Sunday, January 29, 2017

The Budget will tell if aspirational Modi is now a populist Modi

The question on our minds is: has the Prime Minister changed? Is Narendra Modi turning populist? We shall have the answer on Wednesday when the finance minister presents the Budget. The nation elected Mr Modi on an aspirational platform of creating jobs, containing inflation, and stopping corruption. Indeed, in the first half of his term, he has pursued responsible policies to meet these goals. As a result, the economy has turned around; inflation has been licked; fiscal indicators are healthy. The big weakness is the lack of jobs, an objective that has suffered a setback in the past three months by a badly executed demonetisation. Modi has recognised this, and is this why his rhetoric has changed?

Instead of the aspirational talk of opportunities and jobs — of startups, ease of doing business, make in India — we have begun to hear the tired, pro-poor rhetoric of the Congress party. Nowhere was this more obvious than on New Year's Eve when Modi peppered his defensive speech with populist giveaways to farmers, pregnant women, senior citizens, etc. Gone was the refreshing talk of personal responsibility that we heard during his election campaign: 'India doesn't owe you cheap diesel, free electricity and loan waivers; the only thing it owes you is good governance; after that, it's up to you to work hard, pull yourself up, pay your taxes, and make India a great nation.'

So, what should we expect from this coming Budget? Let us hope the government will stay the course with the sound strategies pursued so far. Let's not take high growth for granted. Every rupee given away in populist doles is a rupee not available for job creation. Remember, recent state elections have also been won through purposive, long-term development, not giveaways. The window of opportunity for a grand demographic dividend is limited to the next decade, and it would be tragic to lose it to populism.

Job growth has been weak because the economy has been firing on a single cylinder: consumption. The other cylinders — private investment and exports — have failed. It is easy to get discouraged when jobs are disappearing around the world through technological change. The best course is to stay focused on bettering infrastructure, logistics, ease of doing business, implementing sectoral plans — such as the fine package for the labour-intensive textile industry — and resolving NPAs (non-performing assets) of public sector banks. The long-term solution is to bite the bullet and privatise these banks; eliminate the power of politicians to tamper with state electricity boards, and reform labour laws. So, no new schemes, please! Tell people that achhe din will take time; if you are honest, they will believe you.

Since non-farm jobs will take time, keep improving the productivity of farm jobs by allowing traders and farmers to buy and sell freely via e-NAMs (National Agriculture Market), thus ending the APMC (Agricultural Produce Marketing Committee) raj. Have a predictable export-import regime for farm products rather than the present switch-on, switch-off policy. Get over the unscientific bias against genetically modified crops, which is holding back productivity. On taxes, keep lowering corporate tax rate by 1% a year as committed (while eliminating exemptions) until we get to the effective rate of competitors. Move indirect tax rates closer to where they will be in the Goods and Services Tax. On personal income, stretch out the slabs rather than raising the limit for tax-free income to protect the tax base. Only implement the universal basic income scheme when all subsidies have been scrapped and supporting infrastructure is in place.

Whatever the cost-benefit of demonetisation, the Budget must snatch its long-term gains of a wider tax base, higher savings rate, and more resources for investment. Technology has offered a chance to bring banking to the masses. If we seize the opportunity, the aam aadmi can leapfrog over the bank branch into a digital banking future, just as he hopped over the landline with the cellphone. The Budget can fuel this revolution and keep alive the moral crusade against black money.

It was a fresh voice that reminded us in early 2014 that the state did not owe us anything except good governance, and it won Modi the election. People want opportunities and jobs, not loan waivers and sops. In fact, Arun Jaitley would do well on Wednesday to quantify the jobs that each lakh of rupees in the Budget will bring. It would be a pity to lose the Narendra Modi who wanted to make vikas a 'jan andolan', a mass movement.

Sunday, January 01, 2017

As stagnant West gets meaner, rising India spells hope but there’s a big if

2016 was a dreadful year and it is a relief that it's over. The values I cherish most took a profound battering. As a classic liberal, I want equal rights for all; I reject racial and caste discrimination; I revere religious freedom; I seek a free economy based on competition; and I uphold dissent. These beliefs have been undermined by Donald Trump's election in America, Britain's exit from Europe, and rising racism, intolerance and nationalism in the world, including in India where Narendra Modi has made his first big mistake with ill-considered notebandi. The fault partly lies with privileged liberals who have ignored growing discontent in their backyard.

A quarter century ago, at the fall of communism, the political scientist, Francis Fukuyama proclaimed the triumph of liberal democracy based on free markets. He called it the 'end of history' and predicted that the liberal order would spread globally as it best served the human desire for peace, liberty and prosperity. But the willingness to risk one's life for abstract goals and daring acts of imagination and idealism would be replaced by the satisfaction of ever more sophisticated consumer needs. Hence, he warned that the 'end of history' might become a boring place.

