor gumption to fight them.  
  9. Your business will be under constant threat. As Jihadi influence expands, you will be forced to sell off your business, hearth, and home and move to secure places. How long can you keep running away?
  10. Take your call if you want to live with your honor intact pursuing your religion and worshipping your gods peacefully or will reconcile to be treated as ‘dhimmies’ and ‘kafirs’ subjected to constant insults, ridicule and extortions.   
  11. Pappu, Mamata, Kejari, Mayavati, Akhilesh, Tejaswi, Naidu, Stalin, Pawar and the rest will choose to help Jihadis and Naxals over you and you know it.
  12. Never nurse the feeling that the stolen indirect taxes were your hard earned money. It was not. It was money paid by people to the government. You were stealing it. You didn’t have the moral or any other right over it.

Rajesh Kumar Singh

@khulkebolo @neelnabh