Finance Minister P Chidambaram’s move to shift R S Gujral out of the revenue department smacks of his urgency to show the industry and the public that he was not party to his predecessor’s economic decisions. Two policies are relevant here. One is the retrospective legislation and the other is the General Anti-Avoidance Rules (GAAR). As far as the retrospective legislation is concerned, Parliament, by and large, supported it. Kapil Sibal had publicly stated that retrospective legislation in clarificatory matters is a perfectly acceptable method of taxation. During his two tenures in the finance ministry, Chidambaram, too, must have sponsored such retrospective legislations. This policy must have been approved by the Cabinet before it was presented in Parliament. And surely the prime minister, too, must have approved it before the Budget was presented.
As for the GAAR, the international experience is in its favour. It is one of the timeliest legal actions taken and is necessary to stop the generation of black money. Moreover, the GAAR has been considerably softened by transferring the burden of proof on the Revenue. The new committee’s report is due next month and will show how the new law can be made more investment friendly.
Economic policies are made by finance ministers and the duty of senior officers is to implement these. It is not comparable to illegal orders given verbally by a minister that officers can defy. In this case, a perfectly legal and viable policy was announced by the then finance minister and bureaucrats implemented it. By changing the top bureaucrat in this hasty manner, the message is clear: the move was more a show of personal dislike for the previous incumbent. This is a wrong signal for bureaucracy and the government in general.
Sukumar Mukhopadhyay New Delhi
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