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02 May 2017 Editorial

 

2 MAY 2017

Lokpal and the law 

The ruling that the existing legislation is workable is an indictment of the government

The Centre's obvious reluctance to set up a statutory anti-corruption institution stands completely exposed after the Supreme Court made it clear that the existing Lokpal and Lokayuktas Act, 2013 is workable on its own, without having to be amended as proposed by the government. The court's order that the law, notified in 2014, is good to go is an indictment of the delay in establishing the Lokpal. It is a rejection of the attempt to explain the delay on the ground that a parliamentary standing committee's report on proposed amendments is still under consideration. The government was on weak legal footing when it claimed it was awaiting the passage of these amendments, mainly of one that related to the leader of the largest party in opposition in the Lok Sabha being considered as the Leader of the Opposition for the purposes of forming the Selection Committee to choose the Lokpal. The selection panel consists of the Prime Minister, the Speaker of the Lok Sabha, Leader of the Opposition, the Chief Justice of India or his nominee, and an eminent jurist chosen by them. The court has noted that the Act provides for the selection committee to make appointments even when it is truncated due to a vacancy. It has made it clear that the fact that some amendments have been proposed and a parliamentary panel has submitted a report would not constitute a legal bar on enforcing the existing law.

The court has rightly refused to read down the provision on the Leader of the Opposition to mean "the leader of the largest party in the opposition". At the same time, it is curious that an amendment to this effect is pending since 2014, even after it was endorsed by the parliamentary committee in its December 2015 report. Provisions relating to the selection of the Chief Information Commissioner and the Central Bureau of Investigation Director have been amended to treat the leader of the largest opposition party as the Leader of the Opposition in the absence of anyone recognised as such. The delay in passing this simple amendment is inexplicable. Another provision relating to the declaration of assets by public servants was amended last year. A simple way of resolving the impasse was to recognise the Congress party leader in the Lok Sabha as the Leader of the Opposition. There is no law, except a direction from the chair when G.V. Mavalankar was Speaker, that says recognition is given only to a party that has won 10% of the seats in the Lower House. A 1977 Act on the salary of the Opposition Leader defines the position as the leader of the largest party in the opposition and recognised as such by the Speaker. An inescapable inference is that the country does not have an anti-corruption ombudsman not due to any legal bar, but due to the absence of political will.


Equity in taxes

Rich farmers should be treated on par with other taxpayers

Rich farmers need to be treated on a par with other taxpayers, but with a clear road map

A controversial proposal by Bibek Debroy, a member of the government think tank NITI Aayog, to tax agricultural income above a particular threshold has led to a public exchange of views. Finance Minister Arun Jaitley quickly dismissed any plans to tax farm income, but more policymakers have begun to voice their opinion, the latest being Chief Economic Adviser Arvind Subramanian who made it clear that taxing farm income is a State subject. The public image of farming being a poor man's venture and the sizeable vote share that farmers enjoy have made the idea of farm taxes a political taboo. The frequent distress faced by poor or marginal farmers, which could be attributed to structural issues other than taxation, hasn't helped matters either. But India has a presence of rich farmers as well and there exists as a strong justification for taxing them in order to widen the country's embarrassingly narrow tax base. Mr. Debroy suggested that an appropriate tax policy should draw a distinction between rich and poor farmers, thereby addressing the widespread political apprehension of bringing agriculture under the tax net. It is no secret that India's tax base, standing at a minuscule 5.9% of the working population, is already among the lowest in the world. This unnecessarily burdens the more formal sectors of the economy that are already overtaxed; at the same time, it handicaps government spending on the social sector.

The case for treating agriculture on a par with other sectors is thus clear. But policymakers must also show equal care and urgency in addressing the structural issues facing the sector. This includes, among many, reforms to the broken agricultural supply chain that still leaves farmers at the mercy of middlemen cartels. Such reforms are crucial if farming is to become a sustainable enterprise in the long run. Else, a tax on high-income farmers will result only in driving resources away from agriculture into other sectors. It would make no difference to poorer farmers stuck in agriculture, merely because of the lack of opportunities. In this context, the historical transition of labour and other resources from agriculture into other sectors is particularly useful to keep in mind. The said transition has been very slow in India; in fact, according to Census figures, the size of the farm workforce increased by 28.9 million between 2001 and 2011. This is due to a combination of factors, but one in particular is worth noting: the difficulty agricultural workers face in finding jobs in other more advanced sectors. A tax on lucrative high value farm ventures, which affects their ability to absorb labourers from low-value farming, could make life more difficult for farmers unable to make the cut in industry or services. Given this, policymakers ought to tread carefully as they move forward on a long overdue fiscal reform.

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