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Quo Vadis? Whither goest though? Anna asks this ancient question as a concerned Indian, who sees the country approaching a precipice. Speaking on the Finance (No.2) Bill of 1962, he examines the economic progress achieved by the government after 15 years of ‘fleecing the people’ in the name of the plan. He questions the rationale of a tax structure which leans so heavily on indirect taxation, especially in a nation where 95% of the people live on the brink of starvation. He speaks feelingly of the utter lack of coordination between the Centre and the States. He speaks of disparities between the various regions of the country in the matter of development and the neglect of the Southern States by the Centre. He deplores the delay in developing Tuticorin in Tamilnadu as a major port.

Anna, as Chief Minister of Tamilnadu, succeeded in persuading the government of India to take effective steps to develop Tuticorin as a major port. Though the Government of India ultimately accepted his other suggestion of giving tax concession and subsidies for the development of backward areas in the country, this was not done during Anna’s lifetime. Fortunately, today, the country’s attention is fully focused more on regional disparities in development and the paramount need to reduce disparities in development and the paramount need to reduce disparities in the minimum possible time. This was a cause dear to Anna’s heart.

Anna: Madam, Deputy Chairman, the Finance Bill has been discussed in the other House and is being discussed in this House. I have been hearing many good suggestions offered by Members on this side of the House, as well as on the other side. I come to understand on hearing the discussion, that nobody is satisfied with the way in which the people are being taxed. Whatever may be the arguments advanced for the necessity for fresh taxation, no section of this House or no section of the public outside is prepared to bear any more burdens. Moreover, the fresh burden of taxation from the Centre has been preceded by the Railway Ministry and is soon to be pursued by the State Ministries. Therefore, the first impression that one gets on going through the Finance Bill is that the present government, puzzled over their own failings, is asking the people to bear an unnecessary burden.

The present government is not able to offer an explanation for its failures, for its acts of commission and omission except to say that since it has got a plan to be fulfilled, every burden ought to be borne by the people. When the critics ask them what the criterion of their planning is, whether their planning is going to be socialistic or otherwise, they say; “We are very good people; we take bits from here and bits from there, mix them together and call it a mixed economy.” Madam, you know that adulteration is a crime. And the finance Minister was very vehement in attacking adulteration. In the other House, he said that those people who were found to be guilty of adulteration should not only be whipped….

Morarji R. Desai: I did not say that. There was a suggestion that they should be flogged.

Anna: So, the Finance Minister is not willing even to punish them. But anyhow, adulteration is a crime and adulteration of economic principles is a crime for which the present and future generations have to pay. Therefore, I would like the present government to formulate a policy which would conform to the norms of economics. But they want a new interpretation for any economic theory. Whenever it suits them, they say, “We are not doctrinaire, we are a very practical people.” The whole trouble arises because this government lacks a philosophy behind it.

They want to steal the thunder from every political party functioning in this country. They want to steal the thunder from the Communist Party, they want to steal the thunder from the Swatantra Party, they want to steal the thunder from every other party and say, “There need be no other political party here, because we are socialists and we are capitalists, and we have got a mixed economy.” Therefore, if there is a clear-cut exposition of the economic philosophy behind the implications of the present Government policy, the other parties can formulate their own philosophies. And the Hon. Mr. Bhupesh Gupta was pointing out that there were groups inside the Congress, one group pulling towards the Right and another group pulling towards the Left, and he has stated very categorically that the Communist Party would help the Leftist group to out the Rightist group. I was sorry to hear Mr Bhupesh Gupta clubbing the present Finance Minister with the Rightist group which he wanted to shove off.

But may I point out that whatever the philosophy behind the fiscal policies, the bare fact remains that these changes in direct and indirect taxation taken together, will bring in a revenue of Rs.71.7 cores in a whole year, of which Rs.44.5 crores will be from indirect a stoic pleasure when the Finance Minister says that these proposals will bring in revenue. But he does not understand the feelings of the people when they are asked or forced to pay taxes which they cannot bear. And he points out philosophically enough that undoubtedly the richer section must carry an increasingly larger share of the taxation and that the poorer sections must benefit progressively more through development, and that that is part of their concept of a socialistic state. I would very much like the Finance Minister to substantiate both these statements. Is it that he has worked out his fiscal policy in such a way that the richer sections are carrying an increasingly larger share of the taxation and the poorer sections are getting the benefit out of it? I would like to quote the opinion I may even call it a stricture of a member of the ruling party itself.

