The party’s just beginning

It is about the callousness with which the governments — both present and past — continue to treat individuals, particularly the underprivileged. But the good news is that change is on the way. India has millions of smart, honest, committed individuals, including, of course, the lakhs of people who have braved the fury of the powers that be over this past month, and, to be sure, even a few members of Parliament.

Change is coming. I have spent a long time in financial markets and the singular lesson it has taught me is that nothing goes on forever — there is always a turning point, except that nobody is ever able to predict when it will happen or, indeed, what will trigger the change. The world, including India, has been in the clutches of an exclusionary, divisive politics since, probably, 2008, at which point the liberal era ended when a black man was elected to the White House. (Of course, America is not the world, and there were certainly illiberal cretins parading pompously on the world stage before that, but America continues to have a disproportionate impact on the world.)

And it is in America that this nearly 20-year tragedy has started turning around with the election just this year of Zohran Mamdani as mayor of New York. Unapologetically a democratic socialist, he has taken on the oligarchs of America, passing a bill that taxes second homes valued at more than $5 million. It was, of course, met with huge resistance from the cheapskates and the academics who believe taxing wealth never works because it never has. Well, it’s working in New York and, just a few months in, even the “liberal” New York Times is applauding the tax and Mamdani.

So, what does all of this have to do with the CJP?

I believe the CJP is here to stay and it is time all of us who believe in fairness and accountability put in our best efforts to sustain them. In my view, it also needs to focus on policies that promote growth. Consumer spending is a significant driver of growth, clocking in at around 60% of GDP. What is obvious, but seldom noted, is that someone in the top 1% of income and/or wealth (me, for instance) can only buy so many ice cream cones (although I am probably at the high end of ice cream consumption). So, if the wealth of this cohort was taxed at, say, 2% and the amount was distributed equally among the bottom 25% of income earners, a lot more ice cream cones will be sold. Likewise with other consumer products. And as sales of consumer products increase, so will economic growth.

The CJP can demand an annual wealth tax of 2% on all equity holdings—only 22% of Indians have demat accounts—and the collections should be automatically disbursed—Nandan Nilekani, we have a job for you—to the lowest income group (EWS, or the Economically Weaker Section). If we assume they comprise 25% of the population, at today’s equity valuation, the transfer will work out to about Rs 25,000 per person per year, and add 10-20% to the current EWS income. That would buy a lot of ice cream cones. These numbers are back-of-the-envelope and need to be modified.

They could also take a leaf from Mamdani’s book and tax second homes across India — this could be invested in the education sector — again, through a direct process bypassing the government, and it would also put something of a cap on real estate prices, which is an unequivocally a good thing. A small (and loud) minority of the developer community may object, but they don’t have anything like the power of the CJP.

Incidentally, it is wonderful to note that several sub-groups of citizens are getting involved and turning the protests into something of a tamasha, having fun in the process. This is critical — When I first went to the US, I got involved with an anti-(Vietnam) war protest in Times Square; it was a real party and, of course, as we all know, it worked. People will go to only so many protests, but they will surely go to a lot more parties. So, please join the protests and make sure you take your dancing shoes.

The party is just getting started!