Will the price of crude ever come down?
Experts are already talking of 150 dollars a barrel in view of geo political
tensions from the current 120 dollars a barrel. This will become the single
largest reason for higher inflation.
Practical answer : Give substantial tax
breaks to companies which can very rapidly bring alternative technologies for
autos into the market. Also tax breaks for the consumers who buy such vehicles.
I know for a fact that Tata Motors, M&M and Maruti are ready with such
vehicles (Hybrids). Some other technologies are ready for use too. When I went
to Tokyo in 1998, there were 10,000 cars which were on
the road, which were using these technologies without any problems. Now I am
sure they are producing thousands per month. Had heavy tax breaks been given to
auto manufacturers 3 years back, today we would have had no under-recoveries,
because we do produce 28% crude within the country. Therefore the fisc would
have been in control. In fact, M&M is supposed to launch a hybrid in this Diwali,
but it is not affordable. This is where the government can step in to
incentivise and accelerate use of new technologies.
Also, does the FM remember that years
back V P Singh had tried an experiment to drastically reduce taxation to
something like 5%, instead of 30%, if I remember right? The result was amazing
– total tax collection actually went up. Compliance is a major problem due to
heavy taxation. Only about 4% individuals in the country pay income
tax.
Farmers don’t pay any tax
nor do lakhs of shop owners. There is atleast 3 times more black
money in India compared to the estimated 500 billion dollars abroad. When land
deals take place, the landowner wants 60% cash and these are no smaller deals.
This is a known fact.
If wise men in the government don’t
wake up to these realities and bury their heads in the sand like ostriches, it
wont be long before we become a banana republic.
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