Wednesday, 29 June, 2022
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Let’s not offer foreigners special treatment, because Indians can also up and leave now

Every time someone says we must offer foreigners reasonable tax rates or good business processes, one should ask ‘whose country is this anyway’?

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There was a time during the prohibition era in Bombay (as it then was) when only foreigners were allowed to drink in hotel bars. A humour columnist wrote then about his fictional wife walking into the bar of an expensive hotel and ordering a drink. On being told that only foreigners would be served, she asked the unanswerable question: “Whose country is this anyway?”

That should be our question, too, every time someone writes or says that we must offer foreigners reasonable tax rates, or good business processes, or special investment windows, or investment enclaves, lest they take their dollars elsewhere. The usual arguments run like this: The new high income tax rates will make it more difficult to hire expatriates. Or, foreign portfolio investors will turn away from the Indian market. Or, we must clean up and beautify our tourist spots, to attract more international tourists.

The obvious question is, why only foreigners? What about us who live and work here and pay our taxes? Don’t we deserve better tax and other rules, and cleaner towns and cities in which to live and work? Or is the Indian citizen to be treated differently because s/he is a captive, without means of escape?

Well, India is no longer the economic prison that it used to be, when all that you could take out of the country was eight dollars. Later, under a liberalised foreign travel scheme, you could take out a generous $100. We weren’t as bad as the old Soviet Union, which ran the Beryozka supermarket, where only Western tourists could shop (predictably, the Soviet elite, too, found a way to shop there). Or China, where for years, foreigners could deal only in specially-issued Foreign Exchange Certificates. But it was bad enough.

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Most closed systems have opened up, including India’s. No government in its right mind today would try imposing such rules, and if it did, they wouldn’t work. Not that they worked earlier. All that Indian money in Swiss banks and other tax havens didn’t materialise out of thin air. Smuggling was rampant at the time, and the hawala trade flourished. Some of the money round-tripped back as investment from overseas. There was a period when Indians also started coming back. It helped that the domestic environment improved: New private hospitals and schools responded to the demand for better health and education services. Cars, phone connections and air services all got better.

And yet, recent years have seen wealthy and professionally-successful Indians voting with their feet, or air tickets. One plausible figure has it that 150,000 top-strata Indians have emigrated in recent years to Dubai, Singapore and Western shores. They were initially running away from tax terrorism, a term born out of Pranab Mukherjee’s 2012 Budget. Then came new rules about the place of effective business, which induced many to change their residential status. Others have followed because of the worsening air pollution in cities, the impossibilities of school admission, and now the lack of water.

It is easier to leave than before. Millions of Indians have acquired international degrees, or high-quality Indian ones, that make them globally saleable. The many millions of non-residents in the US, West Asia, and elsewhere translate into kinships that facilitate emigration. Countries like Australia target Indians as desirable immigrants, partly to neutralise the effect of a Chinese influx. In short, relatively large numbers from the class of Indians vital to taking the economy forward can leave, and have been doing so.

So we need to treat citizens like they have a choice, even if most of them don’t. If foreigners need reasonable taxes, why offer citizens something else? If foreign businessmen look for assurance on the rule of law, so do citizens (including, or especially, the government’s critics). “Ease of Living” is a great concept — offering, for instance, automated protection from the tax official’s grasping fingers. But let’s not offer special treatment to help foreigners escape the rigours of our rules and laws. That is what closed and oppressive systems do. Let’s do things for all, including citizens, as an open democracy should.

By Special Arrangement with Business Standard

Also read: Why India’s middle classes are Modi’s ‘Muslims’

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  1. As a foreigner doing business in India I agree. I think the ease of doing business focus is the right direction. India doesn’t need foreigners (you don’t need me). India needs exports. Indians selling to Indians makes some Indians wealthy BUT the country gets wealthy when Indians sell to foreigners. Rt. Hon. Modi Ji seems to understand this. Now the question is what does this foreign market place want and how cab we help get it there. 🙂

  2. Very good article, which not against foreigners, but advocates equal treatment to all. It also justifies emigration by Indians to other countries by those who are looking for better quality of life and opportunities. Let us not engage in vilification of this segment of our population, the diaspora, who have chosen to live outside India. In this era of globalisation this is inevitable. I am not at all against reasonable reservations. But now we have stretched this too far with more than 70 per cent of jobs and educational space going under reservation category. This has also encouraged exodus out of India.

  3. I have really lots of thing to said all this about indian democracy . But i always feel that i didn’t get proper words to explain it. Can i get any help from anyone who help me to take out everything with proper words that i have in my mind.

  4. Et tu, Ninan? Jumping on the anti-foreigner bandwagon? Sure your arguments are valid: why special rules for foreigners? But your very first example of prohibition is silly to say the least.

    So why do we need foreigners and their money, even offering special conditions to get them? Well, they not only bring dollars, but critically they bring know-how. This is how the whole of East and South East Asia developed. And of course China, which building on that know how, is now challenging the West.

    Ninan of all the people talking like the RSS-BJP swadeshi brigade is very worrying.

    • 1) Who brought the know-how to the foreigners? Aliens?

      2) And why do you think that a particular way of development, especially that of East Asia, is the right path for India? Just because it is a tried-and-tested path? Doesn’t it bring us on a path of follow and catch-up? And if we do have to catch-up, why not follow the hard but rewarding path of creating the know-how rather than copying it? And of all the East Asian countries, why would you cite the example of China over Japan, Rajiv?

      3) And why would you discredit a person’s opinion by tagging it to a specific ideology? Filling the dots, are we? Projecting our biases, are we? Revealing ourselves by judging others, are we?

  5. I really liked the article , we do too much keeping the white skinned in mind ; whether that is because of our history or because of economic reasons ., I do not know .But one of the plausible reasons that I surmise is, our population , there are just too many of us. The reason for our leaving is also , it is too cramped in here ,even at the top . As far as the question goes , whose country is this ? , of course all the 1.25 billion of us , at least those of us who do not want to immigrate (if there are any like that ).

  6. More than fifty years ago, an excess of reservations in Tamil Nadu drove the TamBrahms out, some to the United States. As all of India goes on an affirmative action binge, now closing in on 75%, expect this pressure to intensify. A citizen is valued not because she is highly educated, productive,, can make her way anywhere in the world, but because she belongs to a powerful voting bloc. This too is a distortion of the idea of India that was meant to be. 2. Coming to the substance of the column, my slightly impressionistic takeaway from this year’s Budget – as much from watching various worthies being interviewed as from its provisions, such as they are – is that the markets, market forces, that includes Wall Street and Dalal Street, are not really the government’s focus or natural constituency. If it was not for the little matter of our being fiscally broke, needing ATF from whoever, wherever some can write out a check for a billion dollars, they could all go take a hike. 3. We are day dreaming if someone believes the rest of the world is waiting to buy all the sovereign bonds we can issue. Former CEA / Governor RBI’s column in ToI should be read by all.

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