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