Observers have often blamed the Indian information technology industry for working for the world but neglecting India; its domestic revenue has not exceeded 15 per cent of the total in any year. It is hardly known that India had been getting its IT services cheap. It took Mr Nandan Nilekani, the chief of Infosys, to point out, at the London School of Economics Asia conference, how much the current boom owed to the IT industry. The pharmaceutical industry could pursue molecules only after digital processing speeded up permutation of genes. Computer numerical control machine tools have taken over engineering works. Trading software made Indian stock exchanges efficient, and brought down brokers’ margins to a sliver. Banks got rid of their bulky ledgers, and computers took discretion out of their accounts. The explosion of mobile telephony was based on electronic processing of voice and word. The business process outsourcing industry came here because digital telecommunications bridged oceans.

And then Mr Nilekani gave away a secret: that since the income tax authorities began to accept returns in electronic form, their revenue had surged. The innocent may have thought that the 35 per cent rise in the Central tax revenue in the first half of the financial year was owing to the boom. Mr Nilekani revealed that it was because of the revenue departments’ acceptance — and insistence in certain circumstances — of tax returns and supporting accounts in electronic form. This gave the revenue departments information that, when poured into powerful computers, told them the names, addresses and colour of tax evaders. Uncomfortable as the taxman’s new-found efficiency may be, it only levels the field between those who have to pay taxes and those who used to evade it; it will therefore be welcomed by honest people. But it is to be hoped that the finance minister will not stop at taking away people’s money in the forthcoming budget — that he will now concentrate on making taxes fair, simple and humane. In particular, he should firmly resist the pressures being brought to bear on him by parties and lobbies. A particularly insidious proposal that he should reject is reintroduction of capital gains tax on share transactions that the left is keen on. All taxes on transactions are undesirable, including the securities transactions tax Mr P. Chidambaram unwisely brought in.

A better case can be made for a tax on wealth — although income tax can proxy for it. But taxing one type of wealth — for instance, shares — without taxing others would be wrong. Equally, the pressure from some automobile producers for differential duties on cars of different horse power is unjustified. Value is the best base for a value-added tax; it should not be complicated by bringing in irrelevant bases. The government has the basics of a good tax system in income tax, corporation tax and value-added tax. The finance minister should refine these and abolish others.