Will it be pakoda wala tomorrow?

"A simple shop selling 'kachoris' in Uttar Pradesh's Aligarh has left the commercial tax sleuths astounded." Kachoris are a kind of pastry stuffed with lentils and fried, and eaten as snacks. "A team of tax inspectors sat at another shop near Mukesh Kachori and started keeping track of sales. They found that Mukesh was earning anywhere between Rs 60 lakh to Rs 1 crore and even more annually." With an income of Rs 6-10 million one would expect Mukesh, owner of the shop, to be living in a grand bungalow and driving a big car. Not so. "A narrow road, littered with garbage leads to the 225 sq ft dilapidated house of Mukesh Kumar, who is now famed 'kachori wala' who has grabbed the headlines of national media because of his purported sales of Rs 70 lakh, as pegged by GST officials, An old rickety desert cooler in the bedroom, where some plastic chairs are kept for visitors. No car is parked outside the house but an old black colored bicycle and a TVS moped, stand leaning against the house." Tax officials are sticking to their story. It is possible that someone wanted Mukesh out of his shop because he is paying a nominal rent of Rs 300. Mukesh may have been saved by all the media attention but investors in India are not so lucky. Investors in stocks "get dividend from a company after it is taxed at 30 percent. Then the company needs to pay 20 percent dividend distribution tax and then the investor pays a further 10 percent tax plus surcharge on dividend income above Rs 10 lakh," wrote V Kedia. "Truth be told, entrepreneurship in India is today comatose, if not dead," wrote H Damodaran. The period after 1991 "saw the emergence of new capitalists and also the rise of the old not-so-big, on an unprecedented scale". But the current decade has seen few new big enterprises but a whole list of companies "have been neck deep in debt or gone belly-up in the last 6-7 years". If companies are ging bust the government cannot collect taxes. "The government's tack record in raising tax revenue does not inspire much confidence in its ambitions," wrote N Kwatra. "Instead it raises fears of overzealous taxmen raising arbitrary demands to meet unrealistic revenue targets." The reason for unrealistic revenue targets maybe overestimation of GDP growth by 2.5%, as suggested by former Chief Economic Adviser A Subramanian. With weak tax growth the government resorts to borrowing. Instead of looking at fiscal deficit which is kept within forecast by "financial jugglery" we should focus on the public sector borrowing requirement (PSBR), which "may exceed 9% of GDP, wrote SSA Aiyer. "This is almost frighteningly high by international standards." GST can only be collected if people buy goods and services but private final consumption expenditure (PFCE) is falling, wrote R Kishore. Even sales of consumer goods for daily use are not growing. People can spend only if they have money. The government keeps changing tax rules and takes in cess what it gives in higher basic income. People cannot plan long term so they stop spending. Today it is kachori wala, tomorrow it maybe pakoda wala. Terrified people will not spend.