[COLOR=black]This thread turned out so interesting, I felt compelled to reply. I do not claim that I am saying anything completely new. However, I would try to reiterate some of the points already put forward by the members:[/COLOR]
[COLOR=black]India[/COLOR][COLOR=black] is in a transition phase, and the focus is to move from a socialist economy to a capitalist one. In our day to day lives, we experience the capitalist forces at work (so, for instance, I am typing this reply on my laptop). This capitalist force, however, generates disparity (of income, living standards etc.) in the society, especially because the people in the system (the country) are in a better position to both benefit from the force, and add to it. That would be people like you and me.[/COLOR]
[COLOR=black]On the other hand, there is a parallel force, which is trying to spread the rewards of the capitalist force to more and more people, even they are not directly in a position to benefit from capitalism, or to add force to it.[/COLOR]
[COLOR=black]In the current situation, the government has two choices:[/COLOR]
[COLOR=black]Choice 1: Take measures that would help the capitalist force become very strong as soon as possible, and then hope the economy would spread the benefits around at its own pace.[/COLOR]
[COLOR=black]Choice 2: Work on creating a capitalist environment, but also have a socialist agenda to reduce the time it would take the benefits of capitalism reaching the underprivileged (those who could not directly reap the benefits of capitalism).[/COLOR]
[COLOR=black]Our country is following choice#2.[/COLOR]
[COLOR=black]Choice # 2 is very difficult to balance out. One of the effects that has been discussed at length here is that it creates severe disparities in taxation (so we have Accords selling at Rs. 16 lakh, fuel at Rs. 48 per liter). Nevertheless, this taxation is spreading the money around the whole country. The challenge is in making choices like:[/COLOR]
[COLOR=black][FONT=Verdana]a. [/FONT][/COLOR][COLOR=black]Is it more beneficial (to the economy in general) to keep a high fuel price, and use the funds to finance irrigation in remote areas, or should the fuel prices be kept low so that all consumers benefit. [/COLOR]
[COLOR=black][FONT=Verdana]b. [/FONT][/COLOR][COLOR=black]Should all cars be taxed heavily (“car is a luxury”), or should the taxes be kept low (“car is one of the basic items needed for progress”)[/COLOR]
[COLOR=black]In both the examples above, the struggle is between the capitalist and socialist forces. When we see Accords at Rs. 16 lakh it is, in essence, this very argument. [/COLOR]
[COLOR=black]It is quite clear, however, that the overall balance which the government has achieved is good (we have 9% economy growth and ‘inclusive growth’ as the next 5 year plan agenda at the same time). And this is made possible through a large number of choices that we have made (think high price petrol v/s low price phone call rates etc. etc.). [/COLOR]
[COLOR=black]Of course, there are two solid criticisms, which can be partly refuted:[/COLOR]
[COLOR=black][FONT=Verdana]a. [/FONT][/COLOR][COLOR=black]Much of the money collected through taxes is being is being embezzled by corrupt politicians [/COLOR][COLOR=black][FONT=Wingdings][FONT=Wingdings]à[/FONT][/FONT][/COLOR][COLOR=black] Agreed 100% that corruption needs to be weeded out, but high taxes allows the government to give gram pradhans Rs. 10 lakh budgets, 70% of which would be embezzeled, rather than face a situation, where the government has funds only to give Rs. 1 lakh to every gram pradhan.[/COLOR]
[COLOR=black][FONT=Verdana]b. [/FONT][/COLOR][COLOR=black]Some sectors are bearing the brunt of excessive taxation (eg. cars) [/COLOR][COLOR=black][FONT=Wingdings][FONT=Wingdings]à[/FONT][/FONT][/COLOR][COLOR=black] True, but the government is *trying* to balance it out there as well. So we have lesser taxes for cars under 4000mm, which are more in line with serving the transport need, rather than the want for luxury.[/COLOR]
[COLOR=black]My whole point is that although it pains me that I cannot buy a Honda Accord, and have to take into account the (huge, in PPP terms) fuel costs when going on a holiday, each of us need to look at the problem at a holistic level. It would not make any of our lives easier, but would just cool us down a little.[/COLOR]
Last edited by GTO : 29th April 2008 at 15:20.
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