Why Jaitley's Budget seems a big surprise to come from BJP

Today’s Budget is a big surprise as it came from the BJP, a party that its rivals have never tired of painting as not only a den of religious bigots who are “anti-poor”, with Nariman Point-type capitalists as buddies. However, finance minister Arun Jaitley, who I first got to know as an extraordinarily sharp young lawyer, was always different. Never a Hindu fanatic, he became a star lawyer over the years, with most corporate moneybags among his clients. In the late '90s, when the first batch of clunky mobile phones had arrived and Jaitley began proudly carrying one for his daily evening round at Lodi Gardens, a PR man servicing his clients would stand by the walkway, only to hold the heavy machine as its owner would take the air. We admired his connections.

Everyone thought Jaitley is a right-wing politician. But he has surprised the left liberal establishment of Delhi, and his party’s professional critics, with a Budget nobody that expected from the BJP. It was for two reasons: First, far from being anti-poor, it is the path-breaker for initiating a social welfare system in India, the world’s second most populous country which is also the home of the largest number of poor people, about 300 million, with income of 1.25 dollars a day at purchasing power parity. India had a defined benefit pension scheme for government employees and others constituting a minute number, and nothing at all for others. In January 2004, as the first NDA government came near its term end, a National Pension Scheme (NPS) was introduced. It was a defined contribution scheme, with post-retirement benefits arising from the employee’s contribution which was matched by the employer’s. But nobody thought of the unbearable burden of poverty in old age of a man who never had worked in the organised sector. About 86 per cent of India’s work force are in the unorganised sector.

Jaitley’s Budget has made a modest but clear beginning towards universal social welfare with a slew of low-cost pension and insurance schemes. The Atal Pension Yojana may sound piffling, as it promises to match the policyholder’s contribution with only 50 per cent matching grant from the government, and that too subject to a limit of Rs 1,000 per annum. The insurance scheme, Pradhan Mantri Suraksha Bima Yojana, is also quite basic. Against a premium of Rs 12 per year, accidental death risk is covered up to Rs two lakh. But it is a significant beginning. Way back in 1909, when UK launched its first old age pension under a Liberal government, the pension amount was five shillings (25p) a week, payable at age 70 or after, and subject to the beneficiary passing a rigorous “means test”, with no pension claim to be entertained if he reeked of liquor. Social welfare in the US began even later at the initiative of President FD Roosevelt; it too had a modest beginning. So, in a democracy, welfare, once introduced, cannot be shrunk, like toothpaste which cannot be squeezed back into the tube. In today’s Western world, individual liberty is protected not just by the justice system but by the large state-assisted pension and health schemes. Many of my NRI friends have acquired property in Pune or Bangalore and are regular winter visitors to "mother India" but they’d never entertain the idea of giving up their flat in North London or Brooklyn for the attraction of NHS or the US Medicare. In India, the seed that Jaitley has planted may take a generation to become a banyan tree. But the pity is, Congress, the party that claims to hold the patent on socialism, could go only as far as showering money on younger people (who can work the fields) for a 100 days a year, knowing these are potential voters, but had nothing for old men and women most of whom cannot show up in polling booths.

I also admired Jaitley’s courage in giving as good as he gets to the big ticket tax evaders, who also wield enormous political power in India. Tax officials have either dreaded them so much that they wouldn’t have the courage to send them even a notice, or have often joined them post-retirement, with fat salary cheques and a promise to keep his ex-colleagues under control. In the past three decades, the tax-dodgers have not only become main financiers of politicians; the latter, on the other hand, became their puppets. They enfeebled the country’s economy as much as its democracy, with nobody having the gumption to name them in any public forum, not to speak of filing a complaint.

Jaitley now promises a comprehensive law which will make the tax evaders’ old way of taking recourse to a dilatory legal system totally ineffective. Tax-evaded money parked outside the country will be an offense to be punished with rigorous imprisonment up to ten years. The offence will be non-compoundable and offender cannot approach the settlement commission, as the usual practice is. Besides, the penalty is 300 per cent the evaded tax. The law also has stiff penalty for non-filing of of returns of foreign assets, of seven years’ imprisonment. If the offender cannot be arrested, his assets in India of the same value as the foreign asset can be frozen.

So we heard something different about BJP, a party that dislikes the poor and loves "crony capitalists". At least Jaitley has proved that it is a party of modern, humane and bold ideas. It should read the riot act to Praveen Togadia, Sakshi Maharaj and such other divisive elements of the saffron fraternity.