Covid-19 crisis and India’s next government

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Published: May 29, 2020 3:00 AM

The Covid crisis has politicised a new crop of leaders who are young, smart, and committed to the country

The remarkable array of Indians who have been helping has been unstinting, without any let up, driven simply by a sense of shared humanity.

Over the past several weeks, thousands—perhaps, tens of thousands—of people in India have been helping the hundreds of thousands of daily wage earners stranded, without food or money, in the cities where they work; jammed at train stations, trying to get transportation; and, worst of all, on the highways, on foot, trying to find the comfort and safety of home, which is hundreds, sometimes thousands, of kilometres away. The remarkable array of Indians who have been helping has been unstinting, without any let up, driven simply by a sense of shared humanity. For many, many people this—helping people in need—has become daily life, almost a habit.

When the crisis ultimately lifts to where we return to a semblance of normality, these habits will drive the contours of the new India—indeed, the new world. People now have a heightened sensitivity to others, whether it be those we now call “essential workers”, people less fortunate than us, or even those to whom we are, in any case, close. Significantly, this new sensitivity brooks no discrimination—nobody asks the hungry on the highways whether they are Muslim or Hindu or Dalit or adivasi or whatever.

Again, many of the thousands of people who have been working tirelessly to help are getting more politicised—we see it happening every day. Without doubt, and this is a collateral benefit from the tragedy, we are seeing the birth of a new wave of political leaders who are young, smart, and committed to the country—everything the current crop is not.

The new politics—and the new government—will, thus, not only be much freer of discrimination but also more sensitive to the environment; it will have a much more educated and scientific temper, and will be able to leverage India’s technological prowess to leapfrog us to a reasonable level of human development quite soon.

Economically, the government will need to be focused both on creating a meaningful safety net, continuing investment in health and education, and, of course, ensuring as strong growth as possible. The first order of business will be to implement a minimum basic income (MBI) program providing Rs 60,000 a year for all families—the payment should be made to the female head of the household, acknowledging that India’s women (like women everywhere) now need to take a larger role in the economy, and in life. The calculated number is close to the median rural income today, and it will serve to ensure that nobody in India remains (or becomes) destitute. If, say, 20% of India’s 35 crore families need this support, this will come to Rs 4 lakh crore (about 2% of GDP).

On health and education, one idea could be to follow AAP’s model for Delhi, and scale it up across the country. Assuming that the average per person or per student cost across India would be about 60% of the cost in Delhi, the new government would need to increase spending by a further 4.5% of GDP. Importantly, these investments would need to be ongoing—this is a must for the country to regain its self-respect and, indeed, to set the stage for sustained growth.

To manage the budget and drive growth, the government, in addition to containing waste (and corruption), would need a creative fiscal approach that eliminates all personal taxes (direct and indirect), as well as all corporate taxes, and replace them with a tax on assets and income from assets. Making money from money should become more difficult.

This approach would (1) support growth strongly, since people would have more money in their hands; (2) lead to increased investment, since companies will have more money to invest; (3) reduce asset prices, which would make living more affordable for most; and (4) given that the value of public and private assets is many, many multiples of GDP, require only a small tax on assets to enable the government to run a contained deficit.

It would, of course, also be necessary for the government to develop and manage its processes efficiently. There are already many initiatives afoot within the government, particularly in NGO-government partnerships that can be leveraged to scale. IIT-IIT, an NGO I am associated with, assists several NGO’s to build to national scale.

One of the programmes they support is the Antara Foundation, which works with front-line government workers in rural areas to target malnutrition amongst babies and children. They are rolling out to national scale to identify and treat 5-7 million babies annually, which is about 15% of the babies born in India each year. Another NGO, PARFI (pan-IIT Alumni Reach for India) is focused on vocational training and placement, and is targeting to scale up to 250,000 reasonably well-paid placements a year (which is 20% of the number of young people entering the workforce each year).

These are just a couple of the thousands of programs whose focus, commitment, and creativity will be key resources in building the new India.

All we need now is a new government.
Aa jaon maidan mein!

 

CEO, Mecklai Financial. Views are personal

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