Tuesday, March 18, 2008

An Urgent call to the members

Posted by Secretary General on 3/18/2008 11:45:00 AM with No comments
(For circulation among the members of AICEIA)

Comrades throughout India are eager to get their new pay scales. There are sustained rumors in the press that a big bonanza is awaiting the Central Government employees in the form of the 6th Central Pay Commission Recommendations. This was the very same Press that hooted against the setting up of the 6th CPC, on grounds that the economy had badly suffered due to the after-shocks of the 5th CPC. The Government had itself been adamant in not setting up the 6th CPC. The reasons given by the FM and thereafter reiterated by the PM were that since 100% neutralization of DA had been granted to all Government employees and the Dearness Pay also was being granted, there was no necessity/justification for a Pay Commission at all. However, after the C.G. Employees expressed their categorical view on the subject, and that in an organized manner, that pay revision was not to just take care of the inflation, but revise the pay structure commensurate to the increase in the standard of living, the 6th CPC had to be constituted. This reminder is only to put things in its perspective.

The CPC itself is likely to face limitations in recommending pay scale to the highest Civil Servant (Cabinet Secretary) due to the President of India’s pay having been fixed at Rs. 1 Lakh per month as against the demand of the Staff Side of the National JCM to fix at least 1.3 lakhs as the pay of the Cabinet Secretary so that only then at least Rs.10,000 could be fixed as the lowest scale. (The ratio between the lowest basic pay and the highest basic pay in Government being 1:13) Thus the scenario on this front requires every one to be on the alert, not to be carried away by sweetened rumors kept afloat through the press.

In the meanwhile, the developments in the department itself require serious consideration by every member of this Organisation.

When the Government started letting private people to do the work of the Post Offices, many of us said, let us get better services. But the Courier services have not yet been able to provide reasonable services even in the cities, let alone penetrating the rural India. And consider the exorbitant cost of mails in the courier.

When Government started withdrawing from providing facilities for health, education, transport, etc., many of us again said that it is not the business of the Government to do business and loss making activities should be given away to private parties. It was not considered that no private party would be willing to handle a loss making activity. Then came the immediate logic that the Government machinery was as such incompetent and corrupt that only private parties would be able to do well. Again we failed to consider that if a no-profit oriented welfare machinery like the Government cannot be expected to deliver, how the very same services would be delivered by a profit-alone-oriented-private-sector.

All the above logics were thrown up under the firm belief that the Government will at no cost let go off the responsibility to collect revenue. So all our members would any way be safe.

Now the Man Eater (ME) is at our own door steps.

This one is not the endangered one, but the one that has come to endanger our species. It has two stripes. One is the LTU and the other is the GST.

The concept of LTU (Large Taxpayer Units) has been brought about by the Government to ‘reduce the compliance cost of the large taxpayers’ and to ‘reduce the interface levels’.

The scheme provides a single window facility to all large tax payers paying Central Excise, Service Tax, Income Tax and Corporate Tax and running business from all parts of India. The FM is on record that the Customs also would be brought under the LTU.

The large tax payers who register under the LTU have been assured against preventive visits by the local authorities. LTU itself does not have the man power either, to conduct any exhaustive investigations. The returns provided by these assesses would most possibly not even get scrutinized, because the staff structure provided for these units ensure that. There is not to be any mandatory audit. The rules have been amended to enable these assesses to move their inputs, semi-finished goods, finished goods and capital goods between any of their units anywhere in India, without payment of any duty. The credit earned in one place can also be transferred to any other place. No proper mechanism is provided to prevent any misuse of these facilities.

It is important to note that the small scale units and medium scale units face the threat of proceedings by the department for even technical violations and there are no mechanisms provided to lessen their problems, though our nation is still a socialist state.

And more importantly in other countries where the LTU concept had been put into practice, it is learnt that the Chief Commissioner level officer heading the unit is brought from the outside market. A perfectly unaccountable political appointment, at the disposal of which, 80% of the national tax revenue will lie.

