Since 2005-06, taxes and duties for the corporate world and the rich have been written off at the rate of Rs.7 million a minute on average. Duties waived on gold and diamonds in the last 36 months equal the 2G scam amount
Forbes has just added an “errata” to Union Finance Minister P. Chidambaram’s budget speech. The Minister had found a mere 42,800 people in the country with a taxable income in excess of Rs.1 crore a year. Or $184,000 a year. Forbes, the Oracle of Business Journalism, does not list taxable incomes. But it does put up a list each year of billionaires the world over. And in 2013, 55 Indians figure on that list, (up from 48 last year) with an average net worth of around Rs.190.8 billion. (See: http://www.forbes.com/billionaires/)Their total net worth is $ 193.6 billion. That’s…er, Rs.10.5 trillion. Chidambaram might want to compare notes with Steve Forbes. They could come up with a lot more names falling within his narrow super-rich spectrum.
The 55 wonder-wallets give India fifth rank in the world of billionaires on the Forbes List. Behind only the U.S., China, Russia and Germany. Our rank in the 2013 United Nations Human Development Index, though, is 136 out of 186 nations. With almost all of Latin America and the Caribbean, bar Haiti, ahead of us. (We have, though, elsewhere managed to tie with Equatorial Guinea.)
Well, okay, the total worth of our megabucks mob comes to just over $193 billion. But a glance within reveals a grim class divide. At the bottom are the aam aadmi tycoons, barely scraping past the one billion-dollar mark. There are four of them, inches away from plutocrat penury, with only a mere billion to their names. There are 17 in all below the BPL (Billionaire Permanency Line), which seems to be $1.5 billion. Once you cross that threshold, you tend to be a permanent member of the club.
There’s another 12 in the magnate middle classes, between $1.5 and $2 billion. Next, the deluxe segment: 16 of them — above $2 billion, below $5.5 billion. And finally, the big boys — above $6 billion each. The top 10 are worth $102.2 billion. (A bit more than our fiscal deficit of $96 billion.) There is also a platinum tier. The top three account for a quarter of our total billionaire wealth, if Forbes is to be believed.
I’m not sure Forbes is to be believed. All these sound like grave underestimates. Meanwhile the Chinese and Russians have forged ahead of us on the List. (Steve, I demand a recount). Either the Chinese and Russians are up to no good, or Indian creative accounting is keeping our numbers down. This fiasco becomes particularly galling when we’ve all been investing so heavily in the growth of our super-rich and better-off. Some $97 billion in this year’s budget. You can express that as Rs.5.28 lakh crore (as our tables do). Or, as Rs.5.28 trillion. It’s just as obscene either way. (See: Statement of Revenue Foregone http://indiabudget.nic.in/ub2013-14/statrevfor/annex12.pdf). Heck, we deserve a better performance from our billionaires.
One of the biggest write-offs in this year’s budget is the customs duty on gold, diamonds and jewellery — Rs.61,035 crore. That’s more than what’s been written off on “crude oil & mineral oils.” Or even on “machinery.” The waiver on gold and diamonds in just the last 36 months is Rs.1.76 trillion. (Or what we lost in the 2G scam). I guess we shouldn’t be surprised, then, that three new Indian entrants to this year’s Forbes Billionaires List are in the field of jewellery.
It’s not as if we haven’t been generous with them in other sectors, though. The latest write-off in corporate income tax is even higher at Rs.68,006 crore. The total revenue foregone this year (Rs.5.28 trillion), as others have pointed out, is greater than the fiscal deficit. But just look at what the write-offs on corporate tax, excise and customs duties add up to since 2005-06, from when the data begins: Rs.31.11 trillion. (That’s well over half a trillion dollars). It also means we’re writing off taxes and duties for the corporate mob and rich at a rate of over Rs.7 million every single minute on average.
But the budget has almost nothing worthwhile for, say, health or education where there’s a decline compared to allocations last year (in proportion to GDP). Ditto for rural development. And a micro-rise for food that will quickly be taken care of by prices.
Gee. It seems there’s no need for the super-rich to commit half their fortunes to charity. They are the charity we all of us support. End the lavish waivers, pay your taxes and we’d be in glowing fiscal health. Every other economic survey and/or budget has noted the obscene write-offs as a source of worry and said so. Recall that the Prime Minister and Finance Minister have both in the past promised to end this corporate feeding frenzy at the public trough. But it only gets bigger.
What gets smaller is India’s tax to GDP ratio. In Mr. Chidambaram’s own words: “In 2011-12, the tax-GDP ratio was 5.5 per cent for direct taxes and 4.4 per cent for indirect taxes. These ratios are one of the lowest for any large developing country and will not garner adequate resources for inclusive and sustainable development.” (Emphasis added) But he does nothing to correct that by way of raising revenue. Only by curbing expenditures in the social sector. He’s nostalgic, though, for a time when “in 2007-08, the tax GDP ratio touched a peak of 11.9 per cent.” That was when the write-off trough was much smaller.
What also gets smaller is the idea of food security in a nation where the percentage of malnourished children is nearly double that of sub-Saharan Africa. How do they get past the porcine gridlock at the budget trough?
Also getting smaller is the average per capita net availability of foodgrain. And that’s despite showing an improved figure of 462.9 grams daily for 2011. (Caution: that’s a provisional number). Even then, the five-year average for 2007-11 comes to 444.6 grams. Still lower than the 2002-06 figure of 452.4 grams.
It’s scary: as we warned last year — average per capita net availability of foodgrain declined in every five-year period of the 'reforms' without exception. In the 20 years preceding the reforms — 1972-1991 — it rose every five-year period without exception (see: Table 3).
Ah, but they’re eating a lot of better stuff, hence the decline in cereals and pulses.
So drone on the Marie Antoinette School of Economics and assorted other clowns. Eating a lot better? Tell that to the nation’s children — for whom sub-Saharan standards would be an improvement. Tell that to the famished in a country ranking 65 in the 79 hungriest nations in the Global Hunger Index (GHI). (Eight slots below Rwanda.) India’s GHI score in 2012 was worse than it was 15 years earlier in 1996. Tell it to Forbes. Maybe they could do a list of the most insensitive elites in the world. You know who’d top that one.