"I often think that the
night is more alive and more richly colored than the day."
—Vincent Van Gogh (Dutch,
1853-1890)
Word for the day
Coleopteron (n)
A beetle or any other
coleopterous insect.
Malice towards none
Congress Party at present is
like an infant holding a banana in his hand.
They are hungry, have
adequate food in their hand, but do not know how to eat it!
First random thought this morning
An increasing tendency is seen amongst almost all political
parties to criticize regulators, judiciary and other statutory authorities and panels,
if their decisions do not go particularly in their favor.
This practice not only raises questions over the autonomy of the
constitutional bodies and casts doubts over the proper functioning of
democratic apparatus, but also sends signal to the common man about the
possible maneuverability of the system.
We seriously need to strengthen the rules relating to contempt and
perjury.
Economic Growth: Goals are important, so are means
The first area of focus for PMEAC
is accelerating the economic growth over next six months.
There is little doubt that an
accelerated economic growth only can reinvigorate the virtuous cycle of
"higher income-higher savings-higher consumption-higher investment-higher
growth", that is quintessential to reaping the much talked about
demographic dividend.
In this context, I would like PMEAC to note the following:
Make growth sustainable
Economic growth which is not
sustainable and equitable has little meaning, in my view. Such growth, whatever
statistic shows, brings only misery and dissipation.
A harmonious and peaceful society
enjoying a decent lifestyle should be the ultimate goal of economic growth and
development. Otherwise, it has little meaning, regardless of the statistical
achievements.
Swami Jagadatmananda in
his famous work “Learn to Live” extolled the readers - the sincerity and
honesty of the means to achieve a goal is equally important as the goal itself.
Mahatma Gandhi succinctly
explained — “Independence begins at the bottom. A society must be built in
which every village has to be self sustained and capable of managing its own
affairs. It will be trained and prepared to perish in the attempt to defend
itself against any onslaught from without. This does not exclude dependence on
and willing help from neighbors or from the world. It will be a free and
voluntary play of mutual forces. In this structure composed of innumerable
villages, there will be ever widening, never ascending circles.
Growth will not be a pyramid with
the apex sustained by the bottom. But it will be an oceanic circle whose center
will be the individual. Therefore the outermost circumference will not wield
power to crush the inner circle but will give strength to all within and derive
its own strength from it.”
More popularly, in blockbuster
Hindi movie DDLJ the hero Shahrukh Khan articulated this thought in a
conversation with the mother of his beloved. When for the fear of her husband’s
retribution, the mother advises the two lovers to elope – the hero tells her
that the path suggested by her appears easy but it would lead to nowhere. He
would rather prefer the path of courage, honesty and integrity which though
arduous definitely leads to the desired goal.
Many may want to argue that it
sounds utterly utopian in the current context. Some may yield that it is
desirable but argue that we have traveled too far down the road we took post
independence from British rule; and it is too late to go back and begin again.
In my view, this defeatist and
fatigued attitude is unwarranted. What we need is a zero base discussion on the
subject and solutions will emerge that would lead us to the desired goal of
making 1.3bn people free, fearless and happy. An incremental approach howsoever
sincere might not yield the desired results.
Even statistically, to propel the
economic growth to much higher orbits, we need a socio-political organization
for the country that is free, fearless and fair.
Social sector reforms, in my view,
should be given top most priority in the economic growth and development
agenda, rather than making it an aftereffect of the economic development.
Focus on structural reforms
not administrative adjustments
For a structural improvement in the
economy we need our manufacturing and construction sectors to grow at a much
faster rate. The currently projected trajectory of industrial growth and
service sector growth cannot and will not lead to any material improvement in
the structural weaknesses of the economy, e.g., high level of
unemployment/underemployment, poor physical and social infrastructure, low tax
to GDP ratio, lower social sector spending, especially education and health,
declining private sector investment, persistent high burden of entitlements on
the fiscal, etc.
All the indicators are
highlighting that the modest recovery in growth will probably come from micro
adjustments, like correction in inventory levels, increased capacity
utilization, higher exports, and improvement in project execution etc.
This will not lead to any material
improvement in employment conditions. On the contrary there are sufficient
indications that many employers may actually further rationalize their work
force to protect their margins. Historically, the work force rationalization in
India, especially in manufacturing and construction sectors, has been more
permanent in nature.
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.
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. 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.
Remember, in past 15yrs 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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