Judicial delays: A systematic issue or a conspiracy caused by criminalisation of politics?

    Today the Hon. CJI made headline for a very different reason. He shared his emotions, which may be anger, helplessness or even frustration on the poor condition of Indian Judicial System with crores of pending cases and drought like scarcity of judges and related infrastructure. Where cases per judge are in thousands and time period for cases goes is not in just months or years but decades.
The data on pendency is available on National Judicial Data Grid (NJDG) and some perspective on Criminalisation of politics can be found in this article in The Hindu. 
    Data suggests that a criminal has more chances of winning an election than a clean candidate. And a party is also more likely to field a crorepati criminal rather than a clean candidate. Only in reserved category (SC/ST) seats, candidates with clean background (and also non-crorepati's) have more chances of winning. In 16th Lok Sabha we have 34% MPs facing criminal charges, up from 24 and 30 in 2004 and 2009 respectively. The trend is clearly visible. In some states, 40-50% MLAs are facing criminal charges. Law commission's 244th report  on electoral disqualification deals with this issue in length and propose many suitable reforms. 
What is interesting is that the action of Civil Society (eg. PUCL) and Supreme Court's laudable decisions in PILs that have done a lot positive in the direction of reducing criminalisation of politics. Be it mandatory disclosure of pending cases and income , or declaring section 8(4) of RPA unconstitutional, that allowed convicted members to appeal, such initiative have shown hope. But we still have made very little progress. May be that's why the present political system is so keen to reform judiciary rather than implementing the already suggested (and many accepted) reforms by various commissions and committees.
    Amidst all this, it's perplexing that while we seem to be a very keen country on reforms,we keep talking about doing business index, investor friendly environment and a clean bharat and so on, three basic reforms in our democratic system, that are 1) reforms in Criminal Justice System, 2) Police reforms and 3) Electoral reforms are pending for so long! (And let's not even talk about Health and Education and save that for some other day.) Should we really be surprised at all. Isn't it so clear! It's the beneficiary of the present system who are the biggest hurdle in the way of any reform or progress. Why criminal-politician-rich-corrupt nexus would want to have these reforms and would make it difficult for themselves to keep a hold on power. How can we expect a legislator who himself or herself is facing criminal charges to make laws for an efficient police and an effective criminal justice system. What is more devastating is that even the people has given up hope and the data on winnability of criminals indicates nothing but that. May be people think that unless the real power is being wielded by the criminals, there is no point in wasting their vote in electing a few clean people. Moreover, when the majority is criminal and corrupt , what would a few be able to do. If this mindset has crept in, it is really a sad thing and should not be allowed to happen. Unless we have democracy in the political parties, we can not have real democracy.
    The sad thing is that , all these things are known, well discussed and understood and yet are unable to pass through the systematic inertia. These are not even election issues. The governments have been successfully diverting attention from governance deficit to mundane emotional issues. Events like IPL water wastage instead of failure in managing water, and sloganism instead of substantial issues have got more public attention. People are more emotional than rational. May be that is why our CJI made an emotional appeal as nothing else have worked yet. I think it is the time to go beyond merely saying "Justice delayed is.... justice denied". We have to ask for it, as if it is a matter of life and death! (wait a minute, isn't it already).

A simple proposition for increasing tax base and simplifying tax regime in India

    In India very small percentage of people (less than one third can be a rough guess) earn enough to pay tax and even a smaller percentage (less than 5%) actually pay. We have a small tax to GDP ratio (about 18%). 
There are two strange things. The famous 80:20 rule applies here too. Rather it become 90:10. Of those who pay tax, 90% pay 10% of the tax (those earning below 5 lakh per annum) and 90% of tax come from very rich that are less than 10% of the taxpayer population.
And secondly, as clear from tax GDP ratio , its the indirect tax which plays a huge role in total tax collection.
Two main reasons i think why tax collection are,
1. the tax rates are too high and 
2. poor perception of government due to corruption. People think the govt is taking almost a third of their income and wasting it.
I think the tax rates for lower income group should be minimized so that people can have a better standard of living. They anyways pay a lot of indirect tax whenever they purchase any product or service. I have this proposition of lower tax rates with mandatory investment in long term bonds. My idea seems very simplistic but I think we should at least think in this direction. It is just the first draft and is open to suggestions and revisions based on advice of experts.