Today, it appears that Fukuyama was wrong. Liberal democracy and globalisation are under attack. China's 'Marxist capitalism' has delivered enormous wealth without freedom. The Middle East has seen the rise of violent Islamic fundamentalism instead of democracy. The 2008 global downturn has challenged the deregulation of banking and finance. Thomas Piketty, the French economist, has persuaded us that free markets have enlarged the gap between rich and poor. And white working class men in the West have let out a wail against outsiders because their political system has ignored them and religion's loss has left them with monotony without meaning.

Yet the post-war globalised liberal order has been one of the best periods in world history. It has been relatively peaceful. It has seen the spread of prosperity and decline in poverty, especially after the rise of China and India. The number of democracies have risen from 35 in 1974 to 120 in 2013. But there have also been job losses in the West due to technological change and the failure to compete with Chinese, Indian, and Third World workers, amidst economic growth that has mainly favoured the top one percent.

Despite electoral setbacks in 2016, the present world order is not in danger of dying. Yes, it will undergo change but Fukuyama's basic thesis remains sound. For one thing, there is no competitor. Radicals in the Middle East may dream of restoring an Islamist caliphate but the average Muslim does not want it. Neither is the rest of the world attracted to a 'China model' that mixes dictatorship, market economy and technocratic competence.

The model might, in fact, collapse in China as growth slows and people clamour for freedom. Ironically, many Indians admire China because it has delivered what the aam aadmi wants from the government: personal security, growing prosperity, and functioning public services. Although India's democracy is impressive, it has not delivered good governance.

In these dark times, India's prospects look bright. Unlike economic stagnation in the West, India has a rapidly growing economy with an upwardly mobile middle class, which is traditionally a bulwark of democracy. Stagnation has made the West meaner, less generous, and suspicious of people who look different. India's historical strength is its diversity. With over 50 tribal groups and 3,000 sub-castes, we are used to 'people who look different'. This is why the majoritarian project of the RSS is doomed to failure, although we must be wary of the intolerance of saffron groups in the short term. India's soft underbelly is governance. A confident new middle class, which pays taxes and feels entitled to hold public officials accountable, may well provide a cure in the long run.

Although a badly executed demonetisation has been a profound economic setback, it has not turned political sentiment against Modi. Ours is an age of rising expectations in India unlike the mood of diminished expectations in the West. India's ascent after 1991 has been based on the classical liberal values of democracy and free markets with multiplying connections to the global economy, Thus, India offers the best endorsement of Fukuyama's thesis. If only Modi could control cultural intolerance, India could become an inspiration to the world, helping restore faith in a liberal future. But it is a big 'if'.

