[Reader-list] On the death of the Internet awki (Rakesh Iyer)

Rakesh Iyer rakesh.rnbdj at gmail.com
Wed Sep 9 08:21:26 IST 2009

Dear Kshamendra

>From pure politics with parties and ideologies, now I am glad at least we
are moving in some measure to economics as well adding on to it. This would
be interesting to look at.

My views:

1) Trickle down is one of the most dubious ways of development, which has
been followed since the past 60 years of independence, and should be
thoroughly condemned. The result why the Congress is today in a state of
doldrums at the political level in one way is indicative of the pitfalls of

Trickle-down doesn't work because of many reasons. Firstly, there is a
person at the top or an entity at the top, which is involved in deciding
about the production and the consumption functions, as well as decisions to
be launched in the name of 'social sector'. The problem is that none or very
little of the problems of the people at the ground level is taken into

We should not forget that India is a very diverse country, and what may work
in Gujarat may not necessarily work in a neighboring state like Rajasthan or
Madhya Pradesh. What's more, what may work in a region like Telengana in
Andhra Pradesh, may not or will not work at all in a region like Rayalaseema
in Andhra Pradesh. Therefore, micro-level changes have to be made, which may
be quite substantial, but trickle-down policy never allows changes to be
made. Changes are made by people sitting at a distance, who may have never
lived the way the people (for whom the policy is made) lead their lives.

What's more, trickle-down never works thanks to corruption. And before one
says, corruption can be removed, please go and read Kautilya. He himself has
said it's impossible to remove corruption totally, and corruption itself is
based on the principle of social trust in our country. Therefore, I don't
see any great saint going to change the dynamics of social trust on a grand
scale within the country, who will ensure that corruption is wiped out.

What therefore, we do need, is to incentivize ways which will reduce
corruption. And one of the best ways is the bottom-up approach. This
approach is good, for it means that people at the bottom decide what is good
for them and what is not, and they take the decision. It's like saying
panchayats are the most powerful entity in India, where they choose
representatives from amongst them who will then form a state level kind of
delegation. They in turn then get elected to form the Central level
delegation. (Gandhi's vision of Indian Republic, which was never adopted.
The Centre was supposed to be the weakest and village panchayats to be the
strongest. Wonder why we still have Gandhi as the Father of India when we
couldn't follow a single thing of what he said properly)

I don't completely agree with this model, but I think we need to take
certain insights from it and realize its practical value in today's India. I
can discuss more about it, but this would be an elaborate discussion. So I
will go into details later.

2) Certain kinds of transactions and consumption of goods is fine, because
at the end of the day we do want to stimulate the economy. But at the same
time, we also don't want people spending too much on wants, because
sustainable development is what we must strive towards. I am not saying we
should ban it, because it infringes upon freedoms of individuals to use such
commodities or buy them. But certainly, they should be taxed.

Regarding expenditure taxations or income taxations, is something economists
have never agreed upon amongst themselves, what to speak of common people
like us? What we need to do is then have healthy discussions amongst
ourselves, and find out why something is good and something is bad. For me,
expenditure taxation is good because it forces rich to consume less of a
luxury or a want, but it's bad as well because it actually affects those who
are indulging in producing those luxury goods.

Therefore, if expenditure taxation is to be introduced, what must be done is
to give panchayats the licence to impose it, so that by consensus villagers
decide to not produce certain commodity or produce certain other commodity.
We can't keep on just spending all resources at will. Also, ensure proper
implementation of the NREGA, now that we have it. Plus, we definitely need
to absorb labor which can be lost in such sectors into other sectors, for
which skill-training programs and skill-enhancement programs will be
required, which is why the govt. must be there for. (Here centrality of govt
with proper funds available is a good way)

3) The issue of hunger has something ironically to do with the rich, through
the budget. When poor are not able to get food, it is a moral and ethical
duty of the state to ensure they get their food as an entitlement, for I
believe it's the right of every human being to a life of dignity and
justice, for which food is an essential requirement. We can't simply
disregard people because they don't have the resources to get food for
themselves or their families.

And when the govt is instead spending crores and crores of your and my money
to provide corporate tax exemptions, which are never talked about at all in
the mainstream media, it is even more ridiculous. There was a huge
discussion about why or why not should the farmer loan-waivers' scheme be
implemented? But nobody asked the question why should or should not the
Tatas be given corporate subsidies? Why should companies investing in
Uttaranchal be given tax exemptions? Why should Tatas get exemption in
Gujarat, which according to some studies, is of the tune of Rs. 30,000
crore? If even half that money is obtained and then invested for
development, think of what can be done in Gujarat. Is such a tax exemption
justifiable, that too for producing a car which is ultimately going to lead
to tremendous congestion on our already suffering roads, huge pollution of
all kinds (air and noise, but in some measure water wastage and pollution as
well, thanks to washing) and also other issues?

