By Ira Sharma
Over the last one decade or so, three critical issues have captured the mind share of the common man out there. These three issues are economic recession, corruption and terrorism. It has not only exposed massive corruption causes but India has also witnessed some major terrorist attacks. Apart from this, the unprecedented and back breaking price rises have also been a bête noire for the Indian populace. While on the issue of corruption, political parties speak in near unanimity, at least so far as the public posturing goes on. On the issues of economic policies as well as on the issues of having a radical and a ruthless approach to deal with terrorism, there seems to be considerable divergence in their approach and perspective. Indian economy is today standing at a critical juncture whereby it has somehow managed to float in spite of the massive deterioration in economic stability of most of the European economies. However, plagued with relentless corruption of gargantuan proportion, government’s inability to take decisive and bitter economic decisions as well as populist compulsions have completely eroded the sheen off the country’s growing economy.
Therefore as the name suggests, Kejriwal would have to take several bitter and unpopular decisions to bring the Indian economy back on track. Adding to this, several of the freebies and the subsidies would have to come to an end and a culture of making people pay the economic prices of whatever they consume would have to be created. Incidentally, through recent reports BJP wants to abolish income tax and replace it with a standard tax of 2% on bank deposits to contain leakages and make a much larger number of Indians pay tax. Given the fact that a mere 2.77% of the Indians pay tax and bear the associated hassles and complications, there is a need to replace it with a more liberal regime whereby some other mechanism instead of income tax is found out to raise revenues for the government.
The proportion of the people having a bank account is much higher than the number of the people paying income tax and with RBI envisioning to have a bank account for every adult in India in 2016. States like Gujarat have performed better because they have attempted to replace the subsidy regime with the regime of making people pay the economic price for what they consume. The new approach makes more sense as it would increase the tax base by multiples even though the finer details are yet to emerge and implementation of the same might still be a challenge. The possibility of major increase in tax revenue however may nullify many of India’s fiscal problems if properly implemented. Most importantly the conventional approach till now, in a country like India has always been to garner votes with promises of free water and electricity which are never fulfilled and once elected, they face the brunt of sudden increase in prices.
For the government the objective should be to increase the real income of people through efficiency in the distribution system, increased productivity, increased capital investment and changing archaic laws. And at last above all, as one can think economically, for any business entity, small or big or even farmers using motor pumps, ensured and stable supply of electricity at a subsidized price is more important than free electricity with massive power cuts and voltage fluctuations which wreak havoc for machines as well as business fortunes.
