homeeconomy NewsAltering the status quo: These five structural reforms can catapult Indian economy to a higher orbit

Altering the status quo: These five structural reforms can catapult Indian economy to a higher orbit

Altering the status quo: These five structural reforms can catapult Indian economy to a higher orbit
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By Vijay Kumar Gaba  Sept 27, 2019 6:43:52 AM IST (Updated)

A ‘reform’ must be distinguished from ‘administrative corrections’ and measures for enhancing ‘systemic efficiencies’. A policy measure would qualify as ‘reform’ only and only if it alters the status quo materially, for the betterment.

Reform’ is perhaps one of the most abused buzzwords in the context of the Indian economy in general and financial markets in particular.

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A ‘reform’ must be distinguished from ‘administrative corrections’ and measures for enhancing ‘systemic efficiencies’. A policy measure would qualify as ‘reform’ only and only if it alters the status quo materially, for the betterment. In the present Indian context, a ‘reform’ must be measured by the positive impact it would have on the lives of common people, especially the last one standing on the street.
We often see minor administrative changes and corrections being passed as reforms. An insignificant step like elimination or addition of a few columns in the annual return to be filed by the taxpayers is often touted as reform. Reducing the number of approvals a businessman would require to commence his business operation is another administrative improvement popularly claimed as major reform. Disinvestment of minor stakes in public sector enterprises is yet another instance of claiming a routine administrative measure as a major reform. The permission to foreigners for investing in a new area of Indian industries or hiking the maximum limits foreigners can invest in a sector is also claimed as a reform.
In recent times, the implementation of GST has been claimed as a major reform measure. The GST may have eliminated many systemic inefficiencies. But has it impacted the life of a common man positively in any significant manner? I think there is no evidence of this so far.
The following five reforms, in my view, can change the status quo materially by catapulting Indian economy into a much higher orbit. These shall enhance the growth potential, improve quality of life for a larger segment of the population, minimise income, social and regional inequalities, and protect India from external and internal vulnerabilities.
1. Bring factories to farm
The old paradigm that agricultural workers move from farms to factories and then to the services sector as the economy moves higher on development ladder may not be totally true in case of present day India, inter alia, for the following reasons:
(a) The employment intensity of both industry and service sectors may have diminished materially with advent of automation and artificial intelligence.
(b) The industrial and services sector growth is concentrated in a few regions which may not be able to bear the burden of further large scale immigration from villages.
(c) The population of workers is rising much faster than the employment opportunities in the industrial and services sectors. Expecting construction sector to absorb all surplus farm labour is a bad idea.
(d) A large proportion of the potential workforce may not be trained and skilled enough to take on the modern industrial and services sector jobs.
The solution therefore lies in bringing factories (and jobs) to the farms rather than moving workers from farms to factories.
Since independence the government has focused on development of industrial infrastructure in the country. It has actively participated in the endeavour through a large number of public sector enterprises; besides offering a myriad tax and other concessions to the private entrepreneurs. Now, the country has a reasonably strong industrial base. Many of our industries are globally competitive. We have a strong set of entrepreneurs and risk takers. It is therefore high time when the government should reset its priorities and turn its primary focus on agriculture. To meet this end, the government must consider exiting all industrial and banking activities and actively undertake agricultural activities - develop barren lands; develop water bodies and irrigation facilities; develop and use technology for enhancing productivity; give employment to landless farmers at minimum wage; take risk with new technologies and crops; partner with marginal farmers in consolidating their land and do farming on that land - just the way it undertook industrial activities immediately after independence.
Private enterprise must be encouraged to setup food processing units close to farms in partnership with local farmers and the government departments.
It has taken seven decades for Indian industries to reach a stage where the government may consider fully exiting the industrial activities. It may take 1-2 decades for Indian agriculture to reach a stage where the government will be able to exit farming activities completely.
2.  Make a national water grid
The government must make it a mission that not a single drop of river water will be allowed to flow into ocean from India.
