Revenue maximization is bad economic policy: Subramanian Swamy

Ravi Shanker Kapoor |


Top policy makers like Reserve Bank of India Governor Raghuram Rajan, Chief Economic Adviser Arvind Subramanian, and NITI Aayog chief Arvind Panagariya are technicians without an ideology, said senior Bharatiya Janata Party leader Subramanian Swamy. In an interview to Ravi Shanker Kapoor, Dr. Swamy discussed a variety of subjects. Edited excerpts from the interview:


The Narendra Modi government promised to end ‘tax terrorism,’ but it is increasingly being accused of being arbitrary in taxation matters. How do you think the government can wriggle out of the taxation mess?

Well, there is unhappiness because while the idiom has been more friendly than before, the action the ground has frightened a lot of people. For example, some of the recent amendments in income tax [law] propose that you are expected to give details of foreign travel and expenses. Then the black money Bill misses out on the main important requirement of identifying where the black money is, and is focused on how to punish those who are found to have black money. It is not about black money detection but punishments. And the nature of powers given to [taxmen]. It is revenue-driven rather than policy-driven. These are some of things that are making it look that we don’t mean what we say.

That is why I have advocated some of the things which are easy to understand—abolition of income tax. It would mean a loss of about Rs 2 lakh crore, but the auction of 2G alone will give you so much [money]… My position has been vindicated. But they say it is additional revenue. This is the reason that there is no enthusiasm.

Then interest rates also are too high. Reserve Bank of India Governor Raghuram Rajan is like those evil doctors who think that by killing the patient you can bring down the temperature of the patient and not by administering medicine. These are the reasons [for the economic mess]. It is kind of ideology-free approach to dealing with taxation that is causing the unrest.

So, policies lack ideology.

That’s right, because people like Rajan, [Chief Economic Adviser] Arvind Subramanian, [NITI Aayog chief Arvind] Panagariya—they don’t have any ideology. There are some things you don’t do if you are ideologically inclined. If you are not, you feel anything that maximizes revenue is okay… Revenue-driven with increase in the discretionary powers of revenue collectors.


‘Rajan, Arvind Subramanian, Panagariya are technicians who can’t inspire’


So, they are technocrats without any vision?

When there is no ideology, how can you talk about any vision? They are technicians. Technicians cannot inspire; they can plug a whole, but can’t make a building.

What to do about the stuck infrastructure projects?

We have a very dynamic minister for infrastructure, Nitin Gadkari, a no-nonsense person. I can’t say what is holding him back but certainly the promises from abroad to help in infrastructure have not come through, like from Japan and China. They promise many things, but these haven’t fructified.

Are vexatious issues like transfer pricing and retrospective taxation holding these projects?

As far as infrastructure projects are concerned, these don’t matter. I would say today what needs is not as much you build new things but repair what is available. I recently went to Darjeeling and was surprised to find that National Highway 55 had a landslide and has not been repaired for six years. People have to find alternative routes; this is makeshift arrangement. The need of the hour is maintenance, renewal, updating.

Railway stock is so old I shudder to think how things will develop in the future. I am happy with Suresh Prabhu not introducing new trains. Railways are getting dangerously close to the cliff.

Is announcing new projects more popular because these are events affording photo-ops, speeches, etc., while maintenance is workmanlike…?

(Laughs) In a democratic world, some showing off is inevitable. After all, you have to get votes. But the translation of what to do into action requires certain degree of commitment. You have to have a decentralized system which is committed… so that if the top man wants something, it gets translated through the layers of implementation. If you centralize, then … well, any individual has the limitation of energy and time.

So, systemic changes are needed?

System is fine. Decentralization is provided in our Constitution, so no need for systemic change.


‘Top industrials do gigantic project by using public money’


For economic revival, a robust banking system is needed. We have to comply with Basel-III norms which mean government has to infuse huge sums in public sector banks. How do we go about it?

The banking system has been stripped of its capital viability by the loans that the government takes to meet is deficit. We have denied, as a consequence, the private sector of investment because the government has been impounding more and more money of the banks, because these are public sector banks.

Then there is no accountability in our banks. Take this Kingfisher case… what a massive amount of money has gone! I think the unpaid loans, written-off loans on the public sector, the banking system, is unprecedented in world history. All these gigantic projects that top five or six industrialists take are by using public money… which they go on updating, cost escalation as an excuse.