He has stated that the whole fiscal policy followed by the Government of India has lessened the value of the rupee which is going down, that 95 per cent of the people are on a marginal or sub-marginal level of subsistence and that more money is getting concentrated in the hands of a few. If Members on this side were to say that the value of the rupee is going down, they will be accused of not knowing the full facts, but I have quoted the opinion expressed by the Hon. Mr. T.T. Krishnamachari Minister without Portfolio, who had to get out of Delhi because man-caters were on the prowl. I hope that the man-eaters have now been chased or perhaps he may have come with a muzzle-gun. The fact remains that a responsible Member who has got a responsible post, Mr. Krishnamachari I say ‘responsible’ because he has not got any portfolio and, therefore, he has got all the portfolios has stated that the value of the rupee going down.

Who is to be accused for the value of the rupee going down? The ruling party members do not have even the courtesy to consult us when schemes are being formulated. But it is Mr. Krishnamachari who is saying that the value of the rupee is going down and that 95 per cent of the people are on a marginal or sub-marginal level, in spite of the fact that we have had a national Government for the past fifteen years conducted and directed by a political party which can command the funds of the capitalists and also the votes of the poor. And yet after having had two Five Year Plans and being in the middle of the Third Five Year Plan, this is the stricture that is being passed by an Hon. Member of this Cabinet.

May I ask the Finance Minister to point out whether this is the time to tax the people, especially to levy indirect taxes, when 95 per cent of the people are stated to be on a marginal or sub-marginal level of subsistence? Here again, are the figures taken from the national sample survey (Agricultural Labour Enquiry) sponsored by the government. It is stated that 27 million people have work for one hour a day, 20 million people have work for two hours a day, and forty-five million for four hours a day, and at other times they have no work. We have been spending crores and crores of money which we have got from our people and from outside loans and aids yet, after 15 years of freedom and 12 years of planning, we find that 27 million people have work for one hour a day. How do we account for this state of affairs after having spent so much money on planning, after having practically fleeced the people for the sake of the Plans?

The other problems today are that our sterling balance has dwindled, our exports have fallen, aid from foreign countries is likely to be cut down, indirect taxation is on the increase, prices are rising, direct taxes are being evaded, and black money is on the increase. And it is stated that Rs.118 crores of income tax is in arrears. May I ask the Finance Minister to point out, why such a colossal amount has been left uncollected? With what audacity can he come to the people and say that because of the Plans, they have to pay the taxes? Why should he not take up cudgels against the income tax arrears of Rs.118 crores? If he had only taken sufficiently stringent measures to collect at least half of this sum of Rs.118 crores, there would not have been any necessity for taxing the people. But he is not merely taxing the people. But he is not merely taxing the people for filling up that gap because he says right royally that these changes will bring in a revenue of Rs.71 crores. Therefore, he has not a collector’s mind, not the mind of a development officer of this sub-continent of ours.

My friend, My Bhupesh Gupta, wanted to know the philosophy behind all these economic implications. The first charge that I am emboldened to make is that because of the lack of a political philosophy you are leading the country blindfold into blind alleys, and therefore we do not know what would be the consequences of all these taxes. They have been saying that taxation and an increase in taxation, is an index of prosperity. I accept it as an index of prosperity, but it has to be answered, prosperity of whom, of which section? That has not been answered. Therefore it is that the indirect taxes, especially on essential commodities, ought to be curtailed, even though the Finance Minister has got the Finance Bill passed in the Lok sabha. Even then, if the Finance Minister he is reputed to be philosophically minded were to take note of the criticisms advanced by Members of the ruling Party itself, he would see that nobody supported him in these new taxes. But then, their vote was got only by whipping them into submission. Therefore he has no moral right to levy these indirect taxes, and he would be doing a great favour, not merely to the poor people, but to the philosophy to which he is stated to be wedded if he takes the criticism offered by Members of his own ruling party into consideration.

And therein, Madam Deputy Chairman, I may be permitted to deviate for a short time into the strange and curious working of democracy in this country. Members of the ruling party, in both the Houses, offered criticisms against the ruling party’s new taxation measures, in as vehement a manner as Members on this side. Yet when they go outside, they are forced to defend the present government and according, to the whip issued, they have to vote for the government. Presently, this month, the Communist party, the Jana Singh, the Swatantra Party and the Party to which I have the honour to belong each one of us separately are organizing protest meetings against excessive taxation.

