Written by : Umakant Sir (Ex-OAS)

Gen Z toppled governments in Nepal and Bangladesh. Many people now ask if India is next. The honest answer is no. It will not even create a dent here.

The world has a leadership problem

Try a small test. Name the top three leaders in the world whom you truly like. Most people struggle after one. That is the sad state of the world we live in. Trust in leaders is low almost everywhere. Anger is easy to find. Anger is also easy to spark.

India is different in one important way. It has enjoyed political stability for more than a decade. That is not a small thing. Without political stability, there is economic chaos. Remember the 80s and the early 90s. Governments changed often. Policy changed with them. The economy paid the price. By 1991 we had to pledge gold to stay afloat.

No investor puts money into a country that may change its rules next year. Factories need years to pay off. Capital does not wait around for the street to settle. Stability is the first thing an investor checks.

Regime change is not economic change

The protests in Bangladesh did bring regime change. But will life improve for the people of Bangladesh? Not soon, and not yet. Economic damage is quiet. It does not show up on the day of the protest. It shows up in the factory that never opened. It shows up in the investor who chose Vietnam instead. It shows up in the young graduate who still cannot find a job.

An economic dent is usually invisible. It takes decades to recover from. By the time people notice, the damage is already done.

What instability already cost us

We have paid this price before. We lost ground to China because of two decades of political instability. We lost another two decades because we opened our economy about 20 years later than China did. So in essence, China is nearly 40 years ahead of India economically.

That gap is not just a number. It is a lesson. Every year of confusion at home is a year of growth handed to someone else.

This matters more because of geography. The USA is a superpower. It was never a big bother for India. India tolerated it because India was barely touched by American hegemony. It was far away. But think about a superpower as your neighbour. Think about a neighbour you have fought wars with. Think about deep distrust on both sides. That brings perplexity and paranoia. In that situation, India cannot afford to be weak or divided at home. A slow economy is a security risk too.

A lesson from Animal Farm

George Orwell wrote Animal Farm in 1945. The story is simple. The animals on Manor Farm are tired of Mr. Jones, the careless farmer. They rise up and drive him out. The mood is joyful. They believe a new age has begun. They write seven commandments on the barn wall. The most important one says all animals are equal.

Then the pigs take charge. Napoleon and Snowball lead the farm. Snowball is driven out. Napoleon gathers all the power. The pigs start to drink the milk and keep the apples. The farm starts to run worse than before. The animals work harder and eat less. One by one, the commandments are changed. In the end, the wall reads: “All animals are equal, but some animals are more equal than others.”

The last scene is the saddest. The animals look through the window at the pigs and the humans. They cannot tell who is who.

The lesson is not that rebellion is always wrong. The lesson is that a revolt without a plan only changes the faces. The animals knew what they were against. They did not know what they were building. Energy without direction is easy to capture. Clever people with ambition simply take it over.

Ask the same question about every regime change. Who sits in the chair now? What is the plan? Who pays the bill? The crowd that makes the change is rarely the crowd that gets the reward. Bangladesh and Nepal are still answering these questions.

Who is the real Gen Z?

Now look at who Gen Z really is in India.

Gen Z are ones who are guarding our borders, providing better civil services to masses, took part in OP Sindoor and creating start ups that employ people.  So the rioting, street dancing and making reels bunch are anything but Gen Z.

The way forward

None of this means India should stop asking questions. A healthy democracy needs criticism. It needs a free press and honest debate. Young people should demand jobs, fair exams and clean governance. They should use votes, courts, and civic work to do it. Anger can be useful if it has a direction.

But burning the house to fix the roof is not reform. A country is not a reel that goes viral and fades. It is a long project, and the benefits come slowly.

India has stability. It has a young and skilled population. It has a growing economy and a place in the world that people respect. The job of this generation is to protect that base and build on it. Do not trade it for a moment of noise.

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  • Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.

    Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.

    The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.

    Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.

    In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.

    Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.

    “Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.

    India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.

    With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.

    They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.

    India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.

    As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices

    The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).

    The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.

    Here is an approximate break-up (in Rs):

    a)Base Price

    39

    b)Freight

    0.34

    c) Price Charged to Dealers = (a+b)

    39.34

    d) Excise Duty

    40.17

    e) Dealer Commission

    4.68

    f) VAT

    25.35

    g) Retail Selling Price

    109.54

     

    Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.

    So the question is why government is not reducing the prices ?

    India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.

    However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.

    That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.

    Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.

    Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.

    But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.