The Big Story: Taxing times

In 1950, India adopted a constitution that retained a colonial provision that allowed the Central government to dismiss a state government. Since independent India – unlike the Raj – was not a unitary state, this was an odd provision, but was justified on the grounds that it was important to maintain the country’s integrity. Of course, the actual use of President’s Rule was simply as a tool for partisan politics. The Union government, right from Nehru to Indira Gandhi, used it against state governments not ruled by the party in power in Delhi. If anything, President’s Rule is a stark warning that centralisation of power is a terrible thing in itself, which cannot be justified by any purported higher aim.

A similar scenario threatens to develop with the high frequency of income tax raids being carried out by the Modi government in the wake of demonetisation. Like President’s Rule, the ostensible aim of the raids is beyond question: to weed out corruption. Yet, the power that it gives the Union government over political rivals raises uncomfortable questions for the democratic process.

In Tamil Nadu, there have been eight high-profile income tax raids since demonetisation was announced with the most dramatic one being done on the state’s chief secretary P Rama Mohana Rao. Rao claimed that Central Reserve Police Force personnel had been used in the raid on his house. The ruling party in Tamil Nadu, the All India Anna Dravida Munnetra Kazhagam has also claimed that raids had been carried out on the premises of the secretariat without informing the state government.

Quoting a senior AIDMK leader, this Economic Times report explains that the raids are as much a method to give the BJP a foothold in the state as to act against corruption.

This patterns seems to be repeated in Uttar Pradesh where Union government sources have leaked information of the Bahujan Samaj Party’s deposits to the media. Officials in the Enforcement Directorate claim that Rs. 104 crore have been deposited in an account belonging to the BSP since the Union government’s announcement on demonetisation.

Uttar Pradesh goes to polls in a few months and the BSP is one of the Bharatiya Janata Party’s main rivals.

In the same vein, West Bengal’s government has protested the use of paramilitary personnel by the Income Tax department without permission from the state.

This aggressive use of income tax raids against political rivals stands in stark contrast to the Union government’s rather more relaxed attitude towards allegations of corruption against the BJP. Allegations have surfaced of large tracts of land being bought in Bihar as well as West Bengal just before the demonetisation was announced by the prime minister. Mayawati’s demand that all parties – including the BJP – make public their accounts public is also a move that the Union government might consider to fend of allegations of bias.

The vast powers accorded to the Union government could be used for much good to tackle corruption and graft. But they could also be used to stifle political opposition. In the pursuit of the former, India must be wary of this trap.

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Giggle

Don’t Miss

Ajoy Bose explains how Mayawati actually thinks the BJP has handed her a chance to play victim:

“While some of Mayawati’s rhetorical fire at her press conference in Lucknow may be sheer bluster, it is unlikely that the Enforcement Directorate’s investigations into the accounts of her party or relatives will succeed in surprising or intimidating her. Knowing the desperation of the BJP to come to power in Uttar Pradesh, she is believed to have been prepared for some time now for harassment from central agencies. Significantly, the same day the Enforcement Directorate leaked the news about the investigation into her brother Anand Kumar’s bank deposits after demonetisation, the Income Tax authorities also indicated that they had launched a probe into his alleged connection with benami properties, or those kept in others’ names.”

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