An open system works

Not enough credit is given in India to the open, democratic system for the way in which it works to correct distortions and reverse wrong decisions.

The latest case in point is the ITC tax matter. The government clearly erred in reacting to an adverse Supreme Court decision by amending the law retrospectively through an ordinance, and having empowered itself through this dubious stratagem, in asking ITC to cough up something like Rs 450 crore as overdue taxes.

Everyone outside the government reacted negatively, and both business as well as media opinion was uniformly critical.

It was no one's case that ITC should or should not pay tax (people will have their own opinions on what exactly the company was up to in managing its tax burden back in the 1980s); rather, the argument was simply that, after having presented its case to the highest court in the land and been rebuffed, the government should not try to rewrite the rules.

If such a decision stood, then the government could re-write the rules at will, and not just in tax matters.

The risks of doing business and joining issue with the government increased dramatically as a consequence of this single step.

It is to the government's credit, therefore, that it has listened to the widespread criticism and developed second thoughts. Informed opinion has it that some Cabinet ministers voiced their reservations when the Bill that was to replace the ordinance came before Cabinet.

The greater merit is that the Cabinet as a whole saw wisdom in retracing an ill-considered step. The result is that no Bill has been presented to Parliament, which is now in recess, so the ordinance automatically lapses early next month.

ITC will be glad, but the greater victory is that of an open system in which the government can be made to retrace wrongly taken steps.

On a different tack, it is also true that after the misdirected efforts at getting pliant governors to try and hijack the system in both Jharkhand and Goa, the government at the Centre eventually saw the light and did the right thing by the system.

To be sure, the initial outrage should never have occurred. But once again, an open political system and a free media made it crystal clear that the government and the ruling combine would lose enormous political capital if they persisted with their ill-considered course of action.

The result is the same as in the ITC case: the right decision got taken in the end.

Where the system has not worked in quite the same way so far is in Gujarat. No one can be in doubt about what Mr Modi did in the wake of Godhra: he and his government not only failed to stop the pogrom of Muslims, there is also evidence of active connivance.

Yet Mr Modi has continued to adorn the chief minister's chair on the strength of his having led the BJP to sweeping victory in the polls. This has not changed the facts.

And in the wake of persistent dissident activity within the state BJP unit, is it too much to ask of the party president, Mr Advani, that he use the opportunity given to him and do the right thing by replacing Mr Modi? That would truly be a triumph of the Indian system.