Shivakantjha.org - 'In a Nutshell' - 8: FDI: It was not for the court to tred on the razor’s edge

'In a Nutshell' - 8

In the Vodafone Context

FDI: It was not for the court to tread on the razor’s edge

By Shiva Kant Jha

April 7, 2012

This quest to facilitate FDI that we get in Vodafone goes against the language of the Income-tax Act which nowhere authorizes the pursuit for obtaining FDI as the legitimate mission to be promoted under that Act. The Hon’ble Court had clearly admitted at the outset that it was deciding a tax dispute.

The Judgment would help promote the neoliberal agenda of economic globalization by facilitating foreign investment routed through tax havens and secrecy jurisdictions. It may help more funds from outside but shall present an uphill task for the government to know what sort of money is coming, and from whence. In most cases the apparent would not be real. Nether our Constitution, nor the Income-tax Act, enacts the ideas of Hayek, or Friedman. This approach reminds one of Justice Holmes in Lochner v. New York who aptly observed that the Fourteenth Amendment of the U.S. Constitution did not enact Herbert Spencer's Social Statics ( 1851). This humble self would submit, variating on that celebrated dictum : “The Income-tax Act, or our Constitution, has not enacted the ideas of Milton Friedman, or Hayek.”

The Vodafone decision would surely delight the proponents of the Neo-liberal Economic Paradigm. This concern for more and more FDI had led the Hon’ble Court to act the way it acted in Azadi Bachao. Perhaps, the hypothesis is that the loss of revenue matters not, if ‘non-tax benefits’ [a concept which conceals more than what it reveals] are derived. It is forgotten that the revenue of a country goes to the Consolidated Fund of the country, and remains under public gaze and control.

All issues pertaining to the incoming of FDI are to be decided by our Government pragmatically keeping our constitutional mission at the most conscious point of decision-making. Borrowings words from Noam Chomsky, I would say that we shall fail in our duty to our nation if we confer decisions in such economic matters to “the hands of a “virtual Senate” of investors and lenders.” Chomsky is right in observing: “ Governments now face a “ ‘dual constituency conundrum,’ which pits the interests of voters against foreign currency traders and hedge fund managers ‘who conduct a moment-to-moment referendum’ on the economic and financial policies of developing and developed nations alike,” and the competition is highly unequal.” In my considered view the right approach has been suggested with great perspicacity by Joseph Stigliz whose words contain criticism and panacea: “If the IMF had an over optimistic view of the markets, it had an overly pessimistic view of government; if government was not the root of all evil, it certainly was more part of the problem them the solution. But the lack of concern about the poor was not just a matter of views of markets and government, views that said that markets would take care of everything and government would only make matters worse se; it was also a matter of values --- how concerned we should be about the poor and who should bear what risks (Globalisation and its Discontents p. 85). We have to be ever vigilant.

I would end this article quoting the Holy Quran beautifully inscribed on the arc-shaped outer lobby of our Lok Sabha: