The dread of angel tax—which has agonised start-ups since it was introduced in 2012—has finally been put to rest. Finance minister Nirmala Sitharaman has proposed in her first Union Budget an easing of angel tax scrutiny.
The government has moved another step closer to the ideal of one-nation-one-all-purpose identity number by allowing the use of Aadhaar besides that of Permanent Account Number for filing tax returns.
India will also have, for the first time since 1992, a top marginal income tax of more than 40%. It is in ‘mission mode’—to use Prime Minister Narendra Modi’s favourite and effective focus phraseology—to ensure than every household in India has access to piped water.
But what is the transition that connects all this activity? It is, I shall argue in this essay, to create the unafraid Indian.
If you think about it, there is one thing that connects your parents and mine, and every other parent in India, even if they do not know, and will never know, one another—that thing is a persistent fear. What if things go wrong? What if we fail? What if someone steals the little that we have?
This is by far the worst trait which has held back Indian enterprise. In India, you know that the system won’t be there to back you up or support you in case something goes wrong. This makes Indians risk averse and also tax averse—after all, if the family is the only support one can ever hope to receive, then why care about and invest in the public ecosystem?
There is little or no social security. Modi is trying to change that by bringing in widespread health insurance and other such ideas—and even today in many parts of the country, you would rather suffer a loss or attack quietly than go to the police station. At times, people fear police harassment more than any trouble they may have faced.
Every service that is rightfully ours as a citizen used to be a burden and a point of relentless pain—from getting a passport to getting a ticket on a train. Each of these pain points are being resolved as the government starts to operate more and more as a service provider. The budget has provisioned an expenditure of ₹50 lakh crores ($73 billion) spread till 2030 in boosting services of Indian Railways, the largest rail network in the world. After the push to create a hundred new airports, this was much awaited. A transformation in the services would have a positive impact on what the Modi government calls ‘ease of living’.
It would also boost tourism which remains the most underutilised sector which has enormous potential in India, but the government perhaps realises that without boosting fundamental infrastructure to dream of high tourist footfall is a joke. Under the Scheme of Fund for Upgradation and Regeneration of Traditional Industries’ (SFURTI), 100 new clusters will be set up so that 50,000 artisans can join the economic value chain, boosting a sector with tremendous potential for sales as evidenced by the ever-rising profits at Khadi and Village Industries Commission (sales up 24% in FY2018) has shown.
By giving financial incentives for buying electric vehicles, the government hopes to make a transition to cleaner transport sooner rather than later. This would help keep the promise of environmental leadership Modi made at the Paris talks on climate change in 2015.
It is now clear that only two things can help fight air pollution in India—the transition to electric vehicles on a war footing and a massive investment in public transport. This is why another 300 kilometres of metro rail lines have been approved, taking the total to more than 600 kilometres. What is missing still is bus connectivity but in many cities, taxi and auto mafias, and pressure from app-based services like Uber and Ola have lobbied hard to prevent state and local governments from expanding bus fleets. But at least fast snaking sets of metro lines are making inner-city travel especially in large cities far smoother than what was ever conceivable.
Each of these are longstanding pain points in the daily life of the average Indian and many of these—basic health, dignified transport, low pollution, basic education—are fundamental pillars of becoming a confident citizen.
India is moving on the path of creating Indians who do not view the world with fear and suspicion and who know that if there is uncalled trouble, their government has their back—as the former foreign minister Sushma Swaraj showed by helping Indian citizens stranded in different countries, or anxiously waiting for passport services at home, who only had to tweet to her asking for assistance. This is a legacy that is—and should—seep into every government department. Prime Minister Modi emphasised this point when he told new members of Parliament in May to ensure that they queue up without fuss at airports—the voters must always feel that these are our representatives and not our masters, he stressed.
This transition needs money which must come from taxes, therefore, for the first time since 1992, India now has a top marginal income tax of more than 40%. There will be legitimate grumbling about this, for the refrain has ever been that for the measure of tax Indians pay, the services they get are abysmal.
This will be a difficult period. None of the problems the taxpayers complain most about—air pollution, water pollution, bad health and education services—cannot be solved immediately.
But Modi can insist that the voters trust him if palpable changes start on the ground—voters understand that things do not change in a day. But they want to see change begin. Indian cities, where most of the voters who contribute most to taxes live, are unbearable and collapsing further with each passing day.
Modi has set out to create—as he always suggested that he would—not just a better India, but better Indians. But better, more honest tax-paying Indians are desperate for a better quality of life. Unless they see action quickly on that front, India might lose another generation of its greatest talents to migration.
As Indians become, at long last, unafraid, or at least less afraid, they are also becoming less patient.