States: Rajasthan: Rollback CM

India Today, May 3, 1999
May 3, 1999

RAJASTHAN
Rollback CM

That's the sobriquet Gehlot earns as he gives in to the rising tide of demands from the Opposition and the public to withdraw taxes and make other concessions.

By Rohit Parihar

Not quite Cooling: Gehlot's move to appease his opponents appears only to have left them thirsting for more. When Finance Minister Chandan Mal Baid got the zero hour suspended in the Rajasthan Assembly on April 19 to announce the withdrawal of professional tax without waiting for cut motions or an appropriation bill, the message was more than clear. The Government was in no mood to face the growing tide of protests against the budget it presented in March this year.

The withdrawal meant that the state would not get the Rs 80 crore it was expecting to raise under the new head of additional taxes this year -- it was for the first time that professional tax was being levied in the state. It also meant that Chief Minister Ashok Gehlot was keeping in mind his predecessor Bhairon Singh Shekhawat's political mantra: skirt a controversy and avoid unpopulist measures when the political situation is fluid or when elections are impending either at the state or Central levels. "I did not want to give the Opposition a chance to blow this issue out of proportion," says the Congress chief minister.

Ironically, the opposition to the "tax-heavy" budget began within the Congress itself. One of the first issues that Girija Vyas, Pradesh Congress Committee president, took up on assuming office on April 15 was to speak out against the budget. "It is quite apparent," she told the press the next day, "that the bureaucracy scored an upper hand in preparing the budget. The impact of the taxes on the people was obviously not taken into consideration.''

Quick to catch on, the BJP joined in the protests, even mobilised a public outcry against the budget. Twenty-six organisations, including those representing advocates and government employees, began an agitation. Gehlot immediately went on the defensive and publicly admitted he had failed to go in for mass consultations before introducing the professional tax.

But far from making amends, the rollback has only made the chief minister appear like a knight errant vulnerable to opposition pulls and pressures. Cashing in on the political uncertainty in Delhi, the Opposition parties and the public in the state are pressuring Gehlot into making more concessions. Shekhawat was the first to come up with the demand for withdrawal of tariff hikes in the irrigation and power sectors. "The Congress will have to withdraw taxes on farmers or face agitation," he says.

Jaipur's jewellers also took to the streets, protesting against the imposition of a 2 per cent sales tax on gems and precious stones. The strategy worked: Gehlot assured them that the levy would be partially withdrawn. Emboldened, a section of the industry is now thinking of pressing for total withdrawal of the tax. Elsewhere, handloom weavers launched an agitation demanding withdrawal of sales tax on low-priced grey cloth. And stamp dealers started saying that the Government should reduce the hike in stamp duty and registration fees.

"The rising pitch for concessions does not augur well for the Government or the economy," says Congress MLA Narinder Singh Bhatti. "If advocates and jewellers do not pay taxes, who would?" The budgetary deficit for 1999-2000 is pegged at Rs 601.59 crore. The Government had hoped to make that up with new levies like professional tax, besides making land allotments worth Rs 200 crore in the developed stretch of the Indira Gandhi Canal area. The additional taxes were expected to rake in Rs 562 crore. The net income so generated would have even allowed a surplus of Rs 160.41 crore which the state planned to spend on rural development. But the rollbacks have changed all that, plunging the state back into a deficit.

Gehlot's moves in the coming days in the power and irrigation sectors will prove especially critical. He can ill-afford to dole out concessions in view of the conditions set by the World Bank for disbursing loans to various projects. For instance, the Government will have to cut down subsidies by raising irrigation charges if it has to avail a Rs 1,800 crore loan for the Rajasthan water resources consolidation project. Similarly, an upward revision in power tariffs is a must if it has to get an aid of Rs 600 crore from the World Bank to restructure the state electricity board.

The options before Gehlot are not easy. He stands to incur the Opposition's wrath if he does not give in to their demands. At the same time, rollbacks will only invite criticism besides demands for more. It's a Catch 22 situation as long as Gehlot remains flexible. The economy is the ultimate casualty.

Issue Contents | Write to us | Subscriptions | Syndication