Swarajya, June 3, 1965
Between ourselves, honest voter, these private monopolies created by the pernicious system of permits, licences, quotas and controls (to be extended now even to foreign capital which voluntarily comes into the private sector) make the Congress Party's rich friends richer, and the poor poorer. It is a close conspiracy; we have a battle between money and liberty, between dharma and atheism, between freedom and communism clothed in Congress robes.
When the premier All-India organization of industrialists and businessmen engaged in the major part of the nation’s economy, offers advice to the Prime Minister, based on the failure of the Government’s socialist policy, the Prime Minister argues in a circle saying the nation is committed to ‘socialism’ and so they must learn to live with crushing taxation and smothering controls. This may be some kind of debate but does not serve any political or economic purpose. When industrialists and businessmen say that socialism has failed it is no answer to say that the nation is committed to socialism as if it were a matter religion to which one belongs by birth and it is unchangeable. Sri M. R. Masani has convincingly and comprehensively covered the Budget proposals in his speech in Parliament.
All sorts of foolish remedies are being hatched in pursuance of this same attitude, which will make things worse instead of improving matters. The elimination of managing agencies, with which idea the Cabinet seems now preoccupied, is a supreme example of this line of thought, born out of crude envy and suicidal in result. The liquidation of the managing agency system will be worse than the liquidation of the large agricultural estates in reducing production and hampering progress and expansion. The liquidation of large farms deprived the national agricultural industry of its management talent and capital resources for modernization. The liquidation of managing agencies will result in discord among shareholders and mismanagement, and many flourishing units may before long break up. If managing agencies are replaced by some kind of direct or indirect State-management, the result can be even now envisaged from what we have hitherto seen of the working of government managed industries.
The people who are actively engaged in the nation’s industry are really in gloom. The artificial optimism of the Prime Minister is of no avail. We may all dislike evasion and fraud. But the remedy for these diseases is reduced taxation, and therefore reduced goals, until more enthusiasm is created for honest effort and capital flows into industry in a flood of joy over profits made openly.
The attempts at grand achievements beyond our resources, for the benefit of posterity, through our famous five-year Plans is not very different from the once-famous attempts of some scientists to invent a machine for perpetual motion. It is just impossible. There can be no hope for increased production in any sphere, unless taxation leaves an adequate residue of profit to those who are expected to achieve the result. The laws of human nature demand a ceiling on the tax levies of the State. If this condition is not complied with, it would be only trying to spin rope out of sand. Or it would be a plan for slave labour, even which has its limits, viz., that it can be put into force only in prisons or in concentration camps and cannot cover a population such as ours, and for production of the magnitude which we aim at. Plans, therefore, should be limited to the measure of our resources. The other way about, viz., designing the size of our goals first, and then laying down taxation to cover the Plans, is basically wrong. The reverse, viz., that the nature and size of our objectives should be limited by the taxation we are capable of levying and paying should be the governing rule. Subordinate and local bodies may plan and ask those above for grants to fulfill those plans, but the Central Government must follow the rule of measuring resources before finalizing Plans. Also, this taxation for Plans should be direct taxation. To resort to indirect taxation, when we have already reached the maximum possible direct taxation, is a sheer assault on the life of the poorer section of the nation. Indirect taxes on industrial raw and intermediate materials increase the cost of the Plans themselves and become self-obstructive. Indirect taxation on other commodities increases the price of consumer goods, making for distress among the poorer classes and for increased wages and government salaries. Thus indirect taxes are not only of no avail but make matters worse.
To argue that socialism cannot be reopened, or that the Plans cannot be given up, is not democracy, but an attempt to run democracy with no passage for reason and debate which would make it a sham and a mockery, not democratic socialism as it is being sought to name it.