Thursday, December 08, 2016

કાળું નાણું આ રીતે પણ બહાર લાવી શકાય

નોટબંધીનાં ત્રણ અઠવાડિયાં પછી સામાન્ય માણસની જિંદગીમાં તકલીફો, આર્થિક ગતિવિધિઓમાં સુસ્તી અને અનેક ક્ષેત્રોમાં નોકરીઓ જવાના સમાચારો આવવા લાગ્યા છે. આગામી  બે ત્રિમાસિક ગાળામાં અર્થતંત્ર બે ટકા જેટલું સંકોચાશે - રાષ્ટ્રીય સંપત્તિનું આ ખૂબ મોટું નુકસાન છે, પરંતુ હવે પીછેહઠ કરવાની કોઈ ગુંજાશ નથી. ચાલો, જોઈએ કે નરેન્દ્ર મોદી નોટનાબૂદી સિવાય કેવી રીતે કાળાં નાણાંવાળાના ભ્રષ્ટાચારના સ્રોત નાબૂદી કરી શકે છે.
તરલતા જ મૂળ આધાર છે : નવા ચલણ માટે માત્ર આપણા જ પ્રિન્ટિંગ પ્રેસ પર નિર્ભર ન રહો. મિત્રદેશોનાં કરન્સી પ્રેસની મદદ લો. તેમનું સુરક્ષાસ્તર આપણા કરતાં સારું છે, પ્રેસ વધારે ઝડપથી ચાલે છે. વિમાન દ્વારા નોટ મોકલીને બૅન્કોમાં રોકડની ભરતી લાવી શકાય છે. વિકલ્પ તરીકે  સ્વિત્ઝરલૅન્ડ અને અમેરિકાનાં પ્રેસ જ છે. ભારતીય પ્રિન્ટિંગ પ્રેસને તમામ નોટ બદલવા માટે જરૂરી કરન્સી આપવામાં છ મહિના લાગી જશે. જો વિદેશી સરકાર પાસેથી નોટ છપાવવામાં આવે, તો મુશ્કેલી એક અઠવાડિયામાં ઉકેલાઈ જશે. ભૂતકાળમાં પણ વિદેશી નોટ પ્રેસ ભારતીય ચલણ છાપી ચૂક્યાં છે. વાસ્તવિક મુશ્કેલી લાંબી કતારોમાં કલાકો સુધી ઊભા રહેવાની નથી, પરંતુ એ છે કે તમામ ક્ષેત્રે વેપાર ઠપ થઈ ગયો છે.
આવક જાહેર કરવાની યોજનાની મર્યાદા વધારો : એ ખરું કે માફીની હમણાંની યોજનાને નજીવી સફળતા જ મળી, પરંતુ હવે દંડો ઉગામ્યા પછી થોડી રાહત વધારે સારું પરિણામ અપાવી શકે છે. નોટબંધીએ નવા પ્રકારના દલાલોને જન્મ આપ્યો છે, જેઓ જૂની નોટો 30થી 40 ટકા વળતર પર બદલી રહ્યા છે. જોકે, સરકાર કાળાં નાણાંની સામે બેનામી જમીનોની તપાસ જેવા અને વધારે કડક પગલાં લેવાની ચીમકી આપે છે, ત્યારે લોકોનો ઝોક કોઈ નવા બ્રોકર દ્વારા જૂનાં કાળાં નાણાંને નવાં કાળાં નાણાંમાં બદલવાને બદલે યોજનાના માધ્યમથી કાળાં નાણાંને ધોળાં કરવા તરફી જ રહેશે. 50 ટકાનો દર બરાબર છે.
અમુક લોકો પોતાનાં કાળાં નાણાંને ‘વર્તમાન આવક’ના રૂપમાં જાહેર કરીને કાયદેસર રીતે 35 ટકા ટેક્સ આપવાનો વિકલ્પ પણ પસંદ કરી શકે છે, પરંતુ તેને આવકાર મળવો જોઈએ. બીજો એક વિકલ્પ ઓછો લાભ અપાવનારા લાંબા ગાળાના બૉન્ડ ખરીદવાનો પણ છે, જે કાળાં નાણાંને ધોળું કરી આપશે. સરકારને સસ્તામાં પૈસા મેળવવાનો ફાયદો મળશે. તેનો ઉદ્દેશ રોજગારી સર્જનારા વર્ગના સૌથી ઉત્પાદક જૂથનો ડર ઓછો કરવાનો હોવો જોઈએ. તેમને ખલનાયક ન બનાવો, કારણ કે આ ધર્મયુદ્ધ નથી. જૂની ટેવો બદલવાનો મૂળ હેતુ છે.
હેરાનગતિ નાબૂદ કરો : કાયદાનું પાલન કરનાર નાગરિકોને જો ભરોસો બેસી જાય કે આવકવેરા અધિકારી તેમની સાથે સન્માનજનક વ્યવહાર કરે, તો તેઓ રાજીખુશીથી ટૅક્સ ભરપાઈ કરશે. લોકોને એ જણાવવાની જરૂર છે કે તેઓ ટૅક્સ રિટર્ન ઓનલાઇન ભરી શકે છે, ટૅક્સ ઓનલાઇન ભરી શકે છે અને ઓનલાઇન જ રિફંડ પણ મેળવી શકે છે. મારા પાડોશીએ પોતાનું રિટર્ન ઑક્ટોબરમાં ભર્યું અને નવેમ્બરમાં તેમને રિફંડ મળી ગયું. મોદીએ આ મુદ્દે અભિયાન ચલાવવું જોઈએ, જેથી લોકોને આશ્વાસન આપી શકાય. જો કોઈ ટૅક્સ અધિકારી કરદાતાને પરેશાન કરતો ઝડપાય, તો તેને કડક શિક્ષા થવી જોઈએ.
