Arvind Kejriwal is making progress as a politician. In a recent outburst against political parties that are raising a shindig over the diesel price hike, Kejriwal declared the protests as little more than “drama.”
He said: "The parties have begun their drama. They will now shout and scream. After three-four days of protest, the government will reduce price by Re 1. Then everybody will fall silent...this script has been enacted so many times," The Indian Express quoted Kejriwal as saying.
We are happy Kejriwal has chosen to expose this aspect of how political parties manage reactions to painful economic decisions, but what are his solutions that would not equally amount to “drama”?
An ANI report shows Kejriwal criticising Mamata Banerjee and the BJP for raising a banner of revolt over diesel prices without doing what is in their power to reduce them. “We demand that if Mamata Banerjee and the BJP are, in a true sense, serious that the price of diesel should be reduced, then why do they not lower the Rs 5 state tax on diesel in the states ruled by them?" he added.
Again, this is important to show the two-facedness of the opposition parties, but what is Kejriwal really battling for here? That states should give away revenues in the case of an overused and depleting fossil fuel like oil when he is all for auctioning other natural resources like coal, which will anyway raise prices?
If he is all for the poor, wouldn’t it be more logical to allow the better off to pay market prices for diesel of LPG and directly subsidise only the real poor?
Listen to him on another related issue: concessions to the rich. "You can allocate coal blocks for free. But we don't have money for giving it to the common man. Rs 13 lakh crore (of) tax concessions (have been) given to corporates in (the) last three years. Can't government give a Rs 37,500 crore subsidy on LPG?"
One of the well-worn techniques used by politicians is to contrast irrelevant ideas with emotive ones to score brownie points with the masses. But the distinction between the poor, who need to be subsidised, and the not-so-poor, who need not, is erased in the process.
The coal block allocation is a scam in itself that needs no juxtapositioning with cooking gas prices. Even if there was no scam in the allocations, the issue of cooking gas subsidies would still have to be tackled. A big chunk of the Rs 37,500 crore of LPG subsidies is paid to the rich and middle classes (have you heard of any below-poverty line people using gas to cook?). So limiting it to six cylinders is a fair enough compromise, though it will create another avenue for corruption. This is what Kejriwal’s India against Corruption should be protesting about (more opportunities for corruption), not the reduction in entitlements to subsidy. (If you are poor, are you likely to use more than one cylinder in two months?)
As for the so-called Rs 13 lakh crore tax concessions, once again Kejriwal shows he is a politician by using irrelevant figures to prove an unrelated point.
The Left is fond of using this figure to show that the rich get concessions, but not the poor.
There is no doubt at all that concessions to vested interests should be abolished, but most of the so-called revenue forgone figures given out in the budget relate to setting up export-oriented industries (which bring in foreign exchange to buy the oil we need), setting up industries in backward areas (Uttarakhand, north-east, etc), increasing investment in plant and machinery (accelerated depreciation), and middle class concessions like 80C deductions, et al.
As Firstpost noted before, a study by Rajiv Kumar and Soumya Kanti Ghosh of Ficci looked at the revenue forgone figure (around Rs 5 lakh crore) and concluded that it wasn’t exactly what the Left thinks it is. In an analysis published by The Indian Express (read this), they suggest if the so-called revenue forgone is taxed, growth could fall significantly.
According to Kumar and Ghosh, the revenue forgone (relating to 2010-11) largely comprises the following:
*Rs 1,98,291 crore of duty concessions for mass consumption goods like medicine, toothpowder, candles, kerosene, etc – withdrawing these will directly hit the poor that Kejriwal & Co want to protect.
*Rs 1,74,418 crore comprises import duty concessions for items meant to be re-exported. If these go, our export story also collapses.
*Rs 50,658 crore of exemptions relate to concessions on insurance premia, contributions to charities, interest payments on loans for higher education, etc. This is, admittedly, not going to the poor, but the salaried. But this is where Kejriwal draws his support from.
All these figures relate to 2010-11, but they do not change the underlying argument even for subsequent years.
If Kejriwal wants to become a credible crusader for transparency and a voice of sanity, he has to delve deeper into the facts. Otherwise, he can equally be accused of using convenient arguments without really standing for reason.
In an earlier article, we found his candour refreshing. Is he now changing his stripes to that of a true politician for whom the truth is only a matter of convenience and can be tweaked?
How is Kejriwal going to change the politics of this country with this kind of old-style rhetoric?
Updated Date: Sep 15, 2012 17:25 PM