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The thoughtful taxman

Since the whole world (and its grandmother) has already called Yashwant Sinha all kinds of names for the Budget he put out this year, it may be pertinent now (after all the abuse) to assess its final impact. After all the roll-backs, all the dithering, and all the changes that have been put in place.

I have no idea of what the Budget will achieve for the Indian economy. For that, there are analysts galore. Almost of all them have savaged it. The softest critics have called it unimaginative and stupid. Others have described it as disastrous. Inflationary and uncaring for the poor. Maybe they are right. But what interests me far more is its political attitude. The three signals that it sends out to an average, financially half-literate citizen like me.

This is a government that is humble, ready to learn.

While the media has widely attacked Sinha for what it sees as his mistakes, I see his quick, corrective measures, his roll-backs as genuine gestures. Rarely have we had a finance minister ready to go on record saying he was wrong. Even if he wanted to, the all powerful mandarins of the North Block would never have allowed him. They would have swiftly covered up their mistakes by taking a slew of new steps, further complicating the process of revenue management. But here is a man ready to say: Sorry, that was a clanger. May I set it right? Sinha did precisely that. He conceded every mistake, every error of judgement -- including the ones his officers were responsible for -- and one by one, even at the risk of looking amazingly stupid, rolled back the steps he had taken. You will admit that this is very rare in our politics. Particularly when you are part of a government pulling in different directions, where the slightest snafu can create enormous problems. In such an environment, Sinha was man enough to admit his errors promptly and roll them back swiftly, with no fuss.

We now have a government ready to trust its citizens.

All our tax laws have been traditionally structured so as to intimidate and harass the common citizens and, at the same time, allow the big offenders to escape through huge gaping holes in the net. That is the reason why the real rogues are rarely caught in India while small, first-time offenders -- usually people who have erred in judgement, not deliberately broken the law -- get hauled over the coals. This is the way the bureaucracy keeps itself in power and extorts the small guy. This is also the way they ensure their fancy post retirement jobs with the big business houses.

Sinha has taken the first step towards creating a more trusting system. Take, for example, the abolition of the gift tax. Every newspaper, every analyst, every chartered accountant will (given half a chance) lecture you on how this will open up vast opportunities for unscrupulous people to divert their income to their associates and family members. Maybe it will. Maybe it won't.

But what impresses me much more than all this clever analysis is the fact that here, for the first time, we have a government eager to trust the tax payer. A finance minister who starts with the simple assumption that a tax payer will not misuse a fair and just system. Who does not prejudge every citizen as a shifty, manipulative, cunning and untrustworthy person always looking for a loophole in the tax laws to exploit.

In fact, this Budget has done exactly the opposite. It has set in place a new attitude towards that small (and much harassed) minority of salaried people and entrepreneurs who have, over the years, unflinchingly paid for most of India's growth and progress. Even under regimes that were stupid enough to punish them for their integrity and enterprise by taxing them at over 100 per cent! Every time someone talks to you about corrupt businessmen who have side-stepped taxes and stashed away their fortunes in Swiss banks, tell him about those hundreds of thousands of honest Indian tax payers who have (over the years) paid entirely unrealistic, Back-breaking taxes (usually deducted at source by their employers) to finance profligate, thieving regimes that used every subsidy they could think of to squeeze out of the system. For their bureaucrats and their political masters.

Sinha has restored faith in these tax payers. The abolition of gift tax or the floating of the Resurgent India Bonds -- which sections of the media have disparagingly described as an official hawala scheme -- will set a trend for the future. They show that this finance minister is not prepared to be led by the nose by bureaucrats and media analysts. He is ready to trust his own instincts. And the much-maligned Indian tax payer.

This government is not ready to browbeat its citizens.

The moment P Chidambaram decided to scrap Foreign Exchange Regulation Act in the belief that modern India -- about to enter the next millennium -- deserved a less draconian, less wicked law to govern the foreign exchange transactions of its citizens, there was a huge outcry. From those who were enforcing or exploiting FERA to make their own fortunes and, of course, from a pompous, self-righteous media that makes a fetish out of defending ugly, indefensible causes.

FERA was not just an embarrassment to any civilised society. It was an obscene and despicable law that had no reason for its survival. It reflected the mindset of an evil, overbearing state that thought it could ride roughshod over the rights of its own citizens. Those who broke this law -- wilfully or unwittingly -- did not deserve the kind of punishment they got in the hands of sadist, lawless officers. Some of them, unable to bear the torture, attempted suicide. Others came out of the dungeons, broken men.

Instead of punishing these law breakers, the law makers who designed FERA should be horse-whipped by history because they put hundreds of decent, law-abiding citizens at the mercy of a wicked, corrupt, sinister system that used a thoroughly rotten law to terrorise and extort them. It was a law any democracy would be ashamed of. Like TADA. Like MISA. It was law that bred its own Dirty Harrys.

Sinha has replaced FERA with a humane alternative. Foreign Exchange Management Act will control India's foreign exchange problems without intimidating and extorting its law-abiding citizens. It also reflects a remarkable change in attitude.

The finance minister no longer sees himself as an enforcer. He sets the laws and allows the rights of citizens to be protected by the courts. This is exactly as it should be in any self respecting democracy. Remember this the next time someone tells you what a rotten job Yashwant Sinha has done. Tell him that we have had enough of tough governments and macho ministers riding roughshod over the rights of the common citizen.

It is nice to have (for a change) someone who listens, who corrects his mistakes, who rolls back his decisions. Who trust us, respects our civil rights, changes the laws to reflect the true spirit of economic liberalisation.

What he missed out on swadeshi he has made up with samman.

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Pritish Nandy