Some food for thought
"Even if a snake is not poisonous, it should pretend to be
venomous."
—Chanakya (Indian Political philosopher, 350BC-275BC)
Word for the day
Librate (v)
To remain poised or balanced.
First random thought this morning
The popular narrative in past 2-3years has been revolving
against the persons accused of financial impropriety in India, who have taken
shelter in the foreign jurisdictions. Recently, the Vijay Mallya, Nirav Modi,
and Mehul Choksi have been at the center of political slugfest as well as the
joke factories of social media.
Now look at the irony.
The government agencies and BJP supporters are trying to build a
perception that the incumbent government has tightened the compliance regime to
the extent that the non-compliant are either falling in line or running away to
safer jurisdictions.
The opposition parties are however pressing that the government
is helping BJP cronies to escape the rule of law and take shelter in safer
jurisdictions.
But the truth may be lying miles away from this popular
perception. The truth is that the number of Indian rich seeking to settle in
foreign jurisdiction is increasing exponentially. They are not necessarily
seeking settlements in "easy" jurisdictions, but adopting strictly
regulated jurisdictions like USA, Singapore, Australia, and UK. They are
paying/investing millions of dollars to get permits to settle overseas. It is
pertinent to note in this context that this year Indians have exhausted the
quota permits granted under EB-5 program of USA, within no time.
Most of these aspiring immigrants are not necessarily
non-compliant or violators of law. These may include honest and sincere
businessmen and professionals disenchanted with the under delivery of government
on various promises; or concerned about the safety of their daughters; and
those refuse to buy certificate of patriotism religious faithfulness from ultra
constitutional authorities.
Playing ostrich to this trend and drumming up the position on a
questionable "Ease of Doing Business" index may not be much helpful,
after all.
Chart of the Day
Be truly desperate
The conventional wisdom is that the "desperate time needs
desperate measure!" With the general election 7months away, and still
short on delivery, the government does look desperate in its disposition.
Following the conventional wisdom, it is also taking some desperate measures.
Abandoning the discipline on fuel pricing again (first it was done just ahead of
Karnataka elections) and brazenly introducing direct subsidy burden of Rs1/ltr
on oil marketing companies is one such measure. By this step, the government
has—
(a) Effectively
killed the chances of any further private investment in fuel retailing;
(b) shown total
disregard for the interest of minority shareholders once again, and thus
severely impeded the prospects of future private investment in public oil
marketing companies; or any other public sector company. The disinvestment
program may thus be reduced to a mere book entry business whereby cash rich
PSUs are forced to buy the government's stake in other PSUs.
Moreover, the measure per se is too little and too late.
A mere 2.5% rise in global crude prices could totally annul the relief in few
days.
In the blockbuster Hindi movie DDLJ, the heroine is deeply in
love with a guy against the wishes of her father. Her mother is afraid of her
husband’s retribution and advises the two lovers to elope. But the hero, who is
equanimous and noble, tells her that the path suggested by her appears easy but
it would lead nowhere. He would rather prefer the path of courage, honesty and
integrity which though arduous definitely leads to the desired goal.
Unlike our hero, our governments have historically preferred to take
the easy road, even if it leads to destruction. First the transportation fuel
was allowed to become an essential commodity for a large part of the
population. Then it was taxed heavily. This is the easiest way to generate bulk
revenue that could be used to sustain the social profligacy of the politician
and maintain an inefficient and oversized government.
Unfortunately, the incumbent government that had assumed power
on basis of the promise to implement a differentiated policy, also chose to
tread the path to destruction followed by previous government, instead of
staging a quick retreat to the starting point to the right path.
The right path, for example, in case of the fuel pricing
would be as follows, in my view.
(a) Accept that the
Mother Nature has not given us enough hydrocarbon reserves, but she has given
us plenty of sunshine and water. She obviously wanted us to use more of solar
and hydel energy and minimal hydrocarbon fuels. Post independence following the
Gandhian theory of self reliant village as the key economic unit, the
government should have focused more on developing a large renewal energy base,
world class public transport system and less water (and therefore less diesel)
intensive crops, among other things.
(b) The government
must have treated hydrocarbons as a "luxury" and "sin
consumption", just like tobacco and alcohol and taxed it more heavily; but
earmarking the tax revenue for development of world class public transport
infrastructure, mainly railways and trams, that could be run on very economical
fares. This would have also saved lot of money that is spent on combating side
effects of carbon pollution, e.g., spending on health etc.
The desperate measures, I would take today shall include (a)
raising the price of petrol and diesel for personal vehicles to Rs200/ltr,
raise public parking charges by 500% and make public bus service free and cut
metro fare by 50%; (b) let fiscal deficit rise by Rs1trn, and add immediately
to public transport system (AC buses, Metros, Trams etc.) and distribution of
roof top solar panels free to farmers and households using DG for electricity.