કાળાં નાણાંનો સદુપયોગ કરો : અનેક પૈસાદાર લોકો જૂની નોટો પકડાવાના ડરથી જૂની નોટો નહીં બદલે. સરકારે આ મોંઘવારી વધારનારાં નાણાં - અંદાજિત ત્રણ લાખ કરોડ રૂપિયા - માર્ગનિર્માણ, સિંચાઈ અને ઓછી આવકવાળા મકાનો બાંધવામાં ખર્ચવાં જોઈએ. જેથી મોટા પાયે રોજગારી ઊભી થાય અને નોટબંધીમાં ગુમાવેલી નોકરીઓનું સાટું વાળી શકાય. બીજો એક વિકલ્પ બધાં જન-ધન ખાતામાં 10 હજાર રૂપિયાની રકમ જમા કરવાનો છે. તેમાં 2.50 લાખ કરોડ ખર્ચાશે. ત્યાર પછી પણ મૂળભૂત જરૂરિયાતો પર ખર્ચવા માટે 50 હજાર કરોડ રૂપિયાની રકમ વધશે.
રિયલ એસ્ટેટ પર ફોકસ : નોટબંધીથી એ ભ્રષ્ટાચાર ખતમ નહીં થાય, જે કાળાં નાણાંનું નિર્માણ કરે છે. રિયલ એસ્ટેટમાં જમીન ખરીદવાથી મંજૂરી મળવા સુધીનું પ્રત્યેક પગલું ભ્રષ્ટાચારના કીચડમાં ખૂંપેલું છે. કાળું નાણું હદ ઉપરાંતની સ્ટેમ્પ ડ્યૂટીનું પણ પરિણામ છે. આ જ કારણ છે કે વિજય કેલકરે સ્ટેમ્પ ડ્યૂટીને જીએસટીમાં ભેળવી દેવાની ભલામણ કરી છે. આપણે તર્કપૂર્ણ કરવેરા અને જમીન ના ચોખ્ખા સોદા માટે સંઘર્ષ કરવો જોઈએ.
સોના પરની કસ્ટમ ડ્યૂટી પાછી લો : 1991 પછી આયાત પરના અંકુશો દૂર થવાથી સોનાની દાણચોરી ઘટી ગઈ. સોનાનાં ઘરેણાંમાં ચોખ્ખો વ્યવસાય ફૂલ્યો-ફાલ્યો. 2013માં જ્યારે સોનાની આયાત પર ફરીથી કર લાગુ કરાયો, ત્યારથી તેને ધક્કો લાગ્યો. રોકડમાં ચૂકવણું સામાન્ય બની ગયું, કારણ કે તસ્કરીનું સોનું સસ્તું હતું.
કાયદેસરના ચૂંટણીફંડ પરના મૂર્ખામીભર્યા પ્રતિબંધોમાં સુધારો કરો : આનાથી ચૂંટણીમાં કાળાં નાણાંનો ઉપયોગ થવા લાગ્યો છે. હું રાજકીય પક્ષોને સરકાર તરફથી નાણાં આપવાની વિરુદ્ધમાં છું. આનાથી મારી કમાણીમાંથી ભરપાઈ કરેલા ટૅક્સનો ઉપયોગ એ ઉમેદવારો અને વંશપરંપરાવાળા પરિવારોને આપવામાં કરવામાં આવશે જેમને હું પસંદ નથી કરતો. આના કરતાં આપણે અમેરિકા અને યુરોપમાં પ્રચલિત કાનૂની નાણાંમાંથી ફંડિંગની પરંપરા અપનાવવી જોઈએ.
નોકરશાહીમાં સુધારો કરો : કાળું નાણું સત્તાકીય વિવેકાધિકારથી પેદા થાય છે. સિવિલ સેવાઓમાં સુધારાની શરૂઆતનો સૌથી સારો રસ્તો જસ્ટિસ શ્રીકૃષ્ણનો ઇન્ડિયન ફાઇનાન્શિયલ કોડ લાગુ કરવાનો છે.
કાળાં નાણાંને સંપૂર્ણપણે સમાપ્ત કરવાના પ્રયત્ન ન કરો : લોકોએ કાયદો તોડવો તો ન જોઈએ, પરંતુ નાનાં-મોટાં ઉલ્લંઘનો સામે આંખ આડા કાન કરવા જોઈએ, જેવી રીતે આપણે લાલબત્તી વખતે રસ્તો ઓળંગતા રાહદારીઓ પ્રત્યે દુર્લક્ષ સેવીએ છીએ. રોકડ ચૂકવણાંથી વ્યવસ્થાને તેલ-પાણી મળે છે અને એ સુગમતાથી ચાલે છે. જ્યારે રોકડવિહીન સમાજ પર સરકાર. વધારે ધ્યાન રાખવું પડશે અને સ્વતંત્રતાની મર્યાદા ઘટશે. નોટબંધીથી આદતો ખૂબ ઝડપથી બદલાઈ રહી છે અને વેપારીઓ તથા વ્યવસાય ચેક, ડેબિટ કાર્ડ અને મોબાઇલ વૉલેટથી ટેવાઈ રહ્યા છે, પરંતુ રોકડની જરૂર તો હંમેશાં રહેવાની જ. ધ્યાન રાખો કે બધી રોકડ કાળી નથી હોતી.
સામાન્ય નાગરિકની નોટોને હાથ ન લગાડો : આવતી વખતે તમારે નોટબંધી કરવી હોય, તો બજારને પહેલાં 5,000 અને 10,000ની નોટોથી છલકાવી દેજો. જ્યારે કાળું નાણું આ મોટી નોટોમાં આવી જાય, તો માત્ર એ નોટોને નાબૂદ કરી નાખજો. સામાન્ય માણસને મુક્તિ આપો.

