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Why
are you leaving your post as adviser to the finance
minister?
I
have been in this position for well over three years. I
have advised and assisted the finance minister on tax
reforms in three Union budgets. We have also carried out
fundamental tax administration reforms through information
technology.
Revenue
productivity of the tax system is at a historic high and
revenue growth has also been most impressive in any
international comparison. The FM (finance minister) is at
a commanding height over taxation. Now it should suffice
to carry on with what we have established and obviate any
erosion. This is the right time for me to demit office.
Income
tax revenue is very high; but what about excise? Are you
satisfied with that?
Don’t
look at excises separately. They are a part of the
indirect tax structure. Service tax revenue productivity
has been extremely high. Customs revenue growth is also
robust despite steady duty cuts.
Excise
on imports is reported under Customs duties for
statistical purposes. Put together, indirect tax revenue
is also demonstrating a steady growth. Also, please
remember that, with economic growth, direct tax revenue
tends to overtake indirect tax revenue. This is occuring
in India as well.
You
have been an integral part of state-level tax reform also.
Now…?
(The)
finance minister asked me to take responsibility on the
VAT front. The Empowered Committee (EC) of State Finance
Ministers for VAT invited me as a permanent invitee, and
it was a pleasure to work with all of them on a common
professional platform, while hailing from diverse
political backgrounds.
It
was instructive how the chairman exercises patience while
his colleague finance ministers recognise policy rather
than politics to reach consensus in decision-making. The
goodwill I have been able to establish with them is most
satisfying. And it was a good feeling when states, leading
the light, or through cajoling, or in hindsight,
introduced VAT group by group.
Now
the reform process for indirect taxation has gone up one
notch further. India is poised to debate, discuss and
introduce a Goods and Services Tax on April 1, 2010. I was
co-convenor of the working group on GST, and we have
already submitted a report to the EC.
The
EC has endorsed the report, and it is expected that a
revised version will be sent to the Union finance minister
soon. So we are already on the road map to a dual GST. It
is quite satisfying to feel that, with gentle pushes based
on a well defined strategy, the process is on the march.
Again, it is a good feeling.
What
are the lessons you have learnt from your experience?
Many
lessons. I have learnt how policy is made, whether in the
context of delegations from industry, chambers, lawyers,
politicians or line ministries. Participating in entities
set up at the highest levels of the government, such as
empowered groups of ministers, the prime minister’s TERC
(Trade and Economic Relations Committee), the National
Manufacturing Competitiveness Council, the Committee of
Secretaries — has been an eye opener, and involving.
Perhaps
most intensive were the pre-Budget policy formulations
with the finance minister and rounds of discussions with
the prime minister. These were terrific, especially when I
felt I could help convert my beliefs into policy through
intensive analysis and discussion.
Some
people have commented that you got too involved in daily
decision-making and that, given your expertise, you should
have involved yourself more in tax reforms.
I
have involved myself in all matters of tax policy! But I
do not want to downgrade file examination, paradoxical as
it may sound. At the beginning, I wondered if I should get
into it, but soon realised that, unless I understood the
policy-making process in its entirety and in depth,
thereby getting my feet muddied, I would remain in the
periphery and my experience would remain incomplete if not
unfulfilled.
So,
over time, I found myself poring through all manner of tax
issues that are thrown up on a daily basis — double
taxation avoidance agreements, international taxation,
inverted duty structure affecting industry, tax evasion,
tax equity matters in specific sectors, on and on — and
I enjoyed it all.
You
know, when you have been able to help out a small bicycle
parts manufacturer, the marginal utility from that could
be higher than, say, helping resolve issues faced by
colossal business houses. It has also been an eye-opener
how such giants may face hiccups too, so that smoothening
out creases became my forte almost!
...Like
who?
Why
pinpoint individual entities when I have tried to sort out
matters big and small — whatever the FM sent in my
direction. It was my duty and I enjoyed it. It also gave
me satisfaction and confidence in untying knots and
unlocking bolts in the bureaucratic process. It taught me
patience. Yes, that is it, great patience I think.
Is
your departure related to any particular issues?
Let
me relate two episodes to you. Vito Tanzi, my superior at
the IMF, and I were working on a research paper. I gave
him a tough time in discussing a point. He put on a
serious face and said, “Partho, you don’t criticise
your boss.”
Then
he turned around, smiled and said, “But you are welcome
to do that with a fellow researcher.” What a relief that
was! Seriously though, I have worked with many a finance
minister over time. And in general also, you have to
identify those aspects of a person with which you can
work; thus, I learnt from his electric speed. We have had
many relaxed, cordial exchanges. They will be with me.
But, of course, one cannot agree on every matter.
The
second. You know I come from a family of bureaucrats. My
grandpa was Advocate General. His brothers were judge, IAS,
etc. My father was in the Reserve Bank. My uncles were IAS,
IPS, IAAS, etc. I broke rank from their generations.
It
was fate that brought me back to it. But my father rightly
said, “Partho, never confuse yourself with the chair on
which you are sitting.” When I eventually understood
what he meant, I made it easy for myself to leave a
position when I felt on top or when I was convinced it is
the proper moment.
Returning
to your departure, it had been announced that your tenure
had been extended till September 2010. Then why are you
leaving?
I
am at a crossroads. I feel on top of the world in having
supported the FM in his tax reform goals and helping lay
the foundation for revenue productivity along
international lines.
Electronic
returns, third party information, computer-assisted
scrutiny selection, large taxpayer units, systems
integration, revenue projection models, publication of
revenue foregone estimates due to exemptions and
incentives with the Union Budget, analysis based tax
policy formulation and day-to-day decisions — these all
are areas where I was intensely anchored and feel I have
contributed or even spearheaded with the FM’s support.
But
is not this a sudden departure?
Not
really. One does not abandon ship. I kept the FM fully
informed as I approached this decision over the last
months. I am forward looking. At this point, others may
need my advice and assistance elsewhere.
Finally,
Dr Shome, What is your next step?
I
have been fortunate to get some interesting opportunities.
I was bent on returning to academia to regroup, think,
write, and contribute from that vantage point. But that
may have to wait for some time. I think I am needed, and
can contribute, more directly from the field. Thus I have
accepted the position of Chief Economist, Her Majesty’s
Revenue and Customs (HMRC), United Kingdom.
That
sounds extraordinary as an Indian?
From
what I understand, I am the first Indian to have been
offered that position. What is challenging for me in this
new adventure is to be able to carry my prior professional
experiences to a fresh environment. Yes, I am looking
forward to it.
Source
:
Business
Standard - Mumbai, Maharashtra, India, dated 09/01/2008
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