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About Amit Varma

Amit Varma is a writer based in Mumbai. He worked in journalism for over a decade, and won the Bastiat Prize for Journalism in 2007. His bestselling novel, My Friend Sancho, was published in 2009. He is best known for his blog, India Uncut. His current project is a non-fiction book about the lack of personal and economic freedoms in post-Independence India.

Bastiat Prize 2007 Winner

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12 July, 2007

Licensed to toast

This is the 22nd installment of my weekly column for Mint, Thinking it Through.

“You may now need licence to own toaster,” read the headline of a news report this Tuesday in the Hindustan Times. The article began: “You do not use the Toast Authority of India’s toasting services, but may soon have to pay a one-time licence fee for the toaster you own and an additional tax on any new toaster you buy in the future. Why? To support the Toast Authority of India and its employees.”

“Wait a minute,” you tell me, “you’re pulling a fast one on us. This is way too absurd to believe. Our gentle, compassionate government would never do something like that.”

Right. Well, I did make some of that up. The headline actually said, “You may now need license to own TV.” And in the para I quoted, replace “TAI’s toasting services” with Doordarshan, “toaster” with “TV” and “TAI” with “Prasar Bharati”, and there you have it.

Now tell me, is that any less absurd?

This gives me a bad sense of déjà vu. A few weeks ago I read Doordarshan Days, Bhaskar Ghose’s memoir of his days as director general of Doordarshan in the 1980s. In that, he bemoaned the scrapping of a similar license fee.

“Given that today there are at least 8 crore television sets in the country and at least 15 crore radio sets,” Ghose bombasted, “an annual fee of, say, Rs 1000 for a television set and Rs 100 for a radio set would have brought in Rs 4000 crore. Even after paying for the cost of collection and for an inevitable shortfall in collection, the amount left over would meet a truly professional public broadcasting network’s operational expenses, costs of upgrading equipment and expansion plans.”

Leave aside the questionable math and the small matter of why “a truly professional” network would need to look beyond its revenues to manage its costs. Ghose’s statement is revelatory because it reveals the sheer arrogance of power that the government displays, the assumption it makes that it is our lord and master, and can charge us whatever it wants for the facilities it kindly allows us to enjoy. It is as if we owe our existence to the government, and exist at its mercy. Should it not be the other way around?

I assumed while reading Ghose’s book that such thinking was a remnant of the past. Well, silly me. That HT news report states that there might be a levy of between 5-10% on every TV set we buy. (At the time of writing, on Wednesday morning, the meetings to decide these are a few hours away.) Another proposal being considered is to make TV channels pay a “public broadcast fee” of 5% of gross revenue to Prasar Bharati. Along with this fee, they will have to send an Archie’s card to the government saying, “Thank you for letting us exist, my honourable mai-baap. Slobber slobber.”

Other publicly funded broadcasters exist around the world, but that is no justification for such blatant theft. It takes remarkable ineptness for Doordarshan, with its large reach and low quality of programming, to remain unprofitable. This is not surprising: If its existence depends on subsidies, there are no incentives for it to respond to competition and raise its standards. Spending other people’s money when there is no accountability is hardly likely to lead to responsible behaviour.

Consider one thing, though: it is easy to feel outraged at the prospect of this licence fee because we know exactly what’s happening to that money, and can see the waste. But I would argue that most of our taxes are similarly wasted. Most of our ministries should not exist. Ditto most public sector companies. Ditto most of what the government does. This wastage would be more apparent if the government gave us a neatly itemized report of where exactly our money goes. But our taxes, so inevitable that we do not question them, go into this vast hellhole called government – who among us has the time or energy to bother about what happens after that?

Note that the amount of taxation on us goes beyond the taxes that we pay. Anything that interferes with market processes imposes costs on us, and has the same impact as a tax. Protectionist tariffs raise prices to beyond what we would pay in a competitive market. So do regulations and licences, either by imposing higher costs on companies or by deterring them from entering markets, thus reducing competition. In the 1980s, when there was a government monopoly on telecom, people had to wait up to five years to get a telephone – that time, and all that you could have done with a phone, was effectively a tax.

And yes, you pay taxes on your toaster, not just when you buy it but for every use, for bread and electricity don’t come free of taxes. And where do they go? Mostly towards uses quite as absurd as the Toast Authority of India.

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You can browse through all my columns for Mint in my Thinking it Through archives. My thanks to Gautam, Sumeet and Sruthijith for their inputs for this piece.

Also read: “Your Maid Funds Unani.” “A Beast Called Government.”

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