Thursday, December 01, 2016

नोटबंदी को बचाकर ऐसे निकालें कालाधन

नोटबंदी के तीन हफ्ते बाद आम आदमी की जिंदगी में तकलीफ, आर्थिक गतिविधियों में सुस्ती और कई क्षेत्रों में नौकरियां जाने की खबरें दिखने लगी हैं। अगली दो तिमाही में अर्थव्यवस्था दो प्रतिशत अंक से सिकुड़ जाएगी- राष्ट्रीय संपदा का यह बहुत बड़ा नुकसान है। लेकिन अब पीछे हटने की कोई गुंजाइश नहीं है। आइए, देखें कि नरेंद्र मोदी नोटबंदी को बचाकर कैसे कालेधन वाले भ्रष्टाचार के स्रोत खत्म कर सकते हैं। 

रफ्तार ही मूलभूत सार है। नई नकदी के लिए केवल अपने प्रिंटिंग प्रेस पर ही निर्भर मत रहिए। उन मित्र देशों की करेंसी प्रेस की मदद लीजिए, जिनकी सुरक्षा का स्तर हमसे ऊंचा है। प्रेस अधिक रफ्तार से चलती हैं। विमान से नोट ले जाकर बैंकों में नकदी का सैलाब ला दें। विकल्प स्विट्जरलैंड और अमेरिका की नोट प्रेस ही हैं।

भारतीय प्रिंटिंग प्रेस को सारे नोट बदलने के लिए अावश्यक करेंसी देने में छह माह लग जाएंगे। यदि विदेशी सरकारों से नोट छपवा लिए जाएं तो समस्या एक हफ्ते में सुलझ जाएगी। भूतकाल में भी विदेशी नोट प्रेस भारतीय मुद्रा छाप चुकी हैं। असली तकलीफ लंबी कतार में घंटों खड़े रहना नहीं है, बल्कि यह है कि सारे ही क्षेत्रों में बिज़नेस ठप हो गया है। 

आय घोषित करने की योजना का दायरा बढ़ाएं। सही है कि माफी की पिछली योजना को मामूली सफलता ही मिली, लेकिन अब डंडा लहराने के बाद थोड़ी रियायत बेहतर परिणाम दे सकती है। नोटबंदी ने नए किस्म के मुद्रा-दलालों को जन्म दिया है, जो पुराने नोट 30 से 40 फीसदी के डिस्काउंट पर बदल रहे हैं। चूंकि सरकार कालेधन के खिलाफ बेनामी जमीनों की जांच जैसे अौर अधिक कठोर कदम उठाने की धमकी दे रही है, लोगों का झुकाव किसी नए ब्रोकर के जरिये पुराने कालेधन को नए कालेधन में बदलने की बजाय योजना के माध्यम से कालेधन को सफेद में बदलने का होगा। 50 फीसदी की दर ठीक है। कुछ लोग अपने कालेधन को ‘वर्तमान आय’ के रूप में उजागर कर कानूनी रूप से 35 फीसदी टैक्स देने का विकल्प भी चुन सकते हैं, लेकिन इसका भी स्वागत किया जाना चाहिए। एक अन्य विकल्प कम फायदा देने वाले दीर्घावधि के बॉन्ड निकालना भी है, जो कालेधन को सफेद में बदलेंगे। सरकार को सस्ते में पैसा हासिल होने का फायदा मिलेगा। उद्‌देश्य नौकरियां पैदा करने वाले समाज के सबसे उत्पादक समूह में भय कम करना होना चाहिए। उन्हें खलनायक मत बनाइए, क्योंकि यह धर्मयुद्ध नहीं है। लक्ष्य बेहतरी के लिए पुरानी आदतें बदलने का है। 

उत्पीड़न खत्म कीजिए। कानून का पालन करने वाले नागरिक खुशी से टैक्स चुकाएंगे यदि उन्हें भरोसा होगा कि आयकर अधिकारी उनके साथ सम्मान का व्यवहार करेंगे। लोगों को यह बताने की जरूरत है कि वे टैक्स रिटर्न ऑनलाइन भर सकते हैं, टैक्स ऑनलाइन भर सकते हैं और ऑनलाइन ही रिफंड प्राप्त कर सकते हैं। मेरे पड़ोसी ने अपना रिटर्न अक्टूबर में भरा और नवंबर में उन्हें रिफंड मिल गया। मोदी को चाहिए कि वे इसे लेकर अभियान चलाएं ताकि लोगों को आश्वस्त किया जा सके। यदि कोई टैक्स अधिकारी करदाता को उत्पीड़ित करता पाया गया तो कड़ी सजा भी दी जाए। 

