Ten rich countries received the first 80% of Covid vaccines, U.S. disposable income per person is 27% higher than in February 2020, and capital spending by companies in rich countries will soon be 20% higher than before the pandemic. We’ll need decades to filter the noise and prejudice to explain which countries have handled Covid better – small versus large, democracies versus autocracies, presidents versus prime ministers, male versus female leaders, urban versus rural, decentralized versus centralized – but the intuition that rich and powerful countries made the crisis less painful for their citizens is hardly original; the poet Ramdhari Singh Dinkar wrote: “Kshma shobhti us bhujang ko jis ke paas garal ho“ (Snakes without venom cannot be kind, generous, or benevolent). Covid reminds us that the only sustainable solution to our challenges in health, education, sanitation and nutrition is to increase India’s GDP per capita through the massive creation of formal, non-agricultural, private jobs. .
Raising India’s wealth and power – our 148th ranking of countries in hospital beds per capita closely follows our 142nd ranking of countries in GDP per capita – must recognize that economic development is what psychologist Robin Hogarth has. called a “nasty learning environment”; the rules are not fixed, the patterns change, the objectives are multiple and the feedback is often delayed or inaccurate. This contrasts with the “fatal vanity” embedded in the 1955 Congress Party resolution which assumed that development was a “lovable learning environment” where rules are set, patterns are reproduced, goals are finished, and feedback is given. are immediate and precise. The change began in 1991 when China and India had the same GDP per capita; the average Chinese are now five times more prosperous. Our reforms have been powerful but incomplete.
The increase in per capita income requires higher productivity in our regions (Karnataka and UP have the same GDP although Karnataka has a quarter of the population), sectors (IT employs only 0, 8% of the labor force but generates 8% of the GDP while agriculture employs 42% of the labor force but generates only 15% of the GDP), businesses (our larger and smaller manufacturing companies have a difference in productivity 24 times higher) and individuals (sales are the fastest growing entry-level job with salaries varying four times depending on skills). These structural transformations require bold reforms in terms of formalization, urbanization, industrialization, financialization and qualification. In the meantime, here are five simple reforms with immediate impact and no tax requirements:
Increase net wages: Our laws impose the highest compulsory wage confiscation in the world; 42% for low-wage employees (this deduction is only 9% for employees whose wages exceed Rs 25,000 per month). Keeping the employer’s contribution compulsory, we should amend article 6 of the EPF law and article 39 of the ESIS law to make the employee’s contribution voluntary. Salary is individually owned, payday deductions cannot exceed savings, and FP loans solve a problem that should not exist.
Cholesterol Regulatory Attack: The universe of employer regulatory compliance in state and central governments includes over 60,000 compliances, over 6,000 filings, and over 6,000 annual changes. The change has started; The Punjab recently abolished 479 conformities and central ministries are culling. But this must be accelerated with a mandated compliance commission with goals of rationalization (40%), decriminalization (50%) and digitization (100%) by December 2021.
Massify employability: Covid has hurt education but has sped up online learning, non-exam assessments and made skills more valuable. The National Education Policy, 2020, anticipated these changes but the proposed 15-year descent path should be reduced to three years. And immediately authorize each university for e-learning (currently only 32 of our 1,000 universities are), authorize graduate apprentices (UGC Act 2F and Apprentices Act Rule 2), and legitimize qualifying universities (UGC Act Chapter 8). and Section 22).
Accelerate civil service reform: Civil service structures currently treat good and bad students equally, promote too many to the front ranks, load upstream training, sabotage the emergency with too many ministries and undervalue specialization. We should set a deadline of December 2021 for differentiation (cannot rank 98% outstanding), downgrading (retirement if not shortlisted for promotion beyond thresholds), and decluttering (reduction central ministries to 25).
Carry out privatization: Covid is shredding public finances but there are limits to raising taxes or borrowing without creating informality or stealing our grandchildren. Completion of the privatization program this year will help control public debt by taking advantage of the strong attraction of investors and FDI to India resulting from unrealized growth potential, Chinese fatigue and an overabundance of capital in the world. Most importantly, privatization is a strategic signal; the state will do less in order to be able to do more.
The new book The constantly changing past by James Banner suggests that history review is used by all societies to better understand who they are and where they want to go. The title of this article is based on the book Wealth and power by Schell and Delury who reframed the thoughts and lives of 11 Chinese writers, activists and leaders as China’s 200-year quest for fuqiang (wealth and power) via fuxing (rejuvenation). India has no interest in becoming China; we have remarkably built the world’s largest democracy on the barren soil of the world’s most hierarchical society. But we have yet to revise our socialist economic history as hurting those it purports to help by sabotaging formal, private and non-farm job creation. To paraphrase Swami Vivekananda, the pain and helplessness of Covid is, hopefully, a fire that stirs new vigor in billions of veins; we are responsible for who we are, and we have the power to make ourselves what we want to be. India is poor but does not have to be.
The opinions expressed above are those of the author.
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