All this talk about rich not able to do anything for poor, or poor's plight
not related to rich's actions is nonsense. When you (you meaning not you as
an individual, but members of a society in which you may or may not be party
to as an individual) go and ask for a dam, it displaces poor people. When
you demand that we want a SEZ, it will inevitably lead to displacement of
people. When you ask for control of panchayats to fake muster rolls, which
is what the village rich do, then you lead to poverty of people. Poverty is
not just simply a matter of luck. It is perpetuated and accentuated by the
actions of the rich in one way or the other. Their consumption may have a
role to play in that, be it that of electricity, or of land, or of something
else. Consumption forces them to corruption too, as also power.

Even the amounts to be allocated in budgets, and the way it has to be spent,
is something which has to be decided in the context of how the rich lobbies
with the govt. and asks them to spend money on it's needs. Look at the way
Union Budget 2009 decides on giving exemptions on pipeline-building for gas
and oil, and think how it helps the Ambanis in particular. Why give
exemptions, is there a justifiable reason for it? Shouldn't the public have
a right to know all this?

I will give you one more example. In my state, Madhya Pradesh, and in the
state I am living (to gain education), Tamil Nadu, after a state budget is
presented, there is a debate each day on discussing the amounts or grants
given to each ministry, and what all is going to be done in that. It is
discussed, to an extent, upon whether the money is sufficient enough to meet
the needs, and what has been the pattern in earlier years and what needs to
be improved. But for the Central govt. budget, when the Central govt. is
more powerful, there is no such debate or discussion on why a particular
dept. gets more money while some other dept. gets less. And they all manage
to evade by simply making announcements at will as they feel, leading to
impoverishment in one form or the other. What about that, Kshamendra jee?

4) Water. Good point. Go and find out how the rich elite splurge water in
Mumbai, and how the nearby villages are not able to get water for daily use.
Go to Delhi, and you will find outskirts in deep trouble. Go to Hyderabad,
and you will find trouble in the same measure. Come to Chennai, where you
can stay in my room, and you will find water problems within as well as just
outside of Chennai. People sell water there, while in some of the villages,
coconuts are free!!!

About electricity, the emphasis must not only be on building plants, which
are displacing so many people from their lands. The emphasis must be on
reducing wasteful consumption, promoting austerity in some way, and also
making processes more energy-efficient. In Maharashtra, the govt there has
decided to build plants in Konkan region (very green and environmentally
sound thanks to Western Ghats) in the name of generating more electricity.
According to a study made by the Prayas Group (one of the leading NGO's
working in the electricity sector whose report I have read on this issue),
if the govt simply decides to reduce T & D losses
(transmission-distribution) from around 40% in areas to 20-25%, and also
increase the rates slightly, there is no requirement of one plant. And they
were going to build plants to produce electricity of thousands of Megawatts.
What a shame!!! Pollution of environment and displacement of helpless
people. Is this what a govt should be doing, acting like a Robinhood with a
difference: take from the poor and give to the rich?

I would feel better to commit suicide rather than involve myself in such an

5) Regarding benami properties, what I will say is that it's not expenditure
taxation but use of power in dubious ways which is the problem, and hence we
need to look at structural changes and institutions which can help in
ensuring reduction of corruption, though as I said earlier, this will not
work beyond a limit. But let's keep the limit as low as possible.

Let's try to bring civil, judicial, police and administrative reforms. There
are so many reports lying in the dustbins. Why not implement them or have
discussions with the public and implement them within a given time frame?
Why not talk on Sarai about that?

6) Your last paragraph I agree on, because not only does it give freedom of
trade, innovations and economic growth, but more importantly, the revenues
generated out of that can be helpful in ensuring reduction of poverty
levels, referred as growth-mediated development. I am all for it, if this is
what you wish to ensure. But I am not for the theory of 'growth for the sake
of growth'. That's what the NDA's philosophy was, and look where it is now.
Let's focus on growth-mediated development, and if tax exemptions are to be
given to corporates or small entities for this purpose, give it, but be
judgemental and careful because they have costs and benefits, and an
analysis only can help in making proper decision, based upon discussions and
some mathematics.

I want to say more on this, but I stop as I have said too much (Bahut paka
diya aap sabko).



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