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June 3, 1998


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The Rediff Budget Interview /Nani Palkhivala

'It is the best possible Budget'

For years, the views of Nani Palkhivala on the Union Budget held the nation in thrall.

Huge, milling crowds attended his annual post-Budget analysis in Bombay and, long before television reached the Budget to the common man, it was Palkhivala who unravelled its many mysteries.

What does the legendary legal luminary think about Yashwant Sinha's swadeshi effort this year?

Why has he not commented on it as yet? Pritish Nandy interviews Palkhivala.

What do you think of the Budget in overall terms?

I think it is a very good Budget and, under the circumstances, it is precisely the kind of Budget that might revive the economy.

In what ways do you think it could revive the economy?

By ensuring that there are no additional levies, no further levies of any kind, this Budget will restore the health of the economy.

What about the increase in tariff? What about the rise in petroleum and urea prices?

Well, these are manageable increments. The economy can afford them. And, in any case, I think the way petrol is being wasted these days it may not be an entirely bad idea to raise its price. In fact, it has become very necessary. The raise is also not too much to hurt the people or the economy. It is only a slight increase that we can well afford to absorb.

What is the real focus of the Budget? What do you think Finance Minister Yashwant Sinha was actually trying to do in terms of policy objectives?

I think what was most crucially needed was to simplify the laws and this is precisely what he has done. He has made the laws easier, simpler, less complicated. That is his real contribution this time.

Do you think his three-pronged tax collection strategy of Saral, Samadhan and Samman -- simplified, satisfied and sanctified, as it has been translated by the media -- will actually work? That the Indian tax payer will respond to this challenge of an easy, honest, friendly tax-collecting system?

I would not say that all this would be or could be achieved but I know that it will result in less litigations and more recovery. I have often called this legal litter. This legal litter adversely affects the already poor quality of our tax administration.

In the UK, there are over 29 million tax payers but the number of references filed in the high courts is only around 30 in a year. In India, there were only 4 million tax payers in 1984 but the number of references in our high courts was around 6,000 in a year! Plus, believe it or not, there were about a thousand writ petitions.

These figures reflect, Pritish, the tremendous dissatisfaction of people, the terrible discontent with the quality of the law and of the fiscal administration. The strategy that you mentioned, I hope, will work towards ending this. Maybe not completely. But to a certain extent, which is not entirely a mean achievement I would say.

What do you think of the huge increase in defence spending?

It reflects the ground reality. I may not agree with it, but that does not change the perceived need.

Do you think India can afford a 14 per cent rise in defence spending, from Rs 361 billion to Rs 412 billion in one year?

No, if you ask me. But what is the answer to what Pakistan is doing?

Two years ago, I wrote a letter to the newspapers suggesting that we solve the thorny issue of Kashmir once and for all, by partitioning the state.

For 50 years we have fought over it. Two wars and the immense agony of its people have not helped to resolve the issue. Terrorism has grown. Tourism, the most important industry in the state, has suffered enormously. There appears to me no other solution left than to partition the state and close the chapter.

Sir Isaiah Berlin suggested the same while talking about the problems of Israel and Palestine. He said, "Since both sides begin with a claim of total possession of Palestine as their historical right, and since neither claim can be accepted within the realms of realism or without grave injustice, it is plain that a compromise, that is partition, is the only correct solution." That is why my view about Kashmir as well. Let us solve the issue and move on with the future. Otherwise, both nations will fritter away their energy and their resources on this futile conflict.

Do you think this is politically possible?

Otherwise, we are doomed. For fifty years we have fought this endless war. It is time to find a solution, however drastic it may sound.

What else about this Budget strikes you? What about the swadeshi thrust?

It should have come a long time back. It is good that they have thought of it, even belatedly, and I think it will be good for India and our economy.

The thrust for rural regeneration?

That is another strong point of this Budget. It is not just urban India-oriented. It supports rural India and its priorities. That is why I called it a good Budget, a Budget I would commend as the best possible under the current circumstances. It makes no tall claims, but it is realistic, reasonable and takes all the key issues into consideration. That is its real strength. I am sure it will change the economic scenario for the better.

Budget '98

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