Dr. Malay Chaudhuri
Founder - Director, IIPM & Author of the Best Seller ‘The Great Indian Dream
[March, 2007]
The first two months in the year are the months when our ‘beloved’ Finance Minister appears to be in his all powerful ‘avatar’. India Inc. starts begging for one favor or the other It’s a great feeling to experience an exhilarating GDP growth rate, which has surpassed 9% this year, but has poverty reduction rate even approached 2% a year? NO!! Two sections of India’s population, namely Dalits and Muslims have the right to demand that at least Rs. 200,000 crore be allocated through a dedicated fund for their upliftment to bring them socio economically at par with the other sections of the people.
Here, The IIPM Think Tank has made some suggestions to raise additional resources to the tune of around Rs. 257,500 crore over and above what the conventional economists at the Finance Ministry may suggest:
1. Since diesel prices in advanced economies are almost around 90% of petrol prices, while it is around 70% in our country, there is scope to increase price of diesel by Rs. 10 per litre, which will add roughly Rs. 55,000 Cr to the exchequer.
2. Price of electricity per unit can be raised by Re. 1 which would contribute to Rs. 75,000 Crore to the centrally administered resources.
3.There is a serious discussion on abolishing exemptions given to corporate tax, reducing nominal tax from around 34% to 17% in reality. We can safely withdraw most of these exemptions, since global forces have strengthened our corporate sector to such an extent that they can on their own take up the global challenge. Indeed, Mr. N.R. Narayana Murthy has advocated withdrawal of tax exemptions to IT sector (which may alone contribute Rs. 16,000 Cr. annually). It has been calculated that exemptions granted on account of corporate tax, income tax, customs and excise duty and various subsidies (not necessarily going to the poor for whom they are meant), cost the exchequer upwards of Rs. 150,000 Crore. Even if 1/3rd of these exemptions are retained as economically meaningful, 2/3rd of the remaining (i.e, Rs. 100,000 Cr.) may be withdrawn and dedicated to the upliftment of Dalits and Muslims.
4. Imposition of a 25% tax on foreign exchange allowance on out-bound tourists (around 6.6 million expected in 2007- 08), will bring around Rs. 27,500 Cr. We have therefore accumulated on these four counts, around Rs. 257,500 crore. Let this fund be not frittered away for satisfying sectional and vested interests and be dedicated towards the creation of employment in rural areas, healthcare and social insurance and for improvement of primary education of the Dalits and Muslims.
1. For full employment among people below the Poverty Line, we need to create employment opportunities for 10 crore people. The IIPM Think Tank has calculated that an investment of Rs. 20,000 is needed to create employment of one person in rural areas. We may therefore require Rs. 200,000 Cr to create employment in rural areas. Such massive employment in rural areas will increase the supply of commodities exerting downward pressure on prices, which will effectively counter potentiality of inflation due to increase in price of diesel and electricity.
2.Roughly about 1 crore private tutors (1 tutor for every 10 primary school children from Dalit and Muslim families) will be required for extra coaching after school hours. In rural areas, such tutors will be easily available at Rs. 2,500 a month. A sum of Rs. 30,000 Cr. will be required for this specific purpose.
3.Around Rs. 21,000 Cr. per annum is foreseen for health insurance, AIDS care and sanitation. Details have been described in our book, ‘The Great Indian Dream’. (2003, Macmillan India, New Delhi)
4. The IIPM Think Tank proposes to allocate the balance of around Rs. 6,500 Cr. for the improvement of the Indian judicial system for speedy and qualitatively improved delivery of verdicts on cases. This last point is the most important of all measures proposed by us, so that socio-economic lives of Indians become free from the grip of the criminals and criminalised politicians. Without implementing these judicial reforms, none of the above measures can be achieved.
Let us hope that the honourable Minister Mr. Chidambaram will accept our suggestions and thereby earn a glorious place in the history of post-independent India.
This came out as Malay Chaudhuri’s guest column in the Feb. 21st issue of THE SUNDAY INDIAN and has been brought to you by a special arrangement with THE SUNDAY INDIAN
Our previous column on “Contempt of justice be just, not just legal” received tremendous feedback from the readers. Every month, India: Today & Tomorrow reaches around 125 lac urban house holds, with approximately 750 lac readership, perhaps the highest ever in the world! You can log on to www.iipm.edu/itt.html to read our previous articles. Your feedback is important. Send your feedback at: feedback@iipm.edu or to Prof. Arindam Chaudhuri, IIPM Tower, B-27, Qutab Institutional Area, New Delhi - 110 016. The views expressed above are solely of the author. IIPM does not necessarily share the same opinion.