March 16 2012
Despite having been a former banker I couldn't for the life of me understand economics. Even today I can barely distinguish the fiscal from the monetary. Therefore, it is understandable that I have questions:
For instance, I can’t fully digest that rising GDP necessarily reflects the rising standards of its 'people'. Say, for example, that in a country inhabited by Mr Mukesh Ambani and 99 other paupers like me, a GDP growth of 10% would seem impressive. And even the GNI, deduced by GDP/Population equation, would provide a happy picture. But I would still remain the same: a pauper.
Worse, each of us 99 may have together become poorer, while Mr Ambani got that much richer, and more. I could never be sure economics is only about growth, and not about distribution.
What economic growth fundamentals would collapse if wealth of individuals were frozen at some level, say a billion rupees each? Anything they earn to accumulate beyond that attracts 100% income tax. [In other words why not peg the IT rate slab to an individual’s wealth?] After all, the law of diminishing returns underlines the marginal satisfaction the one-billion-first rupee earns to our dis-affected billionaire. And he should be well advised to pursue other forms, and sources, of happiness at that level of wealth.
Infrastructure development sounds impressive. But golf courses, airports, even flyovers 'develop' the poor far less than pucca roads to the village, urban housing, slum development, basic sanitation, drinking water etc. Consider, for example, that Gujarat fares poorly on malnutrition front even as it ranks pretty high on development.
Why should there be so much hullabaloo on budget day? Can’t we do away with this yearly tamasha, and instead make economic governance an everyday affair for the state?
Should there be an inter-state council in our federal republic to determine impacting economics in the federal budget? Equally shouldn't the Centre have some say in the state budgeting process, such as in sales tax?