Inclusive Growth and Missing Goals
The cab stopped at the Traffic signal in Mumbai while on my
way to the venue for my meeting at Mumbai from Santacruz west to BCK. A few
boys peeped into my window with a few books – all of them are unauthorized
print versions of famous novels at reduced prices. Since there was some
traffic jam, the car stopped for more
time than usual. I thought I would ask the boys how much they earn per day
through the sale of books and what margins they get. Sab, ‘hum ko roti, chaval
milta with some pocket money of about Rs.50 to Rs.70 per day depending on the
sales we get. There could be some days when we don’t get any margin.
The next day I happened to visit Crawford Market and took a
stroll on pavements where a string of shops and anything and everything one
wants is available and all one may have to do is to do a bit of bargaining. I
asked about fifty such shops whether they have a bank account; they answered in
the negative. Then I asked them where from they get the money to do their
business. The reply was simple: ‘we get money for the asking as long as we
promise a good return at the end of the day.’ I asked them what is the price
they pay for this money. The answer was no surprise: They get Rs. 900 to even
Rs.9000 in the morning to return Rs.90 to Rs.10000 in the evening as they fold
up their shops for the day. The person who gives money in the morning comes and
collects it back. Sometimes the transaction is carried out on weekly basis.
Where do all these businesses figure in the country’s GDP? Nowhere. Neither the
small retail businesses they do nor the money transactions that take place
between the dealers and shops.
A friend of mine narrated to me his experience with some of
the other big shops – the scrap dealers. Everything is transacted in cash and
cash alone. Then move the Zheveri Bazar. Most un-branded shop keepers do not
accept cheques nor do they give receipts. Where does their purchase or sale get
taxed? Do they pay income tax? Do they pay service tax? Some do. But many do
not. Where they pay taxes, they pay on whatever record they choose to disclose
and with a certificate from a Chartered Accountant!!
There are high pried doctors in private clinics where even
income tax officers would not dare ask for receipt or insist on tax liability
to be recorded scrupulously; lawyers; even Chartered Accountants and the movie
actors. Most do not dish out receipts. To the list movie actors we can now add
the TV anchors. The grapevine that we see often in print in most weekly popular
news tabloids that some of the leading actors demand as much as Rs1-5crores or
even more is also beyond the tax net.
These listings are the surest routes of black money and this
is the colour that most seem to like. Will the Finance Minister look at these
guys to fulfill his growth dreams and enlarge his budget receipts? The time is
ripe but the routes are rough.
Published in the digital journal: Business Advisor dated
February 10, 2013
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