PM Modi corners Congress after Sam Pitroda fuels wealth row

A new front in the raging debate on the redistribution of wealth opened on Wednesday, with Prime Minister Narendra Modi seizing on comments by Indian Overseas Congress president Sam Pitroda, who said that the idea of an inheritance tax should be debated and discussed, accusing the Opposition party of intending to grab the wealth of people accumulated through hard work, and taxing them even “after death”. Follow full coverage of the Lok Sabha elections here.
Even as the Congress scrambled to disassociate itself from Pitroda’s comments, the party’s former president Rahul Gandhi waded deeper into the issue that he first raised in Hyderabad on April 6, and said the Congress aims to reclaim and return to people a portion of the “ ₹16 lakh crore provided as loan waivers by the Bharatiya Janata Party (BJP) to 22-25 businesspeople”.
With other BJP and Congress leaders also weighing in, India’s general elections are seeing the discussion of classic economic concepts such as redistribution and taxes. The debate is peaking as the campaigning for the second phase of the seven-phase national polls ended on Wednesday. On Friday, 89 seats across 13 states to go to the polls . In the first phase, 102 seats across 21 states and UTs have already voted in a mammoth exercise to elect 543 MPs.
In a video aired by news agency ANI, Pitroda, who has served as an advisor previously to former prime ministers Rajiv Gandhi and Manmohan Singh, on Wednesday morning said that an inheritance tax existed in America and it was these kinds of issues that “people have to debate and discuss”.
“In America, there is an inheritance tax. So if let’s say, one has $100 million worth of wealth and when he dies he can only transfer probably 45% to his children and 55% is taken by the government. That’s an interesting law. It says you in your generation, made wealth and you are leaving now, you must leave your wealth for the public. Not all of it, half of it, which to me sounds fair. In India, you don’t have that. If somebody is worth 10 billion and he dies, his children get 10 billion and the public gets nothing,” Pitroda said.
India used to have an inheritance tax but it was scrapped in 1985 by VP Singh, the finance minister in Rajiv Gandhi’s Congress government.
Within hours of Pitroda’s comments, Prime Minister Narendra Modi, at an election rally in Surguja, Chhattisgarh, said that the dangerous intentions of the Congress party are now being exposed. “The advisor to the royal family had said some time ago that more taxes should be imposed on the middle class. Now these people have gone one step further. Now the Congress says it will impose Inheritance Tax… your children will not get the wealth that you accumulate through your hard work, the claws of the Congress government will snatch it away from you,” he said.
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Modi said that this showed that the Congress “mantra was loot both during life and after life”. “Those people who considered the entire Congress party as their ancestral property and handed it over to their children, now do not want Indians to pass on their property to their children,” he said.
Modi’s attack is consistent with his comments over the past few days in which he has claimed that the Congress wants to redistribute both wealth and reservation benefits to Muslims, pointing to a 2006 speech by former Prime Minister Manmohan Singh who had said that the first right over the countries resources should go to minorities, particularly Muslims. To be sure, the Congress has said that the BJP is misrepresenting Singh’s remark, and that the Prime Minister had only spoken of the need to empower the marginalised, including Muslims.
The origin of this debate would appear to be an April 6 speech by Gandhi in Hyderabad, in which he promised a “financial and institutional survey” if the party was voted into power, which would be followed by a “historic assignment to distribute the wealth of India, jobs and other welfare schemes to these sections based on their population”.
On Wednesday, without referring to Pitroda’s comments, Gandhi said: “I’m not interested in caste but in nyay (justice). I am saying that gross injustice is being done with 90% of the population. I have not even said that we will take any action on that. I just said let us find out how much injustice is being done. There should be no objection to that. If you get injured and I say that get an X-ray done, no one should object to that.”
To be sure, Gandhi’s original speech spoke of a wealth survey but did not explicitly refer to redistribution.
