Successive governments in India have lacked the vision or the political will to recognize that for adopting a broad based and effective pro-poor programme as well as finance its development it must shift its fiscal policy in a direction that is geared towards taxing the rich effectively in order to generate more tax revenues and a high tax-GDP ratio. In fact, the trend has been to the contrary: the rich have received several tax concessions. The capital market, the corporate sector and the new service sectors have also received unduly large concessions in the name of growth and development goals, but have actually contributed relatively little in terms of real sector widespread growth and, more importantly, broad based employment generation. Despite the adoption of the Common Minimum Programme (CMP) by the current UPA government, which is a mutually agreed upon set of policy prescriptions between the ruling coalition and its left allies (who are lending support from outside) that includes specific provisions for a revision of the tax regime, the actual policy scenario has seen a continuation of the previous trends. This note outlines the specific demands for an alternative resource mobilization strategy which has been put forward by the combined left parties in India.

February 10, 2006.