The India I Dream Of

This is what I expect the government that gets elected would do for this country after the elections:

The government would free us to buy and sell at whatever time we choose to, with whomever we like, and from wherever we choose. All restrictions on imports, exports, and foreign exchange are lifted overnight. Ludwig Erhard, the German politician, did exactly this and the West German miracle began – the West German economy got bolstered, its stores were full of goods, and its currency, the Deutsche Mark, became the strongest in Europe. East Germany, up to its demise in 1989, could not even repair its war damaged buildings and roads. And this happened precisely because of its communist and totalitarian government, obsessed with absolutism and control.

The restrictions on our right to work, wherever, whenever I want to work and at wages that I negotiate with a willing employer is not subject to endless restrictions of wage and labor laws. Yes, if I do not want to face a reduction of my salary for provident fund, that should be my right too. I do not need an army of do-gooders that the government pays for deducting my salary. These so called for-my-justice measures do just the opposite. They reduce employment opportunities available to me by doing away with all the incentive for businesses to invest, expand, or hire. Hong Kong, from the mid-forties to the mid-eighties, had no protection for its workers. The result: zero unemployment, even as its population grew at an unprecedented compounded annual growth rate of about 6%, both in terms of natural growth and immigration. Anyone landing in Hong Kong in the morning could get employed by noon! A laborer working at its dockyards could earn over US$2,000 per month, in those times! America protected its labor more by anti-discrimination policies and saw a 5% to 10% unemployment rate. Europe protected the economy even more, with cradle to grave security, and saw its unemployed soar to over 20% in the overprotected countries of Spain, Italy and Greece; and continues to have its economy in shambles. India’s case is clear. It has millions of unemployed and underemployed today.

The India of My Dreams

I dream of an India where there would be no restriction on moving capital in or out. All restriction on capital flows would be abolished. It is a simple fact unknown to our bureaucrats and politicians that people park their money where they have complete autonomy of choosing what they can do with the money. While we rally against people who take their wealth into Swiss banks and other tax-havens, why don’t we just emulate them and do an even better job in granting privacy to owners of capital instead of taxing them to death? Why can’t we allow them their share of economic freedom to take money out and to bring it where they think fit? This will imperatively lead to floods of dollars, euros, yens, and yuans, washing onto our shores. This would definitely open up opportunities for its citizens to be employed, for its industry to have capital, and for its trade to flourish to an extent that the country would again be ‘the golden bird’.

Do this, even as you abolish the income tax, and bring down the customs excise duties to a flat 5%. If Dubai can survive and flourish with this model, why can’t India? Of course, the government would then be lean and mean. Its job would be to protect us against external aggression via a strong defense and against internal conflicts, ensuring a riot-free, crime-free India. It could also provide the framework for speedy justice. That is all that the governments in India always need to do. For other tasks, it just needs to furnish a proper framework of laws or facilitating provisions as I like to call it, and then get out of the way.

The people of India shall do the rest. It will be an India where growth will, conservatively speaking, be not less than a healthy 15%. No unemployment. No shortages. Wealth for all. That is the India of my dreams.