Time for Economic Re-invention:
An Open Letter to Shri Narendra Modi
To
Deeply respected Modi Ji!
Needless to repeat that hopes of an India that I can live in proudly and achieve satisfaction at having been a productive human being has come alive finally, with your presence.
I will jump straight to the points, without other un-necessary formalities. Economic Reforms have been around. Not enough, to unlock the true potential of India. I seek, Economic Re-invention, thus.
Economic Blue-print for the heralding of a New Era, not just in India, but setting up an example for the Universe to emulate:
1) Taxation, propagated irrationally, is at the root of all dark economic practices. It must be re-looked at intensely. In a family, the son who earns most is adored and respected for undertaking larger responsibilities and the son who squanders on irresponsible consumption is chastised and reprimanded. If my nation is a family and if every society is a larger manifestation of the familial roots of man and mankind then why should wealth creators and income generators be chastised instead of being treated as Heros?! For enterprise, action, work the socialistic posturing has turned the true sons of the family lurk and lurch. It must stop. Income Tax Rate, must be announced openly on the day you take oath in office of the Prime Minister, will be reduced systematically within a period of five years to 15% only! Simultaneously Sales Tax and other Indirect Taxes will be made progressive. For example a Nano Car may have a mere 2% sales tax, a Santro Car may have a 5% sales tax, a Maruti Dezire may have a 10% sales tax, a Honda City may have a 15% tax, a Honda Civic may have a 20% Sales tax, an Audi A4 may have a 25% sales tax, an Audi A6 may have a 30% sales tax and a BMW Series 7 may have a 50% Sales Tax! The more hedonistic a consumption anyone does, the more he pays to the society for his ostentatious ways of living.
2) Clear Long Term Policy where Income is Worshipped and Expense abhorred: The moment a firm announcement is made that Income Taxes will be brought down to 15% in a matter of five years, endless positive things will happen. Re-rating of the country as an economic destination will start happening soon as a clear signal is given that India no longer runs on adhocism but has clear path-breaking progressive plans of long term stature. This will result into higher sovereign rating reducing the cost of capital from overseas, rushing in of new business plans and investments into the country both by way of FDI as well as through stock-markets will open flood-gates of capital.
Business Activity will start booming. A lowering tax rate every year will increase tax compliance. Upon making wealth what a man craves most is respectable and peaceful existence. Since there is no choice, due to a corrupt political system requiring existence of pools of large hoardes of cash, the high income tax rate becomes a sufficient motivation for big business to evade taxes. With a rate that is competitive globally, the increased on-board profit declarations will multiply market capitalizations of companies and the rapid multiplication in wealth will be a compelling enough reason for unprecedented tax compliance. Not only thus the tax compliance enhancement will take care of the dent in the loss of revenue to the exchequer, the rapidly enhancing Economic Income Multiplier along with Business Activity Level Boom, lowered cost of capital will create an unprecedented environment for celebrating creation of wealth.
India is a civilization where Mahalaxmi is worshipped. On the Diwali day we worship coins, gems and bullion. Our Samskar has been to not merely cherish wealth which socialists also do, but to celebrate the creation of wealth & to worship the source of wealth, i.e. the Mahalaxmi. Please help my civilization rediscover its samskar. How come those who are doing upasana of Mahalaxmi are villains and not heroes in our Civilization now? Where is my India gone, where God lived? The creator, Lord Vishnu, bestowed every resource on our geography so as Mahalaxmi could reside permanently here. Yet, it is we the people of India who must create the ambience and open-ness to receive Mahalaxmi as our permanent guest. To tax her incrementally rather than her use has taken her away from us. Switzerland & Singapore are two places which respect the upasaks of Mahalaxmi and that’s why she resides there more than in other places. By shouting slogans and challenging the democratic setup some attention grabbers may delude some of us that their rants will bring the capital from Switzerland to India, but they are clearly ignoring that Mahalaxmi is also known by the name Chanchala and she floats in this universe at her will visiting and living in place that truly understand Her ethos and have profound understanding of how She is to be treated.
Please thus, herald the Era, the Yuga-parivartan wherefrom Creation of Wealth will be a Celebration and Squandering of Wealth will meet with opprobrium, chastising, discouragement and penalty by making a flat low Income Tax Rate but a progressively higher Sales Tax.
The progressive consumption based sales and other indirect taxes will make India the ultimate factory of the universe. Since, lowered income taxes will incentivize production and sale of anything and everything and motivate larger and larger capacities for production creating jobs, trade and opportunities, the self regulated consumption mechanism due to higher and higher tax rates of sales and other indirect taxes on consumption would mean that even if extravaganzas, luxuries and super-brands are produced out of Indian factories, they would naturally be exported away to countries with irrationally flat consumption taxes but progressive income taxes.
So called modern economic thought is a hypocrisy. Progress and Wealth Production have to be acts that are celebrated by the whole society and hedonistic consumption must be something that should compensate the society. The modern day tax regimes have been upside down, the world over. To lead the universe, India has to lead in path-breaking new economic thought & action. The true essence of Swadeshi is to not isolate ourselves from the world, but to invite the world to be our good guests, bring gifts of their effort, capital and expertise and in the process leave our household a happier and vibrant place.
