Gujarat poll results showed neither freebies policy nor blind loyalty worked

While Prime Minister Modi is right about balanced budgets, he must dare to use direct taxes more fully to subsidize the poor in a kind of Robin Hood taxation.

While Gujarat’s results were predictable, the winning streak — 156 out of 182 editing places—that’s stunning. And it’s not just vote-sharing with AAP do the spoiler why the BJP vote share is gone up to 52 percent. It is also not a case of Gujaratis alongside a fellow Gujarati PM. If that were the case, they would have accepted the AAP giveaway story — 300free power units for each particular household.

Prime Minister Narendra Modi echoed similar sentiments in his victory speech to the BJP headquarters invoking half century hindi movie song —amdani atani karcha rupaiya. AAP hopes to capture people’s imaginations and votes with a single formula —- freebies. But this is not sustainable. What does it apply to families the microcosm also applies to the nation and states, the macrocosm.

We must learn to balance our budgets both centrally and across states. That the Modi government brings a constitutional amendment to this end. The decades-old tax liability law has barely worked.

To his credit, Modi practiced what he preached by doing subsidies for the poor, be it PM Awaaz Yojana or LPG. While free primary education is Parliament’s mandate, free electricity is not. Nordic nations give free universal healthcare and education based on a strict income tax, which it is 40 percent. While Prime Minister Modi is right about a balanced budget, he must be daring use direct taxes more fully to subsidize the poor in Robin Hood fashion taxation. We abolished the wealth tax in 2015 without a thought on specious ground that the revenue from it was exceeded by the administration of the law! The richness the 1992 tax law, as many of us know, targeted just six assets, leaving stock and severely lonely bank deposits and that was his undoing. There’s no reason why we cannot impose 2% wealth tax on net worth above 5 crore rupees without exemptions and exceptions. Likewise, the property tax went into effect suspended animation since 1985. We need to revive it. Many states in the United States, take away up to 50 percent of the deceased’s estate by making him wiggle in the grave.

Returning to politics, there are many straws in the wind. BJP performed creditably in both Himachal Pradesh and Delhi, although this is not reflected the results. In Himachal the difference in the share of votes between the BJP and Congress it is only 1 percent and even in Delhi the BJP has lost a little. By the way, it should bring the issue of proportional representation to the fore. It’s strange which have been the three major democracies, India, the United States and the United Kingdom clinging to the first past the postal system while most democracies in the Europe has decidedly moved away from it in favor of proportional representation representation system. Anyway.

Modi looms over both the BJP and the nation. And not undeservedly. Politics and popularity are both about perceptions. Modi is rightly perceived as industrious and of impeccable integrity. It cannot be denied that BJP minus Modi is unimaginable in cheating. This makes it bigger than life but not a dictator. Lead by example. In the time between now and the The 2024 general election must open new foundations both politically and on the other economic fronts. Tailored productivity incentive schemes for select industries has shown encouraging results in the field of mobile phone manufacturing that needs to be replicated in the semiconductor industry on which most hinge computerization and digitization efforts.

S Murlidharan is a CA by qualification, deals with economic, fiscal and commercial matters. The views expressed in the article are his own.

Read his previous articles here

(Edited by: CH Unnikrishnan)

First publication: IST

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