MODI 2.0

The mandate has been given. People of India have spoken in no uncertain terms. The absolute majority in Lok Sabha, the impending majority in the Rajya Sabha, coupled with the fact that he will probably not be looking to play to the choir for a third term, sets the stage for Modi 2.0 to potentially be a blockbuster which could transform India and be the inflexion point for our country in its era of independence.

Well begun is half done…the allocation of the portfolios to the ministers is promising indeed. Persons with pedigree and experience have been given key portfolios rather than distributing these amongst political favourites. Nirmala Sitharaman as FM and Jaishankar as MEA are two such cases which are drawing very positive reactions from investors and international community alike.

This article is my attempt at suggesting some radical measures that could change the future of India, economically, socially and geo-politically, albeit over a medium to long term. Measures, that I feel Our PM, Shri Modi does have the wherewithal to carry out.

So here is my list:

1. DIRECT TAX CODE – A simplified direct tax code to replace the Income tax Act. One which does away with all exemptions, widens the tax base and lowers the tax rates, thereby increasing compliance and the tax to GDP ratio.
2. GST – Bringing oil and gas, alcohol and other excluded commodities into GST net, reducing the number of slabs to two or three and easing out the compliances.
3. AGRICULTURISTS – Agriculturists and large landowners to be brought into tax net, albeit with a nominal rate of income tax pegged to their land holding, thereby giving visibility over the income in rural sector and preventing revenue leakage through evasion under the guise of agriculture income.
4. STARTUP TAX – Tax of 1% on the value of shares issued by a startup at a premium to any investor as opposed to going through a long drawn tax proceedings on justification of premium in the first place.
5. LEGALIZE BETTING – Legitimize betting on sports, regulate and tax this to raise tax revenues rather than having it carry on under the radar as an ‘illegal’ activity.
6. DEMONETIZATION 2.0 – Pumping more of INR 200 and INR 100 denomination notes into the market and phasing out INR 2000 and INR 500 notes gradually over a period of 2-3 years rather than the overnight knee jerk move of demonetization 1.0. This will effectively eliminate parallel economy over a period of time.
7. CAPITAL ACCOUNT CONVERTIBILITY – Allowing free entry and exit of capital for investments, merging FDI and FPI route as one, eliminating approvals and sectoral limits.
8. OIL & GAS REFORMS – Market linked pricing for LPG, allowing private players to import and market petroleum products and liberalize licensing regime for fuel retail.
9. CAPITAL MARKETS – Eliminating capital gain and all other taxes on gains, dividends and income on listed investments and only charging STT on trades which can be a higher rate thereby yielding greater revenue and preventing tax compliance issues.
10. BANKING – Consolidation of PSU banks to 4-5 banks and recapitalization to the extent required post consolidation.
11. EDUCATION – Consolidation of multiple regulators in education such as UGC, AICTE etc. Allowing free entry of foreign educational institutions, minimizing oversight on higher education and allowing institutions to be housed in ‘for-profit’ structures such as companies rather than insisting on trusts and societies.
12. TOURISM – Awarding management of tourist attractions and heritage sites to private companies on revenue share basis so that private companies are motivated to attract more tourism to the country by developing, maintaining and marketing the sites.
13. AVIATION – Awarding operation and management of Air India to private player on profit share basis akin to hotel management model, thereby improving quality and reliability of Air India and turning it around without having to divest it. Privatization of all airports.
14. DIVESTMENT – Privatization of all major PSUs, leaving only few critical ones which are of importance to national security under government control, such as oil & gas PSUs, Defence PSUs etc.
15. KASHMIR – Abolition of Article 370 granting special status to Kashmir, implementation of all laws in J&K, and affirmative steps for resolution of Kashmir issue through dialogue with Pakistan coupled with pressure of stoppage of international funding and aid to Pakistan.
16. TERRORISM – Dealing with a hard hand with all terrorists, zero tolerance and no negotiation policy to ensure no terror incidents – an achievement of Modi 1.0 though not adequately appreciated was the elimination of terror incidents in civilian areas.
17. INTERNATIONAL RELATIONS – Permanent seat for India in UN Security Council with backing of China, US and Russia, all of whom are having superlative relations with India as a result of Modi 1.0.
18. UNIVERSAL HEALTH COVERAGE – Comprehensive rollout of INR 5 lakhs annual health insurance scheme throughout the country linking the scheme with Aadhaar and enlisting maximum hospitals within the scheme.
19. UNIVERSAL PENSION – Universal pension to all senior citizens of the country, linked to Aadhaar and through direct benefit transfer route, can be started with a smaller amount and gradually increased based on exchequer’s affordability.
20. ENFORCEMENT – Extradition of Nirav Modi, Mallaya, Dawood Ibrahim and other criminals and defaulters. Bringing other scamsters to book and not allowing them to flee the country.
21. JUDICIAL REFORMS – Increasing strength of judges across courts, reducing the number of holidays and case backlog. Bringing in accountability for pending cases with judiciary and each judicial officer.
22. DATA – Bringing greater transparency and online availability of data relating to the economy such as employment, GDP, inflation and other major parameters.

These are the critical areas where the Government can intervene. For the rest it should let the free market play its role and resort to minimum governance model.

Hon’ble Prime Minister – the nation has put the mantle of its high expectations on your head. It will be interesting to look back in 2024 and see how much of this is actually implemented.

© Anshuman Khanna 2019

Published on www.anshumankhanna.in