कालेधन का सदुपयोग करें। कई धनी लोग पुराने नोट पकड़े जाने के भय से पुराने नोट नहीं बदलाएंगे। सरकार को यह महंगाई बढ़ाने वाला धन अनुमानित 3 लाख करोड़ रुपए- सड़क निर्माण, सिंचाई और कम आय वाले आवास पर खर्च करना चाहिए ताकि बड़े पैमाने पर जॉब निर्मित हों और नोटबंदी में गंवाई नौकरियों की कुछ भरपाई हो सके। एक अन्य विकल्प सारे जन-धन खातों में 10 हजार रुपए की रकम जमा करना है। इसमें 2.50 लाख करोड़ खर्च होंगे। इसके बाद भी मूलभूत ढांचे पर खर्च के लिए 50 हजार करोड़ रुपए शेष रहेंगे। 

रीयल एस्टेट पर फोकस। नोटबंदी से वह भ्रष्टाचार खत्म नहीं होगा, जो काला धन निर्मित करता है। रीयल एस्टेट में हर कदम भ्रष्टाचार के दलदल में धंसा है- जमीन खरीदने से मंजूरी मिलने तक। काला धन जरूरत से ज्यादा स्टैम्प ड्यूटी का भी नतीजा है। यही वजह है कि विजय केलकर ने स्टैम्प ड्यूटी को जीएसटी में मिलाने की सिफारिश की है। हमें तर्कपूर्ण करों और जमीन के स्वच्छ सौदों के लिए संघर्ष करना चाहिए। 

सोने पर कस्टम ड्यूटी वापस लीजिए। 1991 के बाद आयात संबंधी पाबंदियां हटाए जोन से सोने की तस्करी घट गई। सोने अाभूषणों में साफ-सुधरा बिज़नेस फला-फूला। 2013 में इसे धक्का लगा जब सोने पर आयात शुल्क फिर लागू हो गया। नकद भुगतान आम हो गया, क्योंकि तस्करी का सोना सस्ता था। 

वैध चुनावी चंदे पर लगी मूर्खतापूर्ण पाबंदियों में सुधार लाएं। इससे चुनाव में कालेधन का इस्तेमाल होने लगा। मैं राजनीतिक दलों को सरकार की ओर से धन देने के खिलाफ हूं। इसमें तो मेरी गाढ़ी कमाई से लिए टैक्स का उपयोग उन प्रत्याशियों और वंश परम्परा वाले परिवारों को देने में किया जाएगा, जिन्हें मैं नापसंद करता हूं। इसके बजाय हमें अमेरिका और यूरोप में प्रचलित वैध धन से फंडिंग की परम्पराएं अपनानी चाहिए। 

नौकरशाही में सुधार करें। काला धन प्रशासनिक विवेकाधिकार से पैदा होता है। सिविल सेवाओं में सुधार की शुरुआत का सबसे अच्छा तरीका है जस्टिस श्रीकृष्ण के इंडियन फाइनेंशियल कोड लागू करना है। 

कालेधन को पूरी तरह समाप्त करने का प्रयास करें। लोगों को कानून तोड़ना तो नहीं चाहिए, लेकिन छोटे-मोट उल्लंघनों की अनदेखी कर देनी चाहिए, जैसे हम लालबत्ती पर सड़क पार करने वाले पैदल राहगीरों की अनदेखी कर देते हैं। नकदी से व्यवस्था को तेल-पानी मिलता है और वह सुगमता से चलती है और नकदी विहीन समाज पर सरकार को अतिरिक्त निगरानी रखनी पड़ेगी और स्वतंत्रता का दायरा कम होगा। नोटबंदी से आदतें बहुत तेजी से बदल रही हैं और व्यापारी व्यवसाय चेक, डेबिट कार्ड और मोबाइल वॉलेट के आदी हो रहे हैं, लेकिन नकदी की जरूरत तो हमेशा रहेगी। ध्यान रहे कि सारी नकदी काली नहीं होती। 

आम आदमी के नोटों को हाथ न लगाएं। अगली बार आप नोटबंदी करना चाहें तो बाजार को पहले 5,000 और 10,000 रुपए के नोटों से भर दें। जब कालाधन इन बड़े नोटों में जाए तो केवल उन नोटों को बंद कर दीजिए। आम आदमी को बख्श दीजिए।

Monday, November 28, 2016

Ten ways to save demonetisation and stop the economy from choking

After almost three weeks of demonetisation, there is visible pain in the lives of ordinary people, a noticeable slowdown in economic activity, and reports of job losses in many sectors. The economy may contract by as much as two percentage points over the next two quarters — a colossal loss in national wealth. However, there can be no rollback. The gains from a cleaner, whiter economy are far bigger in the long run. Here’s how Narendra Modi can save demonetisation.

1) Speed is of the essence. Don’t depend only on our own printing presses to replenish the cash; subcontract the currency presses of friendly governments whose security levels are unimpeachable. Fly in the new notes and flood the system. The priority is to restore liquidity in the market so people can get on with their lives.

