Thought for the day
"For the bureaucrat, the world is a mere object to be
manipulated by him. "
-
Karl Marx (German, 1818-1883)
Word for the day
Gaslight (v)
To cause (a person) to doubt his or her sanity through the
use of psychological manipulation.
(Source:
Dictionary.com)
Teaser for the day
Should Manmohan Singh volunteer for
examination before Coal block allocation and Telecom Spectrum investigation
teams/courts?
Peripheral changes would not do much
I have been insisting since ever that "Economic
Reform" is perhaps the most misinterpreted, misrepresented, misused, and
abused terminology, especially in Indian context.
Businesses have invariably interpreted it as (a) lesser
controls; (b) lower taxes; (c) protection from global competition; (d) deeper
and easier access to foreign capital; (e) privileged access to natural
resources; and (e) freedom to run variety of ponzi schemes.
Politicians usually refer to this term to connote (a) Sale of
minority stake in various PSUs; (b) Sale of sick PSUs; (c) higher foreign
ownership in local businesses; (d) higher tax to GDP ratio; (e) simplification
and complication of taxation rules and procedures; (f) deepening trade
relations with foreign countries; and (g) subsidy management. Of late
development of basic infrastructure like railways, roadways, ports, public
transport, coal, and provision of essential utilities services like electricity
& banking services have also been included in the discourse on economic
reforms.
Investors usually use the most pervert and restricted definition
of the term 'economic reform'. To them economic reform mostly means (a)
measures that would allow unrestrained one way flow of foreign capital to
Indian businesses and financial markets; and (b) tax exemptions for income from
investment. Often investors also support contentions of businessmen to the
extent it helps immediate rise in the value of their investments.
One often wonders how the following are examples of Economic
Reforms and these reforms change what?
(i) Wal-Mart is
allowed to own 75% of Pantaloon Retail.
(ii) The government
stake in Coal India and ONGC is pared by 10% each.
(iii) The government
stake in PSBs is reduced to 52%.
(iv) DDT and MAT are
abolished and Short term capital gain is also exempted from income tax.
(v) Concessioners
under various PPP projects are allowed to exit midway if projects become
unviable.
(vi) All industrial
and infrastructure projects are cleared by the regulators and authorities in
7days at a single window.
(vii) Government
acquires the land for industrial and infrastructure use and give it to the
businesses at half the stamp duty valuation rate.
(viii) All natural
resources and mining activities are completely decontrolled.
(ix) Electricity
tariffs and natural gas prices are allowed to be hiked by 10% every year.
(x) National Food
Security Act is repealed.
In my view, these measures do not bring any fundamental change
in the way businesses are done or government is run and hence do not qualify to
be called "Reform".
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