When we address the masses about the impracticability of these taxes, about how these taxes are going to undermine the poverty-stricken people still further, it is these same Congress Members, Members of the ruling party, who are going to come and defend the government. But do not think that the people will accept your words. People do not merely read the reports about what it said outside this House to defend their case. They also read what is said inside this House. That is why I am very glad that Members of the ruling party have spoken very correctly and very boldly in attacking the indirect taxation policies of the Finance Minister. The Finance Minister may turn round and say, “But I will have to get the money.”

One way of getting money, if I may say so, is to collect the income-tax arrears, find out the evaders and get all the loopholes plugged. But I am not going to repeat what my Hon. Friend, Mr. Bhupesh Gupta, was saying, because you may not digest it. I would say that even in your present set-up if you economise the various departments of the administration if you plug the loopholes in the various administrative sections, you can find enough money for carrying on the administration and even to implement the plan. But whenever we from this side say that the administration is lopsided that there is corruption and nepotism in this administration, Members of the Cabinet turn round and say, “Prove it.” As they Hyderbad Economy Committee Report points out;

“Corruption, it is said, is often difficult to prove. All the more reason why there should not be the least hesitation in investigating every matter in which there is ground for complaint."

Mr Gorwala, whom the government themselves commissioned to report on the reforms to be carried out in public administration, is pleased to state about the income-tax system in his report as follows :

“On the Income-tax side the real complaint of the public is that while small men are often troubled quite unnecessarily, tax-evaders, whose assessment should run into lakhs, seem to escape. The failure of the Income-tax Investigation Commission to produce any real results and the ease with which the most blatant tax-evaders seem to be able to manage their affairs undisturbed has caused a very widespread belief in the impotence of government when pitted against really influential and wealthy people.”

The word used is, ‘impotence’; I would have thought twice before using such a strong word, but Mr Gorwala, because he had been commissioned by the government to report on public administration, says ‘impotence’ of the government. May I ask the Members of the Cabinet, what right have you to ask us to pay crores and crores of rupees when Mr Gorwala says that your government is impotent? Therefore I would like to see some more potency and vitality in the administrative set-up.

And here is another stricture and this is about the commerce Ministry :

“The Commerce Ministry had gained an unenviable notoriety in respect of the amenability of some of its principal officials to the wishes of big business.”

Perhaps this is what Mr T.T. Krishnamachari means by “man-eaters on the prowl”. How he able to come to the conclusion that man-eaters are on the prowl, I have not been able to understand unless I make a bold conjecture and say, that having been the Commerce Minister himself, he might have had some curious experiences. The Commerce Ministry is notorious for favouring bid business in issuing licences. If these things are reformed, there will be what the Hon. Member preceding me had stated, some enthusiasm in the people for the plan. But when growing larger and larger in dimension, when they find that the present state of the government is such that they cannot even provide the necessities of life, how do you expect the people to be enthusiastic about the Plans? Of course, there are people who have got to say something in favour of this or that item in the fiscal policy of the government. Apart from the fact that I belong to a party which demands separation of Dravida Nadu from India may I point out that the way in which you have planned out the industrial reorganization will make it impossible to get the maximum output from the whole sub-continent. Economic activity has been lopsided, the industrial organization has been lopsided. It is only late in the day that the

Bhupesh Gupta: You give up your Dravida Nade demand, and we shall join you in fighting for more industries for Tamilnadu within the Republic of India. Let us have that deal. Will you have it?

Anna: I am thankful to Shri Bhupesh Gupta for his anxiety to be with me, but I would not like to have him as an ally, giving up my ideal.

I way saying that it is only late in the day that the government have come to realize that their policy of industrialisation has been lopsided. They are now using an economic policy behind which there are many political philosophies the meaning of which most of them do not divulge fully. They are talking about regional, economic reconstruction. They say that particular regions are today economically advance and therefore it is the policy of the Government of India, as far as industries are concerned, to give more attention to the neglected parts of the country as a whole. Therefore, it means that all these twelve years of planning, you have had a defective planning, a lopsided economic planning.

The other day the Hon. Member Shrimati Devaki (Gopidas) when she was giving a very lucid account of how Kerala is being let out in matters of development, stated that when plans are formulated, the special features and special standards of the Kerala State ought to be taken into consideration and remedies found out. Otherwise, it will be a thorn in the further development of the India Union. This statement comes from one who believes that India should remain one and indivisible. If you do not take into consideration the special standards or the special features of Kerala, Kerala would remain a thorn.

