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Pranab Da - The 'Gulliver' of Indian Taxation is gone!

TIOL - COB( WEB) - 727
SEPT 3, 2020

By Shailendra Kumar, Founder Editor

IN the skittish corridors of slippery Indian polity where nothing is certain, save for uncertainty, he was known as the 'Gulliver' from the land of 'Lilliput's' (Ms Indira Gandhi had commented on presentation of his first Union Budget in 1982 - the Longest speech by the shortest Finance Minister)! And it took him over five decades to earn such laurels! Given his delicately-inculcated habit of taking long walks with conspicuously absent kink of a recess, the vox populi knew him as an urbane 'marathon' runner! But a piercing look at his meandering political journey infused with chaos of power and the fragility of empires, tends to reveal that he was truly an ace 'maze runner' in the bhulbhulaiya of intriguing Congress Party's internal politics! He was widely construed as the one who had mastered the cut-and-thrust of parliamentary politics!

India's Iron Lady, Ms Indira Gandhi, had sounded the whistle for his marathon run way back in 1969 from an unknown 'dot' in the state of West Bengal! The whistle-blower failed to give him companionship for long but he did not let his nimble feet have the luxury of comfy halts! Fuelled by indomitable spirit of public service, he kept the pace of running until the Lutyen's walls of Rashtrapati Bhawan closed in to make him breathe easy! He was undoubtedly an 'air-bender'! He was also known as the Simon Legree (harsh taskmaster) of Indian politics! Unfortunately, the Colossus is gone! And the persistent COVID-19 contagion is to be blamed for stubbing out the last sliver of hope for his recovery from an accidental blood-clotting in his brain! Our beloved 'taxman' Pranab Da is gone!

Most of my colleagues from the media circle remember him for his entente-forging capabilities - a curious bundle of traditional and modern wisdom, hard-earned 'capital asset' of 'jugad' experience, startling administrative acumen, a disciplined Parliamentarian, a man of elephantine memory, a stickler for protocols, a nemesis for swaggered TV anchors and overall, a fine human being. Pranab Da was perhaps the last 'Banyan' tree of the traditional school of Indian politics which was all about looking beyond political ideologies and holding hands like two ordinary mortals do! Naturally, political columnists would tend to remember him for all such political anecdotes which had the tailor-made plots of melodramas from Kollywood! But I would prefer to see the veneer of a tenacious and indubitable 'taxman' in a fire-baked all-weather politician.

Pranab Da had two remarkable stints as Union Finance Minister. He also held many other key portfolios in the Union Cabinet and did take important decisions but my memory tends to link him with two historic reforms of DTC and GST. He profusely used his political acumen to 'ultratech cement' the foundational columns of direct tax a la DTC and indirect tax reforms a la GST albeit both the reforms did not fructify during his second tenure as the Finance Minister. One of them finally saw the light of the day when he climbed the stairs to the Rashtrapati Bhawan! His second stint in North Block between 2009 to 2012 commenced at a time when the global economy had slipped into choppy waters on account of crash of financial grandees like Lehman Brothers. Indian financial sector was to be insulated from the devouring tsunami. To overcome the deepening financial crisis, the G-20 had underlined prevention of tax avoidance and appropriation of slush money parked in close to 92 tax havens (See Cob(Web)-135). A global war cry against tax havens escalated to a new crescendo. Political dust over Indian black money parked in Swiss & other Bank accounts had begun to take shape of scandal-bearing clouds! BJP, the then principal opposition party, had identified the substance of a possible political plank in the running issue. The consequential din was richly enriched by some activist lawyers who petitioned before the Apex Court.

Tax haven and slush money were global problems and India alone could not have made a mark. But, on his part, Pranab Da recast Section 90 of the Income Tax Act to enable India to sign agreements with even non-sovereign territories like Hong Kong which had figured in the list of Asian tax havens. The amended Section also facilitated India to enter into OECD-promoted Tax Information Exchange Agreements (TIEAs). This was to enable India to filter popular tax havens among Indian tax evaders and then enter into TIEAs (See Cob(Web)-143 for more details). He also sanctioned a good number of overseas posts for the CBDT so that vital banking information and other intelligence could be culled out on real time basis and shared with the assessing officers back home. Though the IAS lobby created a miasma of avoidable controversies but Dada prevailed over. Both the Boards - CBDT & CBIC - expanded their overseas networks.

