Partho Shome 

                                         

Development  and  Taxation by Parthasarathy Shome ; Published by Academic Foundation ; Pages 326 ;Price Rs. 1095/-

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The author of the book was Adviser to three governments across the world—India, Brazil and U.K on matters of taxation. He is presently Chairman, International Tax Research Foundation, Bengaluru. He was Chief Economist, Her Majesty’s Revenue and Customs, U K. He was awarded the highest civilian honour by the Brazilian government. He advised the Indian Finance Minister. His doctoral thesis won the Jeanne Mattersdorf Award of the American National Tax Association.

The book under review is a selection of sixty articles Shome wrote in “Business Standard” on subjects like economics, political economy and social challenges both on the domestic and international arena. They represent deep reflection, clear analysis, cogent conclusions and recommendations on a variety of subjects.

The subjects covered are macro economics, estimation of GDP, savings and growth, inflation and interest rates, financial markets and land acquisition. Shome  also analyses fiscal policy,  budgets of several years , tax matters, tax evasion and corruption. Other topics  covered are the controversial  G S T and corporate taxes. He has critical comments on the quality of  tax statistics emanating from the Tax Department. Emerging international economic relations, U K  leaving the European Union and India’s economic relations with a number of countries are also studied in depth .The author touches upon Demonetisation, constraints to the “ Make in India Policy”.

The book is divided into nine Sections.The opening Section is on “Macroeconomy”. The C S O’s change of base year for G D P  from 2004-05 to 2011-12 and the basis itself comes in for serious comment. The reform of the G D P should feature the correct extent of economic activity in the black or non-tax paid economy. The C S O is advised to report the old with the new series for 5 or 10 years so that their underlying differences are transparent on a continuing basis. Shome advises RBI that its inflation projection comprising base effects   obtained from inflation momentum and time series for future momentum should be supplemented by a comprehensive technical framework from which a more convincing interest rates policy can be demonstrated . Analysing India’s savings growth, Shome advocates that the public sector should step back and stop crowding out the private sector, eradicating custom-tailored tax incentives and create a level playing field for all productive activity.

The next Section is devoted to fiscal policy. Shome analyses the budgets of 2015-16 and 2016-17 and makes sharp comments on fiscal policy.

“Taxation  Matters ” is the subject of the next Section . Recently tax professionals have conducted in-depth research which has led to improvement in the method of assessment. Tax evasion as form of corruption has been analysed and Shome declares,” It is important to investigate what has been motivating and sustaining corruption before designing draconian measures to combat the evil.”

Section IV is devoted to  “Income Tax” . Two chapters analyse the  I T Department Statistics which are classified into two categories—Macro economy and micro-tax payers’ levels. Growth in tax buoyancy is not too impressive; initial gain in direct tax collection has been challenged by indirect tax and the only difference is closing the efforts to increase the numerical base needs to be intensified. Shome calls for a severe cut-back of tax incentives matched with a lower and more equitable corporate tax. All the recommendations of the Tax Administrative Reforms Commission have to be implemented as indicated by the Finance Minister. Shome analyses the “Vodafone Affair” in two articles and concludes,“Neither the policy makers have to hand out tax incentives selectively nor do they have the resort to retrospective taxation except under the most exceptional circumstances and after consultations with all stake holders.”

Indirect Tax is the theme of Section V . The problem of GST is discussed thoroughly including a  “ Q and A ” chapter.

The next Section is dedicated to”International Economic Relations” and  discusses thoroughly  a variety of problems. Some of these are Indo-UK  economic relations after Brexit, India’s relations with Japan, China, Myanmar and Pakistan, Euro-Zone, Latin America, Globalisation and G-20.

The Seventh Section is on”Socio-economic policy” and  deals with a number  of subjects—Health Care, Indian Railways, Water wars between States.

“Political Economy” is the topic of Section VIII. It discusses Brexit, Democracy, India and  UK. The final Section tackles the newest concerns—such as Demonetisation, Ease of doing business.

The book has a number of tables and a reading list. It is an invaluable book contributing on many tough subjects.

One cannot but agree with Mythili Bhushnurmath when she declares, ”What sets Partho's pieces apart is the   complete absence of  arrogance that one might expect from someone of his eminence ; instead there is simplicity and an amazing humility, both typical of Partho.”

P.P.Ramachandran.

14  /  07  / 2017