Communication is the key

Take the Financial Resolution and Deposit Insurance (FRDI) Bill, for example. The bill proposes to create a framework for overseeing financial institutions such as banks, insurance companies, non-banking financial services (NBFC) companies and stock exchanges in case of insolvency. The bill presented in the Lok Sabha in August this year is under consideration by the Standing Committee of Finance of the Parliament. It was expected to be tabled with the Standing Committee observations during the winter session. Then the "mass hysteria'' started. It was strong enough to get noticed even during the hysteria created during the campaign of Gujarat Assembly election.

There was no discussion in public domain when the bill was being drafted nor when this was sent to the Standing Committee. In fact, silence of the efficient communicator, Arun Jaitley who also happens to be the architect of the FRDI bill as the Finance Minister of the country has been deafening till the cacophony against FRDI Bill woke him up. When a mighty Government led by a political leadership which can boast of several strong orators get caught unawares on such an important (and a necessary) legislation the unavoidable conclusion is that the Government does not have wit nor interest to communicate.

FRDI bill stands out in the many instances of the current Government inviting trouble with its "I know best'' style of the communication process. Take the case of much appreciated (and hated) tax reform – GST (Goods and Services Tax). Before the same was implemented the point that was most harped on was that it would bring in lower prices since total tax would be less. When GST was implemented the effect was different. Tax for all services went up by 3 per cent. The tax administration became complicated for ordinary individuals. The middlemen assisting the hapless taxpayer mushroomed. What is more articulate opposition leaders could score brownie points asking for inter alia GST on petroleum. P Chidambaram, a former Finance Minister, asked why the Government which controlled as many as 19 state governments was not keen to introduce GST on petroleum products.

Arun Jaitley responded that there was no need to amend any law to introduce GST for petroleum products. But the same needs to be approved by the GST council where all states are members by a three/fourth majority. The answer is technically correct but see how the Government let the question come up to the fore. With global crude prices inching up and Indian retailers adjusting petrol prices daily unknown to many the retail price went up sharply over a period. While one reason for the same is that governments – centre and states – did not reduce tax on petrol when prices went up instead kept enjoying the increased revenue. They noticed only when people protested the high price and the usurious level of taxation. Hence the demand for imposition of GST on petroleum products received popular support. Not that GST rate on petroleum products would get adjusted automatically when global crude price increase but generally it was felt that introduction of GST on petroleum products would help consumers. Instead of communicating aggressively in support of GST when prices were going up the Central Government invited bouncers to be hurled against it. This is yet another instance of null communication.

An oft-repeated word used in any analysis on political economy is reform. What is a reform? Dictionary says it means improve or say make better. For example improving India's rank in the Ease of Doing Business Index is a reform. But ordinary voters are not much excited on such feat. For them what matters is if the government has managed to ease the burden on their life. Take for instance the imposition of Aadhaar. This will, and perhaps has already checked (since the Prime Minister keeps on claiming) pilferage of benefits given to the poor. But look at the flip side. How tough it is to obtain the card and how much man hour is spent in procuring one Aadhaar card? This is an unforeseen harassment. Then Aadhaar is being linked with all financial transactions. Take a simple case. When an insurance premium is paid from an Aadhaar linked bank account and the maturity proceeds will come back to a similarly linked account why must one take the trouble of linking the insurance policy to Aadhaar? Maybe there is some reason but did we hear it from say Arun Jaitley why an honest tax paying non-benefit taking person must stand in a queue to get Aadhaar card or rectify the omissions there and then link those with all sorts of financial accounts? Interesting issue never answered is why the rule cannot be applied to real estate where most ill-gotten wealth gets hidden?

Hapless citizens of the country are tired of flourishes during the never ending elections in the country. What most are waiting for is plain and simple communication that will help us deciding on what should be our priorities. For the sake of ending corruption if the Government ends up creating various levels of rent seekers and consultants to meet the rules so framed, many would opt for a corrupt system that at least did not make their daily existence as miserable as the headmasterly imposition of rules are making.

Gujarat election was a wake-up call. Even a miserable opposition which is clueless about the issues affecting ordinary people received support where the Government failed to reach out. In a democracy, "I only know what is good for you" type governance does not help. Instead of imposition, people want explanation and attention to iron out the issues. Interaction (and dialogue) is the soul of governance.