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Simple Ideas Work

I do not know much about economics but I believe that most things in life work best when you use simple common sense. Sans hypocritical posturing. Governments, unfortunately, do not understand this simple truth. That is why they prefer to obfuscate issues and deliberately complicate rather than make matters easy.

That is how centres of power are created. And opportunities for corruption.

Let us take the case of this ongoing recession. Everyone knows how serious it is but no one wants to admit to it. Some of our best companies are still trying to hide their disastrous performance by fudging their books. They believe that if they can camouflage the truth for long enough, things will look up. And no one will ever know that they had, for a while, deviated from the straight and narrow.

Similarly, our ministers are going around saying a recovery is imminent. In the full knowledge that they are lying. The prime minister is also making one policy announcement after another, floundering on the high seas of complex decision making and yet making no impact whatsoever on the steady erosion of investor confidence. Each time his announcements fail to arouse the somnolent economy, he loses a little bit more of his swiftly vanishing credibility.

The stock market, of course, remains dead. Stone dead. Real estate prices are crashing all over. No one is buying gold or silver. Or even diamonds for that matter. Cars are not selling. People and corporates are cutting back on air travel and even though holidays have become much cheaper, particularly in Asia, no one is ready to spend money.

The most popular piece of commercial paper, Unit 64 lies completely discredited while the banks are flush with funds because no one knows where to invest any more. Even the bluest blue chips among shares and mutual funds no longer attract investors as they used to and, unless the corporate scene looks up, the pink newspapers will soon be downing their shutters. Circulations have already crumpled and they are barely surviving on the strength of advertorials in their colour supplements.

Why? Why are things so dismal? Why is the economy in the doldrums? Why have people suddenly stopped spending? Why is our economy looking almost as sick as Japan's? Why is the mafia so desperate that it is now targeting doctors, real estate agents and Udupi restaurant owners? Why are jobs vanishing? Why is cash drying up? Why is no one ready to bet on a better tomorrow?

You can buy a television today and get a scooter or a refrigerator free. You can buy a car today and get a holiday in Mauritius free. You can book a magazine subscription and get a home theatre free. You can buy a home theatre and get 25 new blockbuster movies on VCD free. You can buy a computer and get the latest colour printer free. You can buy an apartment for a song and get it furnished free. Why is nothing selling even as prices free fall? The reason is simple: There is a demand supply mismatch and, as the economy opens up, control systems are collapsing all around. Lots of business people are scared that they are losing their grip. So is the bureaucracy.

This is perhaps the best time to look at some smart, new, workable ideas. Ideas that may have looked outrageous some years back but can work today. In an economy where ideology has no role left to play. The Japanese government, for instance, is thinking of giving out new year gift cheques to all its citizens to encourage more spending. Why can we not look at equally clever, innovative ideas instead of effing around with tattered, old game plans built on obsolete models of growth and social justice?

Let me offer you six easy ideas. None of them are original but each of them is worth looking at seriously if you want to quickly revive the economy.

1. Declare a tax holiday for two years. This is the easiest way to build up investor confidence and pump more money into the system. In any case, the government spends most of the money it earns by way of income tax in collecting it. Why not give a much deserved break to all those who have been paying their taxes and spend these two years in building up a comprehensive roster of all those who should be paying taxes? After two years, we can start afresh with an enlarged list of tax payers. And this two year break will change our entire attitude towards paying taxes.

2. Empower the Internet quickly. This will help us to leapfrog our technology gap with the first world and demonstrate how quickly India can catch up with the rest. The fierce independence of small Indian entrepreneurs who have gone all over the world and made good can now be exploited right here, in India. Through e-commerce. It will also transform the nature of Indian business and make it more open, more transparent. It will reach education and business opportunities deep into the countryside and demolish all these stupid barriers we have created on the basis of caste, community, gender.

3. Unshackle the power of ideas. Instead of spending huge money on building stupid steel plants and cement factories, the government must nurture the business of ideas. The computer software industry, which has grown tenfold in two years, has proved beyond doubt that India's best talent lies in content engineering. Be it in IT, media, entertainment, television or movie making, we are world class. But for some silly reason we are embarrassed by our brain power and want to focus, instead, on building ugly, obsolete factories which destroy the environment and make us poorer as a nation. It is time we realised this and focussed on what we are best at. Harnessing creative talent. This can transform India from a nation of job seekers into a nation of talented, self employed people.

4. Debureaucratise the system. If India is to be an economically independent nation, it is no use liberalising the system in theory. We must, at the same time, free it of its bureaucratic stranglehold. Visibly. Quickly. Efficiently. The economy, the political system must breathe freely, think freely, act freely. Otherwise, like a monkey on a grease pole, we will keep slipping down after every few minutes of climbing. Everyone knows this but no one has the guts to take the bureaucracy head on. Ask Yashwant Sinha and Ram Jethmalani, George Fernandes and Maneka Gandhi. They will all tell you it is impossible to change India unless you first cut the bureaucracy down to size.

5. Restructure our educational system. Instead of producing assembly line graduates in millions, it is time we focussed on creating self employed professionals. We must encourage enterprise, not corruption. Talent, not mindless mugging. Today, all that our educational institutions are churning out are unemployed, in fact unemployable graduates of remarkably poor quality, fighting for a declining number of jobs in the marketplace. It is time that we focussed, instead, on self employment. On training young people to discover their own skills. Unless this happens, we will continue to nurture a corrupt, effete workplace where only the lazy and the entirely talentless will flourish.

6. Break the black money regime. This survives purely on the artificial divide between the white economy and the black. There is a huge number of pimps who make profit every time white money turns black or black money turns white. They are byproducts of the licence raj and its corrupt infrastructure. It is time they were thrashed and thrown out, and the artificial divide smashed. The two years of tax holiday can be used to bring much of this cash into the economy where, every time it is used, the money will generate other taxes for the government. Like sales tax and excise. Why stand on pretences? Use this cash to unleash the hidden power of the Indian economy.

These are six simple ideas in search of a political mentor. Someone with the daring to put them in action.

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