Ten things to kickstart the Indian economy

Here are some ideas to bring the economy back on the growth track. Some of these could be permanent, yet others could be temporary till the situation improves.

1. Drop income tax rates, for both companies and individuals. More cash in the bank will perhaps make consumers and companies more comfortable spending.
2. Cut import duties. This will bring pressure on companies to lower prices. Do this across the spectrum including consumer products. Domestic companies may crib but lower income tax rates should balance this. This should help curb inflation of manufactured products.
3. If the rupee seeks to appreciate, let it, a stronger rupee could have contained inflation somewhat. Exporters may cry, but the always do, and if India’s economy is not dependent on exports (as the government keeps reiterating), then why is the minority holding the country to ransom?
4. Speed up completion of infrastructure projects that are more than half way through, the additional spending will be welcome, completion will ensure the money is not wasted, and if infrastructure improves, people will see development.
5. Pass legislation to implement the Competition Law, man it with enough enforcement officials and fan them out to sniff out cartels in various businesses. Eliminating price fixing should be their top priority.
6. Provide a generous terror cover to all business and leisure tourists coming into the country, for maybe one year. Communicate transparently the government’s efforts to ensure the country is safe for business and tourism. Will do a lot to improve sentiment, no one is asking for a foolproof environment, but basic safeguards should be evident.
7. Don’t waste money on bailouts. It is not worth sacrificing the economy for a few sectors. When industry has been saying ‘The government has no business to be in business’ all these years, there is no reason to plead for doles at this point.
8. Do a privatisation exercise to raise funds, either of existing PSUs or new ones, including banks, make it exclusively for the Indian public only; offer shares at prices that are irresistible even in a bear market. Funds flow into the government’s coffers. Sentiment improves and the government can’t be accused of selling out cheaply, if it sells only to Indian public. That money can be used to spur growth.
9. Food inflation is quite unbearable for the masses. There is no one way to tackle this, but the government has the answers for this. It could be imports, ensuring there is no hoarding of foodgrains and maybe ensuring that the PDS works as it should. The longer term solutions are different, but the short and medium term needs some solutions too. This one is more like a wish.
10. Banks will play a crucial role ensuring that there is enough money in the system; cheap credit was one of the reasons why the Indian economy jumped onto the growth bandwagon. They should be incentivised to lend with an assurance that they will not be persecuted for loans that turn bad, as long as they have done their due diligence. These are just some top of the mind ideas. Maybe some of them are utterly impractical or useless, or there are better ideas out there. Either way, feel free to leave your comments.

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