The economy is in bad shape. There is no more debate about it. With a second innings of a super-stable government, we should be looking at a double-digit GDP growth by now. Instead, we are at 5%. We are no longer one of the fastest growing economies of the world. The US, with a much higher base, is growing at 3%. The incremental 2% we offer is frankly just not worth the extra sarkari, regulatory and other third-world risks one has to take to do business in this country.
Tax rates are not only high, but also change every few months. Tax officials in particular, but also other government departments depending on your business, come after you like you aren’t doing business but are running a mafia enterprise. They will try their best to ensure you don’t make money. God forbid you do, and become successful, you will not be called a super achiever. No, you will be called super rich. And in India, rich people are bad people. So, super rich people are super bad. Hence, your income will be taxed the highest, and then some more with cess and surcharges.
Whatever money you are left with after all this, the government takes another big chunk when you go out to spend it. Staying in a nice hotel? Oh, that means you are rich, and rich people are bad, so pay another 28% of your already super-taxed income. Want a car? Pay us another 28% of your already super-taxed income, and pay us road tax and a couple of other charges as well.
And when the GDP numbers come out, wonder why we aren’t growing? After all, we made a beautiful logo for ‘Make in India.’ We also said India is great. What is wrong with these stupid investors? Where have they gone?
Well, they may be in Dubai, where tax rates are zero percent and investors are welcome. Or they might be in Singapore, Hong Kong or any of the Southeast Asian countries where taxes range from 10%-20% overall. Or they might be somewhere they don’t mind paying high taxes, because the roads are smooth and everything works. Most of all, they must be in a place where investors, achievers, capitalists and entrepreneurs are not seen as evil who need to get their eyes gouged out to keep them in their place.
Well, I don’t mean to rub it in too much, but the point is the problems with our economy are self-created. We have created an anti-investor, anti-wealth creator, anti-achiever, anti-success culture so bad that now all these things evade us. When faced with a crisis, all we do is roll back some bad policies, and announce more government schemes, which require even more money, which in turn requires gouging the achievers even more.
Here are some specific suggestions that can kick-start this economy:
Remove the capital gains tax. Investors hate it, and it makes Indian returns uncompetitive. It’s not worth the revenues.
One GST and super simple, low tax rates. Tinkering around will not fix this economy. Changing GST rates and ‘granting relief’ to the auto sector will not kick-start the economy. Setting one GST rate and getting the hell away from changing it every few weeks will. Income and corporate tax rates should also not have any cess, surcharge or any complications. Both the GST and the tax rates should be low simple, and fixed.
Change the mindset. See the rich/achievers/capitalists as nodes of a hydra like economy. They have the capital that trickles down, creates jobs and grows the economy’s tentacles. Cutting the nodes with the false notion of creating equality or fairness will kill the economy. The rich will get richer in a growing economy, deal with it. Focus on making the poor richer, not the rich poorer.
Open almost every sector to 100% foreign investment. Barring national security industries, there is no reason in today’s world to have it any other way. India is open for business, for one and all.
Let tax collections drop. Stop celebrating gouging more taxes as an achievement. Let collections drop due to lower taxes. They will come back when we grow at a much faster pace.
Fix the metros. Just as rich people, cities are also nodes to the economy’s hydra. If senior management, achievers, talented people do not want to live there, we will not have the kind of growth we want. Mumbai, Bangalore, Kolkata — try rush hour traffic. We choke our own growth due to our choked cities.
India can grow fast quite easily. The anti-success and anti-wealth mentality pervasive in our society and endemic in our government officials has to change. It has always kept India’s growth below potential. Major moves and not just tinkering is needed. We deserve to be a rich nation. Let’s go for it!