I read in the newspapers and watched on the television about how everyone wants to make Mumbai a global financial hub, about how they envisage Mumbai could rival
While the investment and the necessary infrastructure could be created using grants from the Union Government, it is apt time that we start to evaluate as to whether we can make the city self-financing. Every March 30th, we hear of how the Mumbai region alone contributes around 33 percent of the total tax revenues of the country. Nice. So, we pay so much tax. Now why isn’t all that tax money being seen to do any good for the people who pay it?
Tax, in my view, is akin to a service charge. The State provides services like roads, electricity, water supply, education infrastructure, healthcare facilities et al, and in return asks people to pay for having used them. A fair deal, if you ask me. The only flaw in the whole affair is that the State is not really seen to be doing a good job at providing these services. So what do we do? Privatise them? Hardly so. Privatisation of all and sundry services is hardly the panacea to our problems. It may be easy in the short term, but in the long run, matters could turn out to be quite different.
One argument put forward for the poor state of affairs is that there is too much centralization of responsibility. Ok, so make the local self-governments responsible for these services. But then, the local SGs would complain about the paucity of money. That’s where the tax revenues could come in.
Say, a particular region, as per the IT department’s classification, generates an optimistic figure of Rs. 1000 crores as central tax revenues. Rather than diverting 100 percent of these monies to the Union Government and then redirecting a part of it back to the said region, why can’t we at the very onset demarcate a rough 10 percent of the monies for the region, an additional 10 percent for the state in which the region lies, and send the rest to the Union Government? That way, the Union Government gets 800 crores in its kitty, and the region gets around 100 crores for its own use.
Now, the point I am trying to make here is that a performing region would have a higher quantity of demarcated funds as opposed to a non-performing region. Consequently, the system is to be seen to reward performance. You perform well, you get rewarded accordingly. The non-performer would feel the pinch and would try to use the funds demarcated for the current financial to improve its chances at a higher demarcation next year. Of course, one cannot be permitted to increase one's tax revenues by increasing the tax rates, so that is one objection nullified.
This system should ideally cause a competition for higher demarcation akin to the one seen now, only unlike the current system wherein politics often has a lot to play; this system would look at performance and certain other factors when considering demarcation.
What do I mean by “certain other factors”? A region like Orissa cannot be expected to be able to match the performance of Mumbai in a span of five years. Keeping factors such as the median income, poverty rate, unemployment rate, literacy levels (both academic and functional) etc. in mind, a higher rate of demarcation could be envisaged, as in Orissa could merit a demarcation of 40 pc instead of 10 pc as in the case of Mumbai. The point of course is that Mumbai, being such a high performer, would find even the 10 percent allocation to be worthwhile.
Of course, this system reads too much into the tax revenues generated from a particular region, which may not be truly indicative of real performance. But, it must be comprehended that other than this, there exists no clear-cut source of indication as to how exactly a certain section is growing. I am poor at statistics, but then I am sure that statisticians can come up with some formulation that would be able to define how much should be demarcated for a region on the basis of its tax revenues for the previous financial year and any other factor that may be deemed valid.
I may be too small a fish for my idea to matter, but to my simpleton mind, this seems like a winner.
4 comments:
decentralisation is surely one way out to speed up the process. but how far the smaller entities will work towards development is a truly debatable question..a public private partnership can also work wonders...e.g.the planned infrastructure of navi mumbai is only because of the involvement of CIDCO...sometimes, initiatives & willingness on the part of authorities is the only impediment than the funds..think of the Rs2 crore MP funds that are not even being touched by the MPs for their constituencies..
The point that I was trying to make is that while the larger entity does manage to do everything in a centralized manner, smaller entities are aware of what exactly is needed, and more often than not, the enthusiasm to do something is lessened by the lack of support for the larger body, which invariably controls funding and other issues concerned. I am in favour of the plan to abolish the MPLADS, the thing being that we cannot entrust the job of allocating funds to projects and developmental work to legislators. That is the prerogative of the executive, and the MPLADS, in my view, undermines this prerogative.
Decentralization and delegation to the local bodies does seem to be a good solution! The only impediment I see is reams of red tape. As mentioned by you, there should be a clear demarcartion in the roles and responsibilities of every rung of the administration. This would set up a good competitive atmosphere and could be the solution we are looking for.
This should work lest, the underperformers get disheartened and give up like school-children.
Difficulties are meant to rouse, not discourage. The human spirit is to grow strong by conflict. And if that not be so, then cease your clamour for change. It ain't happening here any time.
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