Politics

GST: Why PM Modi's address to chartered accountants was a flawed rhetoric of nationalism

Arup K ChatterjeeJuly 5, 2017 | 15:56 IST

On July 1, 2017, the 68thChartered Accountants’ Day coincided with the GST rollout, when it was incumbent on the prime minister to invoke a nationalist rhetoric. The invocation was historically flawed and incomplete.

Nationalism, on its own, was and is not a problem. Nor were there factual errors in the PM’s speech. He quoted Albert Einstein on income tax being the hardest thing to comprehend in the world. This too is proven to be historically true. Nonetheless, PM Narendra Modi’s inaccuracy came in three very bold details or assertions.

He held that the GST revolution would incentivise chartered accountants to play the same nationalist role as lawyers, in India’s independence.

He endorsed the gravity of the phrase "chartered accountant", giving a clarion call to Indian CAs to take their professional and national role more seriously.

He asserted — and this is where the ruptures of the nationalist rhetoric appear boldest — that Indian CA firms should aim to disrupt the hegemony of the Big Four firms (Deloitte, Pricewaterhouse Coopers, Klynveld Peat Marwick Goerdeler, and Ernst & Young), replace the nomenclature into a Big 8, out of which four must be Indian firms.

Why each of these details or assertions are either historically flawed or incomplete must be understood by the audience at large — not only those from the CA profession. A critique of this is especially necessary since none may be forthcoming, except on Darth Vader’s Imperial March theme playing at the end of Modi’s speech.

The kidnapping and purloining lawyers

The Bar Council of India recognises Bal Gangadhar Tilak, Lala Lajpat Rai, C Rajagopalachari, Jawaharlal Nehru, Mahatma Gandhi, Babasaheb Ambedkar and several others. The nexus of the Indian National Congress and Indian lawyers or barristers is a well-recognised fact. But the Constitution, which many of these lawyers helped draftwas a prey not only to Victorian language, but also Eurocentric politics. Indian nationalism was also flawed, since it borrowed the ideologies of European nationalisms — essentially homogenous in nature as opposed to the heterogeneous cultural nationalisms of India.

The First Amendment to the Constitution added the Ninth Schedule (1951), with the aim to abolish the zamindari system. Several high courts noted that the abolition was beyond the jurisdiction of the Constitution, as Nehru lamented: "[s]omehow we have found that this magnificent Constitution we have framed, was later kidnapped and purloined by lawyers." It cannot, therefore, be claimed that our lawyers left an enduring legacy of a justiciable nationalism.

How Indian is the Indian CA

The designation, "chartered accountant", is not original to India. Unlike in other Commonwealth countries, Indian qualified CAs were not initiated through a royal charter to the profession. When the ICAI was founded, in 1949, there were debates in the council as to why Indian CAs should not use the designation. These have been recorded, inter alia, recently, in the article, “Struggle for the Designation of Chartered,” in a 2010-issue of the journal, The Chartered Accountant, of the ICAI.

That the designation Chartered Accountant was used in India as a legacy of the Institute of Chartered Accountants of England and Wales (ICAEW), founded in 1880, must be noted. This brings to the third and the potentially most controversial assertion, that of the distinction between the Big Four and Indian firms.

In 2013, the ICAEW signed an MOU with the ICAI, allowing for Indian auditors to be accepted as practitioners of accountancy in Europe, once they passed three additional papers, hosted by the British body. This means, India and the ICAI recognises the importance of international collaborations and interactions in the world. But does it do so in India, or is it content being inward-looking, awaiting the hypothetical disruption of the nomenclature: Big Four?

The Big Four firms themselves have a very long history in India. The first of their legacy firms in India are older by over 50 years than the oldest of the so-called Indian firms.

With the exception of KS Aiyar & Co (established in 1897) — the first Indian CA firm — most of the early CA firms established in India joined hands with the Big Four. The firms that later constituted PWC or Deloitte in India, came up in the second half of the 19th century in Calcutta, Bombay, Madras and Delhi.

PWC’s first legacy firm was as early as 1875, while Deloitte’s came up in the 1890s in Calcutta and Bombay, respectively.

Monopolise industry, not accountancy

Apart from the GST, 2017 marks the first year of the implementation of auditor rotation, vide the Companies Act, 2013. Vintage auditors of companies—Big Four firms as well — will rotate out compulsorily and make room for new, at times inexperienced, auditors.

This will be a huge impetus for the Indian firms. Nonetheless, they lack the talent, tradition and technology(three of the PM’s own Big Ts) that the Big Four nurture. Rather than giving a nationalist turn to the CA profession, India may do well to strengthen its own industries and the tottering startups.

The father of modern economics, Adam Smith, once argued why Scotland should not produce wine, despite its natural resources — it did not have the climate of its rival, France.

Smith believed rather than trying to produce everything that a nation consumes, it could specialise in any one commodity. That would automatically give it a monopoly of trading other utilities in exchange of its own monopoly goods. The CA profession may also be seen as one such utility, which need not necessarily be a part of "Make in India".

The modern accountancy profession does not have its origins in India. It does not need this nationalist rhetoric, which will only widen the chasm between the Indian firms and the Big Four — much of the latter too are rightfully Indian.

Those who think the foreign firms are corporates trying to seize business opportunities of smaller and nationalist firms in India — I may be persuaded by them to write the rich and complex 150-year-old history of the Big Four in India. 

Also read: GST: Modi’s address to CAs was one of his finest

 

Last updated: July 05, 2017 | 15:56
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