Thought for the day
"Children are completely egoistic; they feel their needs
intensely and strive ruthlessly to satisfy them."
-
Sigmund Freud (Austrian, 1856-1939)
Word for the day
Doggo (adv)
In concealment; out of sight.
(Source: Dictionary.com)
Teaser for the day
Whose Robe could easily beat Modi's 4.31cr suit:
·
J. Jayalalitha
·
Rajnikanth
·
Sonia Gandhi
·
Amitabh Bacchan
·
Salman Khan
·
Other (pl specify)?
My dime on reforms
I have been insisting that the reforms must be distinguished
from mere administrative corrections. A policy measure in order to qualify as
"Reform" must change the status quo materially.
I f I may reproduce what I wrote few months back:
When faced with the task of catapulting the economic activity to
a higher orbit it is imperative for the policy makers to distinguish between
"administrative corrections", "systemic efficiencies" and
"reforms".
The businesses, investors and consumers need to assimilate that economic
reforms do not necessarily result in more profit in the immediate term. To the
contrary, economic reforms are more likely to cause pain and inconvenience in
the immediate term as these involve fundamental changes in the processes and
practices of doing business and consuming goods & services.
For example, consider the following:
(a) 100% FDI in
insurance per se may not qualify as a reform if it merely enhances the capacity
of insurers to take more business on a larger capital base. Making health and
accident coverage compulsory for all employees and petty service providers,
including domestic helps, drivers, porters etc., compulsory would be
a reform.
(b) Transfer of de
jure power to fix prices for transportation fuel to IAS officers at
the helm of public sector oil marketing companies from IAS officers assisting
the Prime Minister and Cabinet Committee on Economic Affairs is merely a
administrative change. A rise in global crude prices above USD110/bbl will most
likely cause this change to reverse, as was the case in 2003-04.
A reform in this
area would be implementation of an integrated energy policy that motivates and
(where necessary) forces changes in the consumption patterns. Reducing energy
intensity of water, improving quality of public transport, and improving fuel
efficiency of roads would provide a sustainable solution.
(c) Cutting on some
travel cost, curtailing number and place of meetings, stationary expenses etc. is
a cost management exercise. Empirically, all these expenses tend to rebuild as
the fiscal situation eases with the economic cycle. Labeling this as
expenditure or fiscal reform might be a mistake. A small reform in this area
could be to identify routine government jobs that do not involve public dealing
or matters of national security; and allowing the employees to perform these
jobs from their homes with use of technology.
(d) Food security
programs have been integral part of the government agenda since independence.
Despite leakages and inefficiencies, the public distribution system (PDS) has
helped millions. Similarly mid-day meal schemes have also worked well. Now
bringing the prices of food down to Rs1 or Rs2 per kg for BPL families may not
qualify as major reform to the current system, in my view.
From this view point, I suggest the following 10 illustrative
reform measure that may change the status quo materially. If you find these are
highly idealistic, and impractical to implement, I beg to differ.
(1) To exploit the
demographic dividend fully and generate demand, accelerate the wealth transfer
process. Defining the upper bound of wealth and introduction of material estate
duty on people above the upper bound could be one method.
(2) Transfer the
power to impose direct taxes to the local governments.
(3) Transfer the
ownership of natural resources to local governments. Encourage industry and
investors to partner with local governments for setting up business ventures.
(4) Introduce
competition in Railways. To begin with allow point-to-point private railways
for intercity travel up to 100kms.
(5) Transfer all PSUs
under a listed holding company. Majority voting power in this listed holding
company may be owned by Indian citizens with no individual owning more than 1%.
All these companies should be professionally managed with no intervention from
the government whatsoever.
(6) Allow and
encourage the federal states to have bi-lateral trade, labor and resource
sharing treaties.
(7) Bring the Return
on Investment (ROI) for elected representatives close to Zero level, by
stripping all their discretionary powers.
(8) Constitute a
Clean India Regulatory Authority (CIRA). Make all elected representatives from
local government level to the members of parliament accountable to this
authority. Each member should be mandated to submit a quarterly return of
cleanliness in their respective constituency to this authority. The authority
should cause an independent audit of such certificates. A wrong certificate should
disqualify the person from contesting elections for 25years.
(9) Transform the
Right to Education (RTE) into the Right to Uniform Education (RTUE).
(10) Set up a calendar
for full convertibility of INR.
The newly constituted NITI Ayog needs to tell the government
that in past one decade it is not the farming, textile, railways, or SME but it
is the telecom sector which has provided maximum incremental employment
opportunities. And it happened in spite of the government.
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