2) Extend the income disclosure scheme. True, the last amnesty scheme was only a modest success, but after the stick recently wielded by Modi, a little carrot might work better now. Demonetisation has given rise to new currency brokers who are converting the old notes at 30 to 40% discount. Since government is threatening more action against black money such as scrutiny of benami land titles, people will be more inclined to convert their black to white via an amnesty scheme — say at a 50% tax rate rather than the 60% it is considering — rather than convert old black money to new black money via a broker.

Some may opt to disclose their black money as ‘current income’ and get away by legally paying around 35% tax; this too should be welcomed. Another alternative is to offer low-yielding, long-term bonds that would convert black to white; the government would gain by getting money cheaply. The purpose is to diminish the fear in the most productive groups in society that create most of the jobs. Don’t demonize them: this is not a dharmayuddha. The objective is to change old, ingrained habits for the betterment of society.

3) End harassment. Law-abiding citizens will happily pay tax if they believe they will be respectfully treated by income-tax officials. People need to be reassured that they can file returns online today; pay tax online; and get refund online. The computer decides, not the ITO, which returns are to be scrutinized. Modi needs to mount a major campaign to reassure people about this reduction in official discretion. He needs to also severely punish any tax official caught harassing a taxpayer.

4) Put black to use. Offer a significant fiscal stimulus to the economy from the notes not likely to be exchanged, black money that will disappear forever. Spending this non-inflationary money — an estimated Rs 3 lakh crore — on infrastructure and housing can create masses of jobs and mitigate some of the jobs lost in demonetisation.

5) Focus on real estate. Demonetisation will not stop the corruption that creates black money. For this you have to attack its underlying sources. In real estate, every step is mired in corruption — from buying land to getting approvals. Black money is also the result of excessive stamp duty. For this reason, Vijay Kelkar had recommended merging stamp duty into GST in his pioneering report on GST. That may be too late but we must keeping fighting for sensible taxes and clean titles in land.

6) Roll back the customs duty on gold. Smuggling of gold declined in India when import restrictions were lifted after 1991. A decent white business developed in gold and jewellery. In 2013, there was a setback when customs duty on gold was reintroduced. Cash payments became common again because smuggled gold was cheaper.

7) Reform the silly curbs on legitimate election donations to candidates. This has led to the use of black money in elections. I do not favour state funding, where my hard-earned taxes would finance candidates and family dynasties I despise. Instead we should follow the best practices in the US and Europe in funding elections.

8) Reform the bureaucracy. Black money is generated because of administrative discretion. A good place to begin reform is to implement Justice Srikrishna’s draft Indian Financial Code.

9) Do not attempt to end black money. People should not break the law but we should overlook small transgressions, just like we ignore pedestrians who cross on a red light. Cash lubricates the system and a cashless society is the road to dictatorship.
10) Don’t touch the aam aadmi’s tender. Finally, the next time you want to demonetise, flood the market first with 5,000 and 10,000-rupee notes; once the black money has moved up to these higher notes, demonetise only the Rs 5,000 and Rs 10,000 notes. Spare the aam aadmi.

Sunday, November 13, 2016

When netas see votes in clean air, they’ll cut through the smog

Two apparently unrelated events occured in Delhi in the past few days. In the first, Narendra Modi made a tough, risky move — one of the riskiest in his career — against the long-festering problem of black money. In the second, Arvind Kejriwal was seen floundering as he tried to cope with Delhi’s foul air. What connects the two events is the stark contrast between the decisive action in the case of black money and a sense of helplessness in response to pollution. The dissimilar behaviours of the two politicans are explained by the Theory of Public Choice, enunciated by the American economist, James Buchanan, which won him the Nobel Prize in 1986.

At some point in his political career, Modi realised that there are votes in fighting against black money. He made an election promise, and after a series of other steps, he acted last Tuesday to withdraw high-value notes from the market. It was a risky move. It would bring huge pain to the aam aadmi before it brought gains to the economy. It would disrupt trade, slow down business activity in real estate, the largest employer in the nation. It would alienate the political establishment, including his own party, diminishing their ability to fight the next election. But if Modi manages to contain these risks, he would deal a body blow to black money, tipping India towards a clean, white economy. And in the 2019 election he might even be rewarded for it.

Arvind Kejriwal has been unable to see the electoral possibilities in providing clean, healthy air. He lost an opportunity two years ago when World Health Organisation declared Delhi as the world’s most polluted city. There was panic at the time with an upsurge in respiratory complaints; tourists cancelled bookings and diplomats refused to accept postings to India. But Kejriwal frittered away that political moment. Perhaps, he thought that his core constituency of migrant poor was indifferent to pollution. Or he was daunted by the challenge. After all, there is no single pollutant in this case. Road dust, construction, waste burning, vehicle emission, diesel generators, power plants — all these factors play a role. Then there are nasty jurisdiction problems with multiple agencies to cope with. Even the Supreme Court had not succeeded. In the end, he probably concluded that it was wiser to focus his resources on priorities that had a better chance of accomplishment.

