New Delhi: Can a regime tighten its political grip on the country while killing its economy? India is in the stranglehold of this awful malady, and its only likely outcome in the weeks and months ahead is to reduce the country to a regressive dictatorship. The “bahi khata” budget of last week is unlikely to make India into a $5 trillion economy. It would be a miracle indeed if the country does not slip below its present levels and heads into irreversible decline, and all indications point in that dreaded direction.

The essence of economic growth is the creation of capitalistic surplus which fuels further growth. Being a poor country, India needs the surplus even more to raise people out of poverty and to give them a living. Redistribution neither keeps people out of poverty for long nor contributes to economic growth. It makes them dependent on state largesse that cannot always be forthcoming. Teaching a man to fish is, as the old proverb says, wiser than giving him fish. Receiving the fish as entitlement, he will never learn to work for himself and his family.

The regime uses redistribution for its own perverse ends. Redistribution in its origins had some philanthropic basis. By way of ideals, however, the regime has none. It is innocent of ideals. The regime is wedded to political power for its own sake and redistribution is a means to perpetuate its power. It is a means to purchase voters en masse.

All redistributive measures of the regime’s first term had that single-point focus and it succeeded admirably. Funds were squeezed dry from all sources, ranging from the rich haul from oil price hikes to the raid on institutional budgets, to deploy in redistribution for votes. And the regime is determined vastly to expand the scope of this project in the second term for an even bigger majority in 2024.

If in the process the economy is killed, that is collateral damage. No one in the regime will lose sleep over it. The talk of a $5 trillion economy is just that: Talk. The regime knows that this is impossible in the perilous state of the Indian economy but it never does to be pessimistic. (In dystopia, you cannot harbour negative feelings. The movie, Brazil, has some nice clips for this.) If critics of the “bahi khata” budget are called “professional pessimists” by the regime’s strongman (even William Safire came to realize that alliteration was downmarket), it compels the regime even more to advance a contrary narrative if only to keep public opinion on its side. The $5 trillion narrative has no other purpose. In essence, it is bogus.

Since the regime’s need to purchase voters in even larger numbers is overwhelming, it can only possibly meet its targets by taxing the economy. This explains the new cesses and taxes on petrol, diesel and HNIs and entities bracketed with them and the additional taxes mooted from increased public shareholdings in listed stocks which are bound to instigate an overhang crisis. (Talk of increased weightings in the MSCI Emerging Markets Index is a red herring.)

The regime has made it abundantly clear that taxes on petrol and diesel will rise higher. There is no green sentiment behind this as hapless corporate representatives are compelled to say: taxes for votes are the sole aim. If endless hikes spur inflation, the data can always be fudged, and the Reserve Bank under its present bureaucratic leadership will docilely go along: It would know that Recep Tayyip Erdogan just sacked Turkey’s central bank governor.

The extortive taxing of HNIs and the fiddling with public shareholdings of listed stocks (some of which had thus far actually held back the market from crashing) are more problematic because the adverse reaction is spontaneous. The BSE Sensex fell seven hundred and ninety-three points today. Domestic investors are stuck but foreign ones are fleeing. Even as this is being written, HNIs and related entities are making plans for discreet exits out of the country. No one is buying the regime’s argument that HNIs in the West are taxed as much or higher than what is proposed here. The regime might like to think that India is the United States but the rest of the world is not so easily fooled.

Having driven the economy into a cul-de-sac, the regime intends foreign borrowings in dollar-denominated bonds which come with extraordinary multiple risks. (A commercial banker called it a trap and doubted the country’s capacity to repay.) Taking all the risks into account, they would cumulatively and interactively drive up the volatility in the economy, whose redistributive rather than growth thrusts would further accelerate the collapse. Since economy and business are about sentiments and the feel-good factor, India does not stand much of a chance in the present course.

None of this should overly distress the regime. The lemmings that gave an even bigger majority to the regime in May would conceivably surpass themselves in their support five years hence. But lemmings are lemmings and cannot be said to know better.

Editor’s Note: The bonfire of the vanities started with Girolamo Savonarola and continued with the Nazi book burnings. The regime has modified that with a five per cent duty on imported books. What does it tell of rulers who tax books?