But Pitroda said that when there is conversation about the redistribution of wealth, they were talking about “new policies and new programmes that are in the interest of the people and not in the interest only of the super-rich”.
The snowballing controversy made the Congress scramble a defence, distancing themselves from Pitroda’s comments, but saying that it was the BJP that has spoken of such a tax on multiple occasions in the past. Jairam Ramesh, the Congress general secretary in charge of communications, said that Pitroda was a “mentor, friend, philosopher and guide”, had made many important contributions to India, but his views did not reflect the position of the party. “In a democracy, a person is certainly free to express his views, discuss and debate personal views…at times, his views differ (with those of the Congress). Now his comments are being sensationalised and presented in a different context. This is being done deliberately to divert attention from Prime Minister Narendra Modi’s malicious and hate-filled campaign,” Ramesh said on X.
In the afternoon, Pitroda said that he had spoken as an individual and his remarks were being twisted to divert attention from Prime Minister Modi’s lies on the Congress manifesto. “I mentioned US inheritance tax only as an example in my normal conversation on TV. Can I not mention facts? I said these are the kind of issues people will have to discuss and debate. This has nothing to do with the policy of any party including the Congress,” he said on X.
Ramesh clarified that the Congress had no plan whatsoever to introduce an inheritance tax, and it was Prime Minister Rajiv Gandhi who had abolished Estate Duty in 1985.
Between 1953 and 1985, a tax was levied in India on assets gained as part of inheritance, with 40% the maximum marginal rate levied on property exceeding the value of ₹50 lakh. Proponents of such a tax argue that it helps address disparities that inherited wealth causes. But in 1985, the then Congress government scrapped the tax, with then finance minister VP Singh telling Parliament in his budget speech that the duty had not achieved the twin objectives of reducing unequal distribution of wealth and assisting the states in financing development schemes. The Wealth (Inheritance) Duty Bill, 1989, sought to renew the taxation and to overcome the implementation issues with the previous legislation but the Congress government fell, and the legislation did not progress further.
Ramesh said, however, that it was the Modi government that advocated an inheritance tax in the past, pointing to comments made by former BJP minister of state for finance Jayant Sinha and former finance minister Arun Jaitley in 2018. The latter, Ramesh said, had praised the concept for “spurring large endowments to hospitals, universities in the West”. “Over to you Prime Minister Modi- what is your party’s stance on this issue,” Ramesh said on X.
Ramesh posted a clip of Sinha speaking in support of estate taxes “to level the playing field and create opportunity”. To be sure, these comments were made in 2013 when Sinha was managing director of Omidyar India at the Forbes India philanthropy awards. He was elected as an MP in 2014.
Over the past three days, Modi has been attacking the Congress and alleging that the party intends to redistribute both wealth and reservation benefits to Muslims. “After the Congress formed government in 2004, one of the first things it did was to try and snatch the reservation of SC, ST and OBC and give it to Muslims… this was a pilot project that Congress wanted to try out in the entire country. Between 2004 and 2010, the Congress tried four times to implement Muslim reservation in Andhra Pradesh but due to legal obstacles and an alert Supreme Court, the Congress plan failed,” Modi said at a rally in Tonk, Rajasthan on Tuesday.
While the Congress has rejected that it intends to re-route reservation benefits to Muslims, senior party leader Rahul Gandhi on Wednesday said that the party’s manifesto had a political direction, was revolutionary, and intended to address inequality. “The income inequality that Narendra Modi has brought… they have given 16,000 crore to 22 people. A little bit of that money, not a lot, the Congress manifesto says that we will return to 90 percent of the population,” he told a Congress social justice conclave in Delhi.
Union home minister Amit Shah also flayed Pitroda’s remarks and said that the appeasement politics of the Congress stands exposed. “He (Pitroda) reaffirmed the party’s intention to seize the property of the majority and distribute it among the minority. It yet again brings to the fore that the empowerment of India’s poor, Dalits, youth, tribes, and backward classes was never on Congress’s agenda,” Shah said on X.