Beyond Budget: Indic Paradigm of Equilibrium
August 30, 2024
In the earlier article (part I), we spoke of how there is a need to relook at the structure of the economy, nay reimagine the overall structure itself. We shall look at the key aspects of how the structural changes should happen and accordingly suggest illustrative policy implications for the Governments to take this forward.
The transformation from a society of Homo Economicus to Homo Sapiens will need some critical change in out thought process and the following presupposes some of them:
- Pro bono socially focused segment: The entire life of a person need NOT be centered around transactional activities based on monetary considerations. This would mean leveraging of a very strong “Vanaprastha” segment of our society, the well achieved seniors who can afford to and are willing to spend time pro bono for the betterment of the society. They add value to the youth to enable them deliver on financial responsibilities at their age. These are the excellent resources of our society who can add immense value to the key education, health and nutrition space. (Refer to #3 & #4 in the policy recommendation part – schools and hospitals)
- Philosophy of Gita –
- उद्धरेदात्मनात्मानं नात्मानमवसादयेत् । आत्मैव ह्यात्मनो बन्धुरात्मैव रिपुरात्मनः॥ (Bhagavad Gita 6-5). . One should save oneself by oneself; one should not harm oneself. For oneself is verily one’s own friend; oneself is verily one’s own enemy. (English translation) This concept very clears mandates us to take the lead to uplift ourselves. Then obviously the whole society too shall lend their supporting hand to achieve the same. DICCI (Dalit Indian Chambers of commerce and industries) is a prime example of such thought process, which believes in holistic upliftment of their community that starts from a benevolent policy change.
- देवान् भावयतानेन ते देवा भावयन्तु वः । परस्परं भावयन्तः श्रेयः परं परमवाप्स्यथ ॥ (Bhagavad Gita 3-11) – . May you please the demigods by this sacrifice, and may they please you in turn by granting you your desired benefits. By satisfying one another in this way, you will attain supreme prosperity. Public Private partnership in key segments of social work becomes crucial, which can be more effective as well as efficient. (Leverage the vanaprastha segment especially in a big way)
- Economic Prosperity must go hand in hand with Social / religious cycles – viz. businesses should focus their economic activities that creates a robust ecosystem of festivities centred success. Yugadi, Rama Navami and Navaratri & Deepavali sales – for example can be the Indian equivalent of the Black Friday and Christmas sales in the US that give disproportionate percentage of annual of sales to businesses & ALSO ensures there is a national level celebration of festivities and social time for families.)
- State must act as a safety net or an enabler only – The role of the state is to act as a safety net (Antyodaya for example stresses on this) and viable gap funding agency, with greater autonomy to the communities and sectors to pump up their growth. The socialist mindset of Government does it all (or mai baap sarkar mindset should be wound up completely)
- Family run businesses in a new mode should be the way ahead: The last century has almost come a full cycle. Now especially with multiple skills available within the larger family itself – combination of old & new ways should be used to run family businesses. For example, an old model of catering done by the earlier generation, can be supported by the younger generation that has exposure to tech & supply chain concepts. With massive support seen from the Modi Government for small businesses, a creative way of involving almost all members of the family is a feasible thing indeed. And the individual if s/he is an employee elsewhere, shouldn’t be stopped from contributing to the family business in a meaningful confidence inspiring manner.
- Family as a unit rather than the individual. This may be considered for example in taxation matters making the HUF regulations made easier. US for instance to promote family values, allows clubbing of couple for getting advantage of higher tax benefits (ah, come to think of it, USA that celebrates super individualism, also sees value in this form of supporting the family structure)
- Indian economy must be seen an agglomeration of local economies (thereby making full use of local resources without unnecessary pan India competition & stress). Each state to be a predominantly self-contained economy with Rest of India linkages thereby providing maximum relevant opportunities for the local people. Imagine this to be like an economic pyramid in each state, rather than have one all India pyramid). (Please note this is NOT a reversion to vernacular only concept, but core focus to be on the local requirements of firms and therefore appropriate acquisition of those skill sets)
- “Benefit now but pay when capable” model – This is more of a mindset change. PM Modi has brought this once through the “Give it up” initiative. Once the beneficiaries are economically strong, they can “pay back” for the services used (linkage of Aadhar & PAN later can be used). This allows long run sustainability of these initiatives, makes the beneficiaries proud partners & key stake holders. At the same time it doesn’t pressurize them if they cant repay even later in their life. For eg. If the monthly market fees for a good school is Rs 10,000/- and the subsidized fee in the Sec 25 run equally good Govt schools is Rs 2,000/- (for those who can pay), the poor may actually pay only Rs 500/- . And the differential of INR 2000 -500 = 1500 can be paid at a later point in life. (This purely is based on moral suasion basis to start with, once the student has become strong economically with a job. NO compulsion should be imposed. As a society if there is a change in thinking , this can further strengthen the society.