Compared to China, we have a powerful asset called Democracy and the Rule of Law and endless mass of competitively priced educated and trained manpower. If domestic consumption is going to be self-managed due to progressive consumption tax, exports will boom as every key business enterprise on our planet will vie to shift its production abilities in a territory as India that God has bestowed with every climate, every soil type, every mineral, every resource and endlessly rich variety in our Human Resources.
3) Re-invention of Human Capital: In the name of land reforms Congress has looted the morale of our Rural population as much as communists have. However, both these political thought processes have only worked at enriching the rich farmer, further.
No doubt agricultural revolutions will have to be really brought, but what is a key point of importance that we have continuously missed since independence is that the real source of wealth is the human being himself. Land without human beings is of no value. For that matter any asset without human beings is of no value to human beings. The real wealth and all of its origins lie in human capability. To hopelessly tie the future of the future generations in rural India to lack of land and unfair distribution of land is a sad veil at permanently destroying the hope, ambition, morale, skill and potential of our people.
I strongly wish that a leader of your stature should on an urgent basis institute the following, to establish pilot projects all over the state of Gujarat as a demonstration to not just India but the whole world:
a) Each district should have a very powerful and well funded Polytechnic that will focus on imparting skills to people interested in creating self-employment. BJP Leader Shri Manohar Joshi has a model organization by the name of Kohinoor Technical Institute in Dadar area of Mumbai. I urge, you rush some of your top thinking minds from your team to study that institute which is despite its achievements a pale small setup in comparison to what needs to be setup at each district. Perhaps an institution of similar nature, but with the resources and scale of a huge university is required in each and every district.
b) District Magistrates must be fully involved as leaders at each District Level, to run surveys and assessments on estimating which facilities and skills are lacking relatively in their districts. Do people need more Television repair mechanics, motorcycle repair mechanics, English and or Hindi language teachers etc. etc. for an example.
c) Micro-finance institutions must be promoted, partly by funding from the Govt. of Gujarat, partly by seeking funding from global multilateral agencies such as the International Finance Corporation and partly by the people of each and every village. Hamare desh ke har naagarik ko nav-nirman ka maalik banana hai. Less than the need for money from our people, we have to get their heart, soul and mind.
c) Nothing will be done on a charitable basis. We have to create a million Dhirubhais, a million JRD Tatas, a Billion self-dependent respectable human beings. Training courses will be sold to people by the polytechnics, even if at fair costs and at no profits. People will take micro-finance institutions’ funding to even buy these courses. They will then obtain more micro-finance to set up their tea-stalls, motorcycle repair centers, TV repair shops etc. etc. The whole approach rests on making people confident at taking risks of taking loans and buying training and setting up their own economic units that are not dependent on land or large capital but only on their imagination and effort. Swaabhimaan, Swaavalamban, Swaadheenta!
d) The community in each village that will become the micro-finance lending committee will act as the moral deterrent for anyone from becoming frivolous. “Why after all the training, finance and support a young man or woman cannot create income and then wealth without land” will become the social milieu. Traditional families which have had values and which thus provoked a sense of shame on failure and a pride on achievement is what one wishes to do through the creation of village and district wide familial atmosphere.
e) The next layer of this Rural Revolution would be to start propagating the sense of co-operative movements and help build brands and raise capital for these co-operatives through capital markets. Shri Kurien did a path-breaking work in creating Amul as a Brand. Had he stretched his vision to create a Company fully owned by the Co-operative and shifted the Brand into this Company and obtained Private Equity Funding to hire professionals for growing the marketing of Amul and eventually got that company to list on the Stock-markets then the Anand Milk Marketing Co-operative Federation would have easily monetized an asset to the tune of Rupees Twenty Thousand Crores. Each and every member of the Anand Co-operative would have been a Crorepati and their Children would have by now been studying in IIM-A, Harvard or at IITs. A completely new class could have been created in the society. Progress is unlimited, like our imagination is. If this has not been done so far, what is stopping us from doing this now? To create an infinite factory of Arab-patis?!
f) Execution is what makes an idea work. You have the power to execute and get things done. As execution happens and as the desire to move from villages to cities is reversed and as a slogan reaches the sky, “Haalo re Haalo, Paachha gaam maaj jaiye” the sense of enterprise, ownership, effort and success will become a household idea. Israelis have this sense at the grassroots level. We have to acquire this sense with the same intensity and if we can acquire it with our size and diversity, we will then truly setup the path of making India the leader on this globe in not just thoughts, but as much in actions.
Without any doubt, without any questions an unflinching faith is arising again since Sardar Patel, that you can execute with zero failure tolerance. I humbly thus submit my wish-lists before you draft your election manifesto, with an earnest desire to extricate robust promises from you.
My mind races with endless imagination at how India’s potential could be unleashed. I clearly will never be able to finish the script of the ultimate saga that India will be. For now, I will close this open letter with a promise that I shall write endless more addendums, for you and our nation to reflect and then act upon.
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