Make a national water grid through a network of pipelines, canals and channels. Constitute a Statutory National Water Council (just like GST Council) which shall work out water sharing formula for all states and union territories every three years. Make sure that the eastern regions are fully rid of devastating floods every year and all regions get enough water throughout the year; ground water is recharged consistently and all households get potable water.
3. Implement Right to Uniform Education
The Right to Education (RTE) law should be transformed into a more comprehensive Right to Uniform Education. It should be a fundamental right of all children to receive an equal and uniform opportunity to receive quality education. Besides, a strong vocational training network should be integrated with the post-secondary education system. This network should be managed and funded by the industry under their CSR initiatives. The students should be assigned to this network based on their aptitude. The government's role in this network should be to make sure that the society honors the dignity of labour and no one is discriminated based on their profession.
4. Empower communities
From my experience gained through extensive travels across the length and breadth of the country, I understand that there are numerous democratic assemblies within various communities and localities in our country. Indian people in general have been seen to be most compliant, philanthropic, productive and honest while dealing within their own small local communities.  This ‘communism’ is in fact a key strength of Indian society.
The government must consider assigning the task of ensuring compliance with tax and other laws to local communities on principles of self-regulation.
The government may consider establishing a constitutional framework for allocating resources to these democratic assemblies within the society for creating social infrastructure and managing it for the larger benefit may not only minimise the cost of administration materially but also enhance the efficacy of the expenditure.
The ownership of public resources like minerals etc. should be earnestly handed over to ‘the public’. Instead of a few feudal ministers controlling the resources, the trusteeship of all the natural resources should be vested in the local governments. The local people should determine how these resources should be exploited. Industry based on these resources should be developed on co-operative model with equitable ownership of local people, entrepreneurs and financiers.
5. Social reforms
The disproportionate rise in aspirational consumption; distortion of social customs (especially marriage, death, birth) for the sake of vanity, ignorance, and misguidance; rise in crime and litigation expenses; rise in cases of chronic diseases and hence prohibitive healthcare expenses form an overwhelming part of ‘farmers' debt’. This debt usually has nothing to do with farming activity. This is also true for a large majority of urban poor and lower middle class people also.
Householders often compromise on essential expenses like health checkups, nutrition, medical treatment, coaching, home improvement, skill improvement and investing in technology for business improvement to gratify their social recognition and vanity needs. They are increasingly becoming more dependent on the government for all needs like education, health, food and shelter.
To cure this problem on a sustainable basis, it is important that economic reforms are implemented with social reforms. For example consider the following.
The government should take strong affirmative steps to eradicate social distortions that have crept in over a period time in our social, religious and cultural events.
To begin with the government should make dignified birth and death a fundamental right of every citizen. It should totally nationalise the religious part of the birth, death and marriage ceremonies.
The government should appoint qualified religious persons (QRP) who can perform these ceremonies at the designated venues established by the government in every block of the country. All the expenses like salary of QRP, cost of performing the rituals, food offered to QRP, cost of feeding up to 25 close relatives of the person for whom the rituals are being performed should be borne by the government. The corporates may also be encouraged to fund this initiative under their CSR obligation. The government should actively discourage profligate spending on the social part of these events through tax and other means like an extensive awareness campaign.
Special public officers may be appointed to supervise all such ceremonies and issue certificates (birth, death and marriage) on the spot.
In the case of birth, the government should assume responsibility of the child from the conception stage, for up to two children for each parent. This includes good diet for mother, medical tests, medicine, delivery expenses and immunisation of the child. This should be done on a global standard basis not the way a typical government medical facility is run by the government presently.
In case of death, the final rights of the deceased should be performed in a dignified manner, as per his/her religious traditions, at the government's expense. This should apply to all unclaimed and unidentified bodies also.
Vijay Kumar Gaba explores the treasure you know as India, and shares his experiences and observations about social, economic and cultural events and conditions. He contributes his pennies to the society as Director, Equal India Foundation.
Read his columns here.
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