Buchanan’s concept of Public Choice throws light on Kejriwal’s dilemma. Many of us are familiar with market failures, but few know about his systematic theory of government failure. We tend to have a romantic view of public officials, believing that they act altruistically in the public interest. Public Choice teaches that politicians and civil servants are just as self-interested as you and I, and they look out primarily for themselves. While Modi and Kejriwal may feel passionately about the common good, their driving force is their own interest — their re-election to begin with.

The key is how do we channel the self-interest of politicians and officials to our desire for clean air? Generally, ministers in a vast democracy operate under the influence of vested interests that are generous in their contributions to the minister’s election campaign. A small lobbying group with a narrow focus always has this advantage over dispersed and disorganised individuals who want clean air but have no voice. How can these individuals come together and persuade their politicians that there are votes in clean air?

One doesn’t know if Modi will succeed in fighting black money. Demonetisation is only one step in a prolonged campaign. But the lesson for those who want clean air is to bring public pressure on politicians so that the subject gets on the national agenda. It is not Delhi’s problem alone, and it not fair to dump it all on Kejriwal. Many Indian cities face this problem. Narendra Modi will have to get involved. It will also not be easy to raise consciousness because of political apathy.

The air improved slightly last week and the subject quickly disappeared from the media and the public imagination. However, the winter is upon us and Delhi’s air will soon become foul, and people will again begin to scream. Success will depend on institutionalising individual screams into a collective scream in order to awaken the political class to the possibility of votes in cleaning up the air.

Monday, October 31, 2016

Beyond the control of scions in India’s family businesses

Indians have a saying that captures the tendency of family businesses to decline over generations: “The life of a business house is 60 years.” This phenomenon was portrayed by the German writer Thomas Mann in Buddenbrooks, his novel about a wealthy merchant family in the city of Lübeck whose business disintegrates as the children lose an appetite for making money. Until now, the 148-year-old Tata Group has defied this rule. But today India’s largest conglomerate is caught in an existential crisis — its own Buddenbrooks moment — that began last week with the dismissal of Cyrus Mistry, its chairman, and the temporary return of Ratan Tata, his predecessor.
Mr Mistry called his sacking illegal and said he had become a “lame duck” chairman, while Mr Tata called his words “unforgivable”. I was once a member of a Tata company board and was shocked at this unseemly row. But the significance of the episode goes beyond the Tatas.
It is a cautionary tale for India’s business community as a whole, which is struggling to separate ownership and management, families’ interests from businesses’.
The appointment of Mr Mistry in 2012 was always risky. After a global search for his successor in 2011-12, Mr Tata settled on the son of the largest shareholder. Mr Mistry is personable and competent but his experience was limited to managing a second-tier construction company. Suddenly, he was being asked to turn around a complex conglomerate.
This is a cautionary tale for groups struggling to separate ownership and management.
I recall feeling somewhat uneasy about his appointment at the time. Why was the company compromising by choosing the scion of a family that had been its second-largest shareholder since the 1930s? Surely there was someone else somewhere in the world capable of leading the house of Tata?
Yet there has been no satisfactory explanation for Mr Mistry’s dismissal. He inherited a lot of problems. Tata Consultancy Services was delivering the bulk of the group’s profits, while too many of its subsidiaries were underperforming.
By the time of his departure, Mr Mistry seemed to be doing a reasonable job. He had managed to reduce debt on the balance sheet. Part of Tata Steel’s British business had been sold, while the Indian operations were delivering strong profit growth.
The domestic business of Tata Motors had created a car capable of winning market share, while the overseas Jaguar Land Rover was earning good profits. The only blemish on Tata’s reputation has been a legal tussle involving a $1.2bn payout to Japan’s NTT DoCoMo after a failed buyout.
Certainly, Mr Mistry was no visionary nor did he make forays into new markets like his predecessor but, at this stage in the group’s evolution, consolidation was the right strategy. Unfortunately for him, another recent corporate succession was on people’s minds.
Infosys, the software group, seemed to have made a happier choice in 2014 when it appointed Vishal Sikka as chief executive, a man with a bold vision for the future.
After Mr Mistry was defenestrated, a headline in Dainik Bhaskar, a leading Hindi daily, proclaimed: “Tata’s dharma is wounded”. This suggested an ethical failure. If America’s key word is “liberty”, India’s is “dharma”.
In this context, dharma refers to the right and wrong ways to do business. The newspaper was referring to failures of corporate governance in India, the inability of private and state-owned companies to be properly accountable to shareholders and the refusal of too many founders to take a back seat after retirement.
Of the many lessons for Mr Tata in this episode, the main one is to focus on bringing in the person best qualified to do the job. It will not be easy. But once he has found that person, Mr Tata should bow out gracefully.