Instead of taxing, make it mandatory to invest in long term bonds for social and physical infrastructure. This will include govt. bonds, municipal bonds, long term infra bonds and long term (5 yr +) deposits etc. When people will invest in municipal bonds, they will be able to see how that fund is utilized and will have an ownership feeling.
My proposal is like this.

Annual income (Rs.)
Tax rates
Exemption detail
Target 
Upto 3 lakh
No tax

Low income population
3-10 lakh
10%
Exemption on investment in insurance and long term bonds upto Rs 2 lakh
The tax seems to be less but we will remove all other exemptions like LTA HRA etc and overall process will be greatly simplified
Most of service class population
Purpose is to simpify tax process for 5-10 lakh Rs income group
10-20 lakh
15%
-minimum 10% of income above 10 lakh to be invested mandatorily 
-More exemption on upto 30% of income above 10 lakh, that is upto 3 lakh) for long term investment
-5% surcharge on tax on income above 10 lakh
Middle class with white color jobs, professionals
(Removing HRA and home loan exemption would balance the lower rate of tax. This will help reduce interest rates and inflation in real state sector)


Now focus on rich who does not pay tax. its better to make certain part of income to be mandatorily invested instead of taxed
special tax saving bonds with moderate return should be made for them
20-50 lakh
20%
-minimum 10% of income above 20 lakh to be invested mandatorily (in addition to mandatory investment of 1 lakh in previous slab)
-exemption on upto 30% of income above 20 lakh(that is upto 9 lakh max) on long term investment (in addition to 3 lakh exemption of previous slab)
-10% surcharge on tax on income above 20 lakh
high income professionals

(encourage investment and avoid tax evasion)
50 lakh
 to 2 cr
25%
-minimum 10% of income above 50 lakh to be  mandatorily invested (in addition to 4 lakh)
-more exemption upto 30% above 50 lakh
-10% surcharge on tax on income above 50 lakh
small businessmen who do everything to avoid taxes, investment in capital infrastructure can be exempted
2 crore
and above
30%
-minimum 10% of income above 2 cr to be invested (in addition to 19 lakh)
-up to 30% of income above 2 cr can be invested in long term bonds without tax
-more rebate can be given on special bonds above 1cr value for tax saving purpose only that may have low returns (say 5%)
Instead of 30% tax, make 30% investment. even if rerun is low, tax saving itself is 30%.

With lower tax rates some simplification should also be done to balance that. All exemptions on HRA, LTA etc should be removed and only insurance (health and general), PF and pension fund should be exempted. HRA contribute to higher rent and ultimately the landlord or the home loan giving bank get what the govt. should have got. Exemption on Home loan should also be removed as it also contribute to high home prices and high interest rates which makes real estate even more costlier and contribute in making a bubble in this sector. Simplified calculation would help easier assessment and greater compliance.

This will solve many problems,
1. with lower tax rate, tax base will increase
2. presently banks are stressed because they are financing long term projects while there income is from small term saving accounts. We must have a separate long term fund in terms of a strong bond market to fund long term infrastructure projects.
3. the purpose of tax is to invest in social infrastructure. If we make people invest directly in these developments, people will be more willing to pay tax.
4. the black money would be redirected to white economy and bubble of real estate will also come deflate  as black money has a huge role in high real estate prices.
5. A municipal/panchayat level fund mgmt body can be created to utilise this fund in local area and infra dev like hospital, road , transport, water mgmt etc. This will provide better infrastructure investment in local area governance.


We need to have a change of mindset about how we tax our citizen and how much value we provide to them from the tax they give to the government.

Note:
Some idea of data from this blog