Indian economy - How the heck do we fix this mega mess ?
Now we are starring at another budget, and people are debating what can be done to fix the bank npa, nbfcs and economic slow down.
There are 2 approaches and solutions to kick starting the economy -
1. Incremental Steps - Continue to recap the bank, push additional funding to nbfcs, and sops for sectors that are in crisis. Recap any further collapses like ilfs, IDBI, Dewan housing, etc..as and when it comes. Keep absolutely tight fiscal targets, ensure the macro economic stability. Minimal to No stimulus funding for economy, as this would mean, fiscal targets will not be met. Continue w IBC and NCLTs to reduce NPAs, etc..
OR
2. Radical reforms - The only sure shot option at this time, would be to "abolish individual income tax across the board", right from pensioners, to working class, to traders, executives, to businessmen to all. This will uniformly remonetise the economy and immediately lead to a massive boom across all sectors in the country. The problem with UBI - universal basic income or Kisan schemes are they take a long time to get implemented and impact the economy meaningfully. And depending on states, the impact will be at best patchy.
3. Streamline GST - Elimination of GST would be even better, but politically this will be harakiri, so streamline streamline the GST, on war footing, reduce tax rates, and make it easier to business. And replacing GST with another tax or going back to sales tax is not workable and time consuming leading to massive uncertainty for years.
4. Agri sector - Privatise the agri sector completely. Allow private players to come in, and "lease agri lands" from farmers and take over the farming business. Ensure the farmer gets paid for land lease and also provide jobs.
5. Revenue shortfall - Constrain all unnecessary govt spending, remove all subsidies except agri sector, privatise psu's, increase fuel prices to stem any shortfall. Defocus on the other schemes like Ujwala, housing, etc..till the economy picks steam.
The govt (bureaucrats and also political leadership) is totally demoralised after demo and GST and hence my bet is they will stick to point 1 with lots of sops to different sectors, so we will end up talking about all these small great measures which will not lead to any major economy fill up.
And the economy recovery will be painfully slow, no jobs growth, no stimulus to economy, and another 5 yrs will be lost.
Or will they surprise us with bold positive and well thought out reforms ??
Let's see how this budget spans out,
Now we are starring at another budget, and people are debating what can be done to fix the bank npa, nbfcs and economic slow down.
There are 2 approaches and solutions to kick starting the economy -
1. Incremental Steps - Continue to recap the bank, push additional funding to nbfcs, and sops for sectors that are in crisis. Recap any further collapses like ilfs, IDBI, Dewan housing, etc..as and when it comes. Keep absolutely tight fiscal targets, ensure the macro economic stability. Minimal to No stimulus funding for economy, as this would mean, fiscal targets will not be met. Continue w IBC and NCLTs to reduce NPAs, etc..
OR
2. Radical reforms - The only sure shot option at this time, would be to "abolish individual income tax across the board", right from pensioners, to working class, to traders, executives, to businessmen to all. This will uniformly remonetise the economy and immediately lead to a massive boom across all sectors in the country. The problem with UBI - universal basic income or Kisan schemes are they take a long time to get implemented and impact the economy meaningfully. And depending on states, the impact will be at best patchy.
3. Streamline GST - Elimination of GST would be even better, but politically this will be harakiri, so streamline streamline the GST, on war footing, reduce tax rates, and make it easier to business. And replacing GST with another tax or going back to sales tax is not workable and time consuming leading to massive uncertainty for years.
4. Agri sector - Privatise the agri sector completely. Allow private players to come in, and "lease agri lands" from farmers and take over the farming business. Ensure the farmer gets paid for land lease and also provide jobs.
5. Revenue shortfall - Constrain all unnecessary govt spending, remove all subsidies except agri sector, privatise psu's, increase fuel prices to stem any shortfall. Defocus on the other schemes like Ujwala, housing, etc..till the economy picks steam.
The govt (bureaucrats and also political leadership) is totally demoralised after demo and GST and hence my bet is they will stick to point 1 with lots of sops to different sectors, so we will end up talking about all these small great measures which will not lead to any major economy fill up.
And the economy recovery will be painfully slow, no jobs growth, no stimulus to economy, and another 5 yrs will be lost.
Or will they surprise us with bold positive and well thought out reforms ??
Let's see how this budget spans out,