Raising Revenue through impoverishment: Lifting the Supreme Court ban (Dec 16)
By Amar Yumnam

There was a report in the press recently that a committee of officials is looking in to the possibility of lifting the ban of the Supreme Court on the cutting down of trees. Now this is not a simple issue, which can be left purely to the wisdom of the officials. Further the reported desire of the Government to lift the ban is for raising revenue.

This invites certain issues of how not to raise revenue.

Raising Revenue:
Everybody agrees that the Government needs to raise revenue. But the question is about the manner and methods through which the revenue is raised. Now the issue to be debated is the desire of the Government to raise revenue by allowing the forests of the State to be depleted. Certain points need to be kept in mind while examining this issue. First, there is the question of the present state of forests in the State.

Secondly, there is the question of inter-generational equity to be decided. Further, we also need to examine what has happened to the overall economic scenario consequent upon the ban imposed by the highest court of the country.

The Issues:
The committee of officials is reported to look into the issue of evolving a scheme for planting and regenerating the forests. The first thought which strikes the mind immediately is that the Government as yet has shown neither enthusiasm nor efficiency in doing anything positive. Besides, given the existing property rights regime and the political economy of governance, it is doubtful if any adequate scheme of regeneration of the forests will ever emerge from any committee of officials. And if it emerges at all, will it ever be implemented? However, the same forces will show extreme efficiency and urgency in exploiting and depleting the forests once the ban is lifted.

Further there are two ways of raising revenue. One is by fostering the production of new products and more of the same products. Another means sometimes used is by converting assets into cash.

Forests are an asset of the country. Raising revenue by allowing the forests to deplete amounts to revenue-illusion. We will be depleting our own assets and imagining to ourselves that we have mobilized revenue. Subjecting the forests to further depletion, while the state of forests is already so deteriorated, will only lead to compromising the long term health of our environment for a short term gain in revenue.

There is also the fact that forests are an asset, which belongs to all the generations and not just the present generation. The present generation, given the State has already had its share of forest wealth exploited.

Deciding to further exploit the forests now will only mean taking a decision by the present generation compromising the interests of the future generations and without reflecting what the future generation might think about it. In deciding on these issues, we need to remind once again that forests are already so degraded in the State.

Post-Ban Scenario:
While deciding on the issue of whether to lift the ban or not, we also need to look into what has happened to the economics of forest based industrial sector in the post-ban period. Large scale cutting down of trees and equally large-scale export of timber was the order of the day in the pre-ban period. But the impact of the ban has been the visible control on the cutting down of trees and stoppage of export of timber has had the positive impact of encouraging the growth of furniture manufacturing sector in site. The people who were adversely affected in the initial period of the ban have now been largely adjusted to the changed circumstances and manufacturing activities have sprung up on a scattered scale. 

In other words, we observe value-addition taking place in situ at every stage of forest-based activities in the State. Besides, the benefits of value added products are now reaped by the furniture manufacturers in the State rather than by the people outside the State. There is another way of stating this fact. Even though the revenue of the Government from the forest based activities might have declined in the wake of the ban by the Supreme Court, yet there has been a rise in the income earned by the State from the export of value added forest products.

Lift and See:
If, in the present circumstances, the ban is lifted, we can visualize certain outcomes. First, the rate of depletion of forests immediately on lifting would be absolutely unprecedented. Secondly, most of value added addition will take place in more developed areas of the State and the significant value additions will be made by furniture manufactures outside the State.

In other words, net lost will be incurred by the people of the State in general. The gains of timber merchants and furniture manufacturers in other parts of the country depending on timber from Manipur would be tremendous.

In fine, the issue to be settled is not lifting of the ban. It is rather of deciding whether we should allow ourselves to be impoverished in the illusion of a transitory gain in revenue of the Government. Should we ever try to stunt the growth of any entrepreneurship within the boundaries of the State?

(The author is Professor of Economics, Manipur University and Member of the National Level Advisory Committee of Citizens' Commission on National Issues)

(Courtesy: The Sangai Express)

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