Recommended Potential policy changes on these lines
- Industry-MSME council – A substantial amount goes as CSR route & the best long term use of these funds is to make these MSMEs stronger. The CSR funds from corporates with a matching contribution by MSMEs and the Government to be used for MSME priorities, which may be run by a team of corporate leaders along with MSME stake holders as MSME Council. The council can decide on the priorities for which this may be spent. The ECLGS during Covid was a very successful and effective scheme that leveraged revival of MSMEs for overall economic growth, especially that touched the bottom segment of our society. This amount will be over and above what the Government has anyway been doing.
- Agricultural council- The Rich farmers need to be taxed like other segment. There is no reason NOT to tax them when soldiers who give up their lives for the country have their salaries taxed. Following the above MSME instance, an Agricultural council consisting of all key state holders (Union and state Agriculture ministers, farmer unions, academicians etc) can decide on use of this particular tax revenue with a matching contribution from State Governments together as one stake holder and Union Government as another contributor. This amount to be used exclusively for poor farmers of the country – to be decided by the farmers’ council – helps in the country’s support for the poorest farmers improving their income. This obviously will be over and above what the Government has anyway been doing for this segment.
- All Government schools to be put under a Sec 25 company for each state headed by excellent senior former corporate leaders (Vanaprastha mode) – who can run these schools like top quality private sector. The assets will be owned by Governments but managed & run by professionals. This will act as a win-win situation for all segments, in providing top class education at very affordable cost.
- All Government hospitals to be put under Sec 25 company headed by excellent leaders former corporate leaders (Vanaprastha mode)– who can run these hospitals like top quality private sector. Yet again assets owned by Governments, but managed & run by professionals. Jayadeva Hospital in Bengaluru under the very capable Dr. Manjunath’s leadership shines as an example of a Government owned entity that can exceedingly do well with good management.
Please note –Aravind Eye Hospital in Tamil Nadu runs a very extensive and successful eye care chain that works on principles of efficiency and social goal. They charge hardly half of what a private sector hospital charges and even this amount by one patient cross subsidizes two other poor patients, who get the service free of cost! No reason why this model of excellent private sector level care should not be offered through the Government Owned Private Operated mode for both education and healthcare.
- Family run businesses with members who are employees elsewhere – to be formally supported and enabled for better economic opportunities – policies that support moonlighting needs to be allowed explicitly to enable this new segment for family business.
- Big fish in a small pond (Skill acquisition should be the end goal of Education as a first step towards local economic engagement) – Mere mapping of skill acquisition with some level of education may not be fully effective. Therefore, each region / state to work on an economic model that enables local talent maximally – eg. 3 months Sales & Marketing course in Kannada is affordable, effective and helpful for a youngster from Karnataka’s rural area to get a sales job in local region (big fish in a small pond) instead of a 2 years MBA in English throwing the candidate in Pan Indian job market (small fish in the big sea)
- Family level income for taxation rather than individual level income – One of the grouses of the middle class and rightly so, is that single income families have a heavier burden on them with both direct and indirect taxes stacked against them. Following the US model, it would be highly advisable to increase the tax bracket to include the spouse and children to avail of higher tax benefits. May be going one step ahead, parents and in laws if they are dependent may also be included in the enlarged bracket.
The above suggested change in framework flows from the thoughts of great thinkers like Deen Dayal Upadhyaya ji and Dattopant Thengde ji , whose belief was that India should have her own solution to the socio-economic problems. A customized solution, so to speak is the need of the hour. Reimagining our society and economy as one big family, with the same moral commitment to help each other and contribute to our best ability is the future. Clubbed with the trust in the delegation of responsibility to develop each segment to the society rather than Government doing it all alone – Agriculture, MSME, education, health care – for example as discussed above, is the way ahead.
The first two parts of this article series has focused on the existing thinking, need for an Indian thinking and therefore a change in the mindset. The third and concluding part will touch upon on how the communities can take charge of lots of welfare activities for their members. This would help the community members directly and indirectly the entire country itself.
Dr. Samir Kagalkar holds a PhD from IIMB and a Masters in Economics from GIPE. He was a former APS in GOI & till recently headed the Economic Cell of BJP (Karnataka)
