A letter from my chartered accountant last week reminded me that despite our vaunted economic reforms we continue to live under the jackboot of an economic police state. He wrote to say there was a new policy and he could not file my income-tax returns until I supplied him with intimate details of my expenditure in the past year. He wanted my credit card number, any investments over Rs 1 lakh I may have made, other expenses of over Rs 50,000 I may have incurred, details of any foreign trips I or my dependents may have made and details of where my children were studying and how much I was spending on their education. Was I under some income-tax scrutiny, was my immediate reaction. He said no, every Indian taxpayer was being subjected to this inquisition. Why? Because some official sitting in the rarefied atmosphere of the Finance Ministry oblivious of ground realities has not understood the implications of what he is doing.

The Government has, as usual, spent more than it should (mostly on itself) and needs at least enough extra money to pay off the interest on its loan. So the handful of Indians who bother to pay income tax will be harassed and hounded by tax inspectors, who are arguably the most corrupt officials in India.

Will the Government make more money? Of course not. It will, ironically, spend more. Committees of tax inspectors will need to be created, they will need air-conditioned offices and money to travel abroad (in summer, naturally) to track the trail of Indian money. They will need sophisticated equipment and expensive cars, they will go to fancy parties in five-star hotels to spy on big spenders and at the end of all this they will be bribed into silence by those who can afford to pay. So they will make money but the Government will remain broke. Based on a little private research I have been conducting it is my estimate that a middle-level tax inspector makes a minimum of Rs 25 lakh when he raids a big business house. This is why when they occasionally raid an income-tax official it reveals crores (rather than lakhs) of rupees worth of properties and moveable assets he has acquired in his humble career.

Meanwhile, the handful of Indians (about 23 million) who pay income tax, work themselves to the bone to earn that holiday abroad or that small car. And what does the finance minister do? He sets his hounds on to them. Is it any wonder that the middle classes are thoroughly disenchanted with the bjp which once was their favourite party?

Instead of attacking the small minority of Indians who pay taxes, why doesn't the finance minister widen the tax base? This has to be done not just because taxpayers tend to have a bigger stake in their cities and their country than those who do not pay taxes, but also because taxpayers demand better services. Experts who have studied urban India's water problems have, for instance, discovered that in the slums of Mumbai and Delhi, when there is no water even the poorest citizen is prepared to spend money on bottled water. If he was persuaded instead to pay for his water and electricity, the government could provide better services. But, no, because our politicians belong mostly to another time and continue to be victims of our old socialist mindset, they will not charge for services because they do not want to "burden the weaker sections".

It is a patently stupid policy but nobody has the courage to change it although our "weaker sections" live in conditions that no human being should ever have to suffer. We are so inured to poverty that we sometimes need a foreigner to see it in all its hideousness. So listen to this description of Bharat Mata by Leon Louw of South Africa's Free Market Foundation. "Mud oozed between her toes. Not ordinary mud. Mud containing rotting garbage, human and animal faeces, urine and years of decaying vegetation. She milked an emaciated cow. The stench was appalling. A gaunt man vomited from the window of a dilapidated bus, into a street that was so filthy that his vomit would not be noticed.

"Children sat in wet dung and urine making dung pats to dry and burn for warmth and cooking-in tiny unlit shanties filled with asphyxiating smoke on that long cold winter night ... I saw scenes of numbing destitution in Mumbai, Delhi, Agra and surrounding areas; symptomatic of how billions of humans eke out short brutish lives in India and many other countries. They are condemned to their fate by government policies that subvert free markets and property rights."

In our case, we are condemned by an economic police state that seems designed to enable officials to make vast amounts of ill-gotten money while rewarding the honest labour of India's citizens with tax raids and inquisitions. When will the Government realise that economic reforms cannot happen so long as corrupt officials are given powers to harass those who, through their enterprise and hard work, bring a measure of prosperity to our destitute land?