Before Status Quo takes over

Manmohan Singh,
Finance Minister,
Government of India

Subject: 6 things to do before status quo takes over

Sir,

Congratulations on taking over the additional charge of Finance Ministry! (Thank God, Pranab Mukerjee is out and so, hopefully, the 1980's economic thinking).

People expect change. They have high hopes from you. Don't let this opportunity slip by. If you wait, status quo will take over. Here are some of the items that you may want to start with.

Get rid of the changes in tax laws with retrospective effect. Make a statement, or come up with a policy stating that changes with effect from back date won't happen going forward.  

Get rid of GAAR, it is arbitrary, ambiguous and open to interpretation. If you must tax transactions that happen abroad but involve assets in India, then make it mandatory for the asset to change hands in India as well, to a newly registered entity. Let that asset gets valued independently and then tax it as per exiting norms. What I am proposing may not be best possible solution, as I am not an expert, however the idea is to take out ambiguity, arbitrariness from proposed GAAR.

Untangle the wires in telecom sector. One of the showcase sectors of our economy, a sector that is an enabler for larger economy, is now bogged down in procedural and legal hassles. The guilty must be punished, but please don't look at maximizing the money thru' auction  and cripple the growth of this industry. Don't kill golden egg laying goose.

Announce a plan to completely get rid of diesel subsidy. Put a timetable in place, clearly showing, when the entire energy sector is going to get decontrolled and deregularized. The money thus saved, should help reduce fiscal deficit and some should get pumped into research for renewable energy.

Implement GST, all the work has already been done. Give it a final push and get it implemented. Roll out multibrand FDI initiative, at least let those states that want to implement it get started. But ensure that those states don't go back and force the businesses to shut down, when the government changes. That will be a kiss of death for the Indian economy.

Put better administrators in charge of government departments. Put some kind of status reporting mechanism in place for all government employees. Hold them accountable. Inefficiency is rampant. Meetings get pushed. Leaves are taken in good measure. Holidays are plenty. Now and then there is a strike.

You know more than anyone else, it is a lot about sentiments and feel good factor. Restore it.


Your Truly,