The pandemic has caught the whole world unawares and brought on an economic catastrophe of titanic proportions not seen since the great depression in USA since 1929. India has suffered right from its independence in 1947 with very poor government policies. Now is the time for India to course correct and for the government also to course correct, and I am submitting my wish list for joining in the debate for the benefit of our country. I have select a few broad themes which can be built on for India to really be an economic giant by way of over 100% increase in its per capita income for the whole population.
1.FORMATION OF A BODY LIKE MITI IN JAPAN BETWEEN BUSINESS AND GOVERNMENT
After World War II, Japan was devastated and the progress of Japan can be summed up in the famous song sung by Raj Kapoor in his film “Äwara” which began “mera joota hai Japani”. Japan was not known for any technology, but basic products like shoes. Emperor Hirohito formed MITI in the late 1950s, the full form being the Ministry of International Trade and Industry, comprising business and government. It was meant to foster co-operation between people having political and economic power—I repeat “co-operation” and not competition. The results have been spectacular, with Japan pioneering the total quality movement for excellent manufacturing techniques and becoming a world power with the automobile industry in the 1970s and electronics in the 1980s. India can learn a lesson from Japan and set up a similar type of body under the aegis of the Prime Minister comprising bureaucrats, politicians and business people which will form and implement policy. Similar bodies can be formed in all spheres of life such as healthcare, education, sports etc. Such cooperation between all sections of society can truly transform India by unleashing the potential of its people.
2. ABOLISHMENT OF ALL INDIRECT AND DIRECT TAXES
This will be the biggest and best stimulus the government can provide to its people in these financially crippling times. All indirect taxes like GST and other levies and cesses, capital gains tax, STT and CTT in the stock market and direct taxes like income tax and company taxes should be abolished. There will be no need for the government to then announce an economic package as other countries in the world have done. India by doing this can provide a case study of governing for the world. In this way, money will be in the hands of the public and the velocity of circulation of money will be much faster, leading to greater consumption than if the government spent the money. It is similar to building many check damns rather than one gigantic dam which requires much less capex and maintenance costs and is also more doable and better for the economy.
The government can still meet its expenses by drastically slashing its expenses across the board by a detailed TQM (total quality management) system of implementation as being done in leading corporates. In addition, the government can rely on the receipts of its public sector undertakings which are many and very big and also charge nominal fees for various services rendered such a toll tax on highways, visa fee etc.
3. PRINT MONEY AND UTILISE IT IN DEVELOPING INFRASTRUCTURE
In these extraordinary times, the government should throw the rule book away and focus on what needs to be done. As management experts have said, it is more important to do the right thing than doing things right. The money so printed should be only utilised for infrastructure creation only for roads, ports, airports, sewage plants, desalination plants etc. In this way, there will be no inflation and also huge and essential infrastructure will be created which the private sector will not have the resources to do.
4. SPECIAL EMPHASIS ON EXPORT PROMOTION
It will take a long time for the Indian economy to limp back to normalcy and there will be a chicken and egg situation on whether to produce if there is no demand and how to create demand in the first place. The world is a huge market which India should tap, having less than 2% market share with services occupying the major proportion. To encourage exports and even local production, industry can become competitive if inputs supplied to it by government companies are in line with international prices. For example, state electricity boards can easily reduce their tariffs by 20% by becoming more efficient, a report mentioned there is over 40% power loss and theft from generation to transmission, oil companies should have import parity pricing for furnace oil as per policy laid down in the 1990s, but not being followed, interest rates by public sector banks to be reduced to 5% for both working capital and term loans and for exports to 1%. In addition, export incentives like MEIS to be hiked to 10% for Indian companies to be competitive in the international markets. All these measures can make industry competitive which are outside it, and increase production.
In the last 20 years, many Indian companies have invested overseas as the costs and business climate there has been better and also many companies have closed down in India due to cheaper imports for no fault of theirs. For example, the freight costs from China to south India are approximately Re 4,000 per tonne, whereas from south India to Delhi it is Re 6,500 per tonne, all due to high taxes on petroleum products.
The government should also announce a moratorium on repayment of term loans for two years taken from public sector banks to encourage companies to continue production by conserving their cash flows. Interest repayment can be continued with a staggered payment schedule.
5. WITHDRAWAL OF PROVIDENT FUND BALANCES BY EMPLOYEES
To meet the unexpected and rising expenses, all employees should be permitted to withdraw 90% of their balances in their provident fund accounts. This will enable to meet their living expenses and anyway are theirs legitimately. They are only withdrawing it earlier.
6. APPROVALS FROM REGULATORY AUTHORITIES TO BE OUTSOURCED TO PROFESSIONAL AGENCIES
Any regulatory approvals from various bodies either at the central or state level should be outsourced to expert agencies and the government only collate and collect a nominal fee for giving it authenticity. For example, approvals from the factories’ inspectorate can be outsourced to chambers or commerce or engineering standards companies, labour matters to HRD firms and trade unions etc. This will be a totally new way of doing business as it will eliminate state and Central government interference and reduce them to being collators of information. This will also professionalise the mechanism of working and enable the governments to sharply reduce their costs in governing this activity.
7. ENCOURAGE EMPLOYMENT BY COMPANIES
Another revolutionary proposal is for the government to actually pay firms employing people. For example, if a company employees 100 people, it should be entitled to cash incentives and a fast-track approval system. The government should incentivise firms to employ more people. Unemployment is going to sharply increase in this new world with emphasis on digitization, physical distancing, robotics, artificial intelligence etc. By encouraging employment, it will curb social unrest and bring peace to civil society by developing the potential of people who would otherwise be idle.
The above few suggestions to transform India into a new India are no doubt revolutionary, but make good common sense and are also practical. All rules and regulations in a society are man-made and can either stifle it or bring orderliness to it. The art of government lies in providing good leadership—I repeat good leadership and not bad leadership, which can provide peace, prosperity and heaven on earth.