The UPA-II has celebrated its third anniversary. I have reproduced below the post that was written by me on the 15th Nov 2008 and captures precisely where the govt has to put its attention to. The subsidies which come from the easy way of resorting to deficit financing is bad in taste and bad in practice. There should be conscious attempt at fairly transferring resource from the affluent to poor , gimmicks would not do. Showing poor that govt is for you and keeping wealthy at the same level of comfort can not go hand in hand. Please go through the post and please send your comments:
“Saturday 15 November 2008
The crude prices have visited under 55 dollar/bbl territory and on the other hand the PM has expressed inability of India to put forth any stimulus package for India. He happens to be the same PM who did not look at Rs 60000 crs farm loan waiver as out side the capacity and did not see necessity of raising of retail petro prices although crude prices touched a very high figure leading to big losses to petro marketing firms (I am not against farm loan waiver for different reasons). Such statements from PM are clearly an exercise in falsehood, may be under political compulsions which is a different matter. If you are endorsing some thing wrong at one point, the history will catch you some time later.
Coming back to the stimulus required, it is need of the hour and govt should come forward. It may come in form of saving cost in collection of some of the taxes and letting the tax be abolished. It can come from resource generated by taxing the idle wealth of rich and putting it to productive uses. India should ask for declaration of possession of precious metals in what ever form and should ask for a reasonable tax on it without making the trade or possession as illegal. India can ask for declaration of value of houses meant for living including the decorations and furniture. Those having it beyond a thresh-hold value should be asked to pay some reasonable tax. The cash hoard of money is already covered in statute and no body keeps it. The whole point is that wealth engaged in generating economic activity may not be taxed, if the govt so prefers but where ever their is idling of the same, it should be taxed. Every rupee transferred to poor hands sees greater and better satisfaction of a need. It is necessary to enable the artisans and self-employed buy better tools and equipment. Spreading credit for these purposes will not hurt anybody and would help everybody. Today people are forced to save to get tax relief and than these very people are offered credit by way of personal loans and credit cards at far rate of interest. Whose interest is served, only the money management agencies are given jibs which do not create surpluses but only wastefully use resources. The choice of spending now or later should be left to the income earner and not forced. What is the point in not letting somebody give good education to his children and rather save perforce for some future consumption in a luxurious way some distant time in future (by which time the frauds and mismanagement and inflation etc may have eroded the value of savings, this precisely happened in case of people opting for VRS, this precisely happened in USA and this precisely been done by the MFs in India). There is no plain and simple way of conserving purchasing power over long period and nobody is competent to guarantee it. When such is the limitation, why attempt doing it. This is true in peace times, God forbid, if a big war comes along the way the savers who skipped essential consumption just for saving will be the most foolish. The provision for future is right thing to do but its good only so long as it is done to take care of essential expenditure for living, the savings to ensure a princely life style is some thing which will create stressful situations time and again and in not so desirable ways. Here comes the value of religions advocating charity as a pillar of society. Whoever will have more than required will come forward to give to needy, is the only answer for the ongoing good of society.