Let us go through the observations below:

“Forbes billionaires' list featured the names of 36 Indian businessmen, with an accumulated worth of a staggering USD 191 billion (that is, almost 20% of what the entire Indian population earned for the same year). In fact, of these 36, three of the names also appeared in the top 20 of the global rich! The only other economy that outscored India was the United States of America with five billionaires. In fact, India is the only Asian economy to have so many billionaires in that list; and next to it is Japan with 24!! While the Indian media mainly consisting of half /ill educated people and middlemen with negligible intelligence and analytical skills go ga ga over the same, and the masses get carried away with excitement, taking it to be an achievement, it's time to reveal some gruesome truth about our billionaire industrialists.
After Independence, our industrialists were given a monopolistic market to operate upon, thanks to the bureaucratic system of bribery-driven work culture we created. Over the years, the same industrialists were further helped (through more greasing of palms) by the government to amass more wealth and profits by allowing them to buy public sector products at subsidised prices like, say, steel while the private companies sold the finished products like buses and tractors in the markets at the market price. Thus, profits and potential profits and wealth of the PSUs were transferred to private sector balance sheets and PSUs were branded loss-making failures!! This was the first phase of growth for our Indian business houses creating primarily monopolistic and fraudulent rupee billionaires.
Since the first experiment kept us a third world, third class country, the second phase of growth started post liberalisation. Gigantic and the so-called loss making PSUs had been built on tax payers' money with huge infrastructure and land, and it was time to create the next generation scam in the name of opening up the economy. In this phase, the government started selling off the public sector units in totality only at a fraction of the price they should have commanded in the markets because the bribes they got from the industrialists was more than that in our wildest imaginations. Once the sell-out of these companies was virtually complete and increased the wealth of our industrial houses further and made, but obviously, a few dollar billionaires, has come the latest phase!!

Having virtually run out of ways to get more bribes in a privatised world, after having sold most of the public sector wealth (or having sold out the future potential wealth of PSUs by selling away, for example, the tediously researched and located oil field scans of PSUs to private oil companies, etc.), it is actually the government of India that started the process of creating numerous global billionaires out of our existing industrialists through what TSI and B&E have termed the National Land Loot Act the SEZ act.
No wonder then that in the month of August, Business Week, along with Interbrand, came out with the 100 top brands and (not so) surprisingly, not one of them was Indian. That kind of explains the story. While the Japanese, French, Swiss, Germans, Italians and the likes get beaten hands down in the billionaires' lists by Indians, it is they who dominate the top brands lists... and of course not to forget the Americans. While they spent a hundred years competing in the markets, creating brands, investing in huge R&D, losing out to competition, fighting back again, and finally creating wealth and billionaires, Indians are there in these lists right at the top too, albeit through creation of scams, loot and transfer of national wealth into private hands. Managing mind boggling market capitalisation (m-cap) and becoming billionaires without churning out a 'single' global brand or product!! That unfortunately is the story of India...which houses the most number of poverty stricken people, and will soon house the maximum number of billionaires too. After all, in this huge country, there is a lot of land and natural resource left yet to be sold away by the “merchants of death” ruling this country!”

The above extract is not from the uttering of any trade union leader. It is from an article in January 2008 under the title ‘Blood billionaires. scam billionaires. indians storm into the global billionaires' list!!’ by one of the greatest management gurus from the IIPM, Prof. Arindam Chaudhuri.

The above described selfish attitude ruining our nation is the ME (Man Eater) attitude. It would now be clear that the large tax payers can now officially form cartels and the fiscal policies can be expected to be only to their advantage, because they would be contributing 80% of the total tax revenue. When 8% of the existing staff in the present CBEC and CBDT combined is alone to be employed for this, the future of 92% of the remaining staff to collect only the remaining 20% of the revenue is any body’s guess.

But some of our intelligent members have again found some light in the increasing service tax net. Here is the other stripe of the Man Eater coming to light. The GST (Goods and Services Tax) going to be a composite tax regime to brought into effect from 2010. The Committee going into the proposals has already zeroed in on certain services to be given to the State Governments as compensation to their losses from Commercial taxes on account of introduction of the VAT. It is only a technicality whether it would be dual VAT or a composite VAT. In either case, all services where manpower deployment would be required for monitoring, are likely to be given to the State Governments. With only the organized services like the Telephones, Insurance and the like, and with the 80% of manufacturing sector also going into the LTU, the future of this department could be very well be imagined.

The irrelevance of the Board itself in Budget preparation is known to every keen observer. The CBEC hardly is consulted on tax proposals. Even the concept of LTU came to the CBEC only at the time of implementation. In this situation the members have to massively be sensitized to the developments and a national movement has to build up – if the department and the nation have to be saved.

Dated 17th March 2008
Camp. Kolkata. R.Manimohan,
Secretary General, AICEIA