Making a case for Rahul Gandhi to take over as Prime Minister

India's GDP numbers for the last quarter is a sad commentary on how our government is running our economy into the ground. Pranab Mukerjee talks about India's GDP growth better than that of Euro zone countries. He does not talk about the basic standard of life that those countries have already provided to their citizens. I really wonder what is the motivation for people like him, who are far beyond their retirement age, to stretch and aggressively work towards economic upliftment of the country or fix issues quickly. They are happy warming their cozy chairs, bending backwards to appease the people who keep them in power. While we are stuck with Congress for couple more years, here is the best possible scenario that I can think of, under current circumstance  - Rahul Ghandhi should take over as Prime Minister. He is young and has maximum at stake - his future. He has shown the inclination to go out and connect with people. He had the courage to speak in favor of FDI in retail, logically arguing that it will benefit a large population of farmers vs the short term impact that it will have on the trading community. There are still couple of years for him to turn things around. The going has been so bad for UPA II till now, that anything marginally better would reflect good on him. He has to just put some energy and focus on getting things done. If group of Ministers must meet to take a decision, then instead of that meeting taking place after couple months, have that meeting done now, push the envelop. Allow executives to take decisions rather than lining up all of them for legislative discussion and hence delays. Punish people for corruption and showing favoritism, however don't start second guessing executive decisions, there is no end to it. No one will take any decision. Hindsight is always 20-20. 


Manmohan Singh should take over Finance portfolio.(A good nurse may not necessarily be a good nurse supervisor, likewise, a good economist may not necessarily be a good administrator/politician). Why not use Manmohan Singh in a role that he is good at - Finance vs. in a role where he is ineffective. Pranab M should be booted up to Presidential Palace.

Mr Prime Minister please take over Finance Portfolio

World over, the economic environment  is getting tough and uncertain. The countries that show that they have their act together will have less pain and the countries that continue to dither will bring misery to their citizens.

In case of India, we have done enough in the recent past to scare away the investors - changed the tax laws retrospectively, cancelled the spectrum allocations in case of telecom, brought in General Anti Avoidance Rule (GAAR), announced opening up of retail and then put it on hold,  not implemented uniform Goods and Services Tax, did not do anything concrete to bring the runaway subsidy bill under control, created ambiguity around allocation of coal blocks, allowed general corruption and red tape to have a field day. The list goes on and on.

I am sure there are a lot of good things happening too. However, the perception and the sentiment is negative and before you know it becomes reality.

If there is one thing that this government could do, just one, to start hacking away at the negative sentiments, then that would be to move Finance Ministry under Prime Minister Manmohan Singh.

Bump up the current finance minister - Pranab Mukherjee - to the President's office and make Prime Minister Manmohan Singh take additional charge of Finance.

Manmohan Singh is not known for his political astuteness, we have witnessed that, (or may be he is, that is why he became the Prime Minister, topic for another debate), however he is recognized for his hold on economics. He is respected for that. Why not send a signal to the world that we take our economy seriously and we show this concrete action to back our words!

Mr Prime Minister please do it!

Shape of Water

Went to Sikh National College, Qadian (near Batala) yesterday. (Very rich history, topic for another note, some other time). Drove thru' Punjab country side. I was amused to see the shape of overhead water tanks in private homes. They come in all shapes - Cocks, Pigeons, Hawks, Aeroplanes, Cars, Footballs etc. Do the other parts of the country have anything like this?

Making Past Perfect!

Our government follows it literally! It has chosen to revise the tax laws from back date. The law in question relates to capital gains on sale of India based assets, when the transaction happens between two foreign entities. We are not debating whether the change is right or not, I personally think it is right. However, the bigger question is whether the government should change this from past or not!

It is akin to government making changes to the motor vehicle act, mandating that all vehicles should be driven on the right side of the road instead of left . Imagine these changes are made with effect from 1960. As a followup, the government sends penalty notice to all the people, who owned any vehicle since 1960, since they have been driving on the wrong side of the road. To soften the blow, government says, the normal penalty is Rs500  but we will only charge Rs250 to the people who have been driving on the left prior to April of this year! What generosity!

It does not take a rocket scientist to figure out that this is nonsensical? So do we assume that the top policy makers and bureaucrats are idiots? I am tempted to believe it, however, the situation is probably more complex than what seems on the ground. 

Here's what I think is the core issue. Government does want to tax sales of any India based asset, even if the ownership of the asset changing hand lies outside India. Fair so far. I think it also does not want to tax past transactions(I would like to give it a benefit of doubt). Here's the catch, there probably are cases, in the past, where such transactions were taxed. Supreme courts ruling in Vodafone's case would have allowed such companies, who paid taxes in the past, to come back and claim refund. Government, by bringing in this law, with retro effect, is covering its behind. 

Government is between a rock and a hard place! If it does not bring in the legislation from back date, it is vulnerable to refund claims by companies, who can cite Supreme Courts' ruling in Vodafone's case. If it does, it  vitiates the investment environment! What should it do? 

What is your vote?