Here, Madam Deputy Chairman, I would, through you, ask the Hon. Mr. Bhupesh Gupta to pay attention to this; “It will be a thorn in the further development of the Indian Union,” she says. What do we do with thorns? We take them away. That is what we do. If there is a thorn in the body politic, or in the body what we do is, we take away the thorn.

Therefore Madam, even people who have an abiding faith in the Indian unity think that if the particular region in which they live, remains industrially disorganized, the problem of unity will remain unsolved.

Bhupesh Gupta: I think your separation movement would weaken the democratic movement in Tamilnadu, and it will spoil the case of Tamilnad. It would neither bring what you want, which of course, we do not want nor will it bring industrialisation to that part.

Anna: To Mr Bhupesh Gupta’s advice, I will pay very serious attention. We will try to be as democratic as possible.

What I am trying to formulate is that there is a very real grievance in the minds of members of every political party that there is a regional disparity. I am pointing out this, not for separation, but because of the fact due to lopsided growth, we have not brought out the maximum output that this country could give. That is my point.

For separation, I have got other reasons, but I would not deviate into that even though one Hon. Member deviated into it and delightfully asked me to go to Ceylon to propagate it. I do not know whether he is more attached to me or to Ceylon. He has however admitted that he is a Dravidian. I may say categorically, that neither cannons nor contempt is going to deter me from the mission to which I wedded. About that there can be no compromise.

From the economic point of view, to prove that there is regional disparity, I am giving you a very delightful fact. I was talking about the income-tax arrears. It has been given State-wise or circlewise. Bombay City-I and Bombay City-2 and Bombay Central account for Rs.36 crores and West Bengal, Calcutta town, accounts for Rs.43 crores. Therefore, the Finance Minister should get his gun towards these two regions, wherein blocks of money remain unpaid.

Bhupesh Gupta: West Bengal has big capitalists. Mr Shanti Prasad Jain bought a house recently for Rs.60 lakhs.

Anna: Most of the capital of West Bengal is from outside. The economic disparity is being proved by statistics of State-wise distribution of income from agriculture. In Madras, we have got in 1958-59 Rs.343.3 crores whereas in Uttar Pradesh it is Rs.1,146 crores and in West Bengal, it is Rs.427 crores. I do not grudge U.P. or West Bengal’s becoming rich and wealthy. But may I point out that if there had not been this lopsided economic arrangement during these Plans, we would have been getting very much more than even Uttar Pradesh in the matter of agriculture. Even now, the yield per acre in Tamilnadu is the highest in the whole of India, though we do not have many irrigation programmes and we do not have a Bhakra Nangal or even many smaller schemes.

S. Channa Reddy (Andhra Pradesh): You have the Kunda Dam.

Anna: That is more for power than for irrigation purposes. So without all that, we are able to increase our output per acre. If such sturdy, intelligent and understanding agriculturists are to be found there, is it not the duty of the planners to apply their eyes more to the South with regard to planning the agricultural sector? They could have developed the fishing industry in the South. They could have developed the transport industry in the southern area. There are so many other things that can be done. There are so many opportunities. They have not only missed those opportunities but have been shelving the issue wherever an issue like this was raised.

When such issues were raised, they used to say/ “There is a strict economic principle that industries can be established only if the raw materials are to be found there.” But they have now come round to recognize the principle that regional disparities should be done away with once and for all. For the information of the House, I may say that the very same problem arose in Italy. Southern Italy was industrially very backward compared to Northern Italy, and then the Italian government took very intelligent, very bold and very radical steps formulating a special scheme for Southern Italy. They offered tax concession for new Industries to be started in Southern Italy. They gave loans and other aids for this purpose in order to improve this part of Italy. I am not leading you on to the tempting ground where you can rise up and say we will follow that example. You may follow it. I do not ask you not to follow it. Do follow it. But I should not, I cannot, and I need not guarantee that my political party will give up its philosophy because of that. Its philosophy is quite apart from such compromises or such subsidies.

I am only pointing out that if the economics of the South had been taken into consideration, we could have produced more wealth by this time. I may point out that the sea-coast in the South is one of the best in the whole world. There are many ports, used and unused, and I hope my Hon. Friend Mr. Dahyabhai Patel will not come to grips with me when I say that he has got Kandla Port and yet we have not got our Tuticorin. Two days back, the Industries Minister of our State, while addressing the Merchants’ Chamber at Tuticorin stated that it is not enough to accept the proposal. The Government of India should move in the matter to get things done. Therefore, I say if at least economic reorganization had been carried out throughout the country, especially in the neglected South, then the demand to pay taxes would not have been felt to be so heavy. Therefore it is that the South especially finds itself being taxed too much for the benefit not of its own territory, but for some other territory and so the tax-pang comes as a double dose. It is our request to the Finance Minister and through him to other Ministries that they should find out how they could reorganize or reconstruct the South economically so that more wealth may be produced and less taxation be indulged in.

