20 January, 2021

It Is All Or Nothing

To be effective, the Kelkar Report has to be implemented in toto. Will it be?

It Is All Or Nothing
Its lukewarm reception shows how snail-pace reforms have cooled off even the most sensation-hungry newsperson. But special advisor to the finance minister Vijay Laxman Kelkar's recent report on direct taxes has a lot of soul-stirring stuff similar to Raja Chelliah's report in the early '90s. Not the least of which are the two proposals to tax agricultural income in the states and exempting three-quarters of the middle-class assessees from income tax.

But that's exactly the problem. If accepted in toto, as preferred by Kelkar, the prescriptions may have major implications on government revenues as well as on the existing tax regime for corporates and individuals. Already, North Block is jittery about the possible impact of the report on the Indian psyche and a tussle has ensued between bureaucrats who favour the report and those who feel that the proposals cannot work. Finance minister Jaswant Singh has been caught in a Catch-22 situation, where he wants to be seen as pro-reforms but is restricted by stark financial realities.

No one doubts that the Kelkar report is in...


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