On the Direct Tax Code (DTC) front, a detailed report was fathered by his predecessor, Mr P Chidambaram, but the same was released by him immediately on assumption of his new assignment. In its new avataar, the report was a much more improved version but Dada rightly waited for fresh scrutiny and inputs from the public. Even the second version of DTC proposed to make the institution of Revenue Secretary more autocratic at the costs of Revenue Boards (See Cob(Web)-150). The overall functionalities of CBDT were slated to be scaled down and the wings of IRS were to be clipped (See Cob(Web)-149)! Having fathomed serious objections to many chapters of the DTC, Dada finally placed the Bill in the Lok Sabha with a future date of implementation. This is how he ensured an unceremonious burial of the raging controversies over many of its changes.

On the GST front, an issue close to his heart, he talked about it in Para 85 of his 2009 Budget Speech. He informed the House that it is going to be 'duel' GST and is to be implemented from April 1, 2010! Although he knew that he had embarked on a 'Mission Impossible' but the then Septuagenarian had demonstrated his nerves of steel to sort out the growing cleavages over the compensation issue. Since he was convinced that such a seismic reform would buy him a moment of tryst with the fiscal destiny of 21st Century India, he came up with his 'pièce de résistance' overture and accepted the States' demand for Rs 14000 Crore VAT compensation. And his gesture did create an ocean of goodwill for the godsmacked States to speed up the wheels of negotiations over the pending issues. In the later months, he continued to play the role of a 'wheel horse' to gee up the chances of early implementation of GST (See Cob(Web)-158).

Since many States had wrangled and haggled over the fine points of GST, legions of bilateral issues could not be sorted out and April 1 deadline turned out to be a 'Fool's Day'! However, Dada, having gone through several rounds of gentrification in his political career, had never allowed a crisis to devour his mission, he decided to swim with the course of currents the Empowered Committee had chosen to ride. Then came the first breakthrough in May 2010 when the States agreed to Rs 10 lakh uniform exemption threshold. The caravan of GST continued to move on albeit sputteringly. Finally, all the parties landed on the same page for a 'flawed GST' with dual rates and a new deadline of April 1, 2011 was etched in stone (See Cob(Web)-193)! Dada also floated a 'fusion theory' for dual rates and managed to rope in purchase tax under GST ambit! Dada deployed all his political acumen and sagacity to drag the GST Caravan to the floor of the Lok Sabha in the form of a Bill.

Apart from tax reforms being close to his heart, Dada was equally adept at human resource management. During his tenure, there were a couple of Revenue Secretaries who had managed to create a foul-smelling eco-system for the tenure of Revenue Board Members and also the appointment of Chairman of the Boards. Dada had a deep-rooted sense of fair play and he did justice in many individual cases where even Rules were found to be 'Frankenstein' in application! He knew that his efforts of tax reforms would succeed only if due focus is given to the HR aspect of tax administration. While addressing a gathering of Income Tax officers in June 2010 he said: ''... The tax laws can be implemented effectively by aligning the tax administration with the intent of tax policy.  If there is a mismatch, then it may be difficult to implement a tax policy, however good it may be ...''

Whenever an instance of injustice was brought to his notice, he never felt hog-tied by Rules and did allow his fair play instincts to carve out a precedent. One decision I would like to refer here is about the legendary Custom officer, Daya Shankar, who had instilled fear in the mind of internationally-dreaded smuggler-turned-terrorist Dawood Ibrahim with his raw courage and devotion for official duty! Risking his life he had earned laurels for his Department but the CBEC was caught in a rigmarole of painful rules to accept his resignation (See Cob(Web)-254)! When I spoke to former CBEC Chairman, Mr Sumit Dutt Majumdar, who had the fortune to closely work with Dada, he nicely summed up his unspicy work style - "He always bestowed complete freedom on officers to take decisions in the interest of the Department and never disagreed with me in appointment of officers for sensitive posts unless he had prior and more sensitive inputs with him". Dada, India's 13th President, left for heavenly abode on August 31 - truly an exceptional 'odd-man' for his generation of politicians!