There is another erroneous impression that is being created by the Members of the ruling party. They say: “Do not ask for the distribution of the profits now. You go on producing. It is your duty to produce. So produce more and more. But do not talk about distribution now, because distribution comes only after production.” Let me add that only in economics books does production come in the first, and distribution in the second chapter. But in actual practice, while you produce you distribute. You do not go on producing and then pile up all the goods and one fine morning come and say: “Now we shall have distribution.” That is not the way in which economic activities are to be conducted. That is only the way in which economic books should be written. Therefore, the Members of the ruling Party should not trot out such a weak argument.

We on this side say that which is being produced is not being properly distributed. If the goods had been properly distributed, if there had been proper distribution of wealth, there would not have been so much poverty in this country of ours. Our distribution is such that in my State, old men and old women who are destitute are to be pensioned off by the State. I am glad that my State Government has got such a proposal. But that is an index of the destitution to be found in the country. Why is it that after producing so much wealth we find so much of poverty? It is because the question of distribution has not been paid enough heed. That is why there is wealth produced and we find newer and newer Cadillacs and newer and newer bungalows and newer and newer business houses.

I read the other day in the papers that even the Prime Minister was astounded to find that when the government is not able to get cement, private contractors are able to get cement in any quantity. I would say - I do not know whether it is too strong a word to be used/ it is very shameful for a national government to find these two words current - black market and black money. We are using these words in a casual manner. When speaking of any article, we ask; what is its price in the open market and what is its price in the black market? I was astounded to read in another paper that one of the Cabinet Ministers, not the present Minister for steel, once stated that he was well conversant with the black market price of steel. Therefore, it is clear that the government knows that there is this black market, and the government also knows how the black market is being conducted.

The government, however, also knows that to book these black market people will work havoc in their elections. Therefore, black marketeers are being allowed to flourish. When there is the black market, there is also black money, and this black money cannot be ploughed back into the industry. When a private concern gets profit in the open, it can bring it out and reinvest it in the business. But when they get black money which is not capable of being accounted for, they cannot bring it out, or put it into the industry. Therefore it goes into ostentations living. It was with a view to curtail that ostentatious living that the other Finance Minister thought of the expenditure tax. But the present Finance Minister perhaps thinks that this ostentatious living has gone down, or that ostentation is good. He has taken away this expenditure tax. It might not have yielded much revenue.

I find from the papers that it bagged only Rs.77 lakhs. But whatever be the amount, the social value behind that tax has significance, and yet it has been taken away. On the other hand taxes on kerosene, match-boxes and tobacco are being increased more and more, and the other day in the Lok Sabha the Finance Minister flourished a matchbox and said: “Here is a matchbox and I got it at the correct price”. I would now ask him to get the matchboxes. Now, the price of a matchbox has gone up, and the price of everything has gone up because even though the Finance Minister, like Kind Canute, has stated that prices would not rise, neither the waves stood silent before Canute, nor the prices before the Finance Minister. Therefore, whenever there are taxes, prices are bound to go up and if at least the government is capable of controlling price rise, then it has got not a reason but an apology for excise taxation or these indirect taxes.

The Finance Bill is a fleecing Bill. I can understand fleecing rams and sheep for weaving blankets, but you are fleecing men, you are fleecing the poor people, and you are fleecing the people in the name of the plan, you are making the people look with horror at the plan. Whenever you say that because of the plan, all these taxes are being levied, they not only condemn the taxes but begin to doubt the very necessity for a Plan. In a way, you are undermining the planning system, of which you have been a votary yourself.

I would ask the Finance Minister not to advance arguments, intelligent logic, sandwiched with statistics but to take into consideration the poverty-stricken people, their plight, their unemployment etc. Their taxable capacity has been reached, and therefore, you should take away the indirect taxes, especially on essential commodities and try to get money from elsewhere, but I can assure you that even if these taxes are taken away, he is going to get more money because whenever he presents a Budget, the estimate is always given on a lower scale so that afterwards he can come up, stand before Parliament like a conjurer and say, I expected only Rs.23 crores, but I got Rs.32 crores.” Therefore, I say, there is no necessity for such indirect taxation to fleece the people.

(C.N. Annadurai's speech at Parliament on June 1962)

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