Wealth of Nation

Swami Gulagulaananda said:
"The herd is powerful when they are together. They can be an army or a mob..."

I am reminded of an old story where a king decided to run a charity drive where all citizens were requested to donate some milk. A giant vat was placed in the centre of the capital and citizens were requested to pour a glass of milk into it. A miser decided to pour a glass of water, for who would notice a glass of water in a vat of milk? The citizens arrived one by one with their vessels and emptied the contents into the vat. The miser was jubilant that he had gotten away with it.  The king checked the vat in the evening and was baffled when he saw that it was full of water...!

I had an interesting conversation with a cab driver recently. The driver was explaining that he only runs airport routes and prefers it to rides within the city. He told that it was economically preferable and was less of a headache. During his elaboration on his expenses, he revealed that the significant costs were the commission to the cab company, fuel and maintenance costs. He said in a matter-of-fact tone, "I take my car to the local garages instead of authorised dealers because they don't charge any taxes or GST. This way, I save around Rs 2000. This amount is savings for me."

I was surprised that he considered tax avoidance as savings. I also empathised that these amounts are pretty significant for low earners. The problem, though, is that the government is unable to track these transactions effectively as they are cash-based transactions.

On a different day, I was travelling home by another cab, and my co-passenger on the shared ride didn't tender the exact change. The cab driver asked passers-by and us if anyone could help him break the note. But it was in was in vain. The driver then asked the passenger if he used Paytm or Google Pay. The passenger said he did. "Why don't you pay me using that?" he said. The passenger agreed, got off and walked away while we resumed the ride. A few moments later, a notification on the driver's phone showed that the passenger had transferred the amount. The driver appeared to be from a simple background and was not very tech-savvy. UPI has evidently penetrated the system effectively.

The Modi government has done a great job in getting bank accounts opened for almost every citizen through Jan Dhan. However, it is not effective if people don't operate them. The government should, in my opinion, penalise cash transactions or alternatively incentivise cashless transactions. Instead of charging an additional 2% on cards, they should reduce the final price by 2%. It is bound to encourage more people to make digital transactions. An initial increase in expenditure will soon be offset by an increase in taxes.

As educated citizens, we should emphasise the advantage of online transactions to the lesser educated. Perhaps educating our maids, gardeners and others about the great offers on Phone Pe, PayTm and Google Pay is more effective than talking about taxes. People are more likely to appreciate direct benefits to them in the short-term than the long-term. 'Grab the low hanging fruits' is the appropriate cliched phrase.

However, it is not just the uneducated or under-educated people who game the system. There are numerous instances where highly educated people who have studied in the prestigious IISc, Bangalore and work in major MNCs who cheat the government of taxes. There are couples who work in different companies and both claim housing rent. The government should use their enormous databases more effectively to analyse this. But more importantly, we as citizens should have more integrity.

Ordinarily, as citizens, we shout slogans against the government and pass comments such as "This is the state of our country. Look at that other country which is so much better. India will never develop." If we, educated Indians, short-change the government, do we have the moral right to criticise them?

Systems and processes should discourage citizens from breaking the law. Tough punishments and enforcement along with education and awareness will serve as an effective deterrent. The government should ensure that systems like credit scores assist in keeping the citizenry in check but also ensure that they don't push people to such an extent that they get driven to the informal loan sectors. It is a hard problem to solve and attaining the right balance is key.

In the end, we all have a role to play in the system. The responsibility lies with us all. We should make sincere attempts to increase cashless transactions in society. Apart from transacting ourselves, we should educate others to increase cashless transactions and try to explain that taxes are not an additional burden that they are forced to bear. Cashless transactions should also be incentivised by the government. The government should also work toward developing highly integrated systems that can detect frauds more effectively. It will ensure a more transparent system that is fair and just and help us achieve our goal of being a superpower.

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