The net result is that capital enhancement that is now necessary; it is staggering. The banking system is on the verge of collapse.

What is the way out? Privatization?

The way out is not privatization. Of course, I would be in its favor. Why so many public sector banks should be there? You can have one consolidated bank… We need mostly private sector banks that would not be answerable to the Ministry of Finance because would mean patronage… We should penalize bank chairmen who have three years of losses; there should be performance criteria.

How to get black money back?

There are four methods. The first is the French-German method of bribing, which they did with Liechtenstein Bank and Hong Kong Shanghai Bank. Then there is the American approach: arrest top officials of banks which are suspected of Indian accounts. The third, which requires a little more work but is far more clinical, is the use of the United Nation’s Resolution 2005 which requires that… you officially nationalize all accounts in 70 countries which have secret banking of Indian nationals and go about asking these countries to return the money. The Egyptians did it with Mubarak, the Philippines did it with Marco, the Libyans did it with Gaddafi. It worked. Finally, the small aspects of the DTAA approach where people go abroad and don’t pay. I think a combination of these will work.

But the people who do it should not themselves have such accounts.


‘Govt should not procure land for industrialists’


How do you view the proposed Land Bill?

This quarrel between the Congress and the BJP—I don’t want to get into this. My basic focus is: the government should not be into the business of procuring land for industrialists. If any industrialist wants to buy the land, the government should give him the list of farmers who are willing to sell, and we [government] will be kind of passive umpires [to ensure] that there is no dadagiri.

How can the Ram Temple be built?

The matter is in the court. In my opinion, it can be settled following two or three principles. One, if the government wants to… if the Arab countries are willing to testify in our courts at the government-to-government basis requests that the masjid can be shifted, because they do it in their countries. Even if they don’t want to come to the court and get cross-examined, you can have from them that they have been engaged in the shifting of mosques. You can get an explanation from them as per which part of Islamic law they are doing it.

They hold masjid just a prayer hall type; the same thing about Christians about churches—prayer hall.

As for temple, once the Prana Pratishtha puja is done according to Agamshastras, the Lord enters the temple and, therefore, whether the temple is used, whether prayer takes place, whether demolished… that site belongs to the god. That is our Hindu principle.

Third, in the affidavit given by the government in 1992, if it can be shown that there was a pre-existing temple, then the government will hand over the land to the Hindus to build the temple. Now, it has been established by a commission of inquiry that there was a temple.

So, what remains of the dispute? Only that we give them land across the river Sarya and say that you build a nice mosque here and we will help you. By the way, there are seven masjids in the Ayodhya area and in many of them there are cattle in it, because they are not able to maintain it.

You have to press for it. After all, people said that Ram Setu was impossible [to save] but I did it. I did it in the case of so many others. It needs to be pursued.


‘Mufti is like a dog’s tail that cannot be straightened’


Is the PDP-BJP sustainable?

You are asking whether water and oil will mix. It is impossible. It was explained to me by somebody who was an interlocutor that it is an experiment. It [the experiment] has failed in my opinion. Mufti is like a dog’s tail which cannot be straightened. So, it’s now only a matter of time. The forces in Pakistan are uniting—the al-Qaida, Taliban, LeT—they are all uniting, and they are releasing all those monsters who should be in jail—in fact, hanged a long time ago.

And Article 370?

It is a question whether we force the government to do it or not.

How difficult is it to repeal the Article?

It just needs a presidential notification.

What is the progress in the National Herald Case?

The summons were issued on June 26 last year.

What has happened after that?

I waited for 18 years to get Jayalalitha convicted. If you don’t have stomach for this, don’t get into this. I am not government. I am fighting against heavy odds… I will pursue this to the end


‘Rahul doesn’t seem sober, talks rubbish’


How do you view Rahul Gandhi in new avatar?

No new avatar. This is all your imagination.

Well, this is what the mainstream media tells us.

(Laughs) The man is incompetent, he is a fool, hasn’t passed any exams, he is clueless, he talks rubbish, doesn’t seem sober. The fact is that he disappears without trace; this is a scandal by itself. This country is much too liberal; in no other country this kind of thing will happen. He is a bit of a joke; I don’t take him seriously. The more you talk about them is precisely they want you to do. He is a worthless character.


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